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The FTSE 100 has closed down 0.3 per cent or 21.1 points to 7,891.1. Among the companies with reports and trading updates today are Whitbread, AB Foods, Travis Perkins, Hammerson, Hornby, IWG, Anglo American and Next 15 Group. Read the Tuesday 25 April Business Live blog below.
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McDonald’s has revealed higher prices and rising orders have boosted sales in the first quarter by four per cent to $5.9billion, compared to this time last year.
It comes as the fast food chain makes sweeping changes to its menu staples and lays off its workers.
Just before close, the FTSE 100 was down 0.26% at 7,891.95.
Meanwhile, the FTSE 250 was 0.12% lower at 19,203.66.
Joules has launched consultations with staff over potential job losses after new owner Next said planned cost cuts would be ‘significantly greater than originally anticipated’.
Next, which bought Joules in December last year, told shareholders it was set to launch the fashion retailer’s online operations on its ‘total platform’ in October this year, five months ahead of schedule.
Tens of thousands of homes are missing out on government heat pump subsidies worth up to £6,000, as critics slam the scheme as a ‘cash bung’ for the rich.
The Government has set aside £150million to subsidise 30,000 homes and small businesses a year fitting heat pumps or biomass boilers.
Tesco is set scrap ‘use by’ dates on 30 of its own brand products in a bid to curb excessive food waste.
The supermarket giant will remove the dates – which advise customers to consume foods before a specified period – from all its own brand yoghurt products.
UK car ownership rose last year for the first time since the coronavirus pandemic and the overall number of vehicles in use on British roads reached record levels, the latest industry records have shown.
After a historic decline during the pandemic, car ownership climbed by 0.36 per cent – or 124,393 cars – to 35.15 million in 2022, slightly less than, but similar to, pre-pandemic levels in 2019, the Society of Motor Manufacturers and Traders (SMMT) said.
KitKat and Nescafe maker Nestle’s quarterly sales slightly beat expectations after sustaining demand despite price hikes of almost 10 per cent.
The Swiss food and drinks giant, which is also behind Haagen Dazs ice cream as well as pet food brands Felix and Purina, said it put up prices by an average 9.8 per cent across the group in the first three months of the year.
Pet food saw the biggest increase in prices, rising 12.2 per cent, followed by milk and ice cream products, which went up by 11.8 per cent, while prices for its prepared dishes, such as Maggi noodles, rose by around 11 per cent.
Joules has launched consultations over potential job losses after new owner Next said it is accelerating transition plans.
Next snapped up the troubled fashion brand late last year after Joules fell into administration, securing the future of 1,450 workers at Joules and 100 stores, although 19 stores were shut as part of the move.
On Tuesday, Next said it has made ‘significant progress’ since the takeover was agreed and it is now set to transfer Joules’ online operation onto its own Total Platform logistics system in October this year, five months ahead of schedule.
But as result of these changes, ‘a number of tasks performed by Joules personnel will be absorbed into NEXT teams or no longer be needed’, it added.
Next told shareholders:
Joules is in the process of consulting with colleagues to let them know how they will be affected. Where roles are no longer required, NEXT will be working with those affected to ensure that they are considered for any suitable vacancies at NEXT, whose Head Office is located close to Joules’ headquarters in Market Harborough. It is anticipated that those remaining with Joules (i.e. the Senior management, Product and Marketing teams) will continue to work from Joules’ existing offices.
Next 15 has posted a record annual performance following a series of acquisitions and significant organic sales growth.
The technology-focused marketing consultancy revealed net turnover increased by slightly over £200million to £563.8million for the year ending January, its fastest pace of expansion in more than a decade.
Uber has come under fire amid allegations that users are charged higher fees when their phone battery is running low.
Taxi riders were offered different costs for riding with Uber despite taking identical trips across Brussels, a damning investigation has claimed.
Hornby shares fell sharply after the models and collectibles retailer said it was on track for a ‘modest’ full-year loss, due to rising costs and weaker-than-hoped sales.
The model train company, which also makes Scalextric cars and Airfix model planes, told shareholders that sales had improved in the final quarter to the end of March but are set to fall short of internal budgets.
Construction is one of the largest industries in the world but with so little disruption, things have largely stayed the same.
The industry has dragged its feet when it comes to entering the digital age, and the $1trillion supply chain business is largely conducted over the phone, by email and even pen and paper.
Santander UK has recorded a jump in its profits and income despite warning over a weaker housing market and falling mortgage applications.
The bank made a pre-tax profit of £547million in the first quarter of the year, up 11 per cent from the £495million made last year.
It also saw its total operating income increase by 11 per cent to total £1.3billion, which was largely driven by higher interest rates, the lender said.
But the bank flagged a decline in mortgage applications by 37 per cent across the UK, and its mortgage balances reduced by more than £4billion, amid a slowdown in the wider housing market.
House prices are likely to fall back by 10 per cent this year, returning to 2021 levels, Santander predicted.
Builders merchant Travis Perkins saw sales fall at the start of the year due to a slowdown in housebuilding and homeowners putting off renovation work.
The group reported a 2.9 per cent fall in like-for-like sales in the three months to the end of March compared to last year, as rising sales at Toolstation failed to offset a slump at its merchanting business.
But despite the ‘challenging start’ to the year, it told investors Tuesday it continued to expect to deliver results in line with market expectations for 2023.
UK grocery price inflation rose by 17.3 per cent in the four weeks to 16 April 2023, down marginally on the 17.5 per cent in the previous three months, according to Kantar.
But the data company cautioned it may rise again.
Fraser McKevitt said:
The latest drop in grocery price inflation will be welcome news for shoppers but it’s too early to call the top. We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year. We think grocery inflation will come down soon, but that’s because we’ll start to measure it against the high rates seen last year. It’s important to remember, of course, that falling grocery inflation doesn’t mean lower prices, it just means prices aren’t increasing as quickly.
Shoppers continued to opt for supermarket own label lines, which are often cheaper, with sales still growing at 13.5 per cent.
The very cheapest value own label lines are doing even better, with sales soaring by 46 per cent versus a year ago.
German discounter Aldi has surpassed 10 per cent share of UK supermarket sales for the first time as shoppers opt for cheaper food amid the cost of living crisis.
Data company Kantar said Aldi hit new market share of 10.1 per cent over the 12 weeks to 16 April, from 8.8 per cent in the same period last year.
Fellow discounter Lidl also saw its market share grow to a fresh record of 7.6 per cent.
Fraser McKevitt, head of retail and consumer insight at Kantar, said:
Consumers are continuing to shop around, visiting at least three major retailers every month on average. The discounters have been big beneficiaries of this, with Aldi going past a 10% market share for the first time this month. That’s up from 5% eight years ago in 2015, so we can see just how competitive the market can be. Retailers are really battling it out to show value to shoppers, but if consumers feel their offer isn’t quite right then they’ll go elsewhere.
Associated British Foods’ profits dipped in the half year to 4 March despite strong in-store growth, as inflationary pressures ate into margins.
Adjusted operating profits, the group’s preferred reporting measure, fell 3 per cent to £684million during the period, eroded by the impact delays to price hikes and a weaker pound.
Online grocer Ocado has announced plans to shut its oldest distribution centre as it shifts towards robotic warehouses in a move that will affect around 2,300 workers.
The group said it will close the site in Hatfield, Hertfordshire, which accounts for about a fifth of its customer orders each week, later this year.
The private equity sweep on the London Stock Exchange shows no signs of abating after a radiology firm yesterday became the latest to receive an offer.
London based private equity vehicle IK Partners tabled a £269million bid for Medica, which provides services to NHS radiology departments.
Whitbread profits rose above pre-pandemic levels in 2022, thanks to reduced competition from independent hotels and a resurgence in demand.
The FTSE 100 group, which owns Premier Inn, beat expectations with pre-tax profits of £375million in the year to March, up from £58million in the previous year and higher than the £280million reported in the full-year before Covid.
Revenue soared 54 per cent to £2.62billion, 27 per cent ahead of 2020, helped by pricier room rates.
The reputational damage done to Britain by the gilts market tumult last autumn is immeasurable.
At this month’s spring financial gatherings in Washington, Chancellor Jeremy Hunt was at pains to tell everyone ‘Britain is back’.
Government borrowing hit £21.5billion last month as the cost of energy bills support and debt interest outweighed soaring taxes.
The figure was the second highest on record for March and £16.3billion above the same period last year, with Jeremy Hunt admitting it was ‘eye-watering’.
Mark Crouch, analyst at eToro:
‘Whitbread has smashed earnings and revenue expectations for its 2023 fiscal year following an impressive year of growth. While the firm’s food and beverage brands are yet to recover their pre-pandemic volumes, Premier Inn has well exceeded them and is significantly outpacing its segment rivals.
‘When household finances are tight, people want value, but not at the expense of quality. Premier Inn provides both of this, which helps explain why it has performed so spectacularly well over the past 12 months, despite the tough operating background.
‘Premier Inn’s German operation was loss making, although that is to be expected with the investment the firm has made in the country. However, its rapid revenue growth gives us confidence that it can replicate in Germany the model that has become so successful in the UK.’
London-listed stocks are trading lower this morning, with the FTSE 100 posting its worst open in three weeks, dragged by industrial miners and lenders.
Whitbread has added 4 per cent after the Premier Inn owner reported its annual profit above pre-pandemic levels, lifting the travel and leisure sector up 0.1 per cent.
Banks have shed 1.7 per cent in early trading, while industrial miners are down 2.1 per cent, tracking weakness in copper prices over lacklustre demand from China.
Anglo American’s overall first-quarter production rose 9 per cent, helped by strong copper output from the ramp-up of its Quellaveco mine. Its shares however are down 1.9 per cent in line with the broader market.
Associated British Foods has slumped 4.3 per cent after the Primark owner reported a 3 per cent fall in first-half profit and kept its guidance for a flat outcome in the full year.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
‘Despite being well positioned to deal with consumers’ shrinking budgets, profits in the first half slumped at Primark.
‘The group sold more goods at higher prices, but it wasn’t enough to offset inflated energy, labour and shipping costs. This was because the value-chain made a conscious decision not to pass along the full extent of rising costs in order to avoid alienating its core customer base – but this meant the bottom line took a hefty hit.
‘The cost-of-living crisis remains a dark cloud over consumers’ heads, and Primark’s owners remain cautious about the outlook for consumers discretionary spending. So in the short-term, jittery customers and inflationary pressures are likely to keep a lid on profits. But longer term, as inflation eases and commodity costs normalise, we think there’s plenty of room for Primark to restore margins.
‘Overall, Associated British Foods’ first-half results were as mixed as the wide array of goods it sells. Total revenues came in slightly ahead of its own lofty expectations, rising by an incredible 17%, ignoring exchange rate impacts.
‘One of ABF’s main strengths is its diversified portfolio of businesses, which includes many well-known food brands such as Kingsmill, Ryvita and Patak’s. This diversification helps to spread out revenue streams, ensuring the company isn’t overly reliant on any one product or division. This bore fruit as the group’s food businesses helped to pick up some of the slack of falling profit at Primark.’
Ocado has announced plans to shut its customer fulfilment centre in Hatfield, Hertfordshire, in a move impacting around 2,300 workers.
The online retailer said it did not expect any change to the volume of orders fulfilled due to the stoppage of operations at Hatfield, adding that current customer orders fulfilled from the site would be moved to the company’s other facilities around the UK.
About the future of its workers, it said:
There are currently around 2,300 employees based in Hatfield, and Ocado has now commenced a consultation process with colleagues on these proposals. Ocado’s priority and focus will be to redeploy as many people as possible to other sites, primarily to the soon to be opened Luton CFC. The consultation is expected to close in the summer 2023, with Hatfield operations planned to halt in line with the start of operations at the Luton site.
NBC Universal’s chief executive Jeff Shell was ousted from his role for having an ‘inappropriate relationship’ with a woman believed to be news anchor, Hadley Gamble.
Gamble is CNBC’s senior international correspondent based in the UAE and was once described as ‘beautiful’ by Vladimir Putin after a 2021 interview in which she was also accused of flirting with the Russian president.
The 41-year-old is best known for interviewing political and business leaders, including former US secretary of state Mike Pompeo and Egyptian president Abdel Fattah el-Sisi.
The cost of financing energy bills support and debt interest drove Government borrowing more than £18billion higher in the year to March, fresh figures from the Office for National Statistics reveals.
Public sector borrowing hit £139.2billion in the past financial year – the fourth highest since records began and £18.1billion more than in 2021-22, according to the ONS official figures.
But the figure was lower than the £152.4billion predicted last month by the Office for Budget Responsibility.
Travis Perkins has said it is on track to meet market forecasts of £272million in annual adjusted operating profit, despite a challenging start to its financial year after fewer new homes were built and homeowners put off renovation work.
Nick Roberts, chief executive, said:
‘As we had anticipated, trading conditions were challenging in the first quarter but our diverse exposure across the construction sector has enabled us to deliver a resilient performance.
‘The timely actions taken to prepare our businesses for a lower demand environment mean that we continue to expect to deliver a full year performance in line with market expectations.
‘We are focused on ensuring the right balance between cost and capital discipline and investing to deliver against our strategic priorities. The growth opportunities provided by the need to decarbonise the UK’s built environment, improve the energy efficiency of public and private buildings and increase the UK’s housing stock remain significant.
‘Allied to our strategy of expanding value-added services in the Merchant businesses and maximising the growth potential of Toolstation, these structural drivers leave the Group well placed for future outperformance.’
ASOS shares slid after a short seller nicknamed the ‘dark destroyer’ warned the fashion brand will need to tap investors for fresh funds.
ShadowFall, an investment firm led by Matthew Earl, has bet against the FTSE 250 firm and built up a short position to the tune of around £4million.
That means almost 11 per cent of the company’s stock is out on loan to short sellers, which will make money if its share price falls.
Primark owner Associated British Foods has posted a 3 per cent fall in first-half profit but kept its guidance for a flat outcome in the full year.
The group, which also owns major sugar, grocery and ingredients businesses, said adjusted operating profit, was £684million in the six months to 4 March.
George Weston, chief executive of Associated British Foods, said:
‘This period was marked by extreme and volatile inflation in all our businesses. We have taken considerable action to mitigate these costs through operational cost savings and, where appropriate, pricing.
‘The performance of our Food businesses was resilient in aggregate, underpinned by an exceptional performance at Ingredients. We were very pleased with the improvement in Primark sales, which recovered strongly from the second half of the last financial year and drove operating profit margin up to 8.3%, higher than we had expected.
‘Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well invested stores. We have had a very strong contribution from new stores opened in the period, and today we are announcing plans for the development of our Primark business in southern states of the US.’
Salmon prices are about to leap by as much as 10 per cent, industry analysts have warned.
The latest blow for shoppers comes as Norway’s Left-leaning government plans to slap a hefty tax on the delicacy beloved by Britain’s middle classes.
Norway is the world’s biggest producer, accounting for 1.5m tons a year, and half the UK’s farmed salmon – a whopping 35,000 tons – comes from the Nordic nation.
The Norwegian government wants to spend the tax haul from one of its most successful industries on schools and hospitals.
Whitbread annual profits have exceeded pre-pandemic levels after the Premier Inn owner was buoyed by strong demand for accommodation and leisure travel.
The company, which also owns steakhouses Beefeater and Bar+Block, reported adjusted profit before tax of £413million for the year to 2 March, versus a loss of £15.8million a year earlier.
Dominic Paul, Whitbread chief executive, said:
‘These are a fantastic set of results. Whilst the recovery in market demand in conjunction with a structural decline in the independent sector has provided a helpful backdrop, it is the combination of our own initiatives and our clearly differentiated business model that has sustained our brand strength and delivered such an impressive operational and financial performance.
“These results reflect the strength of our business model and our persistent focus on delivering an excellent and consistent guest experience across all of our hotels and restaurants.
‘That focus is embedded within our business strategy, that my predecessor, Alison Brittain and the whole Executive team executed brilliantly through one of the Group’s most challenging trading periods.
‘It has also created a platform for future growth, both in the UK and in Germany. This sets us apart from our competitors as we continue to invest through the cycle with a clear focus on capital discipline and operational excellence.’
Britain’s economy has been handed a vote confidence, providing further evidence that the country is turning a corner.
S&P Global upgraded the UK’s credit outlook to ‘stable’ from ‘negative’, reversing the rating it dished out following September’s mini-Budget.
The ratings agency also reaffirmed its AA rating on UK debt, while predicting economic output to shrink by 0.5 per cent this year, before growing by an average of 1.6 per cent a year between 2024 and 2026.
‘The Government’s decision to abandon most of the unfunded budgetary measures proposed in September 2022 has bolstered the fiscal outlook,’ S&P said.
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