Daily Business Live

Tesco profits fall; Dewar’s airport plea; Virgin-O2 deal backed


4.30pm: FTSE 100 closing in on 7,000

The FTSE 100 closed 49.09 points higher at 6,939.58 as traders took heart from the first batch of Wall Street banking earnings which topped expectations.

Goldman Sachs reported a record first quarter as the bank benefited from a strong performance from all of its businesses, both consumer and institutional, and released credit reserves.

Wells Fargo was also boosted by credit release provisions and posted a jump in income. Wells Fargo said the credit release stems from its confidence in the improving US economy.

The blue-chip FTSE 100 has risen 7.4% this year as investors bet on a faster pace of economic recovery as businesses reopen, further aided by vaccine rollouts and government stimulus.

Brent crude oil was trading at $66.32 a barrel. 

The FTSE 100

12.30pm: Czech raises Sainsbury’s stake

Czech billionaire Daniel Kretinsky, owner of Sparta Prague Football Club, has raised his stake in Sainsbury’s from just over 3% to 9.99% through his Vesa investment group.

He acquired the shares from the supermarket group’s long term investor the Qatar Investment Authority, diluting its own shareholding to 15.02%.

Vesa made a failed bid for German retailer Metro in 2019 and Kretinsky has also been building a stake in Royal Mail.

10.30am: Airport boss calls for engagement

Gordon Dewar

Scotland’s global influence and economic competitiveness will be undermined unless the new government engages meaningfully with airports and airlines, the chief executive of Edinburgh Airport has said.

Echoing earlier comments demanding ministers create a clear route to recovery, Gordon Dewar predicts Scotland will support fewer direct routes in the future, and people in Scotland will be forced to fly or export goods through London or European hub airports, making it more expensive to travel to and from Scotland and to do business in foreign markets.

Mr Dewar made similar comments in February when he called for a clear path to recovery and in December when he accused the First Minister of pursuing policies against the airport’s interests.

See also

Airport boss demands talks on ‘clear path to recovery’

Airport boss: ‘Sturgeon is campaigning against us’

9.30am: Wealth manager acquired

Scottish wealth manager and financial advice firm Cornerstone Asset Management has been acquired by Waverton Investment Management Group, formerly known as Hambro.

Full story here

9am: Tesco drops

The FTSE 100 was trading 10.85 points higher at 6,901.34.

Tesco led the fallers table, dropping 3.8% after profits fell nearly 20% (see below). Sainsbury’s suffered a knock-on effect, down 1.4%.

7am: Tesco profits fall


Tesco said full-year profits fell by a fifth despite “exceptionally strong” sales growth.

As a result of shoppers staying at home UK online sales grew 77% to £6.3 billion.

Britain’s biggest supermarket group reported pre-tax profits of £825m for the year to 27 February, 19.7% lower than a year earlier even as UK like-for-like sales grew by 7.7% to £39.4bn.

The company is proposing a final dividend of 5.95p to take full year dividend to 9.15p in line with last year.

Chief executive Ken Murphy said: “Tesco has shown incredible strength and agility throughout the pandemic. 

“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business. 

“We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform.  Sustainability is now an integral part of our business strategy and we’re doubling down on our efforts to reach net zero.

“Our decision to protect and hold the dividend flat for this financial year demonstrates our commitment to shareholders.”

7am: Tesco Bank loss

Tesco Bank said the impact of the Covid-19 pandemic on income and expected credit losses has resulted in a loss before tax from continuing operations of £154.9m (2020: profit of £79.2m) for the year ended 28 February 2021.

The Edinburgh-based bank has recognised a charge for the year of £359.5m (2020: £178.6m).

Net interest margin has increased to 5.2% (2020: 4.4%), predominantly reflecting an improved credit card margin and lower funding costs following the sale of the group’s mortgage business.

In response to the pandemic and lockdown conditions, the group introduced a number of benefits to help Tesco customers manage their money.

These include an increase in the contactless limit from £30 to £45; the removal of insurance policy change fees, providing customers with flexibility to make changes to their policies; the suspension of overdraft interest on arranged overdrawn Personal Current Account balances up to £500 from April until 31 October 2020; and utilising Tesco gift cards to provide school lunches across the UK.

Additionally, the group launched e-gift cards during the year, which allowed friends or relatives to assist vulnerable customers with their shopping.

7am: easyjet ahead of expectations


EasyJet said it expects a first half headline loss before tax in the range of £690million to £730m, which is slightly better than expectations.

The effects of the cost-out programme will support improved margins and reduce seasonality for the future.  

It said the focus on cash generative flying over the winter season has minimised cash burn, with cash burn in the second quarter better than guidance.

7am: CMA backs Virgin-O2 merger

The Competition and Markets Authority has provisionally cleared the proposed merger of Virgin Media and Virgin Mobile with O2 after concluding that the deal is unlikely to lead to any substantial lessening of competition in relation to the supply of wholesale services.

Both Virgin and O2 provide certain wholesale services to other mobile network operators in the UK, as well as retail services to consumers.

The CMA was initially concerned that Virgin and O2 could raise prices or reduce the quality of wholesale services, or withdraw them altogether. If this were to happen, the quality of these other companies’ mobile services could suffer and – if wholesale price increases were passed on by these companies to their customers – their retail prices could go up.

This might make Virgin and O2’s own mobile service comparatively more attractive to retail customers, but would ultimately lead to a worse deal for UK consumers, said the CMA.

7am: Iomart appoints COO

Iomart Group, the Glasgow-based cloud computing company, has appointed Neil Christie as chief operating officer.

More details here

Overnight markets

A mixed session on Wall Street saw the Dow Jones Industrial Average close down 0.2% while the Nasdaq rose 1.05% and the S&P 500 climbed 0.33% to another record high.

There was a similar lack of consistency in Asia this morning, with Japan’s Nikkei 225 down 0.3% while Hong Kong’s Hang Seng was up 1.42%.

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