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FTSE 100 Live: Go-Ahead crashes, oil price tops $80 a barrel, Lego’s a blockbuster

·12-min read
 (ESI)
(ESI)

Inflationary pressures will remain the central focus for investors today after Brent crude began trading above $80 a barrel for the first time in three years.

Shares in transport group Go-Ahead sunk after the government announced it was taking back control of the Southeastern rail franchise over a historic £25 million accounting error.

FTSE 100 Live Tuesday

  • Brent crude above $80 a barrel

  • Go-Ahead shares crash

  • Smiths Group seals medical deal

  • FTSE 100 index slips

FTSE mildly lower in afternoon trade

15:07 , Oscar Williams-Grut

The FTSE 100 is down 16 points this afternoon to 7047, a fall of 0.2%. Tech companies continue to drag the index down - industrial design software company Aveva is at the bottom of the index with a loss of 5.7% and accountancy software firm Sage is 4.5% lower.

Smiths Group is at the top of the index confirming its long-awaited exit from medical devices today.

Shares surged to the top of the FTSE 100 index risers board as Paul Keel said it was an “exciting time” for Smiths based on prospects for the remaining higher-performing industrial technology businesses.

Plans to offload the medical division, which had been the driving force behind the creation of the UK’s ventilator consortium at the start of Covid-19, were delayed by the pandemic.

It has now signed a deal with California-based infusion therapy company ICU Medical in a move valuing the business including debt at £1.5 billion.

Smiths is left with four businesses, including its airport detection and screening division. It will use the proceeds for investment purposes, with £737 million also being returned to shareholders through buybacks.

Smiths reported 7% growth in profits from continuing operations to £372 million as it increased the full-year dividend by 8% to 37.7p a share.

Shares rose 4%.

Cazoo revenue up more than 500% as used car demand soars

13:35 , Joanna Bourke

Cazoo has reported a sales leap (Cazoo)
Cazoo has reported a sales leap (Cazoo)

The used car boom has helped sales at Cazoo to increase more than five fold, the newly listed online retailer has revealed.

The company, started by entrepreneur and Zoopla founder Alex Chesterman, recorded revenue of £248 million in the six months to June, up from £40 million a year earlier.

It sold more than 20,400 vehicles, compared with 4084 last year.

Read the full story HERE.

GSK’s Viiv sets course for future

11:44 , Simon Freeman

 (Viiv Healthcare)
(Viiv Healthcare)

Viiv Healthcare, the HIV specialist majority owned by GlaxoSmithKline with Pfizer and Shionogi, has issued wo promising updates.

Its scientists are enormously excited at the potential for a new very early stage HIV therapy which could ultimately succeed its blockbuster dolutegravir: patients may only need one injection of the medicine every three months.

And the US drugs watchdog has fast-tracked a review of ViiV’s second-generation AIDs treatment cabotegravir for use in preventing infections. Human trials were so successful they were stopped early.

It’s potentially ground-breaking stuff as Glaxo ramps up its drugs pipeline in advance of its split - under the ever-watchful gaze of activist investor Elliott.

FULL STORY HERE

Lego builds up profits and sales, with Harry Potter sets in demand

11:25 , Joanna Bourke

The Lego Group saw sales and profits jump in the first half of the year as lockdowns eased, with Harry Potter and Star Wars sets in high demand.

The toy company, which is headquartered in Denmark, said total revenue increased 46% to DKK 23 billion (£2.6 billion) in the six months to June 30. It added that operating profit was up 104% to DKK 8 billion.

The firm said all market groups delivered double-digit consumer sales growth. Top-performing themes included Lego Star Wars and Lego Harry Potter.

Lego sells a Harry Potter-themed range (Lego)
Lego sells a Harry Potter-themed range (Lego)

Read the full story HERE.

Go-Ahead shares crash on loss of contract

11:20 , Oscar Williams-Grut

The back-to-work recovery hopes of Go-Ahead shareholders were sent spinning today after the shock loss of the transport group’s Southeastern franchise left shares a fifth lower.

The government will seize control of the joint venture contract from next month, with Go-Ahead admitting today it had repaid £25 million to the Department of Transport due to financial errors in relation to the franchise it has run for many years.

Finance boss Elodie Brian is standing down with immediate effect and is being replaced on an interim basis by Gordon Boyd, who has previously held roles at Drax and Capita.

Go-Ahead shares came off the rails, falling 198.5p to 826.5p at the lowest point since December.

The company, which is also the largest operator of bus services in London, is carrying out a review that will mean a delay to its full-year results.

Building supplies firm Lords reports sales growth

10:55 , Joanna Bourke

Newly floated building supplies firm Lords has recorded higher sales and a bounce back from Covid-19 disruption.

Lords Group Trading, which floated at 95p per share in July, sells products such as bricks and radiators to trade customers, as well as individual DIY enthusiasts. It saw revenues in the half year to June 30 reach £179 million, up from £124 million.

Read the full story HERE.

Wise shares sink after CEO’s tax mistake

10:40 , Oscar Williams-Grut

hares in international money transfer business Wise came under pressure today after it emerged that its billionaire CEO had been fined for messing up his taxes.

Kristo Kaarmann, the cofounder and CEO of Wise, was charged £365,651 for a deliberate default during the 2017/18 tax year, the Telegraph reported. A spokesperson said the hefty fine came after the chief exec forgot to file his taxes in a year where he owed the tax man £720,495.

“Kristo was late submitting his personal tax returns for the 2017/18 tax year, despite sufficient reminders from HMRC,” a spokesperson said. “His tax returns have since been completed, and he paid substantial late filing penalties. He has since devoted more time to keeping his personal admin in order.”

The disclosure is embarrassing for Wise and could raise questions about Kaarmann’s competency. The company’s stock lost 27.50p, a fall of 2.4%,on the news.

Read more here.

FTSE slips on inflation jitters

10:05 , Graeme Evans

Further gains for shares in BP and Royal Dutch Shell were offset by profit-taking at Rolls-Royce and British Airways owner IAG as the FTSE 100 index fell 0.4% to 7.032.38 today.

The latest rise in Brent crude to above $80 a barrel triggered fresh rises of more than 2% for the oil giants, but sentiment was otherwise downbeat on fears about how inflationary pressures might impact the global economic outlook.

Federal Reserve chair Jerome Powell is due before Congress later today amid worries that central banks may have to take earlier-than-expected action on interest rates.

Accountancy software group Sage was London's biggest faller, off 34p at 706.8p, and there were also big declines for industrial technology firm Aveva and credit checking business Experian.

Rolls-Royce also fell back from last night's 18-month high, having surged 11% yesterday on the back of a deal with the US Air Force and amid hopes for a rebound in engine flying hours.

Shares were 5p cheaper at 142.4p, while IAG also gave up 5p to 181.3p after rising sharply yesterday. Smiths Group was the biggest riser in the top flight, up 3% or 41p to 1,405p, after announcing a dividend hike alongside plans for a £737 million share buyback in the wake of the sale of its medical devices business.

Rentokil Initial shares were closely watched as the pest control-to-cleaning firm Rentokil upped its growth targets and announced plans to expand its hygiene arm amid booming demand during the pandemic.

The group hiked sales and earnings goals, lifting its organic medium-term revenue growth target to between 4% and 5%, up from 3% to 4% previously.

Rentokil's shares were 9p lower at 568.4p, despite some positive City reaction to its strategy update. Jefferies has a price target of 650p, while Davy analyst David Greenall reiterated his outperform rating and upgraded medium-term growth forecasts.

Go-Ahead shares came off the rails, sliding 17% after the government seized control of its Southeastern contract as the company revealed it had repaid £25 million to the Department of Transport after admitting to financial errors in relation to the franchise.

Finance boss Elodie Brian is standing down with immediate effect and will be replaced on an interim basis by Gordon Boyd, who has previously held roles at Drax and Capita.

Shares were 172.5p lower at 852.5p.

Drinks group AG Barr addresses HGV driver situation

09:28 , Joanna Bourke

Irn Bru maker AG Barr has joined the list of businesses warning of driver issues, as firms grapple with supply chain difficulties.

The drinks company, which is also behind the Rubicon brand, gave the update as it published first half results that showed improvements at AG Barr.

It said: “In recent weeks we have seen increased challenges across the UK road haulage fleet, associated in part with the Covid-19 pandemic, impacting customer deliveries and inbound materials.”

AG Barr is behind the Irn Bru brand (PA Archive/PA Images)
AG Barr is behind the Irn Bru brand (PA Archive/PA Images)

Read the full story HERE.

Smiths jumps after medical sale

08:31 , Graeme Evans

The FTSE 100 index was broadly unchanged, despite BP and Royal Dutch Shell rising another 2% on the back of higher oil prices.

Shares in conglomerate Smiths Group posted the biggest rise after it signed a long-awaited deal to sell its medical devices division to California-based infusion therapy company ICU Medical. The move values the business including debt at $2.7 billion (£1.5 billion).

Plans for the sale of the medical division, which had been the driving force behind the creation of the UK’s ventilator consortium at the start of Covid-19, were delayed by the pandemic.

Smiths is now left with four businesses, including its airport detection and screening division. It is planning to use the proceeds for investment purposes, with the rest going towards a significant return of cash to shareholders.

Unveiling annual results today, Smiths reported 7% growth in profits from continuing operations to £372 million as it increased the dividend by 8% to 37.7p a share.

Shares rose 4% or 60.5p to 1,424.5p.

Moonpig raises annual sales outlook

08:18 , Joanna Bourke

Online greeting cards retailer Moonpig has upgraded its sales outlook, boosted by high customer demand even as high street rivals reopened from lockdown.

The FTSE 250 company, which also sells gifts, saw strong growth during the pandemic when card shops had to temporarily close for Covid-19 lockdowns.

Moonpig today said that trading since April has “been strong”.

Moonpig has upgraded its full-year revenue guidance (Moonpig)
Moonpig has upgraded its full-year revenue guidance (Moonpig)

The retailer now expects revenues in the year to April 2022 to be between £270 million and £285 million. It had previously guided £250 million-£260 million.

Read the full story HERE.

Easyjet optimism

08:05 , Graeme Evans

Airline boss Johan Lundgren says easyJet is now in a position to take advantage of “strategic investment opportunities” after it announced the completion of its £1.2 billion rights issue.

The fully underwritten fundraising, which involved the offer of 31 heavily discounted shares at a price of 410p for every 47 held, closed for acceptances yesterday.

Lundgren said the completed capital raise will enable easyJet to strengthen its balance sheet and accelerate its post-Covid 19 recovery plan. “Importantly, it will position us to take advantage of strategic investment opportunities across our markets which will arise as we move into this period of recovery from the pandemic.”

Where next for Brent crude price?

07:54 , Graeme Evans

Brent crude futures are trading at just over $80 a barrel, the first time the oil price has been over this threshold in three years. Natural gas shortfalls and strong global demand ahead of the winter, particularly in China, are among factors driving the commodity higher.

Oanda analyst Jeffrey Halley said if Brent consolidates above $80 a barrel tonight it will be a significant bullish development to suggest the rally could revisit the 2018 highs around $87.

He said: “The driver is clearly what appears to be escalating energy shortages in China, with winter not even here yet, with Asian buyers competing with Europeans for spot natural gas supplies, and now I suspect, spot oil supplies.

“Notably, downgrades of China’s 2021 GDP by Goldman Sachs and Nomura has had no negative impact on prices today, suggesting upward momentum remains strong.”

Inflation jitters

07:33 , Graeme Evans

The FTSE 100 is poised to open slightly higher at 7,070 today, having seen an initially strong start to the week erode towards the end of Monday's session. It was a similar mixed picture overnight on Wall Street amid weakness for tech shares as strengthening US bond yields diminish the appeal of stocks valued on their strong growth prospects.

US bond yields have risen steadily over the past few sessions, hitting three month highs on expectations for an imminent tapering of economic support and the prospect of rising interest rates from next year.

Federal Reserve chair Jerome Powell is due to speak to US lawmakers later today, having warned in pre-released comments that policymakers might have to act in raising rates if inflation becomes more persistent than anticipated.

Comments yesterday from Bank of England governor Andrew Bailey also reinforced market expectations for a modest rise in UK interest rates in the first quarter next year. However, he has vowed the Bank won't react to sharp wage rises just caused by supply shocks.

Michael Hewson, analyst at CMC Markets, said: “It certainly feels like central bankers are becoming much more nervous about what is happening with the global economy, particularly when it comes to prices.

“While some inflation is welcome, it is becoming increasingly apparent, that even with rising vacancies there are fewer workers available to fill them, potentially creating the perfect conditions for a wage price surge.”

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