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Currys loss | Serco raises guidance | Drax above range

Currys PC World Dixons

5pm: Rates hike hits stocks

Equities in London closed lower as interest rate hikes from the Bank of England and the European Central Bank, as well as bleak economic forecasts, sent a chill through global markets.

The FTSE 100 index closed down 0.9%, or 69.76 points at 7,426.17.


12.05pm: Hike in interest rate

The Bank of England has raised the UK’s base interest rate by 50 basis points from 3% to 3.5%, the highest level for 14 years.

Full story here


7am: Currys

Electrical products retailer Currys has cut its full-year profit outlook after it swung to a loss in the first half as its international business took a hit from heavy discounting by competitors.

In an update for the half to 29 October, the company said it now expects 2023 adjusted pre-tax profit of between £100m and £125m, down from previous guidance of £125m to £145m on a like-for-like basis.

During the half, Currys swung to an adjusted pre-tax loss of £17m from a profit of £45m a year earlier, with revenues down 7% to £4.5bn.

Currys said its performance in the UK & Ireland strengthened again, but the international segment was hit by temporary market disruption, as competitors discounted excess stock heavily.

Chief executive Alex Baldock said: “Our international business, which has consistently delivered growth in sales and profits over many years, has had a difficult first half with margins sharply down. Lower demand has left domestic competitors with excess stock, which they’re now heavily discounting.

“This has substantially disrupted the market, and required margin investment to keep our sales strong. We expect these pressures, intense though they are, to be temporary – demand will normalise, excess stock will wash through, and competitors will find unprofitable aggression hard to sustain. We’ve also stepped up our self-help actions on margins and cost.”


7am: Serco

UK government outsourcer Serco raised 2022 revenue guidance slightly, adding that revenue the following year would increase.

The company said 2022 revenue would be around £4.5bn from prior estimates of £4.3-£4.4bn, despite a £480m fall in Covid-19-related sales, although this was partially offset by organic growth in the rest of Serco’s operations.

Underlying trading profit for 2022 was expected to be around £235m, up from previous guidance of £230m, with the same amount expected for next year.


7am: Drax

Power generator Drax said its 2022 adjusted EBITDA will be slightly above the top of the range of analyst expectations boosted by higher prices and a strong performance from its pumped storage and hydro assets in the second half.

The FTSE 250-listed group sees its range as £651m to £681m and also said it remained on track to be significantly below two times net debt to adjusted EBITDA by the end of 2022.

The power generator said costs for its biomass pellet business have continued to rise and are expected to increase further in 2023.

Further investment is planned in new production capacity with two new pellet production projects – a 450kt new-build pellet plant at Longview (Washington State) and a 130kt expansion of its Aliceville site (Alabama) approved. 

The combined investment in these projects is expected to be in the region of $300mln and the company is expected to begin commissioning in 2025.


7am: STV

STV saw a sharp dip in third quarter advertising revenue and expects a 2% fall for the full year 2022, though this still represents growth of c.8% compared to the pre Covid year of 2019.

Full story here


Global markets

The US Federal Reserve raised interest rates by 50 basis points as expected and ahead of decisions today by the Bank of England and European Central Bank.

The FTSE 100 closed down 6.96 points, or 0.1%, at 7,495.93 on Wednesday.

Wall Street ended lower, with the Dow Jones Industrial Average down 0.4%, the S&P 500 down 0.6% and the Nasdaq Composite down 0.8%.

China’s retail sales plunged last month as Covid restrictions and a property market crisis hammered the world’s second-largest economy.

The Nikkei 225 index was down 0.4%. In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was down 1.4%.

Sterling was quoted lower at $1.2395 early today.

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