Market report

Primark lower | SMS in £175m placing | Henry Boot surges


5pm: Oil higher – but Primark hit by pingdemic


Stocks in London ended manly higher, with oil majors helping push the FTSE 100 up by 40.57 points to 7,069.77 at the close, against a backdrop of rising global inflation and slowing economic growth.

Brent crude oil quoted at $73.57 a barrel, up sharply from $72.67 on Friday following upbeat comments from the producers’ group OPEC.

BP, Royal Dutch Shell ‘A’ and Shell ‘B‘ were up 2.3%, 2.4% and 2.2% respectively, tracking spot oil prices higher. Midcap peers Tullow Oil and Harbour Energy closed up 8.3% and 3.6% respectively.

Rolls-Royce closed up 2.5% after the jet engine maker and Babcock International Group said they have agreed to sell their stakes in AirTanker Holdings to London-based private equity firm Equitix Investment Management, while Airbus plans to maintain its holding in the venture.

Among the fallers, Associated British Foods closed down 2.4% after it warned sales in Primark are set to fall this financial year after stores were hit by the ‘pingdemic’ in the final quarter.

Its sales were almost a fifth down on normal levels and lower than expected.  The cut price clothing store said its like-for-like sales would be down 17% on two years ago.

In the FTSE 250, easyJet was the worst performer as the budget airline’s new shares, issued as part of its £1.2 billion rights issue, began trading. easyJet shares ended down 13% at 590p.

4.45pm: Smart Metering raises funds

Smart Metering Systems plans to raise around £175 million from institutional investors through a share placing.

The Glasgow-based company said a pipeline of work meant it had “a combined £690m capital expenditure requirement over the next five years”.

The investment is “expected to deliver an estimated £75m increase in group annual EBITDA (earnings before interest, tax, depreciation and amortisation) when fully operational”.

The company reported that its underlying pre-tax profit in the six months to 30 June was up by 5% on its previous first half at £9.6m. Revenue fell by 5% at £51.7m.

It says it intends to pay a dividend of a 27.5p per share in respect of FY2021, in line with its stated policy, to be paid in four equal quarterly instalments starting in October 2021.

Noon: EasyJet tumbles

Shares in airline Easyjet fell sharply today following its £1.2 billion rights issue announcement and a note from UBS on Friday that the carrier would be likely to lag behind rivals in its recovery from the pandemic.

Last week’s reports that rival Wizz Air had made a bid for EasyJet has heightened suggestions that the carrier will continue to be the subject of takeover offers.

Shares in the company at mid-day were down 96.4p (14.2%) at 584.6p.

11am: Leighton for BrewDog

BrewDog has hired former Asda chief executive Allan Leighton as non-executive chairman three months after former staff accused the company of creating a “toxic” culture.

Full story here

8am: London opens higher

The FTSE 100 opened 34.18 points higher at 7,063.38 (see markets below).

7am: Henry Boot sees surge in profits

Henry Boot

Henry Boot, the property and construction company, posted a 220.8% rise in profit before tax to £23.1m from £7.2m) increased, ahead of board expectations.

The improvement was driven by the industrial property market performing strongly and delivering positive capital returns through disposal of investment property, revaluation gains and returns from joint ventures contributing a combined £5.8m.

Revenue came in 18.7% higher at £129m (June 2020: £108.7m) as demand increased across the firm’s three key markets.

The company declared a 2.42p interim dividend (June 2020: 2.20p), an increase of 10%, reflecting the group’s strong operational performance and in line with its progressive dividend policy.

Chief executive Tim Roberts said: “The business has performed well, responding to growing demand within our key markets. 

“Whilst we expect profit to be weighted to the first half, the cadence of our activity will remain high, so we will continue to make excellent progress on our clear strategic targets. This will position us well for sustainable growth in the future”.                                     

7am: FirstGroup trading in line

First Bus passenger volumes have reached 65% of pre-pandemic levels on average in recent weeks, and the company expects this to increase further as the autumn terms for schools and then universities get fully under way.

Chief executive Matthew Gregory and non-executive directors Martha Poulter and Steve Gunning will step down from the board at the end of the AGM today, and David Martin, chairman, will become interim executive chairman until a permanent chief executive is appointed.

Mr Martin said: “Trading is in line with our expectations year to date, and we continue to support our passengers and other stakeholders as travel patterns evolve.

“While we complete the search for a new chief executive, my focus is on ensuring we continue to drive value from our strong positions in UK bus and rail, progress our plans to resolve our non-core Greyhound operation and complete the return of value to our shareholders following the sale of the North American contract businesses.

“The vital role of public transport is clear and the policy backdrop has never been more supportive. With a well-capitalised balance sheet and an operating model that will support an attractive dividend for shareholders commencing in 2022, I am confident that FirstGroup is well-placed to deliver sustainable value creation as a focused UK public transport leader.”

Global markets

Asian shares began the week cautiously ahead of key US and Chinese economic data and the launch of Apple’s latest iPhone.

The Nikkei was the standout performer, heading towards highs last seen in 1990 as a new prime minister in Japan gets down to work The Nikkei 225 surged 4.3% last week.

However, China releases data on retail sales, industrial output and urban investment on Wednesday that analysts fear will show a further slowdown in the world’s second biggest economy.

Wall Street suffered its worst run since February as doubts about the resilience of the global economic recovery hurt former reopening darlings in energy, hotels and travel.

Attention will focus on Apple as it unveils the new iPhone line up. US consumer prices are expected to see core inflation ease to 4.2%, while retail sales could show another decline as the spread of the Delta variant spooks shoppers.

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