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FTSE 100 Live: Gas price trebles in a month, Frasers reveals profits boost

 (Evening Standard)
(Evening Standard)

The arrival of cold winter weather has sent wholesale gas prices sharply higher as Brits reach for the thermostat into some of the longest nights of the year.

One industry measure has trebled in a month, while prices traded on London’s Intercontinental Exchange are up by almost a fifth since the start of November.

Meanwhile, Frasers Group today said it had “strategic and trading momentum” after revealing a 53% rise in half-year profits to £284.6 million.

The FTSE 100-listed company, whose brands include Sports Direct, Jack Wills, Game and Evans Cycles, stuck by its full-year guidance despite challenging conditions.

FTSE 100 Live Thursday

  • Frasers Group backs £500m profit target

  • Shares struggle ahead of rate decisions

  • Star fund manager reveals falling returns

New York stocks rise, setting course to end a five-day losing streak

Thursday 8 December 2022 14:54 , Michael Hunter

The S&P 500 set course to end its five-session losing streak on Thursday, after the latest set of weekly jobs data came in bang in line with forecasts, with investors already looking ahead to next week’s Federal Reserve rate call.

New York’s board stock index ticked up by 9 points in early New York trade to 3943.20, a rise of 0.2%.

Claims for fresh unemployment benefits last week came in at 230,000. It followed stronger-than-forecast job creation data late last week, which looked to cast some doubt on the chances of a smaller hike, leading to the run of down days on the stock market.

Investors are looking for a smaller interest rate hike of 0.50% from the Fed next week, after the US central bank’s run of 0.75% increases. The impact of them on the jobs market is being closely watched by policy makers who are also determined to tame runaway inflation and the lack of surprises in the latest data chimed with expectaions for a softer hike.

Investors put the ‘for sale’ sign up over Purlpebricks stock

Thursday 8 December 2022 14:04 , Michael Hunter

Shares in the online estate agency Purplebricks fell after it posted a loss for the half-year of over £8 million and a drop in revenue of almost a fifth.

The company is in the midst of a turnaround plan devised by its chief executive, Helena Marston, and the drop in profit reflected a change in its business model. During the period, people working for Purplebricks as “Local Property Experts” become direct employees of the company rather than being self-employed consultants, resulting in what it called costs with a “largely fixed nature”.

Marston said the “financial benefits” of the changes were “starting to come through in the second half of the year,” she added: “We have taken further steps to reduce our cost base, from an initial £13 million of annualised savings to £17 million,”

Revenue fell 16% to £34.5 million, and its adjusted loss after tax reached £8.4 million, from £0.8 million in the same period a year ago.

The stock fell almost 3% to 9.7p in afternoon trade, taking its loss over the past year to almost 70%.

Gas price trebles in a month as Brits put the heating back on to battle winter freeze

Thursday 8 December 2022 12:08 , Simon Hunt

The arrival of cold winter weather has sent wholesale gas prices sharply higher as Brits reach for the thermostat into some of the longest nights of the year.

One industry measure has trebled in a month, while prices traded on London’s Intercontinental Exchange are up by almost a fifth since the start of November.

Households are protected from the increase by the government’s Energy Price Guarantee, which caps the annual cost of the average amount of gas used by UK households at £2,500 this year. It will rise to £4,279 from January. Rising prices mean the government’s intervention will cost taxpayers more.

Numbers out today from the Office for National Statistics show that the System Average Price of Gas spiked up to its highest since September, more than trebling in a month.

Read more here

Balfour Beatty shares up another 3%, BAT falls 3%

Thursday 8 December 2022 10:21 , Graeme Evans

A profits upgrade today ensured the infrastructure group Balfour Beatty cemented its place among London’s best performing stocks of 2022.

The FTSE 250-listed shares rose another 3% and are up over 25% year-to-date after boss Leo Quinn reported a 5% rise in the company’s “de-risked and diversified” order book to around £17 billion and voiced optimism over next year’s performance.

Higher interest receipts mean profits for this year will top City expectations, with the UK and US-focused company also the beneficiary of currency movements.

Balfour, whose projects have included HS2 and Hinkley Point C tunnelling work and Elizabeth Line stations at Whitechapel and Woolwich, rose 11.6p to 343.2p. However, analysts at Peel Hunt and UBS are backing the shares to reach 400p.

UBS said: “Shares have outperformed materially this year but the outlook for earnings growth and further capital returns should allow for some more upside to unfold.”

Balfour’s strong performance came amid an otherwise lacklustre showing for the FTSE 250 index, which drifted 26.30 points to 18,904.27.

Risk appetite has been hit by the deteriorating economic outlook, with traders on the sidelines ahead of next week’s interest rate announcements in the UK and US.

The FTSE 100 index slipped 4.13 points to 7485.06, with British American Tobacco among the biggest fallers. The company, whose brands include Dunhill, Pall Mall and Vuse, fell 3% or 98p to 3312.5p despite sticking by 2022 guidance for revenues growth of between 2% and 4%.

On the risers board, Shell and BP shares added 1% after the Brent crude price steadied at near $78 a barrel following four days of falls.

Nick Train stocks underperform

Thursday 8 December 2022 10:19 , Simon English

Bad bets on Manchester United, Fevertree and Hargreaves Lansdown shares are increasing the pressure on star City fund manager Nick Train, who today reported tumbling returns at his Finsbury Growth and Income Trust.

FGIT looks after the savings of many thousands of small investors who over time have seen strong returns thanks to Train’s stock picking skill.

He is sometimes dubbed the Warren Buffett of the City, but has had a rocky few years that has seen his abilities called into doubt.

Today the trust reported a loss of 53.4p a share compared to a gain of 88p in 2021.

The £1.8 billion fund fell 5.8% in the year, well worse the FTSE All share that is its benchmark.

Train is not alone among big names in having a tough year. Research by the Evening Standard in June showed that Terry Smith and Stephen Yiu, who between them manage billions of pounds, have also found markets hard to read.

Train said it is “disappointing” and “frustrating” to report a second year of underperformance.

read more here

DS Smith stood ready to lend its pension scheme £100 million in market turmoil after ‘mini’-Budget

Thursday 8 December 2022 09:34 , Michael Hunter

There was £100 million’s worth of fresh insight today into the impact of the turmoil among UK pensions sparked by the Truss government’s “mini”-Budget and it came from just one FTSE 100 company.

That was the cash sum packaging maker DS Smith had to make available to its defined benefit scheme to help it meet financial obligations at the height of the commotion in the UK government bond market. Heavy selling of gilts in late September and early November followed fears about the country’s public finances and led to a slump in the price of the assets, in which pension funds are major holders.

The company said the £100 million “took the form initially of a cash advance in anticipation of potential margin calls and latterly a liquidity facility. The cash advance was fully repaid within days of being made and as at 31 October 2022 the liquidity facility remained in place but was undrawn.”

DS Smith also reported an 80% rise in profit before tax of £315 million from revenue of almost £4.3 billion, up 28%. Its shares rose over 3p to 320p, up 1%.

Hipgnosis boss decries poor share price performance

Thursday 8 December 2022 09:20 , Simon Hunt

The boss of 50 Cent to Barry Manilow song catalogue owner Hipgnosis has railed against the firm’s dwindling share price despite its ownership of top hit songs.

The music investment business has seen its market cap sink 35% since January to £1 billion, despite owning a portfolio of over 65,000 songs with a combined market value of £2.2 billion.

Hipgnosis founder and CEO Merck Mercuriadis said: “I share the disappointment of shareholders that the true value of our iconic songs is not being reflected in today’s share price.

“Hipgnosis is an asset based company with a catalogue unrivalled for its extraordinary success and cultural importance. The current share price implies that our Company is valued using a 12% discount rate…this is a deep discount compared to multiples currently being paid in the market.”

City broker Numis pledge on jobs

Thursday 8 December 2022 09:00 , Simon English

PROFITS at Numis crashed 72%, but the City broker predicts next year will be better and pledged there will be no bonfire of banker jobs even though times are tough.

The investment bank has 326 staff, mostly in London but with offices in Dublin and New York. It insists it has “no plans to address headcount”, though bonuses will plainly fall due to lower revenues.

Staff costs fell 24% to £75 million, as revenue per head tumbled 40% to £445,000.

Co-chief executive Ross Mitchinson said Numis has always looked to expand in downturns since it is easiest to poach talent from rivals during “soft market conditions”.

The lack of company floats and the reluctance of clients to do M&A (mergers and acquisitions) has hurt all City firms. Last week Peel Hunt reported a 99.7% drop in profits.

Numis looks healthy by comparison. Profits slumped to £21 million. Revenue was down 33% to £144 million, but that does compare to a record 2021 for a relative upstart firm in City terms. It was founded in 1989.

Co-chief executive Alex Ham said: “The capital markets outlook remains challenging with deal volumes remaining subdued and unfavourable conditions persisting as the market digests the impact of sustained inflation and higher interest rates.  However, momentum in our M&A business has been maintained.”

He added: “We benefit from a strong balance sheet and a long track record of growing the business through market cycles.”

Numis shares are down 43% this year, but were steady today at 183p.

Staff are mostly working from the office, and “we have never spent so much time with clients”, says Ham.

Frasers Group shares down 4%, FTSE 100 flat

Thursday 8 December 2022 08:40 , Graeme Evans

A lacklustre session has left the FTSE 100 index 13.18 points lower at 7476.01 and FTSE 250 index up 17.60 points at 18,948.17.

Prudential posted the biggest gain in the top flight as the insurer’s shares rose 25p to 1080p but Frasers Group and British American Tobacco lost 4% and 2% after their respective updates.

Construction services business Balfour Beatty produced one of the strongest performances in the FTSE 250 after it said profits for 2022 are likely to be ahead of City expectations.

Shares lifted 9p to 340.6p amid continuing momentum for the company whose projects range from involvement in tunnelling work for the HS2 rail project to the Hinkley Point C nuclear power station.

Travis Perkins was the biggest faller in the FTSE 250, declining by 3% or 31.2p to 916p after analysts at JP Morgan cut their target price by 100p to 800p.

Frasers Group stands by target for up to £500 million in full-year profit

Thursday 8 December 2022 07:44 , Michael Hunter

One of the biggest names in UK retail has stood by ambitious full-year profit targets after reporting a rise in half-year profits.

Frasers Group, the owner of Sports Direct, Jack Wills, Sofa.com and Flannels, reported a 53% rise in half-year profits of almost £285 million. it said “strategic and trading momentum” left it on course to meet its pledge to the City that it full-year profit will be between £450 million and £500 million.

It said it would reach the landmark even as “the macroeconomic environment is clearly challenging and the backdrop for the coming year is hard to predict with any certainty.”

The company, named after the department store chain it bought out of administration in 2018, also said “post-pandemic issues with the global supply chain remain”, but that “there are signs they are beginning to ease.”

US market weakness continues, oil firms at $78

Thursday 8 December 2022 07:36 , Graeme Evans

The S&P 500 index last night dropped for a fifth day running as investors struggle with uncertainty over the outlook for the US economy and interest rates in 2023.

Wall Street’s major indices all fell by around 0.2% yesterday and are forecast to open lower later today, with traders focused on next week’s round of interest rate announcements by the Federal Reserve, Bank of England and other central banks.

Oil prices have also come under pressure this week, returning Brent crude to where it started the year at near $78 a barrel.

It had been as low as $76.50 last night, driven lower by demand fears as expectations of a global recession in 2023 offset any optimism over a reopening of the Chinese economy.

The FTSE 100 index fell 0.4% yesterday but is this morning expected to open five points higher at 7494, according to CMC Markets.

On the Beach CEO quits

Thursday 8 December 2022 07:32 , Simon Hunt

On the Beach CEO and founder Simon Cooper is to quit the firm after 18 years, it announced today, and will be replaced by current CFO Shaun Morton.

Cooper founded On the Beach in 2004 and has grown the business into one of the UK’s largest online beach holiday retailers.

He said: “The visibility of the UK outbound travel industry remains unclear given the tough macroeconomic environment.

“I am confident that after working closely with Shaun on the strategic direction and initiatives of the group over the last few years, he is the right person to lead the business through its next phase.”