Daily Business Live
FirstGroup sells Greyhound | Barclays profits record
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5pm: Index closes lower
The FTSE 100 finished down on the day, off 33 points, or 0.5%, to 7,190, as miners and home builders weighed.
Danni Hewson, AJ Bell financial analyst, said: “Mining stocks have been unable to shake investor concerns sparked by yet another twist in the Evergrande saga and their trajectory helped kept London’s blue-chip index firmly in the doldrums today.
“This week’s slate of earnings reports from both sides of the Atlantic have added their own side of discomfort with company after company warning that supply issues and price hikes aren’t going to be a flash in the pan and are going to impact earnings going forward.”
Among the day’s worst performers were Anglo American down 2.7%, BHP Group down 3.7%, Rio Tinto down 4.8% and Glencore down 2.5%.
Barclays lost 0.8% even as the lender reported a surge in profit in the third quarter, leading to record profits for the year-to-date.
11.30am: Scottish exports
SNP claims that Scotland’s trade would benefit from rejoining the EU and leaving the UK were challenged today by new figures showing exports to England, Wales and Northern Ireland are worth three times more than all EU countries combined.
11.15am: Gas supplier found
Ofgem has appointed Shell Energy Retail to take on supplying 22,000 household customers of GOTO Energy which failed last week. This follows a competitive process run by Ofgem to get the best deal possible for customers.
Funds that current and former domestic customers of GOTO Energy have paid into their accounts will be protected, where they are in credit. Domestic customers will also be protected by the energy price cap with their new supplier.
11am: Manufacturing growth remains firm
UK manufacturers expect growth to pick up “substantially” in the next quarter, according to the latest CBI Industrial Trends Survey.
Output increased over the last three months in 11 out of 17 sub-sectors, with growth driven by the chemicals, aerospace, and food, drink & tobacco sub-sectors.
Export orders increased at a broadly similar pace to last quarter. Manufacturers expect total new orders growth to pick up next quarter, led by an acceleration in domestic and export orders.
Concerns about supply shortages in the next three months escalated further in October. Manufacturers also expressed heightened concerns about labour shortages affecting future output, with two-in-five firms worried about a lack of skilled labour, the highest since July 1974.
10am: Evergrande woes weakens market
Chinese property group Evergrande was again a drag on global stocks after it failed to complete a $2.6bn asset sale.
AJ Bell financial analyst Danni Hewson said: “The FTSE 100 slipped in early trading on Thursday as China’s Evergrande crisis reared its ugly head again.
“The heavily indebted property developer failed to complete a key asset sale to leave it teetering amid fears of wider contagion from a potential collapse of the business.
“This hit stocks with Chinese exposure, most notably the mining sector. China is the world’s biggest consumer of many metals and minerals.
“Rising Covid-19 cases in the UK were also affecting sentiment amid fears measures might need to be brought in over the winter to control the spread of the virus.”
In equity markets, miners were under the cosh again as metals prices fell, with Anglo American, Rio, BHP and Glencore all lower.
Barclays was off a touch despite reporting a record £6.9bn of profit for the first nine months of 2021 (see below).
UK public borrowing fell by almost half in the first six months of the financial year as it continued to recover from the impact of the Covid-19 pandemic.
Public sector borrowing fell to £108.1bn, down by £101.2bn in April-September 2020 but around three times its level before the pandemic, according to the Office for National Statistics.
The FTSE 100 was down 23.46 points at 7,199.64.
7am: FirstGroup sells Greyhound
FirstGroup has sold Greyhound Lines, operator of the iconic US bus business, to a wholly-owned subsidiary of FlixMobility in a deal valued at $172 million (£127m).
The deal completes its stated plan to focus on its UK public transport businesses.
David Martin, FirstGroup executive chairman said: “We are proud of the significant developments we made to Greyhound’s business model during FirstGroup’s ownership, including the introduction of express point-to-point routes, real-time pricing and yield management and a transformed customer offering and experience.
“This transaction realises an appropriate value for Greyhound’s operations and ensures Greyhound’s legacy liabilities are suitably managed.
“Today’s agreement regarding Greyhound’s future completes the Group’s portfolio rationalisation strategy which has refocused FirstGroup on its leading UK public transport businesses with a strong platform to create sustainable value.”
FirstGroup has previously set out its objective to rationalise the group’s portfolio of businesses in light of the limited synergies between its UK and North American divisions, and today’s transaction follows the sale of the Group’s other North American businesses, First Student and First Transit, to EQT Infrastructure in July.
The group estimates that its adjusted net debt at the end of the current financial year will be c.£80-90m lower than previously expected, in the range of £10-20m.
Greyhound has been a mainstay of the North American transportation landscape for more than 100 years. Its fleet of 1,300 vehicles and 2,400 employees provide services connecting 1,750 destinations across North America.
FlixMobility has quickly established Europe’s largest long-distance bus network through its FlixBus and FlixTrain brands. The company launched the first green long-distance trains in 2018 as well as a pilot project for all-electric buses in Germany, the US and France.
Since 2013, FlixMobility has changed the way hundreds of millions of people have travelled throughout Europe and created tens of thousands of new jobs in the mobility industry. In 2018, FlixMobility launched FlixBus USA to bring this new travel alternative to the United States
7am: Barclays hits profit record
Barclays said it has delivered its higher ever year-to-date pre-tax profit, posting £6.9bn for the nine months to the end of September.
It said third quarter profits doubled on a year ago to £2bn, beating market expectations, as it followed Wall Street rivals with surging investment banking fees.
The bank’s advisory and equities business had a record performance in the first nine months of the year, driving a return on equity for the investment bank of 16.4% compared to 10.5% a year ago.
“While the CIB (investment bank) performance continues to be an area of strength for the group, we are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment,” said CEO Jes Staley.
7am: Pernod Ricard sees overseas growth
French spirits maker Pernod Ricard, owner of Chivas Brothers Scotch whisky, said it is seeing strong demand in China, the United States and India which helped it deliver a forecast-beating 20% growth in the first quarter. The market had expected a 15.7% sales rise.
Pernod, the world’s second-biggest spirits group behind Diageo, said consumption by people staying at home remained resilient, while the re-opening of bars and restaurants also lent support.
Travel retail was still subdued although the company benefited in the quarter from a low comparison basis.
Many US companies have been reporting decent numbers and have been able to pass on the increase in costs, to their customers, without a significant impact on their sales growth numbers, or their margins, said CMC analyst Michael Hewson.
“While this is certainly encouraging there is no guarantee it can continue given that the over the next quarter costs will have increased further given the continued rise in raw materials and energy prices, and other supply chain disruptions.”
He added: “For now, that doesn’t appear to be worrying US investors with the Dow posting a new record intraday high, and the S&P500 coming to within touching distance of doing the same thing. This US exuberance isn’t translating into today’s European open which looks set to be weaker one.”
On Wall Street, the Dow Jones closed 0.43% lower, while the S&P 500 gained 0.37%.
Japan’s Nikkei fell 1.58% while Hong Kong’s Hang Seng shed 1%. The Shanghai Composite gained slightly, up 0.17%.