Yahoo Finance FTSE 100 Live: Rolls-Royce shares surge, BAE Systems and WPP post results
Rolls-Royce shares are flying after the new boss of the engines giant posted better-than-expected results and said he would conduct a strategic review as part of efforts to turn around the business.
Shares were as much as 19% higher at one point during a busy session for annual results, with BAE Systems, WPP and Anglo American among other blue-chip companies reporting today.
US recession fears have slowed the momentum of the FTSE 100 index, however, while Brent crude is back near $80 a barrel today.
FTSE 100 Live Thursday
Rolls-Royce shares surge after results
WPP upbeat as profits top £1bn
BAE Systems expects more growth in 2023
Hikma revenue steady, but impairment costs hit bottom line
13:28 , Daniel O'Boyle
Hikma Pharmaceuticals’ revenue in 2022 was level with 2021 at $2.5 billion (£2.1 billion), but writedowns meant its operating profit halved.
The business reported $282 million in operating profit, down by 52% year-on-year.
A major reason for this decline was that the business recorded $218 million in exceptional costs, mostly related to impairment charges in its generics division. Much of these impairment costs involved “excess capacity and the rationalisation of the R&D pipeline”. Writedowns related to asthma medication Advair Diskus also impacted Hikma’s bottom line.
Companies should pull up a (virtual) seat for retail investors in 2023
12:27 , Daniel O'Boyle
For decades, influence over large company decision making was dominated by a handful of institutional investors.
But this has been changing in recent years.
The amount of everyday people who trade for themselves in small quantities – so-called retail investors - has been steadily growing.
Peter Fowler writes that companies would be wise to fully include them in their AGMs and wider governance by letting them pull up a virtual seat in 2023
City monopolies: Back-covering is hurting entrepreneurs in the Square Mile
12:25 , Daniel O'Boyle
In PR, as far as the City institutions are concerned, Brunswick, Finsbury and FTI must be on the ticket somewhere.
In law, perm one from the Magic Circle or you’re nobody: Linklaters, Freshfields, Slaughter and May, Clifford Chance, Allen & Overy.
In auditing, it has to be a member of the Big Four: Ernst & Young, PwC, Deloitte, KPMG.
In management consultancy it must be either McKinsey, Bain or Boston.
It’s a back covering exercise, Chris Blackhurst writes.
Updated US GDP figures to come today
11:22 , Daniel O'Boyle
The US Bureau of Economic Analysis will report updated Q4 GDP figures at 1:30 p.m. GMT today.
Last monnth, the bureau released an “advanced estimate” that found that real GDP grew by 2.9% in Q4.
However, with that estimate based on data that can be incomplete or subject to further revision, this month’s update will provide a clearer picture of economic activity in the US.
Bank of England rate-setter: High inflation could persist into 2024
10:32 , Daniel O'Boyle
Bank of England Monetary Policy Committee member Catherine L Mann said inflation could remain high into 2024, and warned more rate hikes are needed to prevent “the worst of both worlds” where tools to fight price rises become less powerful.
Speaking in front of think tank the Resolution Foundation, Mann - one of the nine economists who set UKinterest rates - discussed the different ways in whIch interest rates can filter through to the economy.
She said that a key factor can be whether businesses look forward or backward when it comes to inflation. ‘Forward-looking firms’ are more likely to respond to changes in interest rates, while ‘backward-looking firms’ will respond to past inflation.
Wood leads mid-cap surge, FTSE 100 lower
10:12 , Graeme Evans
Buyers flocked to the mid-cap FTSE 250 index today, fuelled by a £1.6 billion takeover approach and some well-received results.
London’s domestic-focused benchmark jumped 0.8%, whereas the FTSE 100 index retreated 0.4% or 34.52 points to 7896.11 as heavyweights Barclays, AstraZeneca, Unilever and GSK no longer traded with the right to their latest dividend awards.
The risers board in the FTSE 250 was topped by the consulting and engineering business Wood Group, which jumped 32% after last night’s confirmation of three takeover approaches from US private equity giant Apollo.
It said the most recent proposal at the end of January significantly undervalued its “repositioned” prospects, having been pitched at 230p a share or £1.6 billion.
The Aberdeen-based company is now focused on the core markets of energy and materials after bolstering its balance sheet through September’s disposal of its built environment division.
Shares traded at their highest level since June today, but at 200p are still well short of the takeover approach price. Apollo has until 22 March to make a firm offer or walk away.
Other stocks on the FTSE 250 risers board included animal genetics firm Genus as strong momentum in North America and a recovery for China pig prices helped half-year results beat expectations. Shares jumped 9% or 262p to 2966p.
Morgan Sindall rose 126p to 1760p after the construction group hailed a “strong year of operational and strategic progress” with a 7% rise in adjusted profits to a record £136.2 million. The total dividend rose 10% to 101p a share.
Boss John Morgan said: “There are early signs that inflation, particularly labour inflation, has plateaued and is starting to fall in some areas.” Broker Liberum raised its price target to 1900p following the results.
Other results day risers as the FTSE 250 lifted 162.07 points to 19,842.36 included precision measurement firm Spectris and Hikma Pharmaceuticals, up 7% or 217p to 3360p and 4% or 73p to 1826.5p respectively.
In the FTSE 100, shares in packaging and paper giant Mondi slid 7% or 102p to 1375.5p following 2022 results. Pre-tax profits doubled to 1.56 billion euros (£1.4 billion) but the Weybridge-based company also reported softer demand and pricing, with destocking expected to continue through the first quarter.
Ad boss frets over AI as profits top £1bn
09:59 , Simon English
WPP offered hope today that the economy could be in for a “soft landing” as clients resumed spending and profits zipped past £1 billion.
The ad giant founded by Sir Martin Sorrell saw revenues in 2022 up nearly 13% to £14.4 billion.
New clients include Audible, Verizon and Danone.
Chief executive Mark Read, in charge since Sorrell’s awkward departure five years ago, said the advertising world and the wider economy is in “a better place than people had feared”.
The bad recession predicted by many seems far from inevitable. “I think we are going to see a longer, smoother, landing than people thought last year,” he said.
The final dividend is up 30% to 24.4p, good news for shareholders including Sir Martin, who left after a row about alleged mis-use of company money and claims of a “fear culture” at the business.
Profits for the year jumped 22% to £1.16 billion.
Read thinks the growth of AI is going to challenge advertising as much as any industry.
Rate of young NEETs rises abode pre-pandemic levels
09:57 , Daniel O'Boyle
The percentage of people aged between 16 and 24 who are not in employment, education or training (NEET) in the final quarter of 2022 exceeded pre-pandemic levels for the first time, at 11.5%, according to the ONS.
The figure - representing 788,000 people - was up by 0.4 percentage points from the same period in 2019, and was up by 0.9 percentage points from Q3 of 2022.
Of this total, 299,000 were classed as unemployed, while 489,000 were economically inactive, meaning they were not currently looking for work.
Howden Joinery buys back £50 million worth of shares as profit rises beyond £400 million
09:20 , Daniel O'Boyle
Kitchen and joinery supplier Howden Joinery announced a £50 million share buyback as its revenue grew by 10.8% and its profits by 4.0%.
Revenue came to £2.32 billion, while pre-tax profit was £405.8 million.
Howden paid a 20.6p dividend to shareholders, up from 19.5p last year.
“Howdens delivered a strong performance in 2022, with good progress on executing our strategic priorities and further market share gains,” CEO Andrew Livingston said. “During the year our teams have been adept at navigating the challenges of high inflation and supply chain disruption, while supporting our customers with a market leading product range, high stock availability and outstanding customer service.”
Profits top £400 million at Virgin Media O2
09:00 , Simon Hunt
Virgin Media O2 has posted profits of £425 million in its first full year of results as a merged business.
The telecoms company, which partnered with ITV’s Love Island to make O2 its official network sponsor in May last year, said it had invested £2.1 billion of capital infrastructure and customer experience in 2022, as it increased its customer base 27,2000 to 5.8 million.
The firm said it had made progress with its 5G rollout, which was on track to reach 50% of the UK population in 2023.
The business was formed following the merger of O2 and Virgin Media in June 2021 as a joint venture between Madrid-based Telefonica and London-listed Liberty Global, controlled by media tycoon ‘Cable Cowboy’ John Malone. Malone is worth $9.5 billion (£7.9 billion), according to Forbes.
Wood shares surge on takeover interest, Genus up 8%
08:41 , Graeme Evans
The FTSE 250 index has seen some big price movements today, led by engineering consultancy Wood Group after it revealed last night it had rebuffed a series of takeover proposals from private equity firm Apollo.
The interest, which valued the Aberdeen-based company at 230p a share or £1.6 billion, helped send shares up 30% or 47.2p to 201.9p.
Other big mid-cap movers included animal genetics business Genus and the testing equipment firm Spectris, with the pair up 8% and 4% respectively following annual results.
Kitchens supplier Howden Joinery fell 1% and biomass power station business Drax lost 4% after releasing their full-year figures.
Morgan Sindall CEO: Inflation may be peaking
08:38 , Graeme Evans
The CEO of construction business Morgan Sindall said price rises may be starting to peak, though wage increases might peak first.
John Morgan discussed the wider economic environment as the business reported its 2022 results. He said inflation, and in particular salary inflation, may be peaking.
“There are early signs that inflation, particularly labour inflation, has plateaued and is starting to fall in some areas,” he said.
Rolls-Royce shares surge, FTSE 100 lower
08:16 , Graeme Evans
Rolls-Royce shares have jumped 19% in early trading after new boss Tufan Erginbilgic revealed better-than-expected results alongside plans for a strategic review.
Shares in the company, which is not paying a dividend, surged 20.7p to their highest level in over a year at 128.3p.
The FTSE 100 index fell 22.46 points to 7908.17, partly due to a number of heavyweight companies including Unilever and AstraZeneca trading without the right to their latest dividend awards.
Anglo American shares fell 45p to 3045p following its annual results, but advertising group WPP lifted 4% or 40.7p to 1057.2p on the back of its full-year figures.
Heathrow reduces losses after covid restrictions lifted
07:48 , Jonathan Prynn
Heathrow airport stayed in the red for the third year on the trot in 2022 despite a rapid rise in passengers numbers following the lifting of covid travel restrictions. The west London hub reported a £684 million loss, down from a £1.27 billion deficity in 2021 as passenger numbers soared from 19.4 million to 61.6 milion.
Anglo American cuts dividend as earnings fall 30% from record levels
07:47 , Michael Hunter
Anglo American joined the procession of FTSE 100 mining giants taking the axe to their dividends today, cutting its total payout to shareholders by 60%.
Investors will receive a total of $900 million, or $0.74 per share, which the company said was “in line with our 40% payout policy.”
The swinging cut came as earnings fell 30% to $14.5 billion, (£12 billion) as cost inflation knocked profits down from record levels.
FTSE 100 seen lower, S&P 500’s poor run continues
07:37 , Graeme Evans
The S&P 500 index lost ground for the fourth session in a row last night, although the fall was limited to 0.15% after Federal Reserve minutes contained few surprises from the central bank’s most recent meeting.
Policymakers shifted to a 0.25% hike from the previous month’s 0.5% rise, but payrolls and inflation data since then have fuelled expectations for further hikes.
Traders now expect a rate of 5.37% by the July meeting, which compares with a current range of 4.5% and 4.75%.
Stock markets have fallen this week on fears that higher rates will mean a hard landing for the US economy, with CMC Markets expecting the FTSE 100 index to open 10 points lower at 7920 this morning.
However, there was encouragement for the tech sector last night after chip designer Nvidia reported revenues and earnings ahead of Wall Street expectations. Its share roses 9% in trading after the closing bell.
BAE predicts further growth as countries increase defence spending
07:34 , Daniel O'Boyle
BAE Systems said it expects continued growth in 2023 and beyond as countries across the world up their defence budgets in response to Russia’s invasion of Ukraine.
The defence contractor said that most countries in which it operates have either announced increases in their defence budgets or are planning to do so, because of “the elevated threat environment” following the invasion.
As a result, it expects sales to increase by between 3% and 5% in 2023, with profits to grow by 4-6%.
BAE also increased its three-year cash targets to between £4 billion and £5 billion.
This came as BAE reported its 2022 results. It brought in £23.26 billion for the year in sales, up by 4.4%, and reported profit of £2.48 billion, a 5.5% increase. Both figures were on the upper end of consensus estimates.
BAE also increased its dividend by 7.6% to 27p per share, returning just over £865 million to shareholders.
Rolls-Royce reports £1.5 billon loss for 2022 but underlying profits take off
07:32 , Michael Hunter
Engine maker Rolls-Royce has reported a loss of £1.5 billion for 2022 as the revenue earned from the flying time of its world-famous Trent jets struggles to recover to pre-pandemic levels.
The FTSE 100 stalwart earns money from the number of hours its engines are in the sky. For 2022, large engine flying hours were up 35%, lifting the amount invoiced by £1.3 billion year-on-year to £3.6 billion. It predicted that flying hours would reach 80% to 90% of 2019 levels in 2023.
Its overall loss of £1.5 billion related to one-off losses on derivative contracts and interest charges of £308 million, offset by £81 million in profit from disposals. On an underlying basis, profit was up, rising by £238 million to £652 million, beating forecasts.
Its new CEO, Tufan Erginbilgic, took over from Warren East in January and described the company then as “burning platform”, saying it underperforms “every key competitor out there” and that “every investment we make, we destroy value”.
Today, Erginbilgic said: “While our performance improved in 2022, we are capable of much more. Our transformation programme will improve our efficiency and commercial outcomes.”
He is setting up another restructuring, after East’s tenure was marked by job losses even before the pandemic hit and travel restrictions wiped out the company’s revenues.
Genus boss to quit after 10 years
07:16 , Simon Hunt
The boss if animal genetics business Genus is to step down after 10 years at the company.
Stephen Wilson said he was commencing plans for his retirement and would remain as CEO of the company until September 2023 to support a transition to his replacement.
Wilson said: “After four years as Chief Executive and ten years as an executive director, I believe now is the right time for me to move to the next phase of my life.”
Hays boss to quit after 15 years
07:11 , Simon Hunt
The boss of gobal recruitment firm Hays is to step down as CEO after 15 years at the company as it begins a search for his successor.
Hays said Alistair Cox will remain as CEO until a suitable candidate to replace him can be found.
Cox said: "It has been an honour and a privilege to lead Hays for over 15 years and I am extremely proud of, and grateful to, my colleagues for everything we have achieved together. While the process to appoint my successor is ongoing, it will be very much business as usual at Hays.”
Recap: Yesterday’s top stories
06:45 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday.
Lloyds Bank warns house prices to fall 7% this year as customers struggle with mortgages.
Rio Tinto slashed its annual payout to shareholders in what may be the beginning of the end of a record-breaking run of dividends that helped power the FTSE 100 to its highest ever level.
The taxpayer’s stake in NatWest has been reduced again after the Government offloaded another tranche of shares in the banking giant.
Aldi has joined the list of supermarket chains putting a limit on the amount of certain fruits and vegetables customers can buy, amid industry-wide supply disruption.
Coming up today we have:
Rolls Royce results
Anglo American Results
BAE systems results
WPP results
US GDP figures
