Yahoo Finance FTSE 100 Live: Unilever shares rise as Glaxo interest cools, China cuts rates, Nasdaq in correction territory
The Nasdaq’s slide into “correction” territory after falling 10% since November today failed to unsettle the FTSE 100 index.
London’s top flight remains near a two-year high after Asia markets rallied on the back of China cutting another two key lending rates.
Unilever shares have rallied after it revealed yesterday that it will not raise its £50 billion offer for GlaxoSmithKline's consumer healthcare arm. There are also trading updates from Primark owner Associated British Foods and fashion chain Superdry.
FTSE 100 Live Thursday
Unilever shares rise but concerns remain
China cuts key lending rates
Primark owner AB Foods reports festive sales
Entain, no surprises
14:29 , Simon Freeman
A broadly flat update from Ladbrokes and Coral owner Entain has been met with a general shrug by investors.
Shares in the gaming giant are drifting just below the 1714p opening price as the 60% rebound in trade at its 2700 UK betting shops empire was offset by a 9% slump in online revenue in Q4.
The drop follows 23 consecutive quarters of double-digit online growth, putting it up against strong comparitives from 2021 when bored betters punted their way through winter lockdown.
Entain upped its full-year underlying earnings to between £875 million and £885 million, compared with a previous forecast of £850 million to £900 million.
The bookie, led by Jette Nygaard-Andersen following Shay Segev’s surprise departure to sports streamer DAZN in June, saw two take-over approaches last year.
Its US joint venture partner MGM saw a £8 billion move rebuffed, before US betting behemoth DraftKings walked away from a £16 billion approach in October.
Questions remain for Unilever CEO Alan Jope
13:35 , Oscar Williams-Grut
Has Alan Jope got a target on his back?
The Unilever CEO was already facing pressure from disgruntled investors over the company’s plodding growth rate. This week’s shenanigans can’t have helped.
A surprise tilt at GSK’s consumer healthcare business now looks dead in the water after Unilever was last night forced to draw a line under bidding at £50 billion. It followed a disastrous share price decline as investors fretted the company was poised to overpay.
The share price has ticked up today after that announcement but is still down 5% since news of the approach first broke. There are lingering questions about Jope’s strategy.
13:15 , Oscar Williams-Grut
Retail and hospitality leaders were today pinning their hopes on the return of office workers to boost trade after the government scrapped work from home guidance.
CEOs and industry groups cheered the end of Plan B restrictions but many said businesses were still on a knife edge.
Clive Watson, chairman of City Pub Group, told the Standard: “To get Britain back to work, so to speak, is absolutely vital for hospitality. A lot of businesses, including our own, do rely on people being back at their desks and coming into London. That’s a really key driver going forward.”
It came as trading figures underlined the setback suffered by businesses after Plan B restrictions were introduced.
City Pub Group, which has branches across London and the South East, said work from home orders saw December sales retreat to 85% of pre-pandemic levels.
Revolution Bars said Plan B restrictions meant sales over Christmas were down 23% compared to pre-pandemic levels. CEO Rob Pitcher attacked the government’s “confusing” messaging but said the end of restrictions was “very welcome for our business and will actively help rebuild consumer confidence.”
12:55 , Oscar Williams-Grut
Premier Foods has upgraded its annual earnings forecasts after its Mr Kipling cake brand had its “best-ever Christmas”.
Sales rose 7% in the third quarter, or 7.3% when compared with pre-pandemic levels. International sales in the 13 weeks to January 1 soared 33% compared with two years ago.
CEO Alex Whitehouse said: “This was Mr Kipling’s biggest Christmas ever, as our Sweet Treats brands outperformed the market, growing 6.3% compared with last year and 11.6% versus two years ago, helped by an increased number of family gatherings over the festive period.”
PensionBee doubles in size
12:27 , Oscar Williams-Grut
PensionBee has doubled in size after in its first year on the stock market.
The leading online pension provider said revenue grew by 103% last year to reach £13 million. Assets under manager rose 91% to £2.6 billion.
PensionBee said it has expanded its customer base “across the widest demographic from 18 to 80” and had a customer retention rate of over 95%.
PensionBee’s recently launched a “Fossil Fuel Free” pension plan aimed at attracting millennials and CEO Romi Savova said it has been “particularly popular with that demographic, as your pension can do wonders for the environment”.
Savova said the company has been “roughly doubling in size every year” since its inception in 2014. The company went public nearly one year ago in April 2021, with shares offered at 165p.
After today’s revenue announcement, the PensionBee share price jumped 8.20p, or 6.45%, to 135.30p
Christmas cheer eases share price pain at Deliveroo
11:43 , Oscar Williams-Grut
Deliveroo enjoyed a strong end to 2021 as momentum from its tie-up with Amazon continued.
The takeaway app said today that the total value of orders on its platform rose by 33% to £1.7 billion in the final quarter of 2021. The performance was driven by particularly strong growth in the UK. Strength in the final few months of 2021 helped full-year gross transaction value rise by 70% to hit £6.6 billion.
CEO and founder Will Shu told the Standard the fourth quarter “capped a really strong year”, adding: “We performed really well comping a pandemic period.”
Deliveroo said it was on track to meet previous profit margin guidance of between 7.5% and 7.75%. Shares, which have more than halved since listing last year, rose 5p, or 2.6%, to 175p. Shares were sold at 390p in last March’s IPO, with around 70,000 small-time investors buying into the float.
Jobs to go at Primark but UK confidence set to boom say bosses
11:23 , Simon English
AROUND 400 store management jobs are to go at Primark as the company moves to “simplify” its operations.
Parent company ABF is in consultation with the affected staff – it employs 29,000 in all.
That news came as Primark reported sales up 36% in the quarter to January, compared to a year ago. Sales are down 11% on a like for like basis compared to two years ago, however.
Retail analyst Nick Bubb said: “Primark was again disadvantaged by the swing back to online spending in the Omicron surge, but its stores are still popular shopping venues.”
Superdry back in profit after four years as Oxford St store booms
11:22 , Simon English
SUPERDRY is back in profit for the first time since 2018 and reinstalled CEO Julian Dunkerton says his new Oxford Street flagship store is impressing customers.
Dunkerton, the co-founder, launched a boardroom coup in 2019 to get himself back in charge in anger at what he saw as the dilution of the brand, where discount sales had become the norm.
Since then his “reset” has been buffeted by the pandemic and fading consumer confidence.
In the half year to October Superdry turned a profit of £4 million compared to a loss last time of £19 million.
Unilever rebound slowed by uncertain outlook
10:42 , Graeme Evans
Relief at Unilever's decision not to raise the stakes on its GlaxoSmithKline offer today failed to mask investor unease over the “structural challenges” still facing the Marmite maker.
Unilever shares rose 1.5% or 54p to 3729p after last night revealing it would not up its bid for Glaxo's consumer healthcare arm from the £50 billion tabled before Christmas.
But the FTSE 100-listed stock remains short of the level seen before the weekend as pressure on Unilever boss Alan Jope continues ahead of February 10 annual results.
Analysts at UBS said: “We continue to worry that Unilever's current portfolio faces structural challenges that will prevent the company from consistently meeting its multi-year targets of 3-5% underlying sales growth along with some margin expansion.”
They described the failure to land Glaxo's consumer healthcare arm as a “double whammy” from a portfolio standpoint, given that it deprives Unilever of owning a large, higher margin business and postpones its own disposal of lower growth brands and businesses.
UBS has a “sell“ recommendation on Unilever, with the Swiss bank favouring London-listed Reckitt Benckiser as well as L'Oréal and Nestlé.
Shares in GlaxoSmithKline, which is pressing ahead with an existing plan to spin off the Panadol-to-Sensodyne joint venture, fell 2% or 27.2p to 1639.2p.
The wider FTSE 100 index was 11.46 points lower at 7578.47, despite gains of more than 1% for Hong Kong-based Prudential and luxury goods group Burberry as China delivered an economic boost through a further cut in key lending rates.
A weaker session for oil prices left BP and Royal Dutch Shell lower, while lenders Lloyds Banking Group and NatWest gave up recent gains by falling 3% and 2% respectively.
The FTSE 250 index rose 27.02 points to 22,682.21, with Spirent Communications among the biggest risers after it said operating profits will be slightly ahead of City expectations. Spirent, which provides testing and assurance products for next generation devices and networks, jumped 6% or 14.6p to 245p.
Other risers included brickmaker Ibstock after it forecast underlying profits modestly ahead of previous guidance as strong customer demand offsets inflationary pressures.
Stock management boosts Primark recovery
09:18 , Graeme Evans
The diversified business of Associated British Foods offered a safety net during the pandemic, but now all eyes are on Primark for a comeback.
Today’s figures show the retail chain has yet to return to pre-pandemic levels of trading, not helped by Omicron keeping shoppers at home and its lack of a significant digital presence.
However, Hargreaves Lansdown equity analyst Laura Hoy notes Primark’s impressive stock management performance.
She said: “Last year’s autumn and winter stock made it to the shelves this year with very little discounting, which should be a welcome tailwind for cashflow.”
Hoy adds: “Inflationary headwinds are an unavoidable storm cloud hanging over just about everyone right now, but we think ABF is well-placed to ride it out.
“The group’s low-cost retail business will appeal to shoppers tightening the purse strings, and improved efficiency across all areas of the business together with price hikes in the grocery business look likely to offset the bulk of the pain for now.
“But if costs continue to balloon, it could become a problem for Primark as the group has very little space to increase costs due to its position as a discount retailer.”
Asia-focused stocks lead FTSE 100 higher
08:34 , Graeme Evans
The FTSE 100 index has risen after more support for China's economy helped shares in luxury goods group Burberry to lift 3% and boosted a number of mining stocks.
Other risers included Asia-focused Prudential as the People's Bank of China cut a key lending rate for corporate and household loans.
The FTSE 100 index gained 22.68 points to 7612.34, keeping the top flight at its highest level in almost two years.
Unilever’s decision not to raise its £50 billion offer for GlaxoSmithKline's consumer healthcare arm sent shares 2% higher to 3733p, but the stock is still below where it was prior to its interest being disclosed at the weekend.
Retail-to-sugar conglomerate Associated British Foods fell 8p to 2123p, despite a 16% rise in revenues from continuing operations in the 16 weeks to 8 January. The figure included a 32% rise for Primark as it recovers from Covid disruption the previous year.
Support for Barclays after Investec upgrade
08:12 , Graeme Evans
Jes Staley quit Barclays in November but his six years as chief executive have left a “rich legacy”, according to Investec banking analyst Ian Gordon today.
Barclays shares are up 17% to 207p in the past month but Gordon believes there's more to go for after upgrading his target price to 235p.
Next month's annual results are expected to show the benefit of revenues growth in investment banking, leading to a 164% rise in profits to £8.1 billion. This figure is then expected to normalise at around £7 billion in the following three years.
Gordon says the shares trade at a “meaningful discount” versus NatWest, HSBC and Lloyds Banking Group, believing that the market has failed to appreciate its revenues diversity.
China rates cut aids Asia markets
07:38 , Graeme Evans
European markets are set for a positive start, despite the tech-heavy Nasdaq now being in correction territory after closing more than 1% lower last night.
A rise in bond yields caused by expectations for US interest rates to rise as soon as March has depressed appetite for high-growth stocks and left the Nasdaq more than 10% off its record level in November.
However, London's reliance on resource and financial stocks meant the FTSE 100 index closed 26 points higher yesterday and is set to gain another 29 points at 7618 today.
This follows a strong rebound for Asia markets after China cut another two key lending rates to protect the wider economy against continued Covid-19 headwinds.
The Hang Seng in Hong Kong rallied almost 3% and Japan's Nikkei 225 was up more than 1% after falling sharply to a five-month low in the previous session.
US futures are pointing to a flat start for the Nasdaq and the S&P 500, aided by a slight easing in the 10-year bond yield from the 1.9% seen earlier this week. The US earnings season also picks up pace, with results from Netflix and American Airlines.
Brent crude oil futures held firm, despite US president Joe Biden's pledge to continue with his efforts to lower prices. Brent remained above $88 a barrel amid supply constraints and the surge in fuel demand as the global economy begins to recover from the impact of Omicron.
