FTSE 100 Live: M&S back in profit, SSE makes £25bn investment pledge
Marks & Spencer posted a return to profit today as its departing boss Steve Rowe declared the retailer had the “opportunity for substantial future growth”.
Rowe, who is stepping down after six years as chief executive, said M&S had “moved beyond proving its relevance” after confirming its recovery from last year’s pandemic-led loss with a surplus of £391.7 million for the year to April 2.
In other corporate results, renewables firm SSE said its investment into UK and Ireland infrastructure could exceed £25 billion this decade as it faces up to the threat of a windfall tax.
FTSE 100 Live Wednesday
M&S posts annual profit but no dividend
SSE shares rebound after energy giant’s results
FTSE 100 higher on commodities strength
Ocado falls on retail warning, FTSE 100 higher
10:31 , Graeme Evans
The shredding of Ocado’s stock market valuation continued today as investors reacted to new guidance from its M&S retail joint venture.
Shares fell another 4% as Ocado Retail blamed cost-of-living pressures for an updated sales growth forecast in the low single digits, compared with around 10% seen previously.
The FTSE 100 stock is now at 735p and worth around £5.5 billion after today’s 30p fall, having more than halved from 1,600p in January. As well as heightened consumer uncertainty, Ocado has been caught by the wider dumping of technology and growth stocks.
Its valuation has been built around longer-term prospects as Ocado ties up deals for its grocery warehouse automation and customer fulfilment centres with global retailers including Kroger in the US and Casino in France.
But the original Ocado.com business, which launched over 20 years ago and is now a joint venture with M&S, accounted for 92% of 2021’s £2.5 billion of group revenues.
The update today revealed the online grocery market had shrunk 20% on the same period last year but that the market share is almost double pre-pandemic levels.
Ocado Retail’s increased caution on trading conditions did few favours for the wider retail sector as Sainsbury’s shares also fell 3.3p to 229p. The declines were more than offset by strength for commodities-focused stocks as the FTSE 100 index continued its recent resilience by lifting another 28.23 points to 7512.58.
BP rose 5.6p to 429.2p and Shell added 14p to 2380p after Brent crude moved closer to $115 a barrel, driven by expectations of stronger demand as American motorists prepare to hit the road for the Memorial Day weekend.
Other heavyweight stocks providing support today included Glencore and Anglo American as shares in both rose more than 2%, up 14.4p to 533.8p and 92.5p to 3717p respectively.
In a busy session for corporate results, some investors struggled to get hold of the latest figures because of technical problems with the regulatory news service feed.
One company whose message got through was the FTSE 250-listed ventilation products business Volution, where shares jumped 6% after an unscheduled update showed revenues growth of 17% and earning guidance towards the top end of City hopes.
Shares rose 23.5p to 379p in a session when the FTSE 250 rallied 48.99 points to 19,898.81.
No M&S dividend for shareholders, outlook uncertain
08:26 , Graeme Evans
Despite today’s improved M&S annual results, there’s no dividend for shareholders for the second financial year in a row.
The company is focused on restoring profitability and boosting its balance sheet, but said today it will consider the scale and timing of a resumption of dividend payments at the end of this financial year.
It will do so against a toughening economic backdrop, while this year’s results will not have the benefit of business rates relief or any contribution from its closed Russia operation.
M&S said these factors mean it starts 2022/23 from a lower adjusted profit base.
It said: “The business is now much better positioned and had an encouraging start to the year. However, given the increasing cost pressures and consumer uncertainty, we do not currently expect to progress from this lower profit base in 2022/23.”
Shares were 0.7p lower at 131.58p, which compares with 257p in January.
SSE shares recover after results
08:11 , Graeme Evans
SSE shares opened 4% higher today, having fallen 8% yesterday on speculation that the Treasury’s energy windfall tax considerations include potentially targeting £10 billion of excess profits in the power generation sector.
Annual results from the renewables specialist and electricity networks business today showed pre-tax profits of £3.48 billion, a rise of 44% on a year earlier. This figure reduces to £1.12 billion at an adjusted level.
The results highlight the company’s contribution to the UK’s low carbon energy transition.
SSE pointed out that net investment into UK and Ireland infrastructure could exceed £25 billion this decade, adding that it has contributed over £5.8 billion to UK GDP in the past year and supported over 45,000 jobs.
Chief executive Alistair Phillips-Davies said: “Strategically, operationally and financially, SSE is well-placed to continue to create value for all of our stakeholders and wider society as we create the infrastructure needed to deliver net zero, secure energy supplies and ultimately drive consumer prices down."
Social media giants slide, FTSE 100 set to rally
07:42 , Graeme Evans
US markets endured another bruising session yesterday after revised guidance from the owner of Snapchat sent shares in social media companies sharply lower.
Snap fell 43% by last night’s close, while fears over an advertising slowdown left Facebook owner Meta Platforms down almost 8% and Elon Musk takeover target Twitter off 5%.
The tech-focused Nasdaq lost more than 2% of its value, but the performance of other US benchmarks was more resilient after the S&P 500 limited losses to below 1% and the Dow Jones Industrial Average edged into positive territory.
US futures markets are pointing to a positive start later as investors await the minutes of May’s Federal Reserve policy meeting later in the session. Interest rates were hiked by 0.5% in the biggest rise for two decades, but Wall Street will be looking to see if a steeper 0.75% increase came under consideration.
Markets are currently pricing two more 0.5% increases in rates between now and September.
The FTSE 100 index also posted a resilient performance yesterday, falling 0.4% compared with bigger declines in Europe and a fall of 1.5% for the UK-focused FTSE 250 index.
London’s top flight is forecast to open 70 points higher at 7554, according to CMC Markets.