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Diageo resumes ROC; Menzies placing; Fanduel CEO quits
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4.45pm: FTSE 100 rebounds
The FTSE 100 staged a recovery after its collapse yesterday, regaining the 7,000 threshold to close 56.64 points higher (0.82%) at 7,004.63.
Guinness and Johnnie Walker owner Diageo closed 108.5p higher at 3,298.5p after it restarted its plan to return up to £4.5 billion of cash to investors (see below).
Other big risers in the FTSE 100 index were BP, up 10.7p at 315.3p and Royal Dutch Shell A, 45.4p higher at 1,413p.
The biggest fallers of the day were Just Eat Takeaway, down 567p at 6,247p, and Flutter, down 595p at 12,760p after its IPO slipped on the back of FanDuel CEO Matt King’s resignation (see below).
3.20pm: Whisky grain distiller fails
Alexander Inglis & Son, one of the UK’s biggest suppliers of grain and cereals to the whisky and distilling industries, has fallen into administration.
8.30am: Shares recover
Traders defied spread betters and drove shares in blue chips higher this morning. After yesterday’s steep fall (see below), the FTSE 100 was trading 49 points higher at 6,996.78.
8am: Tourism setback
Tourism businesses in Scotland say there is no evidence of a significant uplift in bookings despite recent speculation that the sector is set for a boom this summer.
7.15am: Economy shrinks
The UK economy shrank by 1.5% in the first quarter of 2021, said the Office for National Statistics. It is now 8.7% smaller than where it was before the pandemic.
However, there was a strong recovery in March with the economy growing 2.1% boosted by retail spending and the return of schools.
7am: Diageo resumes return of capital
Diageo is restarting its programme of returning up to £4.5 billion to shareholders, first announced on 25 July 2019.
Due to the impact of Covid-19, the original completion date for the ROC programme has been extended by two years to 30 June 2024.
The decision to resume payments is based on expectations of organic operating profit growth to be at least 14% ahead of organic net sales growth.
Ivan Menezes, chief executive, pictured, said: “Our priority remains to invest in the business to deliver sustainable and efficient organic growth and to pursue acquisitions that further strengthen our exposure to attractive categories.
“When we have excess cash, we have been clear that we will seek to return it to shareholders. The board’s decision to resume our return of capital programme at this time reflects Diageo’s improved performance in the first half of fiscal 21, the continued strong recovery of our business, and our expectation that we will be back within the top end of our target leverage ratio.
“We are confident that Diageo will continue to execute effectively in this challenging environment and will emerge stronger.”
7am: FanDuel CEO quits
Flutter Entertainment said Matt King, chief executive of fantasy sports business FanDuel, intends to leave the group.
During his 4 years as CEO, Matt has overseen the transformation of the business from online daily fantasy sports operator to the market leader in US online sports betting and gaming. He has agreed to remain with FanDuel while a search is undertaken to appoint his successor.
As previously announced, the Flutter board has been assessing the potential merits of listing a small stake in FanDuel in the US. The company said that whilst Mr King’s departure will affect the timing of any potential US listing, the board will continue to keep this option under review.
7am: Tui slumps as bookings and prices rise
Europe’s biggest holiday company says bookings have shot up but prices are also soaring.
An overseas break is now likely to cost 22% more than two years ago, according to Anglo-German giant, Tui.
It has reported a massive loss of €1.3bn (£1.1bn) for the first half of its financial year to March 2021 but sees strong sales for this summer and next year despite rising prices.
AJ Bell investment director Russ Mould says:” “For all the concerns over TUI, there’s an argument in Germany that the company is seen as ‘too big to fail’, having been bailed out by the German government three times so far during the pandemic and received almost €5 billion in state support.
“And despite the complications and continuing restrictions it does appear people are willing to put up with Covid tests and periods in isolation if it means you can enjoy a cocktail on the beach or a dip in the Med.
“A preference for all-inclusive holidays makes sense, as it will probably be perceived as a safer option by tourists and the good news for TUI is it can charge more for these breaks.”
7am: Menzies placing
Aviation group John Menzies today announced it has successfully raised £22m through a placing, subscription and retail offer which was announced after the market closed last night.
A total of 5,410,349 shares have been placed at 290p per share, a 6.6% discount to the closing price yesterday and raising gross proceeds of £15.7 million for the company.
In addition, certain directors and senior managers have subscribed for 1,831,030 shares at the placing rice.
A total of 344,827 new ordinary shares have been subscribed for in the retail offer, also at the placing price.
In aggregate, the new shares represent 9% of the issued share capital of the company. Chief executive Philipp Joeinig now holds 2.77% of the stock.
7am: Petrofac CFO change
Alastair Cochran, chief financial officer at oil services company Petrofac, is leaving to take up a new role outside the group on 1 September.
He will be replaced by Afonso Reis e Sousa, currently group treasurer & head of tax.
7am: Marston’s names CEO
Andrew Andrea, chief financial office at pubs group Marston’s has been named chief executive with effect from 3 October.
His appointment follows Ralph Findlay’s decision announced earlier this year to step down from the role at that time.
7am: Compass repays handout
Catering firm Compass said it was repaying government furlough cash despite reporting plunging half-year profits and revenues due to the coronavirus pandemic.
The company said revenue fell by 32.4% to £8.4bn and operating profit decreased by 78.3% to £168m due to the adverse impact of COVID and related actions to resize the business and adjust costs. It did not specify how much it received in under the job retention scheme, but did report £119m in furlough payments and tax deferrals.
London’s blue chips are expected to open around 14 points lower after taking a hammering in yesterday’s session as investors’ worries over inflation turned into a selling frenzy.
The FTSE 100 index closed down 175.69 points, or 2.5%, at 6,947.99. The FTSE 250 plunged 2.3% and the AIM All-Share closed down 1.7%.
On Wall Street the Dow Jones Industrial Average closed down 1.36% while the S&P 500 dropped 0.87% and the Nasdaq fell 0.09%.
While concern over inflation is the primary cause the pullback has been partly attributed to profit-taking activity following last week’s record run for equities.
Japan’s Nikkei 225 was also down 1.97% but Hong Kong’s Hang Seng was 0.08% higher.
On currency markets, sterling was down 0.16% against the dollar at $1.412, although the UK GDP data could provide some catalyst for movement later today alongside US inflation numbers.