Weekly review
By Josh White
Date: Friday 25 Oct 2024
(Sharecast News) - The FTSE 100 ended the week down 109.41 points, or 1.31%, closing at 8,248.84 on Friday.
Equity view
NatWest has raised its full-year income forecasts after a strong third quarter, in which profits jumped by 35.3% on last year. The banking group said attributable profit for the three months to 30 September totalled £1.17bn, up from £866m, on the back of lending and deposit growth combined with an 8-basis point improvement in the net interest margin to 2.18% Total income rose 7.3% to £3.77bn.
FirstGroup announced the acquisition of Lakeside Group on Friday, a bus and coach operator based in Shropshire and Cheshire. The FTSE 250 passenger transport operator said Lakeside, which operates under local brands including Lakeside Coaches, Merediths Coaches and AT Brown Coaches, manages a fleet of around 145 vehicles.
Fast fashion brand Boohoo has hit back at part-owner Frasers Group over its demands to urgently replace its outgoing chief executive with boss Mike Ashley, suggesting that any such appointment could be a conflict of interest. Boohoo urged shareholders to take no action in respect of Frasers' proposals.
Airtel Africa slumped on Friday as it posted a decline in first-half profit and revenues. In the half year to 30 September, revenue fell 9.7% to $2.37bn, hit in particular by "significant" currency devaluations in Nigeria, Malawi, Zambia and Tanzania. Meanwhile, operating profit was down 20.3% to $706m.
Barclays has nudged up its net interest income guidance for the full year after a solid third quarter, with the bank on track to deliver on its short and medium-term financial metrics. The bank said it expects 2024 net interest income (NII) excluding investment bank and head office activities to be "greater than £11bn", compared with earlier expectations of "c£11bn". Within this, NIII guidance from the Barclays UK division has been lifted from £6.3bn to £6.5bn.
Consumer goods giant Unilever reported a jump in third-quarter underlying sales on Thursday, underpinned by its power brands.Third-quarter underlying sales grew 4.5%, coming in ahead of analysts' expectations for 4.2% growth, with volume growth up 3.6%.
Homeware retailer Dunelm reported a rise in third-quarter sales on Thursday, driven by volume. In the 13 weeks to 28 September, total sales grew 3.5% on the same period a year earlier to £403m. Meanwhile, digital sales were up 2 percentage points as a proportion of total sales to 37%.
High street conglomerate Frasers Group has urged part-owned fast fashion brand Boohoo to appoint retail tycoon Mike Ashley as its chief executive, the company said on Thursday. In an open letter to Boohoo's board, Frasers said it was requisitioning a general meeting of Boohoo to appoint Frasers boss Ashley as a director and remove current CEO John Lyttle "without delay".
Mexico-focused precious metals miner Fresnillo has left full-year production guidance unchanged after a solid third-quarter output performance. Quarterly silver production totalled 14.4m ounces, down 1.5% on the second quarter but 2.4% ahead of last year, with year-to-date production up 1.2% on 2023.
Precious metals miner Hochschild Mining has maintained its full-year production guidance after reporting its strongest third quarter in nearly five years. The company delivered attributable production of 96,327 gold equivalent ounces or 8.0m silver equivalent ounces, representing a 16% increase compared with the second quarter.
Reckitt Benckiser reported marginal like-for-like net revenue growth of 0.4% for the first three quarters of 2024 on Wednesday, though it faced a slight decline of 0.5% in the third quarter. The FTSE 100 consumer products giant said growth in the health and hygiene segments, which posted like-for-like increases of 2.8% for the year-to-date and 2.6% in the third quarter, was offset by challenges in the US nutrition business.
Lloyds has reported a slight decline in statutory profits over the third quarter but still managed to beat consensus forecasts, as the banking group reiterated guidance for the full year. Statutory profit before tax totalled £1.82bn in the three months to 30 September, down 2% on last year but well ahead of the £1.6bn expected by analysts.
InterContinental Hotels Group reported a jump in third-quarter room revenue on Tuesday, as good business demand and strength in the US and EMEAA helped to offset a weaker performance in China. Global revenue per available room rose 1.5%. Chief executive Elie Maalouf said this reflected "the strength of our globally diverse footprint, healthy business demand and a record period for group bookings".
HSBC announced the appointment of its new chief financial officer on Tuesday, as well as a number of key structural changes aimed at enhancing strategic execution and leadership. The FTSE 100 Anglo-Asian banking group said Pam Kaur will take on the role of group CFO and join the board from 1 January.
Shares in Hunting were sliding on Tuesday morning, after the company announced it was trimming its full-year guidance amid falling oil prices. The FTSE 250 company said it now expected EBITDA of between $123m and $126m - an 8% reduction from prior expectations, due to declining oil and natural gas prices.
Construction firm Morgan Sindall said on Tuesday that full-year profits would now be "significantly ahead" of previous expectations. Morgan Sindall said its upgraded guidance was a result of material outperformance in its fit out division, which saw profits continue to strengthen significantly due to "exceptional volumes".
Pharma titan AstraZeneca has announced that its Wainzua nerve damage treatment has been recommended for approval in the EU. Wainzua, jointly developed with California biotech firm Ionis, has already been approved in the US for use in the treatment of adults with polyneuropathy - disease of the peripheral nerves - associated with hereditary transthyretin-mediated amyloidosis, commonly referred to as ATTRv-PN.
FirstGroup said on Monday that it has bought coach operator Anderson Travel for an undisclosed sum. Anderson Travel comprises three trading entities: Anderson Travel Limited, Anderson Tours Limited and London Mini Coaches Limited. FirstGroup said the deal will extend First Bus' operational footprint and forms part of the group's strategy of targeted acquisitions to grow its share of the UK adjacent services market.
Petrofac announced an extension to its forbearance agreement regarding the non-payment of the interest coupon on its senior secured notes on Monday. The London-listed firm said the deadline for the agreement had been moved from 18 October to 15 November.
Ten-pin bowling centre operator Hollywood Bowl said on Monday that full-year underlying earnings were pegged to come in ahead of market expectations on the back of record annual revenues. Hollywood Bowl said revenues were up 7.2% year-on-year at £230.4m, with UK revenues 3.8% higher at £199.7m and Canadian revenues 42.2% stronger at CAD $53.0m (£30.7m).
Economic news
Thames Water secured a critical £3bn loan on Friday, to sustain operations through to October next year. The funding came as the country's largest water utility grappled with substantial debt, sparking fears it could have run out of capital by the end of this year. According to the BBC, the loan agreement was finalised on Thursday.
UK consumer confidence fell slightly in October, according to fresh survey results released on Friday, with GfK's consumer confidence index dropping one point to -21. The report revealed a mixed outlook, with indicators for personal finances and major purchases improving, while sentiment on the general economic situation continued to deteriorate. The index tracking personal finances over the last year fell by one point to -10, though that was still nine points better than a year ago.
Private sector growth in the UK fell to an 11-month low in October ahead of the Budget, according to a survey released on Thursday. The S&P Global flash purchasing managers' index composite output index declined to 51.7 from 52.6 in September. This was in line with analysts' expectations. A reading above 50.0 indicates growth, while a reading below signals contraction.
Heathrow Airport reported a 12.6% increase in profit before tax to £696m for the first nine months of the year on Wednesday, driven by record passenger numbers during a bustling summer of sport and music. The airport, owned by the Ferrovial-led FGP Topco consortium, said it handled 63.1 million passengers over the period, up 6.2% year-on-year, with the busy summer period seeing over 30 million travellers. That surge prompted Heathrow to revise its full-year forecast to 83.8 million passengers.
The International Monetary Fund has upgraded its projections for UK economic growth for 2024 as falling inflation and interest rates stimulate domestic demand.In its latest biannual World Economic Outlook released on Tuesday, the IMF said it expects UK GDP to expand by 1.1% this year, up from just 0.3% in 2023. In its previous update in July, the financial agency had pencilled in growth of 0.7%.
Chancellor of the Exchequer Rachel Reeves is considering a tax increase on large e-commerce companies like Amazon in her upcoming budget, according to reports on Tuesday, in a bid to support the UK's ailing high street. The plan, reported by Bloomberg, would involve reforms to the current business rates system, which has been widely criticised for favouring online retailers with warehouses in lower-cost areas. A potential adjustment would align with Labour's pledge to level the playing field between traditional retail outlets and online businesses.
The government borrowing figure for last month was the third-highest September figure since monthly records began in January 1993, according to data released on Tuesday by the Office for National Statistics. Borrowing - which is the difference between public sector spending and income - came in at £16.6bn, up £2.1bn on the same month a year ago. The figure was higher than the Office for Budget Responsibility's forecast of £15.1bn but below the consensus forecast of £17.4bn.
UK consumer confidence improved in October, according to fresh survey data released on Monday, with the S&P Global UK consumer sentiment index rising to 47.3, from 46.0 in September. That marked the second-highest reading in over three years. Despite remaining below the neutral 50 mark, the index moved closer to its July peak, reflecting a recovery in household optimism following post-election gains. Households reported a more positive outlook on their finances, with confidence buoyed by strong wage growth and easing inflation.
The Financial Conduct Authority (FCA) has fined Volkswagen Financial Services UK £5.4m for failing to treat customers in financial difficulty fairly, it announced on Monday. It issued the penalty alongside a redress scheme that would see Volkswagen Finance pay over £21.5m to around 110,000 customers affected by its inadequate practices between January 2017 and July 2023. The FCA said its investigation found that Volkswagen Finance failed to account for individual customer circumstances and, in some cases, repossessed vehicles from vulnerable customers without exploring alternative solutions.
The number of homes being put up for sale surged in October, industry research showed on Monday, holding back selling prices. According to the latest house price index from Rightmove, the number of available homes for sale was up 12% year-on-year, the highest per estate agent since 2014. Underlying buyer demand also remained strong, with the number of people contacting agents spiking 17%, despite uncertainty around the forthcoming Budget.
International events
Sanofi reported stronger-than-expected third-quarter earnings on Friday, driven by early vaccine sales and robust performance from its anti-inflammatory drug Dupixent. Quarterly business operating income, excluding one-off items, rose 14.4% to €4.6bn, surpassing analysts' projections of €4bn. Earnings per share reached €2.86, also beating estimates, with total revenue benefiting from accelerated sales of flu vaccines and Beyfortus, a new respiratory syncytial virus (RSV) shot for infants.
Italian energy major Eni announced an increase to its 2024 share buyback programme on Friday, after stronger-than-expected third-quarter profits driven by higher production and strategic portfolio improvements. Despite a 30% year-on-year drop, Eni still reported a net profit of $1.37bn for the third quarter, surpassing market expectations for $1.17bn. The increase was supported by a 2% rise in oil and gas production to 1.661 million barrels per day.
Remy Cointreau downgraded its full-year sales outlook on Friday as it posted a drop in first-half sales amid continued destocking in the Americas. The French drinks maker said sales in the first half fell 15.9% on an organic basis, or 16.2% on a reported basis, to €533.7m. Sales in the second quarter were down 16.1% on an organic basis, versus consensus expectations for a 15.4% drop.
Mercedes-Benz became the latest in a string of automakers to issue a cautious outlook on Friday as profits in its car division slumped due to macro challenges and heightened competition, particular in China. The German manufacturer admitted that third-quarter results "did not meet our ambitions", as adjusted EBIT tanked 48% to €2.54bn.
Business sentiment in Germany has improved for the first time in six months, with confidence around current conditions and future expectations turning brighter. According to the IFO Institute, the closely followed Business Climate Index rose to 86.5 in October, up from 85.4 in September. The consensus forecast was for a smaller uptick to 85.6. The current assessment indicator improved to 85.7 from 84.4, while the expectations gauge rose to 87.3 from 86.4.
Private sector activity in the US grew more than expected in October, according to the flash composite purchasing managers' index from S&P Global on Thursday. The composite PMI increased to 54.3 this month, up from 54.0 in September, signalling a "further solid rise in business activity to mark a robust start to the fourth quarter", S&P Global said. The survey showed that selling prices rose at their slowest rate since May 2020, as confidence in the future outlook rebounded sharply.
New home sales jumped 4.1% to a seasonally adjusted annual rate of 738,000 in September, according to the Census Bureau, the highest reading since May 2023 and ahead of forecasts for a print of 720,000. Sales surged 21.7% to 28,000 in the Northeast and were up 5.8% to 477,000 in the South but dropped by 2.5% in the Midwest to 77,000 and held steady at 156,000 in the West. The median price of new houses sold came to $426,300, while the average sales price was $501,000, compared to $426,100 and $515,000 at the same time a year earlier, respectively.
Logistics firm United Parcel Service beat quarterly profit expectations on Thursday as the group benefitted from improved volumes and tight cost controls. UPS said adjusted profits had grown to $1.76 per share, ahead of analysts' estimates of $1.63 per share, while consolidated revenues were up 5.6% at $22.25bn, also ahead of expectations on the Street. Q3 domestic volumes grew by 6.5%. Q3 adjusted operating margins came in at 8.9%, beating expectations for a print of 8.9%. It also guided for a FY operating margin of 9.6%.
Intel emerged victorious in a lengthy legal battle with the European Union on Thursday, as the bloc's top court ruled in its favour, dismissing a €1.06bn antitrust fine. The ruling by the European Court of Justice (ECJ) marked the conclusion of a dispute that started in 2009, when the European Commission accused Intel of abusing its market dominance by offering rebates to major computer manufacturers including Dell, HP and Lenovo, to favour its chips over those of rival AMD.
Americans lined up for unemployment benefits at a decelerated pace in the week ended 19 October, according to the latest figures from the Labor Department. Initial unemployment claims fell by 15,000 week-on-week to 227,000, the lowest reading so far this month and well below market expectations for a flat print of 242,000. The reading gives weight to the opinion that the US labour market remains relatively resilient to restrictive interest rates by the Federal Reserve, strengthening bets that the central bank will refrain from enacting more aggressive rate cuts in upcoming meetings.
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