FTSE 100 Live: Vodafone revenues fall in Europe, GSK profits rise

 (Evening Standard)
(Evening Standard)

Vodafone boss Margherita Della Valle stuck by the company’s full-year profits guidance today but said a decline in revenues in Europe showed “we can do better”.

The group’s revenues in the UK were 5.3% higher in the third quarter of the financial year but this was offset by weaker performances in Germany, Italy and Spain.

Meanwhile, GSK chief executive Emma Walmsley said the drugs giant started 2023 with good momentum after reporting 14% growth in annual operating profits to £8.15 billion.

FTSE closes lower ahead of interest rate decisions: Evening wrap

Wednesday 1 February 2023 16:32 , Simon Hunt

The FTSE 100 closed down lower at the end of today’s trading session in London as investors paused for breath ahead of a key interest rate decision by the US Federal Reserve tonight, quickly followed by another from the Bank of England tomorrow morning. The blue-chip index finished down 12 points to 7,760.

Shweta Singh, Senior Economist at investment management specialist Cardano, said: “The BOE could hike the policy rate by 50bps to 4% on Thursday in line with market expectations. However, the more interesting bit will be the vote distribution and the Bank’s forward guidance. We expect a more divided BoE monetary policy committee, as the dovish tail becomes fatter.

“In our view, the UK has one of the most stagflationary outlooks in the developed world, and the market may be under-appreciating the risk that the policy rate could remain high for longer than anticipated.

“Market expectations of rate cuts to begin this year seem too sanguine. Similarly, expectations of a swift rebound in economic activity next year are now somewhat ambitious.”

Network Rail makes new offer to the RMT union to try and end strikes

Wednesday 1 February 2023 15:49 , Simon Hunt

Network Rail has made a “newly revised” offer to the biggest rail workers’ union in a bid to break the deadlock over a long-running dispute about pay, jobs and conditions.

The infrastructure giant said it has added some fresh proposals to the Rail, Maritime and Transport union (RMT).

The union said its executive will consider the details of the offer.

An RMT spokesman said: “No decision has been made on the proposals, nor any of the elements within them.

read more here

Stocks open lower on Wall Street

Wednesday 1 February 2023 15:04 , Simon Hunt

Stocks opened lower in the first minutes of trading on Wall Street as investors were in a cautious mood ahead of a key interest rate decision by the Federal Reserve later today.

The Dow Jones dipped 0.14%, while the S&P 500 opened lower by 0.16% and the Nasdaq dropped 11.41 points, or 0.10%, to 11,573.14 in the moments following the opening bell.

Neil Wilson, Chief Market Analyst at Finalto, said: “Ain’t nothing but the Fed today as investors focus on the FOMC interest rate decision. The Fed is all but certain to raise rates by 25bps but the complacency we see sets up for a volatility-driven event if Powell pushes back hard – and why not?

“There is no reason for the Fed to signal a pause – financial conditions have loosened considerably, inflation remains high, the labour market tight and commodity-linked inflation could be rearing its head again. However, as we have seen countless times, the market is willing to take a dovish read to just about anything the Fed says.”

Crypto hacks hit new record as government plans to ramp up regulation

Wednesday 1 February 2023 13:16 , Simon Hunt

Amid a string of scandals, bankruptcies and fraud charges blighting the crypto world last year, 2022 was also the biggest ever year for crypto hacking, new research reveals today.

As much as $3.8 billion was stolen over the course of the year, with huge spikes in March and October across several dozen major hacking incidents according to research by Chainalysis.

North Korea-linked groups were by far the most prolific cryptocurrency hackers in 2022, shattering their own records for theft, stealing an estimated $1.7 billion worth of cryptocurrency across several hacks.

read more here

Stonegate looks at selling off number of pubs

Wednesday 1 February 2023 12:51 , Simon Hunt

Pubs giant Stonegate, behind the Slug & Lettuce and Be At One Chain, is looking to sell up to 1000 sites to pay down its debt pile, it has been reported.

The company completed a takeover of Ei, then the UK’s biggest company, just before the Covid-19 crisis and created a firm which today has some 4500 sites.

The industry has since been trying to bounce back from a challenging time that saw lockdowns temporarily close the hospitality sector.

Stonegate, which is owned by private equity firm TDR Capital, has a £2.6 billion debt pile and plans to sell 1,000 of its pubs for an estimated £800 million, Bloomberg reported.

Sources said any sale was not imminent and would be in line with Stonegate’s long term plan to dispose of sites that did not meet its strategy.

Entain ups guidance as World Cup drives record quarter

Wednesday 1 February 2023 11:55 , Simon Hunt

Ladbrokes Coral owner Entain upped its full-year earnings guidance to almost £1 billion, as the World Cup drove a record quarter for online betting.

Total group revenue was up by 8%, thanks in part to a 13% growth in online sports betting revenue. The total amount of money wagered on sports with Entain brands rose by just 2%, suggesting that most of the growth was due to favourable sporting results.

The betting operator now expects earnings before interest, tax, depreciation and amortisation to fall between £985 million and £995 million, up from the previous projection of £925 million - £975 million and 12% more than its 2021 earnings.

The results come as the gambling sector awaits a white paper that will set out the Government’s plans to reform UK gambling laws, with anticipated measures including “affordability checks” for punters

UK government unveils plans to regulate cryptocurrencies in bid to protect consumers

Wednesday 1 February 2023 10:59 , Simon Hunt

The government has unveiled plans to regulate the crypto market as part of a bid to protect consumers in the wake of the FTX scandal.

Fresh rules are set to be introduced for crypto trading platforms in addition to a new, stricter regime for crypto lending as part of a consultation launched today.

The government consultation paper said the implosion of FTX has highlighted the urgent need for tougher crypto regulation.

Louise Abbott, cryptocurrency fraud partner at Keystone Law, said: “At present in the UK, there is no real regulation for the industry, leaving investors exposed to scams and exchange collapses. Crypto fraud is on the increase with assets stolen through crypto hacks or scams. In addition, the collapse of exchanges such as FTX, along with serious allegations of misappropriation of funds, corruption, and lack of corporate governance have led to investor confidence being at a low point.

“The crypto sector desperately needs some good news, and the Treasury’s announcement today that plans to regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance, is a welcome statement.”

You can read the full details of the consultation here.

ITV shares rise on Studios speculation, FTSE 250 up 0.7%

Wednesday 1 February 2023 10:28 , Graeme Evans

ITV shares were today lifted by speculation over the broadcaster’s Love Island production division.

The reported interest of veteran Hollywood producer Peter Chernin comes with ITV open to selling a minority stake in its Studios business to a strategic partner or private equity firm with production assets. It is believed to be worth around £3 billion.

According to Reuters, Chernin's co-production vehicle North Road and the parent company of French TV production group Banijay are interested in a deal but that they would prefer control of the business.

The speculation helped shares to lift 3% or 2.4p to 83.3p, improving a valution that has been under pressure because of uncertainty over the outlook for advertising revenues and the cost of its new streaming service ITVX.

ITV shares were joined on the FTSE 250 risers board by Darktrace after the cyber security firm announced plans to spend up to £75 million on buying back its shares.

The return of cash to shareholders gets underway with the company under attack from New York hedge fund Quintessential after it disclosed a short position of 0.86%.

Darktrace chair Gordon Hurst said the buyback was the best use of surplus cash in current market conditions. The stock rallied 2% or 4.3p to 214.5p, which compares with its flotation price of 250p in April 2021.

Other big risers in the FTSE 250 included household electricals retailer Currys, which jumped 5% or 3.05p to 67.8p and helped the UK-focused benchmark to improve 0.7% or 130.47 points to 19,983.92.

That was much better than the FTSE 100 index, which nudged 9.16 points higher to 7780.86 as investors opted for a cautious approach ahead of tonight’s Federal Reserve monetary policy meeting.

Anything other than a 0.25% rate rise will come as a big surprise, but markets are wary that policymakers will also signal borrowing costs staying high for longer in order to ensure inflation does not take off again.

Voda boss: “We must do better."

Wednesday 1 February 2023 10:06 , Simon English

Vodafone, in search of a new chief executive following the abrupt departure of Nick Read late last year, disappointed the City today with some lacklustre results.

Revenues in the third quarter slipped slightly to e11.6 billion, with interim CEO Margherita Della Valle, admitting the group needs to do better.

She said: “"Although we’re continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better. We need to do more for our customers by delivering quality connectivity in an easy way.”

Vodafone shares fell 2p to 91p – they have more than halved in the last five years hence Read’s departure.

It is losing revenue in some key markets, notably Germany.

Richard Hunter, head of markets at Interactive Investor, said: “Vodafone faces the twin perils of an extremely competitive landscape and some deteriorating economic conditions, and the latest update highlights the effects of both.”

The company has faced calls from some investors, notably Cevian Capital, to shake-up the business to boost returns. It is likely to shed several hundred jobs as it looks to slim down, but there was no confirmation of that today.

Della Valle, previously the finance director, is in the running to land the top job permanently. But the company is looking at other internal and external candidates.

Virgin Money ups bad debt losses

Wednesday 1 February 2023 09:50 , Simon English

VIRGIN Money set aside almost half a billion pounds to cover possible loan losses today, a possible sign of what is to come for the banking sector.

The challenger bank is going well, attracting clients away from the traditional high street players such as HSBC and Barclays. It saw 27,000 new accounts opened in the first quarter.

And profit margins are rising thanks to higher interest rates, allowing it to push ahead with a share buyback programme. Mortgage lending rose 0.4% to £58.4 billion.

Provisions for bad debts rose from £457 million to £485 million. The big banks report soon and are likely to be making similar contingencies.

Vodafone shares down 3%, FTSE 100 higher

Wednesday 1 February 2023 08:40 , Graeme Evans

Vodafone shares have fallen 3% or 2.9p to 90.3p after the mobile phone giant delivered another underwhelming revenues performance for the third quarter. The shares are down 28% over the past year, or by 59% across the last five years.

Richard Hunter, head of markets at Interactive Investor, said: “Vodafone faces the twin perils of an extremely competitive landscape and some deteriorating economic conditions, and the latest update highlights the effects of both.”

GSK, another blue-chip company whose shares have been under pressure in the past year, improved 8p to 1431.4p after today’s annual results.

Other blue-chip risers included gambling group Entain, which improved 34.5p to 1523p after it forecast a full-year earnings performance ahead of its previous expectations.

The FTSE 100 index rose 19.67 points to 7791.37 and the FTSE 250 index lifted 0.4% or 84.11 points to 19,937.56.

Federal Reserve to hike by 0.25%, forward guidance key

Wednesday 1 February 2023 07:57 , Graeme Evans

Markets are focused on the Federal Reserve’s latest policy meeting, when anything other than a 0.25% rates rise will be a big surprise.

Tonight’s increase to 4.5%-4.75% will be the first “normal” sized hike since March, after which the Fed embarked on a series of supersized hikes in the fight against inflation.

Deutsche Bank strategist Henry Allen said: “Given that the quarter point move is anticipated, the main focus today will instead be on any changes to forward guidance, both in the statement and from Fed Chair Powell’s press conference.”

In December, the Fed signalled a peak of around 5.1% for rates this year. However, recent momentum for Wall Street shares suggests that investors think policymakers will soon signal a pause in monetary policy tightening before potentially cutting interest rates before the end of the year.

Michael Hewson, chief market analyst at CMC Markets, said: “While Fed officials have insisted that rates will stay high for some time to come, the markets simply don’t believe them, especially when several key inflation indicators have shown that prices are still coming down on a steady trajectory.

“This is what makes today’s Powell press conference such a tricky proposition when it comes to market positioning. The danger for the Fed is in allowing the market to continue to think that rates are likely to come down this year, which in turn could see inflation take off again, especially with the labour market being as tight as it is.”

US markets finished slightly lower yesterday, with CMC forecasting that the FTSE 100 index will open 10 points higher at 7781 when trading resumes this morning.

Vodafone “can do better“ as revenues slow

Wednesday 1 February 2023 07:37 , Graeme Evans

Under-pressure Vodafone today stuck by full-year guidance after reporting service revenues growth of 1.8% in the third quarter of its financial year.

However, this was below the 2.5% rate seen in the previous quarter after a slowdown in the company’s key markets in Spain, Italy and Germany. In contrast, revenues in the UK were 5.3% higher.

Interim chief executive Margherita Della Valle said: "Although we're continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better.

“We need to do more for our customers by delivering quality connectivity in an easy way.

“We've already taken action, including simplifying our structure to give local markets full autonomy and accountability to make the best commercial decisions for their customers.”

The company shares closed last night at 93.2p, a fall of more than 25% over the past year.

Profits rise at GSK amid record sales of shingles vaccine

Wednesday 1 February 2023 07:35 , Simon Hunt

Profits were up at pharmaceuticals business GSK amid record sales of its shingles vaccine Shingrix.

GSK chief executive Emma Walmsley said the drugs giant started 2023 with good momentum after reporting 14% growth in annual operating profits to £8.15 billion.

Shingrix sales grew 72% to just under £3 billion in 2022, with Germany and China contributing strongly to the growth.

strong Shingrix take-up in China, Canada and Japan more than offset the impact of supply constraints in other vaccines, GSK said.

Annual house price growth in January slowed to 1.1%, according to Nationwide

Wednesday 1 February 2023 07:33 , Joanna Bourke

UK house price growth cooled in January as a cocktail of headwinds, from higher interest rates to the cost-of-living crisis, hit the market.

Nationwide said annual growth slowed to 1.1%, from 2.8% in December, with average prices now standing at £258,297.

The lender added that price is 0.6% lower than the prior month and down 3.2% lower from their August peak.

But the building society said there are some “encouraging signs that mortgage rates are normalising”. That is something housebuilders and estate agents will welcome as they face challenges grappling the sector, including the fallout from September’s mini-budget.

Read more HERE.