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FTSE 100 Live: Big week for corporate earnings, Ryanair posts profit

·12-min read
 (Evening Standard)
(Evening Standard)

Ryanair today kicked off a big week of corporate earnings by warning that it has “zero visibility” for later in its financial year.

The Dublin-based low-cost airline reported an improvement in first quarter profits to 170 million euros (£145 million) following the release of pent-up demand after Covid.

However, it added: “We have limited visibility into the second half of Q2 and almost zero visibility into H2, when we are typically loss making.”

FTSE 100 Live Monday

  • Vodafone Q1 revenues up 6.5% in UK

  • Markets cautious ahead of earnings, US rates

US earnings to look out for this week

15:43 , Simon Hunt

It’s a big week for earnings among the US’s largest listed companies this week, with upcoming quarterly results poised to play a big role in setting investor moods over the prospects of an imminent economic downturn.

Here are some of the top stocks to look out for this week:

Tuesday: Coca-Cola, General Motors, Mcdonalds, Microsoft, Alphabet

Wednesday: Boeing, Shopify, Spotify, Ford, Meta

Thursday: Mastercard, Pfizer, Amazon, Apple, Intel

Friday: Aon, Chevron, Exxon Mobil

Stocks open a little higher in New York but tech shares disappoint

15:10 , Simon Hunt

The S&P 500 made small gains in the opening minutes of trading in New York today as investors weighed the prospects of a further knock on company profits by an interest rate rise ahead of a big US earnings week.

The tech-heavy Nasdaq opened slightly lower as investors scarred by disappointing earnings by social media giants Twitter and Snap last week braced themselves for earnings of Meta, Google and Spotify later this week.

The oil price nudged up, while the Euro gained slightly on the dollar. US 10-year treasury yields went up 2.8%.

Peter Thiel-backed Shares app raises £33m to attract female retail investors

13:53 , Simon Hunt

London-based investing app Shares has raised £33 million in funding as more and more women are attracted to retail investing.

The app promises to create a community of investors with its built-in social media features and has attracted 150,000 users since its launch in May.

Shares CEO Benjamin Chemla told the Standard: “The surprise we got is the number of women joining the application — 7% of retail investors are women but about 40% of our investors are women.”

Chemla said the funding round, which was led by Valar Ventures — owned by billionaire Peter Thiel — would be used to support European expansion.

Naked Wines shares fall on CFO exit

13:23 , Simon Hunt

Shawn Tabak, chief financial officer of beleaguered drinks group Naked Wines, has left the business.

Tabak has departed the company with immediate effect, as it attempts to re-evaluate its operations.

The already battered shares fell another 7p to 157p today — they are down 80% in the last year.

The online retailer made profit of £2.9 million compared to a previous loss of £10.7 million but said it would not pursue growth “at any cost” and that it intends to trade at “in or around breakeven this year”.

Tabak will be replaced by UK managing director James Crawford who will add the interim CFO post to his role until June next year.

Crawford had previously served as CFO from April 2015 to November 2020. The board position vacated by Tabak will not be filled “at this time”, the company said.

Premier Foods adds Spice Tailor recipe kit firm for £43.8m

12:43 , Simon Hunt

Sharwood’s and Loyd Grossman sauces owner Premier Foods has bought Indian and Thai recipe kit maker The Spice Tailor for £43.8 million.

Premier, whose brands also include Mr Kipling and Bisto, said it would acquire 100% of The Spice Tailor shares for a cash payment. The meals brand said it expected to generate revenue of £17.3 million this financial year.

Premier Foods boss Alex Whitehouse said: “The acquisition is well aligned to our growth strategy and we see a clear opportunity to build on the excellent track record of The Spice Tailor, by leveraging the elements of our proven branded growth model.”

He added the purchase represents a “highly complementary geographical fit” with Premier’s current brands and there was “significant potential” to expand distribution in all of its target markets including the UK, Australia, Canada and Ireland.

Watchdog hands KPMG record fine

12:22 , Simon Hunt

Big-four accountancy firm KPMG has been hit with the biggest fine it has ever faced in the UK after it deliberately misled its regulator.

The £14 million penalty relates to its audits of Carillion, the failed outsourcer, and Regenersis, an IT company. It was imposed by a tribunal which concluded KPMG provided false and misleading documents and information when the Financial Reporting Council undertook routine inspections of KPMG’s audit of Carillion’s 2016 accounts and Regenersis’ 2014 books.

There is an active, separate investigation into the way in which KPMG audited Carillion, which collapsed in 2018 after its books were signed off. The scandal led to calls to reform the UK’s accountancy practices.

KPMG will also pay costs of almost £4 million. It was “severely reprimanded” by the FRC, which also ordered the firm to appoint “an independent reviewer” to assess “the affectiveness” of KPMG’s audit quality review procedures.

KPMG also accepted that the behaviour of five members of staff — including the audit partner on the Carillon account, Peter Meehan — amounted to misconduct. Their behaviour included creating meeting minutes and an audit working paper that were misleading.

Meehan was fined £250,000 and excluded from the Institute of Chartered Accountants in England and Wales for 10 years.

SThree profits surge as supply chain crisis fuels tech jobs boost

11:02 , Simon Hunt

Shares in STEM recruitment firm SThree climbed 3% this morning after it reported a surge in profits as businesses turn to recruitment agencies to plug skills shortages amid continued supply chain disruption.

The London-based firm reported pre-tax profits of £44.3 million in the first six months of 2022, up 64% on the previous year, while revenue increased 27% to hit £772 million.

The growth has been driven by demand for jobs in software engineering as firms automate their supply chains as well as demand for life sciences skills after a rush of investment into pharma companies on the back of the coronavirus pandemic.

77% of the firm’s fees relate to arranging short-term contracts for recruits, an increase of 4% on the previous year, as firms take on fewer permanent staff amid uncertain economic conditions. Demand for contractors has grown 24% in the year to March 2022, SThree said.

Three in four small and medium sized companies plan to reshore some of their supply chains back to the UK within five years, according to a NatWest survey, while one in two said they had already switched to UK suppliers as part of their efforts to reduce their carbon footprint.

City Comment: Ryanair is brilliant

10:49 , Simon English

RYANAIR isn’t to everyone’s taste. You could almost say it isn’t to anyone’s taste – we’d fly differently if we could.

That it is increasingly the best choice is not just down to strained budgets. As rivals squabble, it has at times looked liked being the only airline with actual planes in the air.

It has never been shy of calling it like it sees it, and wins another award on that score today.

“They had one job,” is the abrupt assessment of CFO Neil Sorahan when asked about the total failure of our airports, notably Heathrow, to cope with a surge in demand for air travel now the Covid restrictions are lifted.

It’s a reasonable point, succinctly put.

Did it require genius to sense that there would be a rebound in demand for foreign holidays after about two years cooped up at home?

The bosses of Heathrow and other parts of the air trade would have that it did.

In any case, people book holidays in advance, usually by many months.

So the airlines and airports currently in chaos had taken our holiday money long before they realised they didn’t have enough staff to get us there.

Not only could they not predict the future, they couldn’t predict things that had already happened.

The value of Ryanair is that it sits as a permanent affront to the old-fashioned carriers.

It thinks they are doing it wrong, and frequently demonstrates exactly how.

It is a brilliant business.

“They had one job” - Ryanair bashes airports

10:40 , Simon English

RYANAIR waded into the travel chaos fight today, blaming airports for not hiring enough staff as it emerged as the clear post-pandemic winner in the airline trade.

With rivals stumbling and Heathrow mired in turmoil, Ryanair turned a profit of e170 million for the first quarter compared to a loss of e273 million for the same period a year ago.

That was better than expected and far ahead of rivals who are racking up losses and cancelling flights at an equal pace.

Chief financial officer Neil Sorahan put the blame for air travel cancellations on airports. He said: "You have to hold ANSPs [air navigation service providers] and various governments to account in relation to not staffing up appropriately for that. Equally the airports themselves, they had one job to do to and that was to make sure they have sufficient handlers and security staff. They had the schedules months in advance.”

At the weekend, former BA boss Willie Walsh and former Heathrow chairman Sir Nigel Rudd locked horns, with each blaming the other for ruining the summer travel plans of thousands of people.

Rudd says Walsh devalued the BA brand with cost cuts, Walsh says Heathrow’s move to restrict passenger numbers to 100,000 a day is “farcical”.

In contrast, Ryanair has won praise for keeping hold of staff during furlough which has enabled a swifter bounce back than rivals such as Easyjet.

read more here

Brent crude below $103 a barrel, FTSE 100 lower

09:52 , Graeme Evans

Brent crude’s retreat towards $100 a barrel continued today as fears mount over the impact of sharply higher interest rates on global energy demand.

The US Federal Reserve meets on Wednesday, when policymakers are due to hike by at least another 75 basis points in an effort to bring inflation back under control.

The monetary policy tightening has deepened global recession fears and contributed to Brent crude falling for four sessions in a row to below $103 a barrel.

Energy heavyweights BP and Shell were down by 1.5% today as the FTSE 100 index lost 14.48 points to 7261.89 in a tepid start to the week for European markets.

The interest rate expectations also deflated technology and growth stocks, with online gaming firm Entain 30p weaker at 1150p and Ocado off 17.8p to 773.8p.

Consumer healthcare business Haleon was the worst performing top flight stock as choppy trading since its GSK demerger continued with a fall of 9.1p to 307.4p.

The FTSE 250 index slipped 62.11 points to 19,762.66, but metal flow engineering firm Vesuvius jumped 7% after it bolstered full-year profit expectations.

The company, which mainly serves the steel and foundry industries, said it had been successful in its recovery of higher costs. Shares rose 23.6p to 346.6p, but analysts at Jefferies have a price target of 535p.

Vesuvius update sends shares 7% higher

08:57 , Graeme Evans

Vesuvius, the molten metal flow engineering firm, is the biggest riser in the FTSE 250 index after it bolstered full-year profit expectations.

Ahead of Thursday’s interim results, Vesuvius said trading in May and June had been stronger than anticipated despite ongoing end market weakness.

It said trading profits for the first six months of the year will be £127.4 million, aided by the successful recovery of input costs as well as market share gains.

Vesuvius, which mainly serves the steel and foundry industries, is braced for tougher conditions in the second half but thinks full-year trading profit will be towards the top end of City expectations. Shares jumped 7% or 23.6p to 346.6p.

FTSE 100 lower, Vodafone revenues rise

08:22 , Graeme Evans

Vodafone shares opened 0.5% lower today, despite the mobile phone giant reporting a 2.5% increase in service revenues growth for the first quarter of its financial year.

The improvement was driven by a 6.5% jump in revenues in the UK, offset by a 0.5% decline in Germany.

Chief executive Nick Read said: “We have executed in line with our expectations, delivered another quarter of growth in both Europe and Africa, and seen an acceleration in business growth.”

The downward move by Vodafone reflected a lacklustre session for the wider FTSE 100 index, which declined 19.52 points to 7256.58.

Energy giants BP and Shell were among the biggest fallers after the latest decline in the price of Brent crude.

FTSE 100 lower amid focus on corporate earnings

07:58 , Graeme Evans

Traders are in a cautious mood as attention turns to Wednesday’s Federal Reserve decision, when another big hike in interest rates is expected.

The prospect of the Fed increasing its fund rates by at least another 75 basis points has deepened recession fears and caused the oil price to continue its recent retreat.

Brent crude stood at $102.59 this morning, reflecting fears over weaker demand.

Asia’s leading indices were also under pressure, while IG Index expects the FTSE 100 index to fall about 42 points from Friday’s close of 7276.

The decline follows a strong run for London’s top flight, having climbed by 1.6% last week.

A busy corporate earnings calendar will further test sentiment as figures are due from many blue-chip companies, including Lloyds Banking Group, Barclays and oil giant Shell.

The week ahead also includes Q2 GDP figures from the US and UK economies on Thursday and Friday respectively.

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