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Weekly review

By Josh White

Date: Friday 23 Feb 2024

(Sharecast News) - The FTSE 100 ended the week down 5.43 points, or 0.07%, closing at 7,706.28 on Friday.
Equity view

Chemring has kept hold of guidance but said that annual results will now be increasingly weighted to the second half after severe winter conditions interrupted manufacturing operations at the start of the financial year. The aerospace and defence firm said that the current environment of heightened geopolitical uncertainty continues to position it well for growth as it reported an order book of £991m at 30 January, up 51% on the same point a year ago.

Education software firm Tribal Group has announced it is now entering a mediation process with Nanyang Technological University (NTU) over continued disputes around its eight-year, £17m contract with the Singaporean institution. Issues with the NTU contract have been ongoing since mid-2022 after the two parties were in "significant disagreement" over the details of the work involved, as Tribal blamed implementation delays on changing scope and complexity.

Woodside announced a transaction with JERA on Friday involving equity participation in the Scarborough joint venture, LNG trade arrangements, and cooperation in advancing new energy and low-carbon solutions. The company said it had finalised a binding sale and purchase agreement with JERA involving the sale of a 15.1% non-operating participating interest in Scarborough.

Foreign exchange business CAB Payments revealed on Friday that chief executive officer Bhairav Trivedi will be succeeded by Neeraj Kapur following the publication of the group's full-year results on 26 March. CAB Payments said Trivedi will support "a smooth transition of responsibilities" to Kapur and has agreed to then take on a new role as senior adviser to the board. In this role, Trivedi will lead the company's push globally to build "increasingly strong relationships" with central banks, regulators, current and prospective strategic customers, and other senior industry participants.

Coca-Cola HBC, the Switzerland-based bottling partner of the Coca-Cola Company, has announced it is snapping up an Irish vending-machine business to "unlock profitable opportunities". The group said its Northern Ireland subsidiary has acquired 100% of BDS Vending Solutions, an established food and drink vending services business with around 2,000 vending machines, for an undisclosed sum.

Mining group Anglo American has slashed its annual dividend by a half after seeing profits plunge in 2023 on the back of impairments and downturns in the platinum and diamond markets. Anglo said it is now planning on cutting annual run rate costs by $1bn and capital spend by $1.6bn over the next three years, while also cutting out unprofitable volumes, as it streamlines in the face of high cost pressures.

Paper and packaging giant Mondi reported lower full-year profits on the back of weaker demand and lower prices, with the latter continuing into the first quarter of 2024. Underlying core earnings fell to €1.2bn for the year to December 31, from €1.84bn. Group revenue fell 18% to €7.3bn as customers destocked, although this abated over the course of the year.

Rolls-Royce reported a more than doubling of its full-year profits on Thursday, underpinned by its civil aerospace segment. Full-year 2023 underlying operating profit came in at £1.6bn, up from £652m a year earlier, with revenues rising to £15.4bn from £12.7bn. Analysts were expecting operating profit of £1.4bn.

Mining giant Rio Tinto said that commodity price movements led to a $1.5bn hit to underlying profits in 2023, though results were partly offset by a stronger US dollar and lower energy prices. Underlying EBITDA totalled $23.9bn for the 12 months to 31 December, down 9% on the year before, while consolidated sales revenue fell 3% to $54.0bn. Net cash generated from operating activities was 6% lower on the year at $15.2bn.

Hochschild Mining said the first gold had been poured at its Mara Rosa Mine in Brazil. Mara Rosa is Hochschild's first Brazilian operation and is located in the state of Goias. The project remains on schedule with commercial production expected towards the end of the second quarter of 2024, Hochschild said on Wednesday.

Tate & Lyle cut its full-year revenue outlook on Wednesday as it posted a drop in third-quarter revenue due to softer demand. In an update for three months to the end of December 2023, the company said revenue dipped 4% mainly due to softer demand and the phasing of orders into the fourth quarter.

GSK's specialist HIV unit ViiV Healthcare, which it owns in partnership with Pfizer and Shionogi, unveiled promising findings from the 'LATITUDE' phase three trial of its long-acting injectable HIV treatment Cabenuva on Wednesday. The trial compared Cabenuva, or cabotegravir plus rilpivirine, to daily oral therapy, with interim analysis showing Cabenuva's superiority in maintaining viral load suppression among individuals facing challenges with adherence to HIV treatment regimens.

Plus500 reported a fall in full-year earnings and revenue on Tuesday, but results were "significantly ahead" of market expectations and the online trading platform announced plans for $175m in shareholder returns. In the year to the end of December 2023, earnings before interest, tax, depreciation and amortisation fell 25% to $340.5m, while revenue declined 13% to $726.2m.

Prominent US investor Davidson Kempner is reportedly among the parties being courted by Superdry's founder as he assembles an offer to take the struggling fashion chain private. According to Sky News, Davidson Kempner, which has backed a number of UK retailers, is in discussions with Julian Dunkerton about backing an offer for Superdry.

Annual profits at Australian mining giant BHP slumped after it took a massive hit on its nickel operations and the financial after-effects of the 2015 Samarco dam disaster in Brazil continued to dog the company. A glut of nickel caused by extra production from Indonesia has seen prices collapse, resulting in BHP being forced to take a $2.5bn write-down of its loss-making Western Australian operations.

GCP Infra has agreed a new revolving credit facility and cut its total commitment by £40m to £150m. The three-year RCF has been agreed with four lenders, Lloyds Bank, Mizuho Bank, Allied Irish Bank and Clydesdale Bank (trading as Virgin Money).

Bank of Georgia said on Monday that it has agreed to buy Armenia's Ameriabank for around $303.6m. It said the deal will "significantly enhance" its presence and growth opportunities "within a fast-growing and attractive market".

Moneysupermarket hailed record full-year revenues on Monday following a strong performance from its insurance business. In the year to the end of December 2023, group revenue rose 11% to £432.1m, with earnings before interest, tax, depreciation and amortisation up 14% at £131.9m.

Student accommodation specialist Unite Group announced a joint venture with Newcastle University on Monday, for the development of 2,000 new student beds. The FTSE 100 company said the collaboration with the Russell Group university would have total development costs estimated at £250m, of which Unite would bear a share of £128m.

Drugmaker AstraZeneca traded higher early on Monday after revealing that a combination of its cancer drug Tagrisso with chemotherapy had gained US approval to treat a particular type of lung cancer. AstraZeneca said Tagrisso had been approved in the US for the treatment of adult patients with locally advanced or metastatic epidermal growth factor receptor-mutated non-small cell lung cancer.

Economic news

The cap on gas and electricity charges will fall from April, the energy regulator confirmed on Friday, cutting most household bills. Ofgem said that from 1 April to 30 June, the price for a typical household using electricity and gas and paying by Direct Debit will go down to £1,690 per year.

Consumer confidence faltered in February, a closely-watched survey showed on Friday, as concerns about the economy continued to weigh heavily. According to the latest GfK consumer confidence barometer - which has been running since January 1974 - the overall index fell two points to -21.

Private-sector activity in the UK picked up to a nine-month high in February as solid service-sector growth made up for continued weakness in manufacturing. The S&P Global/CIPS composite purchasing managers' index (PMI), a leading indicator gauging economic activity across services and manufacturing combined, rose to 53.3 this month, surprising analysts who had pencilled in no change from January's level of 52.9.

The UK manufacturing sector continued to falter this month, industry research showed on Wednesday, although order books showed signs of improvement. According to the latest Industrial Trends Survey from the Confederation of British Industry, output volumes fell in the three months to February, with a net balance of -19, compared to January's -10.

The UK notched up a record monthly borrowing surplus in January, official data showed on Wednesday, despite it narrowly missing forecasts. According to the Office for National Statistics, public sector net borrowing (excluding public sector banks) was in surplus by more than £16.7bn last month.

Watchdog the Competition and Markets Authority has launched a market study into the supply of infant formula in the UK, after first looking into the market back in November 2023. The CMA said on Tuesday that it intends to conduct its market study "as swiftly as possible" and intends to publish its final report in September.

The company formerly known as Stobart Group could give up control of London's least-busy commercial airport, it emerged on Monday, as part of a possible restructuring with creditors. Esken, the owner of London Southend Airport, said it was contemplating a deal aimed at securing the Essex airport's future while potentially relinquishing its majority stake.

House prices strengthened in February, industry data showed on Monday, as mortgage rates continued to fall. According to Rightmove's latest house price index, average new seller prices rose by 0.9% on the month, or 0.1% year-on-year.

International events

Investor sentiment brightened modestly in Germany this month, a closely-watched survey showed on Friday, despite the economy continuing to falter. The latest Business Climate Index from the ifo Institute nudged up to 85.5 in February, in line with expectations, from 85.2 a month earlier.

The German economy contracted by 0.3% on the quarter in the fourth quarter, according to data released on Friday by Destatis, in line with the initial estimate and consensus. On the same quarter a year earlier, GDP shrank by 0.4%.

US existing home sales rose 3.1% month-on-month in January, according to the National Association of Realtors. Existing home sales improved to a seasonally adjusted annualised clip of 4.0m, the highest level seen in five months and just ahead of expectations for a reading of 3.97m.

Private-sector activity growth in the US eased slightly in February, according to figures released on Thursday by S&P Global, as a slight slowdown in the services sector outweighed an acceleration in manufacturing. The S&P Global composite purchasing managers' index (PMI) declined to 51.4 this month, down from 52.0 in January. However, this was still the second-fastest rate of growth - indicated by any figure over 50 - since July 2023.

Americans lined up for state benefits at a decelerated pace in the week ended 17 February, according to the Labor Department, hitting the lowest level for new claims in five weeks. The number of people claiming unemployment benefits fell by 12,000 to 201,000 last week, well below market expectations for a reading of 218,000 and the lowest claim count since the 16-month low of 189,000 recorded five weeks earlier.

Eurozone inflation edged lower last month, official data showed on Thursday, as widely expected. According to Eurostat, the European Union's statistics office, annual inflation was 2.8% in January, down from December's 2.9%. That was in line with both the first estimate and consensus.

The downturn in the eurozone services sector showed signs of easing, although manufacturing was still in the doldrums, according to a widely-watched survey published on Thursday. Business activity in the euro area fell at the slowest rate for eight months in February, according to provisional readings from the Hamburg Commercial Bank purchasing managers index (PMI).

Germany sharply lowered its economic forecasts on Wednesday, in response to faltering global demand and growing geopolitical uncertainty. A government spokesperson told reporters that output was expected to grow by 0.2% in 2024, in sharp contrast to the last forecast, made in the autumn, for growth of 1.3%.

Rate-setters in China took decisive steps to bolster its property market on Tuesday, by implementing the first cut in its benchmark five-year loan prime rate since June. The move from the People's Bank of China (PBoC) came as Beijing worked to revitalise the country's sluggish real estate sector amid economic challenges.

Reporting by Sharecast.com staff and contributors.

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