FTSE 100 Live: easyJet in red despite record summer quarter, oil stocks higher

 (Evening Standard)
(Evening Standard)

Budget airline easyjet today reported a loss of £178 million, despite a record finish to its financial year.

The deficit for the year to 30 September followed losses of more than £1 billion in the two previous Covid-hit financial years.

Its earnings hit a record for a single quarter of £674 million over the summer, a performance chief executive Johan Lundgren said showed that “our transformation is delivering”.

FTSE 100 Live Tuesday

  • Airline easyJet upbeat despite £178m loss

  • Oil and China-focused shares rally

  • Shaftesbury reports recovery for West End economy

Oil and tech stocks drive opening gains on Walls Street

Tuesday 29 November 2022 14:42 , Michael Hunter

The S&P 500 ticked higher in opening trade amid demand for resource and technology stocks on hopes that global growth would face less of an impact from China’s Covid restrictions as Beijing looked to increase the use of vaccines.

Protests against against lockdowns across the giant Asian nation left stoked falls across global stock markets at the start of this week. While the mood stayed cautious, it was also optimistic enough to allow the broad New York stock index to inch up 3968.32, with energy and financial stocks rising.

Tech stocks also tried a tentative comeback, with the Nasdaq Composite up 15 points at 11064.0.

New York stocks set for brighter start on hopes for China vaccine programme

Tuesday 29 November 2022 13:17 , Michael Hunter

Wall Street’s S&P 500 looks set to make gains in opening trade on hopes that China’s move to make more use of vaccines in its fight against Covid eased the worst of investors’ fears over the impact of the country’s lockdowns on global growth.

The broad New York index was on course to rise by just over 10 points to 3980.50 at the start of full trade according to the futures market.

HSBC in $10 billion dollar sale of its Canadian business to RBC

Tuesday 29 November 2022 12:47 , Michael Hunter

HSBC is selling its Canadian business to Royal Bank of Canada in a deal valued at over $10 billion.

The London-listed global bank which does most of its business in Asia, has been under pressure from its single largest investor, Ping An of China, to release value to shareholders by breaking itself up. The deal will generate an “estimated pre-tax gain” of $5.7 billion.

In the announcement of the disposal, HSBC said:

“The sale agreement follows a strategic review of HSBC Canada ... [It] considered HSBC Canada’s relatively low market share and the Group’s ability to invest in HSBC Canada’s expansion and growth in the context of opportunities in other markets, and concluded that the best course of action strategically for the HSBC Group and HSBC Canada was to sell .“

Noel Quinn, CEO of HSBC , added: “Our Group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders.”

Shares in HSBC were up 20p at 509p, a rise of over 4%.

Billionaire Detroit family take pizza chain to London

Tuesday 29 November 2022 11:51 , Simon Hunt

A pizza chain belonging to the billionaire Ilitch family are taking their business to London with the opening of two new stores.

Detroit-based Little Caesars, the third largest pizza chain in the world, will be unveiling sites in the capital as well as a store in Derby and one in Liverpool as it ramps up international expansion plans.

Paula Vissing, chief operating officer for Little Caesars Pizza, said: “The U.K. is an important new market for us given how influential it is.

“We expect to open several new sites in this market over the next few years, and we are excited to be entering with such strong franchisee groups in Derby, London, and Liverpool.”

The firm was founded in 1959 by husband and wife duo Marian and Michael Ilitch, using their combined $10,000 life savings to open their first store. The business has since grown to over 4,000 sites worldwide with turnover of around $4 billion, according to IBISWorld.

89-year-old Marian Ilitch has a net worth $4.6 billion, according to the Bloomberg Billionaire’s Index, while her stake in Little Caesars is worth $2.5 billion. Ilitch also owns a baseball team, the Detroit Tigers, and an ice hockey team, the Detroit Red Wings, thought to be worth a combined $2.3 billion.

The UK pizza industry is valued at more than £2.5 billion, Little Ceasars said.

Included in Little Caesar’s London menu are the firm’s signature “Hot N Ready” large pizzas, including with Pepperoni and Margherita toppings. Other offerings include the Mushroom Deluxe, the Three Meat Treat, Italian Sausage and Bacon, as well as “Veggie Crazy Puffs” and “Crazy Bread.”

Business editor’s take: Dull is the new exciting as hope stirs in economy

Tuesday 29 November 2022 11:10 , Simon Hunt

I hate to be the bearer of good news for two days on the trot. But there is no gainsaying the surprisingly optimistic tone of today’s company announcements.

Perhaps the pick of the bunch is Shaftesbury, which as we report, is now seeing trade on its West End estate at 6% above pre-pandemic levels. Meanwhile easyJet looks in danger of finally bursting back into profit after a bumper fourth quarter. The FTSE-100 also has a spring in its step, trading above 7500 for the first time since the summer.

Of course the Bank of England credit and mortgage borrowing figures for October are a bit of a reality check. Mortgage approvals fell from 66,000 to 59,000, while average home loan rates rose 25 basis points to 3.09%.

We always knew October would be tricky after the mini-Budget bombshell reverberated around the economy. But is the data really that bad? And increasingly I am hearing that once the dust settled and discredited Liz Truss and Kwasi Kwarteng were replaced by “boring” Jeremy Hunt and Rishi Sunak, the confidence tide quickly flooded back.

One other set of company results today neatly illustrates the point. Safestyle is a leading retailer and manufacturer of PVCu replacement windows and doors. Not the most glamorous sector but a good proxy for the housing market. It reports that after orders dipped during the month of political turmoil they recovered in November and are now 30% ahead of last year.

The key unknown in all this is stability. After years of Brexit, Covid and cost of living shocks we have forgotten what “normal” feels like. Long may it last.

House market slowdown shows in Bank of England mortgage approval data

Tuesday 29 November 2022 10:28 , Michael Hunter

The sluggish conditions in the UK housing market at a time of rising interest rates and looming recession showed up in mortgage data from the Bank of England.

Net borrowing of mortgage debt fell from £5.9 billion to £4 billion in October. There were 59,000 home loans approved in October, down from 66,000 in September, as the “effective interest rate paid on new mortgages crossed above 3% in the month, up 0.25% to 3.09%.

The tightening mortgage market as the BoE lift rates has been a major financial theme since September, when the Truss government’s “mini”-Budget sent shockwaves through the industry and an unprecedented number of home loans were pulled by bank and building societies.

With the BoE expected to lift rates for the foreseeable future to tame inflation and a recession expected to already be underway, the mortgage approval data will be closely watched by policy makers, homebuyers and economists alike.

London’s credential for creating fin-tech start-up companies boosted by ‘unicorn’ study

Tuesday 29 November 2022 10:15 , Michael Hunter

London’s reputation as a financial centre has been under siege this year, with a dearth of company flotations and challenges from Paris and Amsterdam to its crown as Europe’s main venue for international business.

But a survey into an important niche in the market has shown that the capital retains its ability to shine in a competitve corner of the fintech industry. It shows that London is the region’s most successful place for employees of so called ‘unicorn’ companies -- privately-held or recently floated firms with a valuation of over $1 billion -- to establish new start-ups.

Global venture fund Accel, based in the US, found that 27 London-founded unicorns produced 168 new ventures, with most of them also established in the capital. Paris had 125 start-up from founders of 22 unicorns. In Berlin, 24 local unicorns generated 138 even newer ventures.

The survey, carried out with Dealroom, covered Israel alongside Europe. In Tel Aviv, 27 unicorns created 108 fledgeling firms.

Most of the activity comes in the fintech sector, an innovative area that plays to London’s traditional strengths as Europe’s main capital market. The survey said the top “founder factories” producing another wave start-ups were Klarna, the Swedish payment app, with 15; London’s Wise, the money transfer company, had 11; Revolut, the banking services app based in the UK capital and which offers fee-free currency exchange, produced 10.

FTSE 100 above 7500, Wood Group down 12%

Tuesday 29 November 2022 10:09 , Graeme Evans

A rebound for China-focused stocks today drove a better-than-expected session as the FTSE 100 index traded at its highest level since August.

London’s improvement followed a 5% recovery for Hong Kong’s Hang Seng index after under-pressure authorities in China pledged to boost elderly vaccination rates.

With Covid cases down for the first time in over a week, Prudential shares rallied 6% or 55.8p to 984.2p and miners including Anglo American lifted 3%.

London’s FTSE 100 index reached 7543 before settling 0.5% or 36.87 points higher at 7510.89, with oil stocks adding support after Brent crude touched $85 a barrel on speculation over OPEC production cuts.

The FTSE 250 index weakened 3.34 points to 19,363.25, with Wood Group down 12% as it met investors to set out financial targets from a new strategy.

The consultancy and engineering firm, which is prioritising the markets of energy and materials, reiterated full-year guidance but shares dived 20.55p to 138.85p.

Elsewhere, a profits warning sent shares in windows and doors specialist Safestyle UK down 21% or 6.45p to 24p. Having seen a slump in orders due to the mini Budget, it said a big recovery in November had come too late to benefit 2022 results.

Topps Tiles, which generates 60% of sales from professionals in the building trade, moved 0.8p higher to 40.8p after annual results showed an improved 19% market share and “robust” trading over the past eight weeks.

Oil bounces higher as China signals its intent on Covid vaccines into OPEC+ meeting

Tuesday 29 November 2022 09:05 , Michael Hunter

Commodities markets got a shot in the arm from expectations that China will ramp up its Covid vaccination programme, in a move that could limit the impact of lockdowns there and their impact on global growth prospects.

Brent crude oil, the international benchmark, rose over 2% to $85.77, moving up from some of its weakest levels of the year touched during the previous session. The main US contract, West Texas Intermediate, was also up just over 2% to $78.91.

Markets were also looking ahead to a looming meeting of the OPEC+ oil exporting nations in early December amid talk that supply cuts could be agreed.

Metals prices also fought back, with copper futures up over 1%.

China rebound lifts FTSE 100, easyJet shares fall

Tuesday 29 November 2022 08:25 , Graeme Evans

The FTSE 100 index is 59.68 points higher at 7533.70, a better-than-expected performance that comes in the wake of this morning’s gains of 5% for Hong Kong’s Hang Seng index and 2% for the Shanghai Composite.

The rally for China shares came as the country pledged to boost elderly vaccination rates and Covid cases fell for the first time in a week.

London-listed miners benefited from the improved sentiment as shares in Anglo American and Rio Tinto rose by 1.5%. Asia-focused Prudential rallied 4% or 37.4p to 965.8p and Burberry lifted 21p to 2132p.

A rebound in the Brent crude price to around $85 meant shares in BP, Shell and Harbour Energy improved by around 2%.

The FTSE 250 index is flat at 19,291.34, with easyJet shares 3% or 12.4p lower at 380.6p after its annual results.

Topps Tiles reports record revenue with trading above pre-Covid levels

Tuesday 29 November 2022 07:59 , Michael Hunter

Topps Tiles, the specialist retailer that makes over 60% of its sales from professionals in the building trade, has reported a second consecutive year of record revenue with trading ahead of pre-pandemic levels.

Revenue at the company, which has over 300 stores nationwide, rose over 8% to almost £250 million. Gross profit rose almost 4% to over £135 million

Adjusted profit before tax rose 4% to almost £16 million, a figure which “excludes the impact of items which are either one-off in nature or fluctuate significantly from year to year”. Unadjusted profit before tax fell by over a fifth to just under £11 million. The company is a heavy energy user, using gas-fired kilns to make its tiles. It said: “Wider cost pressures impacted our overheads including our own gas bill rising substantially,”

It added: “Our response across the year has been to increase the prices of tiles to pass on this inflation to our customers on a pound-for-pound basis, which has protected gross profits but impacted the gross margin percentage.”

Topps also said the war in Ukraine “impacted the tile industry”, with the country an “ important source of clay for tile manufacturers based in European markets,” although it was able to manage the situation via “strong supplier relationships”.

West End has bounced back, Shaftesbury says

Tuesday 29 November 2022 07:52 , Rhiannon Curry

Soho and Chinatown landlord Shaftesbury has heralded a “rapid rebound” in the West End’s economy as shoppers flood back into the area, despite the wider cost of living crisis in the UK.

The company’s full year results showed footfall and spending were both ahead of 2019 levels, with its occupiers reporting average monthly sales around 6% ahead of pre-pandemic levels.

Its net income from its properties rose 28% to £82.8 million, in part because it has now ditched the financial support measures for its tenants which were in place throughout the last couple of years.

EPRA net tangible assets per share - a key industry metric linked to the value of the overall estate - rose 3.6% to £6.41.

“We remain confident in the long-term potential of our exceptional portfolio,” the company said.

Brent crude price recovers, FTSE 100 seen lower

Tuesday 29 November 2022 07:48 , Graeme Evans

A poor session for US markets means the FTSE 100 index is expected to open lower today.

The S&P 500 index and Dow Jones Industrial Average were down by around 1.5% at last night’s closing bell, driven lower by uncertainty over China’s Covid-hit economy.

The flight from risk also followed comments from Federal Reserve policymakers that fuelled expectations for an eventual peak for US interest rates of at least 5%.

The hawkish rhetoric wasn’t just confined to Fed speakers yesterday after European Central Bank president Christine Lagarde said there was “too much uncertainty” to assume that inflation had peaked.

Brent crude, which yesterday hit its lowest intraday level since January at $80.61, today stood at $84.77 as speculation over Opec production cuts at the cartel’s next meeting offset fears over slower China demand.

According to CMC Markets, the FTSE 100 index is expected to open 18 points lower at 7492.

Profits at London fintech Wise almost triple as customer numbers swell to 5.5 million

Tuesday 29 November 2022 07:27 , Simon Hunt

Pre-tax profits at London fintech Wise almost tripled to £51 million in the six months to September as customer numbers swelled to 5.5 million -- although gross profit margins shrunk by around 4.6%.

The money transfer service said it expected total income to increase between 55% and 60% for the full-year.

Kristo Käärmann, Wise CEO, said: “Our goal today remains unchanged 一 to make moving and managing money faster, easier, cheaper and more transparent for people and businesses around the world.”

Tuesday 29 November 2022 07:19 , Simon English

EASYJET plunged to another loss of £178 million this year, though that remains a stark improvement on the Covid years when flights were all but banned.

The budget airline lost more than £1 billion in 2021.

Chief executive Johan Lundgren says easyJet will benefit from austere times.

He said: “easyJet does well in tough times. Legacy carriers will struggle in this high-cost environment. Consumers will protect their holidays but look for value and across its primary airport network, easyJet will be the beneficiary as customers vote with their wallets.”

The airlines says it is seeing growth at Gatwick. Sales at the October half-term and for Christmas are “back to normal” and Easter bookings look strong.

Lundgren added: “easyJet goes into the 2023 financial year with one of the strongest balance sheets in European aviation.”

Easyjet shares are down 20% this year. They open today at 395p.