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FTSE 100 Live: Persimmon, Aston Martin and Just Eat post results, house prices fall

 (Evening Standard)
(Evening Standard)

Persimmon, Just Eat Takeaway, Aston Martin Lagonda and Reckitt Benckiser are among companies reporting today as the annual results season continues.

Housebuilder Persimmon reported a 4% rise in underlying profits to just over £1 billion but provisions for building safety remediation meant the bottom-line figure fell to £730.7 million from £966.8 million the year before.

Chief executive Dean Finch warned that completions will be down markedly this year and “as a consequence, so will margin and profits”.

FTSE 100 Live Wednesday

  • Persimmon warns of big fall in completions

  • House prices in biggest annual fall for decade

  • Mining stocks surge on China recovery hopes

Analysis: Is Aston Martin a car crash?

18:35 , Simon Hunt

Is Aston Martin a car crash?

That was the common view until lately. In the last four years since it floated it drove up losses of well over £1 billion.

Investors who believed in the brand saw the value of their investment plunge from £5 billion to perhaps a fifth of that.

The view was that management had over priced the cars and bankers had over-priced the shares.

This seemed a shame for an iconic name, a brilliant British brand and the only carmaker on the London Stock Exchange.

James Bond must have been upset.

He still drove the cars. We don’t know if he owned the shares.

What were today’s figures?

Well, on the most obvious level it lost £495 million in 2022. It splashed out on new models, not least the Valkyrie, the fastest car on the road, which has had, erm, teething troubles.

But it surged into the black in the final quarter. For the year sales rose 26% to £1.38 billion. The shares rose a bit today, and have more than doubled in the last few months.

read more here

City Comment: More green belt homes and a land value tax are needed to fix London’s housing crisis

18:16 , Simon Hunt

News emerged today that house prices have seen their biggest annual fall in ten years. It’s obviously important news and a big deal and it reveals a number of things about the state of the housing market and housing policy in general.

First, the fall is driven by a decrease in demand. This is to be expected given that interest rates are currently relatively high. What’s more, those looking to buy are holding off on purchasing right now as they expect house prices to drop even further for a number of factors including the labour market shrinking.

So far, none of this is surprising. However, despite the fact that house prices have fallen, the cost of renting a property has been increasing and is still at record highs. This is revealing as it shows us that it’s wrong to talk of a housing market and instead we should be talking about housing markets. Although obviously interconnected, the market for renting is radically different from the market for buying and selling homes.

The current housing situation is dreadful. However, if you are a homeowner then the government tends to be on your side. Few things get policy makers concerned than falling house prices. This is partly a mix of politicians wanting to get re-elected (homeowners tend to be older and they vote) and falling house prices are often a sign that something is amiss in the economy. The government or the Bank of England will no doubt intervene in some way to prop up house prices.

read more here

Revolut report shines spotlight on other London fintechs with missing accounts

17:40 , Simon Hunt

The much-anticipated annual accounts of fintech giant Revolut were published today, a little over two months after the statutory filing deadline – and they didn’t disappoint. The results reveal a near-tripling of company revenues in 2021 – though interestingly, auditors BDO say they haven’t been able to independently verify all the revenue disclosed.

But while Revolut has its accounts finalised, the Evening Standard has found there are at least three other major London-based fintechs that still haven’t filed their annual report with Companies House, which are now several months overdue.

read more here

FTSE closes up 39 points: Evening wrap

16:42 , Simon Hunt

The FTSE 100 closed up 39 points to 7,915 at the end of the day’s trading session in London.

Real estate stocks were the biggest losers today, down an average of 2.15% after news emerged that house prices had seen their biggest annual fall in a decade.

But things were rosier for raw materials stocks. Weir’s shares jumped 6.3% at the top of the FTSE 100 index as it forecast further growth this year based on a record opening order book, sending shares in Rio Tinto and Antofagasta up along with it.

The pound has lost around a cent to the dollar to $1.20, paring back yesterday’s gains amid optimism over a Brexit deal on trade in Northern Ireland.

Wall Street slips in cautious trade

14:53 , Michael Hunter

Lacklustre coropoarte earnings news and more talk of further Federal Reserve interest rate rises left New York stock markets in cautious mood in opening trade.

Speculation that US interest rates would peak over 5% was re-circulating, while disappointing quarterly updates from movie screen giant AMC Entertainment and department store chain hit their shares by around 7%.

Overall, the broad S&P 500 stock benchmark slipped 4 points to 3965.74, adding to February’s overall fall of around 2% as March got underway.

New York stock markets set to slip as investors eye a lacklustre set of corporate news

13:59 , Michael Hunter

An underwhelming run of earnings reports left US investors in cautious mood, with futures trade pointing to an overall slip of around 7 points in opening trade for the S&P 500, which would take it to 3969.0.

News of a drop of almost 15% in quarterly revenue at AMC Entertainment, the world’s biggest cinema chain, left its stock under pressure, down almost 7% in pre-market trade, with ticket sales stuck under pre-pandemic levels.

Department store company Kohl’s stock was also marked down by 7% ahead of the opening bell after its quarterly sales missed forecasts.

Bank of England governor says ‘nothing decided’ on interest rates as speculation mounts that they may have peaked

13:24 , Michael Hunter

Andrew Bailey, the governor of the Bank of England, said today that “nothing is decided” on if there will be more interest rate rises in the UK, after a series of hikes has taken them to 4% in a prolonged fight against high inflation.

A run of better-than-expected numbers from the UK economy alongside falling energy prices has lifted hoped that the BoE could be near the end of its rate tightening cycle, which started in December 2021.

Speaking today at a conference on the cost of living, Bailey said:

“At this stage, I would caution against suggesting either that we are done with increasing Bank Rate, or that we will inevitably need to do more. Some further increase in Bank Rate may turn out to be appropriate, but nothing is decided. The incoming data will add to the overall picture of the economy and the outlook for inflation, and that will inform our policy decisions.”

Inflation reached a four-decade high of 11.1% last October, way above the BoE’s official target of 2%. The BoE’s Monetary Policy Committee next meets on March 23

Lunchtime update: Weir group leads FTSE gains

12:58 , Simon Hunt

Halfway through the first trading session of the month, the FTSE 100 is up 65 points to 7,941.

Weir is leading the pack, rising to hit a two-year high after the mining equipment supplier posted profits of just shy of £400 million, a 33% year-on-year jump. That has helped push up the share price of mining giants Rio Tinto and Antofagasta.

At the bottom end of the table, Ocado contines to lag, down 1.3% today as investors are still reeling from the £500 million loss the online grocery store posted yesterday.

City Comment: The mini-Budget is still inflicting maximum pain

12:06 , Simon Hunt

It was only 24 minutes long — but six months on Kwasi Kwarteng’s mini-Budget speech is still delivering the goods.Unfortunately far from the way the ill-fated former Chancellor might have hoped for.

Two major British companies, Persimmon and Aston Martin, today revealed how they have been badly damaged by the waves thrown up by the so called Growth Plan that ultimately did for Kwarteng and his boss Liz Truss.

The chaos in the gilts and mortgage markets that almost brought home-buying to a halt during the autumn is still holding back the housebuilding sector as we report today with an impact that will last long into 2023. Meanwhile the still resonating fallout has finally tipped property prices into negative territory for the first time since the pandemic.

Sterling was the other victim of the mini-Budget with the pound dropping to an all-time low and flirting with dollar parity.

That cost Aston Martin, one of Britain’s few remaining car makers with big dollar earnings , a tidy £156 million last year and helped push it to a loss of almost half a billion.

There are at least some encouraging signs that the economy is picking up more quickly than feared and may even give recession the swerve. But that is despite, not because, of the mini-Budget mayhem.

That speech — less than the length of a TV sitcom — may well prove to have been, minute for minute, one of the worst acts of economic self-harm in British political history. Not a plan for growth but for a charter for contraction.

Move into Middle East and Africa proves a winner for Vimto maker

11:10 , Simon Hunt

A rapid overseas expansion helped Nichols, the manufacturer of Vimto, return to profit for 2022, buoyed by its popularity in the Middle East and Africa.

The fruit cordial, first made in Manchester, is a mainstay accompaniment to iftar meals, taken during Islam’s holy month of Ramadan.

Nichols introduced a “citrus green” Vimto around the Qatar World Cup, coloured to tie in with the kit worn by Saudi Arabia’s team, which got off to a strong start in the tournament.

Andrew Milne, Nichols’ chief executive, told the Standard the refreshed brand “was launched around that first game against Argentina, which hopefully inspired the win”.

Double-digit sales growth in the region helped Nichols report profit of almost £14 million from a loss of almost £18 million a year ago.

Capco hails West End recovery ahead of mega merger with Shaftesbury

10:22 , Joanna Bourke

The boss of Capital & Counties has said “momentum is really building” in West End footfall recovery and consumer spend, in the Covent Garden landlord’s final results before a huge £5 billion merger with Shaftesbury.

Ian Hawksworth said: “There is positive momentum across the Covent Garden estate with strong demand, high occupancy levels and rental growth across all uses which has continued into 2023.”

He pointed to 71 new leases and renewals agreed last year. Deals include Argentinian restaurant Gaucho opening on James Street and clothing group Uniqlo launching a new flagship store in the Spring.

Read more HERE.

Miners and Weir lead FTSE 100 progress, Ocado shares fall

10:19 , Graeme Evans

China’s Covid recovery and dollar weakness helped shares in heavyweight mining companies to rise by as much as 5% today.

The country’s official manufacturing PMI index jumped to 52.6 in February, representing its fastest pace of expansion in more than a decade and much higher than the 50.5 forecast.

The encouraging signs on the post-Covid recovery of the world’s second largest economy deflected attention from Wall Street’s continued worries that US interest rates will stay higher for longer to deal with stickier-than-expected inflation.

The FTSE 100 index, which has been one of the best performing stock markets so far in 2023, opened the new month 27.93 points higher at 7904.21, driven by commodities-related buying on hopes of a China demand boost.

Anglo American shares rose 5% or 133.5p to 3018p, putting back a chunk of the losses seen during a poor February for the De Beers owner. Copper miner Antofagasta, iron ore specialist Rio Tinto and commodities trader Glencore also lifted 4%.

Further evidence of the industry’s positive outlook came in annual results from the mining technology business Weir Group.

The Glasgow-based company, whose engineering expertise helps mining customers to achieve their productivity and sustainability goals, reported a 40% rise in pre-tax profits to £348 million and lifted its dividend by 38% to 32.8p a share.

Weir’s shares jumped 7% or 127p to 2026p at the top of the FTSE 100 index as it forecast further growth this year based on a record opening order book.

Other stocks on the front foot included Asia-focused insurer Prudential and luxury goods group Burberry, with their shares up 15.5p to 1285p and 40p to 2506p respectively thanks to encouragement on China’s economy.

Selling pressure focused on housebuilders and the utilities sector, while Ocado took a further post-results hit after losing another 15.6p to 533.2p.

The FTSE 250 index rose 30.60 points to 19,933.88, with Fidelity China Special Situations up 5% or 12.5p to 265p and Blackrock World Mining Trust 22p stronger at 720p. Gambling group 888 Holdings fell 1.5p to 69.15p ahead of its expected relegation from the second tier benchmark later this month.

CMA clears Viasat Inmarsat merger

09:41 , Simon Hunt

The UK competition regulator has provisionally cleared the merger between American and British satellite giants Viasat and Inmarsat.

The Competition and Markets Authority said the $7.3 billion deal does not substantially reduce competition for services provided on flights used by UK customers.

Richard Feasey, chair of the independent inquiry group carrying out the Phase 2 investigation, said: “This is an evolving and rapidly expanding sector, in which there have been significant developments even during the course of our 4-month investigation. We see this continuing as demand for satellite connectivity increases.

“While Viasat and Inmarsat compete closely, the evidence suggests that the merged company will face significant competition in the coming years – from both emerging players like Starlink and from established firms like Intelsat and Panasonic.

“This competition has led us to provisionally conclude that airlines and their UK customers will not be adversely affected by the deal.”

 (Inmarsat)
(Inmarsat)

Revolut ‘really near the very final stages’ of getting a UK banking license as sales jump 33% in 2022

09:30 , Simon Hunt

Fintech giant Revolut today said it was “really near the very final stages” of securing a banking license in the UK as it reported a near-tripling of sales in 2021 and a further boost to turnover in 2022.

The London-based firm, which offers debit cards and crypto services, posted revenues of £636 million for the year to end-December 2021, while pre-tax profits topped £25 million, turning around a loss of £223 million the year before.

The recent turmoil in the crypto market, which has seen the value of Bitcoin plunge amid a string of bankruptcies, caused Revolut’s own turnover in digital asset activity to shrink in 2022, with crypto services accounting for only 5-10% of the total income last year. But despite the decline, the company said it still sales growth of 33% in 2022 to £850 million. Revolut could not confirm profits for 2022, but chief financial officer Mikko Salovaara told the Standard profitability would show “nothing meaningful in terms of a change versus 2021.”

He said: “We’re going to continue to roll out in new geographies at a quick pace…the business to me feels quite resilient, diversified and sustainable.

“I think we’re really near the very final stages and we’ll be delighted if and when we receive a [UK banking] license – it’s the right thing for customers with things like deposit insurance, and it’s the right thing for Revolut.”

Miners lead FTSE 100, Persimmon slides 7%

08:36 , Graeme Evans

Shares in mining companies Anglo American, Rio Tinto and Glencore are up by 4% or more after today’s better-than-expected figures from China’s manufacturing sector.

With oil giants BP and Shell and Asia-focused Prudential and Burberry also 1% higher, the FTSE 100 index lifted 0.5% or 41.06 points to 7917.34.

Mining industry engineering firm Weir Group led the blue-chip risers board as shares surged 6% or 112p to 2011p on the back of annual results.

The Glasgow-based company reported a 40% rise in annual pre-tax profits to £348 million and lifted its full-year dividend by 38% to 32.8p, adding that it expected further progress this year based on a record opening order book and positive mining markets.

Shares in Persimmon slumped 7% or 99.5p to 1353p after downbeat guidance in its annual results, with Barratt Developments and Taylor Wimpey down 2% as the sector also took a hit from today’s monthly fall in Nationwide house prices.

The FTSE 250 index rose 30.47 points to 19,933.75, with Aston Martin Lagonda up 7% after its annual results.

Just Eat orders drop 9% in 2022

08:30 , Simon Hunt

Just Eat posted a 9% drop in orders in 2022 as consumers cut back on takeaways after household budgets were squeezed by soaring inflation.

Gross transaction value, a measure of the size of orders, stayed relatively flat, while revenues increased 4% to 5.6 billion euros (£4.9 billion). CEO Jitse Groen told reporters most of the increased sales related to higher prices charged by restaurants.

Losses came in at $5.7 billion euros, in large part as a result of an impairment on the value of its acquisitions and a book loss on the sale of its stake in delivery subsidiary iFood.

Groen said: “Our ambition to create a highly profitable food delivery business is firmly on track.”

Shares fell 2.8% to 1,758p.

Persimmon warns completions will be down markedly this year

08:11 , Joanna Bourke

Persimmon today warned that the turbulent housing market in the months after the fallout from the mini-Budget will result in profits and completions being “down markedly” in 2023.

The FTSE 100 company gave the update as it posted results that showed its forward sales position is £1.5 billion, down substantially on the £2.2 billion recorded a year earlier.

Boss Dean Finch said: “The market remains uncertain. Our marketing campaign has helped improve the group’s sales rates in the new year from the lows at the end of 2022, but they still remain lower year on year. We have carefully managed our pricing, recognising the improved value and energy efficiency of our product in these difficult times and sales prices have proved resilient.”

He added: “We responded quickly to stimulate sales, enhance cost controls and preserve cash, promptly slowing new land investment in the fourth quarter of last year. Nonetheless, the sales rates seen over the last five months mean completions will be down markedly this year and as a consequence, so will margin and profits. However, it is too early to provide firm guidance.”

House prices in biggest annual fall since 2012

07:52 , Graeme Evans

House prices are falling at their fastest rate in more than a decade, latest figures show today.

The average cost of a home in the UK dropped 1.1% last month, the biggest annual fall since November 2012 and the first year-on-year decline since June 2020 at the start of the pandemic, according to lender Nationwide.

They are now 3.7% below the peak reached last August immediately before Kwasi Kwarteng’s mini-Budget which sent mortgage rates soaring. The monthly decline of 0.5% was the sixth on the trot leaving the average price of a home across the UK at £257,406.

The building society’s chief economist Robert Gardner said: “The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year. While financial market conditions normalised some time ago, housing market activity has remained subdued.

“This likely reflects the lingering impact on confidence as well as the cumulative impact of the financial pressures that have been weighing on households for some time. Indeed, inflation has continued to outpace wage growth and mort-gage rates remain significantly higher than the lows recorded in 2021.

“Even though consumer sentiment has improved in recent months, it is still languish-ing at levels prevailing during the depths of the financial crisis.

“It will be hard for the market to regain much momentum in the near term since economic headwinds look set to remain relatively strong, with the labour market widely expected to weaken as the economy shrinks in the quarters ahead, while mortgage rates remain well above the lows prevailing in 2021.

Inflation fears dampen February performance

07:48 , Graeme Evans

European stock markets maintained their robust start to the year in February, with the FTSE 100 index up 1.8% despite mounting worries over the outlook for inflation.

That was considerably better than the performance of US markets, where worries over the prospect of interest rates staying higher for longer meant the S&P 500 lost 2% in the month. The Dow Jones Industrial Average fell 4% and is lower for the year to date.

Deutsche Bank said stronger data on the labour market and inflation fuelled speculation that the US economy could be in for a “no landing” scenario, rather than a hard or a soft landing.

In its monthly review, the bank said: “Unlike the hard or soft landing, which both see inflation coming down, the “no landing” would involve inflation remaining high, with growth remaining strong, and the Federal Reserve needing to hike rates even further in order to bear down on inflation.

“By the end of the month, this meant that expectations of the Fed’s terminal rate had risen from 4.92% to 5.42%.”

Aston Martin crashes

07:46 , Simon English

Aston Martin crashed to a loss of almost half a billion pounds last year amid concerns about its finances.

The luxury car maker insists demand for its products are high – sales rose 26% top £1.38 billion for the year to December.

And it insists it is on track to hit targets for next year and the year after. But it has faced concern ever since it floated in 2018, when it presented itself as a luxury brand that did far more than just make cars.

The business was valued then at £5 billion, compared to £1.4 billion now.

Today it blamed a loss of £495 million partly on the weakness of the pound which made some US dollar denominated debt more expensive.

Overall debts are actually down from £892 million to £766 million.

CEO Lawrence Stroll said: “2022 saw Aston Martin continue to build on the strong foundations that have been established during my three years as Executive Chairman. While the last 12 months presented industry-wide challenges, we look to the future with renewed confidence in our ability to deliver on our vision, and the targets we have set.”

He added: “We have made the biggest investment in our iconic brand through the launch of a bold new creative strategy and brand position that aligns Aston Martin to our future ambitions. Our high-performance DNA has been further amplified by our partnership with the Aston Martin Aramco Cognizant Formula One TM team, driving growing demand from a new generation of customers, with more than 60% new to the brand.”

Reckitt Benckiser profit rises above £3.4 billion, up 12%, as prices rise across range of household goods

07:43 , Michael Hunter

Consumer products giant behind major brands from Dettol disinfectant to Vanish stain remover made a profit of over £3.4 billion for 2022, a year when it faced criticism for the extent of its price rises.

Reckitt Benckiser reported a 12% rise in annual operating profit of £3.4 billion. Revenue rose 4% to £14.4 billion. The FTSE 100 company also makes Finish dishwasher tablets and Cillit Bang cleaning products.

Its operating profit margin rose to 23.8% after cost inflation was passed on to customers via price rises, which became controversial, with the FTSE 100 company, with consumer groups accusing it of profiteering.

Reckitt said today that inflation within its cost base was around 17%, which it offset by “productivity efficiencies” and “ other factors including pricing”.

Revolut sees sales jump 33% in 2022 despite crypto winter

07:36 , Simon Hunt

Fintech giant Revolut saw a tripling in sales in 2021, its accounts show today, amid a boom in crypto trading activity, before the so-called ‘crypto winter’ slowed revenue growth in 2022.

The London-based firm, which offers debit cards and crypto services, posted revenues of £636 million for the year to end-December 2021, while profits topped £59 million, turning around a loss of £223 million the year before.

But the recent turmoil in the crypto market, which has seen the value of Bitcoin plunge amid a string of bankruptcies, caused Revolut’s own turnover in digital asset activity shrink in 2022, with crypto services accounting for only 5-10% of the total income last year. The firm said it saw sales growth of 33% in 2022 to £850 million, but could not confirm whether it remained profitable.

Revolut chairman Martin Gilbert said: “When profitability often plays second fiddle to growth for FinTechs, we showed that a company as young as Revolut can continue to accelerate its growth while also being profitable.

“Such strong financial performance and profitability demonstrates Revolut efficiently moving from the ‘start-up’ that is only focused on growth, to the ‘scale-up’ looking to grow profitably.”

Revolut’s accounts were published two months after the statutory filing deadline. Chief financial officer Mikko Salovaara told Reuters the delay was because “our accounting systems needed replacement.”

read more here

China recovery boosts markets, FTSE 100 seen higher

07:29 , Graeme Evans

European markets are set for a steadier session after hotter-than-expected inflation figures from France and Spain led to a weaker session on Tuesday.

The mood has been helped by above-forecast figures from China’s manufacturing and services sectors as the economy reopens after Covid lockdowns.

The FTSE 100 index fell 59 points yesterday but CMC Markets expects London’s top flight to open 20 points higher at 7896.

Recap: Yesterday’s top stories

06:37 , Simon Hunt

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

  1. Losses at Ocado have widened to a staggering £500 million as the online grocery business battles soaring inflation, weak consumer sentiment and a normalising of shopping habits following an end to pandemic restrictions.

  2. Food bills soaring at record 17.1% as milk, egg and margarine prices spike.

  3. Derwent London says ‘buzzing’ West End helps 2023 lettings pass last year’s total already.

  4. London fintech Railsr in emergency sales talks as FCA monitors health