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FTSE 100 Live: HSBC Q4 profits surge, public finances boosted, private sector returns to growth

 (Evening Standard)
(Evening Standard)

Banking giant HSBC today revealed its profits jumped 90% to $5.2 billion (£4.3 billion) in the final three months of 2022.

Despite the improvement, annual profits fell by $1.4 billion (£1.2 billion) to $17.5 billion (£14.6 billion) due to the sale of its retail banking operations in France.

Meanwhile, the public finances posted a bigger-than-expected surplus of £5.4 billion in January after a record £21.9 billion of self-assessed income tax receipts in the month.

FTSE 100 Live Tuesday

  • HSBC profits and dividend surge

  • Private sector returns to growth

  • Hotels chain IHG launches $750m buyback

Neil Woodford funds scandal moving to an end as Waystone bids for Link

18:02 , Daniel O'Boyle

The funds boss looking to buy Link, the administrator still embroiled in the Neil Woodford affair, says he hopes a deal can bring peace to many thousands of investors.

Derek Delaney of Dublin’s Waystone Group is in exclusive talks to buy Link Fund Solutions, for an undisclosed amount.

Link was the administrator of two funds run by Neil Woodford, a one-time stock picking star who saw his £10 billion empire collapse as investors raced for the exit on poor returns.

Read more here

FTSE closes at 7977.75

16:59 , Daniel O'Boyle

The FTSE closed well under 8000 today, slowing the strong momentum of recent weeks.

The index of top UK companies finished at 7977.75, its lowest finish in a week.

HSBC was the day’s top riser, with shares up 4.3% after reporting a special dividend alongside its results. The banking giant gained more than £5 billion in market capitallisation today.

Mining businesses, on the other hand, made up most of the day’s losers, with Anglo American shares down 5.5%.

Pret a Manger ditches milkshakes, frappes and smoothies

16:13 , Simon Hunt

Pret A Manger has dropped milkshakes, frappes and smoothies from its menu in a blow to its coffee subscription users who complained some of he drinks did not come as part of the monthly plan.

The high street chain said it was scrapping the cold blended drinks in favour of iced drinks which will be available in the summer.

Smoothies and frappes will continue to be avaiable in some stores until the end of May, Pret said.

Read more here

New buy-now-pay-later regulations will be a wake-up call for lenders

15:33 , Daniel O'Boyle

With the Treasury planning to tighten the rules for “Buy Now Pay Later” (BNPL) lenders by bringing them into the scope of Financial Conduct Authority (FCA) regulation, it will bring greater scrutiny to lenders and cause them to double check their affordability assessments to ensure they are robust and appropriate.

However, it also represents huge opportunity, especially during the cost-of-living crisis, Freeths lawyer Daniel Meyer writes.

Read more here

Rail strikes led to “no notable decrease” in retail spend, ONS finds

15:31 , Daniel O'Boyle

There was “no notable decrease” in retail spending caused by rail strikes in December and January, according to new official data.

Data from the ONS, based on spending by Revolut card users, found that “in-store spending remained flat” on 16 and 17 December, when compared to the surrounding days. The same was true for strikes that took place in early January during retailers’ sale seasons.

“These data show how industrial action on the railways on the 13 to 14 and 16 to 17 December 2022 as well as 3 to 7 January 2023, appears to have had no large negative impact on total consumer spending, either in terms of total spent or when they spent,” the ONS said.

Read more here.

US shares dip on opening

14:48 , Daniel O'Boyle

US shares have declines as trading opened in New York, after exchanges closed for the Presidents’ Day holiday.

There was no trading yesterday, meaning that the resumption was the first activity since Friday,

The Dow Jones has dropped by 0.8% to 33543. Meanwhile, the S&P 500 was down almost 0.9% to 4040 and the Nasdaq down almost 1% to 11673.

Businesses in the pharmacueticals space struggled, with companies such as BioCryst Pharmaceuticals among the biggest fallers.

Jeremy Hunt may not enjoy the fruits of his good fortune

13:43 , Jonathan Prynn

It was Napoleon who asked for lucky rather than good generals.

There is every sign that Jeremy Hunt is turning into a lucky Chancellor. But only time will tell whether he is a good one too, Jonathan Prynn writes.

Read more here

Revealed: London’s stingiest and most generous delivery rider tippers

12:27 , Simon Hunt

Fewer and fewer Londoners are offering tips to delivery riders, new data has found, as soaring inflation and squeezed incomes stifles the generosity of the capital’s takeaway customers. But the likelihood of leaving a tip varies enormously between different London boroughs.

Residents of Richmond are London’s most generous tippers, according to delivery driver earnings app Rodeo, with at least one in four leaving a tip, closely followed by those who live in Swiss Cottage, Notting Hill and Paddington.

Read more here

Exhibition group Hyve approached over £306 million sale

11:49 , Daniel O'Boyle

Private equity business Providence Equity LLP has made an approach about a possible £300 million bid for exhibition business Hyve Group.

Hyve - which hosts exhibitions such as fashion trade show Pure London - said it had received an offer of 105p per share, having earlier received a 101p per share offer. At 105p per share, Hyve would be valued at around £306 million.

“The board of Hyve is considering its position with respect to the Proposal and a further announcement will be made in due course,” Hyve said.

Under the City Code on Takeovers, Providence must submit a firm offer, or announce that it has no plans to do so, by 21 March.

Hyve shares jumped on the news from 85p to 103.8p. However, that is still down significantly from a pre-pandemic peak of 610.2p.

Vodafone sells Ghana arm

11:07 , Daniel O'Boyle

Vodafone has announced the sale of its Ghanaian business to Africa-focused telecoms provider Telecel.

Telecel will acquire the 70% stake in Vodafone Ghana that had been held by the London-listed business. The remaining 30% will still be held by the government of Ghana.

“The sale of Vodafone Ghana to Telecel Group is a further step in simplifying Vodafone's African portfolio,” Vodafone CEO Margherita Della Valle said.. “Since entering the market in 2008, Vodafone has helped to develop Ghana's critical network infrastructure supporting customers, businesses and communities.”

Smith & Nephew up 5%, miners lead FTSE 100 lower

10:20 , Graeme Evans

Smith & Nephew’s shares jumped today as investors looked beyond weaker 2022 results from the knee and hip implant maker.

The 5% rally at the top of the FTSE 100 index came as chief executive Deepak Nath pledged to create a “consistently higher growth company”, with profit margin expansion to at least 20% by 2025.

This figure slowed to 17.3% in today’s results as trading profits fell to $901 million (£746 million), but Nath expects at least 17.5% this year amid continued market share growth in sports medicine and advanced wound management.

He is also looking for a stronger performance in orthopaedics as the benefits of July’s 12-point growth strategy begin to kick in. Nath added: “We expect to deliver both faster revenue growth and margin expansion in the coming year.”

Shares rose 55.5p to 1221p and have surged by about 20% since October, but UBS has a “sell” recommendation and 970p target price.

The bank said the 2025 margin guidance looked a “stretch to us”, given the need for 1.25 percentage points of expansion in each of 2024 and 2025. It noted the company had only delivered 1% or more three times since 2006, with those years being after the financial crisis and Covid.

Other stocks on the blue-chip risers board included Burberry and JD Sports Fashion but the FTSE 100 index fell back from last night’s latest record close to stand 20.72 points lower at 7993.59.

Miners led the fallers in the wake of BHP’s bigger-than-expected drop in interim profits and dividend, with Anglo American off 126p to 3211.5p ahead of its own results on Thursday.

The FTSE 250 index declined 69.53 points to 20,028.88 but the recovery for electricals retailer Currys continued as its shares jumped 2.6p to 77.5p. They were 53p in October.

Kitchens supplier Howden Joinery also improved 2.4p to 723.8p after analysts at Berenberg switched to a “buy” recommendation with a new 870p target price.

Zoo Digital shares were in the AIM limelight, surging 15% or 24p to 188p after the Sheffield-based media services company announced a contract to become a technology vendor to a major Hollywood studio.

Hope for Woodford investors as Link nears deal

09:52 , Simon English

The funds boss looking to buy Link, the administrator still embroiled in the Neil Woodford affair, says he hopes a deal can bring peace to thousands of investors.

Derek Delaney of Dublin’s Waystone Group is in exclusive talks to buy Link Fund Solutions, for an undisclosed amount.

Link was the administrator of two funds run by Neil Woodford, a one-time stock picking star who saw his £10 billion empire collapse as investors raced for the exit on poor returns.

Thousands of investors are still trapped in what is left of the funds. The Financial Conduct Authority is keen for secure a deal for Link and says it is in “advanced confidential discussions”.

Waystone wouldn’t be involved in handing back money itself, but it hopes the process will be smoother once a deal is done.

Delaney said: “We are delighted this deal might enable the whole industry to move on from Woodford. We look forward to being a major player in the UK, in a market that has learnt the lessons of Woodford.”

Asked what lessons they are, he replied: “They have learned the need to be able to ensure that the investment manager is acting in accordance with the prospectus.”

If successful, Waystone plans to take on Link’s UK staff, about 200 people. Waystone is moving towards overseeing assets of about $1 trillion.

A stock market float of the company has been mooted by the industry.

GB group profit warning after crypto market downturn

09:50 , Simon Hunt

Further signs of shockwaves across the tech industry sparked by a wave of crypto company collapses emerged today after GB Group sounded the alarm on its profit forecasts.

The Chester-based firm, which provides identity verification and fraud detection to crypto businesses, said “challenging conditions for cryptocurrency and internet economy customers” would lead to a slimming down in expected earnings for the year, a volte-face from the company’s optimism in November last year when it raised hopes of improved profits and revenues in the months leading up to March 2023.

The company also warned the signing of new contracts with customers had been delayed as a result of economic uncertainty.

GB Group boss Chris Clark said: “The difficult macroeconomic environment has been well publicised and it is disappointing to have seen the impact on certain parts of our business.”

GB Group shares sunk 10% to 310p in early trade before paring back losses later in the morning’s session.

S&P: UK private sector returns to growth in February

09:45 , Daniel O'Boyle

UK private sector firms’ output increased on a month-on-month basis for the first time since July 2022, according to S&P Global.

S&P’s CIPS Flash UK PMI Composite Output Index registered at 53.0 for February, the first time the figure has been above the no-change figure of 50 in more than half a year.

Manufacturing output reached a nine-month high, while prices increases were the lowest recorded in almost a year.

“Survey respondents cited rising customer demand and improving business confidence in February, due to lower economic uncertainty, fewer supply shortages and falling inflation,” S&P said.

Safestore revenue grows in first quarter

09:37 , Daniel O'Boyle

Storage business Safestore reported a 9.4% increase in revenue for the first quarter of its financial year.

For the three months to 31 January, Safestore brought in £55.7 million. As well as being a 9..4% year-on-year increase, this total was up by 4.2% on a like-for-like basis, after acquisitions of new storage sites are accounted for.

Storage business Safestore reported a 9.4% increase in revenue for the first quarter of its financial year (Safestore)
Storage business Safestore reported a 9.4% increase in revenue for the first quarter of its financial year (Safestore)

“I am pleased to report that the solid early trading indicated in our January 2023 announcement has continued through to the end of our first quarter with the group delivering like-for-like revenue growth of 4.2% and total revenue growth of 9.4%,” CEO Frederic Vecchioli said.

In the UK, revenue was £41.6 million, up by 4.3%.

Inflation eats into Finsbury Food Group’s profits in H1

09:06 , Daniel O'Boyle

Finsbury Food Group’s shares were down by 2% after it reported flat profits in the first half of its financial year.

Revenue for the six months to 31 December 2022 came to £190.9m, up by 14.7% from the previous year.

Operating profit was flat at £6.5 million, which Finsbury said was “mainly reflecting the impact of inflationary pressures”.

“Finsbury has once again delivered a robust performance in the first half to December 2022. We have seen a stable performance in UK retail, ongoing recovery in UK foodservice and continued growth in our overseas division all despite the challenges of continued significant input cost inflation and falling consumer confidence,” CEO John Duffy said.

FTSE 100 lower, Smith & Nephew shares up 5%

08:27 , Graeme Evans

Smith & Nephew is the best performing stock in the FTSE 100 index after annual results sent shares in the medical devices group up 5% or 58p to 1219.5p.

Hotels group IHG moved in the opposite direction, falling 144p to 5450 after its full-year figures, while HSBC dipped 1% or 8.2p to 612.5p in the wake of its update.

The FTSE 100 index was 16.03 points lower at 7998.28, with the FTSE 250 index down 51.34 points at 20,047.11.

Antofagasta slashes dividend as profit falls over a quarter for 2022

07:58 , Michael Hunter

Antofagasta, the FTSE 100 copper miner, revealed the impact of rising inflation and higher input prices as it reported a drop in over a quarter of profit before tax of $2.56 billion ($2.13 billion) for 2022.

It slashed its payout to investors, cutting its dividend by almost 60% to $0.597 per share.

As operating costs rose 10%, annual revenue fell 22% to $5.9 billion. It said operating costs were up 10% “mainly due to inflation and higher input prices”.

The Chilean company also produces gold and molybdenum, an element used in structural steel. It said group production in 2023 is expected to be 670-710,000 tonnes of copper, 220-240,000 ounces of gold and 10-11,500 tonnes of molybdenum.

BHP cuts dividend, boss upbeat on prospects

07:58 , Graeme Evans

Mining giant BHP today revealed a 27% drop in half-year profits to $10.8 billion (£9 billion), driven by a $4.8 billion (£4 billion) reduction in revenue caused by lower iron ore and copper prices.

The interim dividend of 90 cents a share or $4.6 billion (£3.8 billion) represented a 40% cut on the previous year’s payment.

Chief executive Mike Henry said he remains positive about the demand outlook in the second half of the year and into the 2024 financial year.

He added: “We expect domestic demand in China and India to provide stabilising counterweights to the ongoing slowdown in global trade and in the economies of the US, Japan and Europe.

“The long-term outlook for our commodities remains strong given population growth, rising living standards and the metals intensity of the energy transition, including for steel making raw materials."

Smith & Nephew reports drop in operating profit

07:41 , Michael Hunter

Smith & Nephew, the FTSE 100 medical devices maker, has reported a drop in operating profit after annual revenue hit forecasts of $5.2 billion (£4.3 billion).

Operating profit fell to $450 million from $593 million, with the company midway through a “12-point plan” designed to improve its performance over a two-year period. It was announced in November.

The 160-year old company, which took a hit from adverse currency movements, said it expected continued “macroeconomic headwinds in 2023,”although it said revenue growth and margin expansion would both be faster in the year ahead.

Deepak Nath, Chief Executive Officer, said: “We continued to outperform in Sports Medicine & ENT and Advanced Wound Management and, even though we are early in our work to fix Orthopaedics, performance improved here too.”

IHG launches $750 million buyback as Q4 London trading beats pre-pandemic levels

07:40 , Daniel O'Boyle

InterContinental Hotels Group (IHG) will buy back $750 million (£624.5 million) worth of its shares and increase its dividend after operating profit grew to $828 million in 2022, with London trading above pre-pandemic levels.

The business rebounded from the pandemic with $1.83 billion in revenue, though this was towards the lower end of analysts’ expectations. Of this total, $1.45 billion came from its fee business, made up of franchised hotels.

Revenue per available room from the UK for the full year was 1% above pre-pandemic levels, with London revenues per room in the fourth quarter of the year 6% above Q4 of 2019.

Earnings per share almost doubled to $2.82.

Besides the $750 million buyback programme, IHG also increased its year-end dividend by 10% to 94.8 cents per share. This is on top of a 43.9 cent dividend paid in October.

In total, these dividend payments are worth just under $250 million.

The group now operates 911,927 hotels, up by 3.6% from this time last year, with a further 80,388 hotels in the pipeline.

FTSE 100 seen lower ahead of PMI releases

07:33 , Graeme Evans

The FTSE 100 index rose by a modest 0.12% to close last night at a fresh record above 8,000, aided by resilience in the mining sector.

US markets were closed yesterday for Presidents’ Day, meaning a lack of direction for traders at the start of today’s London session.

CMC Markets expects the FTSE 100 to open 10 points lower at 8004, with futures markets also pointing to a weak start for Wall Street amid uncertainty over the eventual peak for US interest rates.

The calm start to the week is likely to be broken later by preliminary PMI data on February economic activity, with updates due in the UK, Eurozone, Germany, France and US.

Deutsche Bank said this morning: “The data momentum has been positive of late but it’s going to be hard for the next few months to assess where we should be at this stage of the cycle.

“There has no doubt been big improvements from gas price falls and loosening of financial conditions but we’re yet to see anything close to the full lag of monetary policy filter through to the US and Europe.”

Profits and divi jumps at HSBC

07:31 , Simon English

HSBC profits doubled in the last quarter thanks to rising interest rates around the world, allowing it to boost its dividend to the highest for four years.

The bank is trying to fend off calls from Chinese shareholder Ping An to break itself up. Ping An wants a split of the Asian and western businesses which it believes would boost value.

HSBC made profit of $5.2 billion (£4.3bn) in the final three months of 2022, a rise of 90%.

For the year overall however profit fell $1.4 billion to $17.5 billion.

It is paying a dividend of 32 cents a share for 2022, the highest since 2018. There will be a special divi next year from the sale of its Canadian arm.

CEO Noel Quinn hopes that higher returns next year will fend off Ping An.

He said: “It has been, and remains our judgement that alternative structural options would not deliver increased value for shareholders.”

HSBC has always argued that its global presence lowers its borrowing costs

Chief executive Noel Quinn was paid £5.6 million, up from £4.9 million. while departing CFO Ewen Stevenson got £4.7 million, up from £3.6 million.

Quinn added: “2022 was another good year for HSBC. We are on track to deliver higher returns in 2023.”

HSBC has been steadily closing UK bank branches. It shut 114 more in November.

European car sales jump 10.7% in January

07:26 , Simon Hunt

New vehicles registered in the EU, Britain and the European Free Trade Association (EFTA) grew 10.7% to 911,064 units, the European Automobile Manufacturers’ Association (ACEA) said, in signs of a bouceback for the continent’s carmakers after registrations slowed in 2022.

Passebger car registrations in 2022 were down 4.6% on the previous year, the ACEA said.

Government had £5.4 billion surplus in January says ONS

07:12 , Jonathan Prynn

The public finances were in surplus by £5.4 billion in January bouyed by record self assessment income tax receipts of £21.9 billion that was partially offset by the energy support schemes and a one off customs payment to the EU, according to the Office for National Statistics.

The surplus was £7.1 billion smaller than in January 2022 but £5 billion larger than forecast by the Office for Budget Responsibility (OBR).

Recap: Yesterday’s top stories

06:49 , Simon Hunt

Good morning. Here’s a summary of our top stories from yesterday: