BUSINESS LIVE: BHP misses forecasts with rate hike warning


BUSINESS LIVE: BHP misses forecasts with rate hike warning

The FTSE 100 is up 0.6 per cent in midday trading. Among the companies with reports and trading updates today are BHP Group, Lookers and Wood Group. Read the Tuesday 22 August Business Live blog below.

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NS&I launches new issue of Green Savings Bonds with a rate of 5.70%

National Savings and Investments has launched a new issue of its Green Savings Bonds, paying a rate of 5.7 per cent over three years.

The boost is a massive hike from when the product first launched in October 2021, when it paid just 0.65 per cent. The last issue paid 4.2 per cent – so this is a 1.5 percentage point bump.

Monarch is set to take to the skies again – six years after going bust

Monarch Airlines is set to stage a comeback six year after collapsing into £466million debts and leaving 110,000 holidaymakers stranded abroad.

The company claimed it will resurface as a ‘premium alternative to low-cost leisure carriers’ and fill a hole in capacity following the Covid pandemic.

Microsoft rejigs £54bn Activision deal to appease UK watchdog

Microsoft has restructured aspects of its $69billion (£54billion) takeover of Activision Blizzard in fresh efforts to get the green light from Britain’s competition watchdog.

The Competition and Markets Regulator will now mull the rejigged takeover, which will see Activision’s non-European streaming rights sold off to Ubisoft Entertainment.

Wood Group lifts profit outlook on fresh contract wins

John Wood Group has upgraded its annual profit guidance following major contract wins and strong growth within its projects business.

The FTSE 250 engineering services company told investors on Tuesday its adjusted core earnings for this year are now forecast to be ‘ahead of our previous expectations’.

Protein shake firm backed by stars to expand

A firm backed by actor Idris Elba that makes meal replacements for those who do not want to cook is building a factory as it expands.

Huel, which was founded in 2015 and sells drinks and bars stuffed full of protein, fibre, fats and other essential nutrients, will open the site in Milton Keynes in January.

Bosses at Britain’s biggest firms raked in an extra £530,000 last year as FTSE 100 chief executives are paid 118 times more than the standard full-time worker in Britain, figures reveal

The bosses of Britain’s biggest firms raked in an extra half a million in pay last year despite the cost of living squeeze.

The average salary for an FTSE 100 chief executive hit £3.91million in 2022, up 16 per cent, or £530,000, from the year before, according to figures from the High Pay Centre.

This was the biggest figure for annual pay since 2017 when bosses were taking home £3.97million on average, the think-tank said.

Fed chief walks tightrope at Jackson Hole

A spectacular mountainous region of the United States will this week provide the setting for central bankers to ponder decisions that will help shape the global economy over the coming months.

Officials from institutions including the US Federal Reserve, the Bank of England and the European Central Bank (ECB) will gather for the annual conference in Jackson Hole, Wyoming.

Are recruitment firms a good investment or is there trouble ahead?

Since the late days of the pandemic, the UK’s recruitment firms have experienced something of a golden age.

Labour shortages and fierce competition for talent led companies across the world to recruit aggressively, and offer bumper salary hikes to get staff on board.

Troubled Home REIT votes to axe policy to house vulnerable

Home REIT investors have waved through a dramatic change to its business model as it scrambles to keep itself afloat.

In a near-unanimous vote at a meeting at the offices of PR firm FTI in the City, shareholders approved a plan to remove the property landlord’s focus on owning housing only for vulnerable occupants such as the homeless.

Instead, the decision would allow it to invest in all kinds of residential property.

Wood Group shrugs off restructuring costs

John Moore, senior investment manager at RBC Brewin Dolphin:

‘Despite the reorganisation and restructuring, Wood’s revenue on continuing operations is up on where it was this time last year and today’s results offer some potential for recovery and if executed, better times for shareholders.

‘The well-publicised bid by Apollo was arguably a costly and ultimately distracting exercise with the outcome heightening pressure on the board to lay out a vision for the years ahead.

‘Key tasks for the incoming CFO will be reducing debt further, improving cash generation and profit margins and the continued streamlining of the business. Positively Wood’s end markets remain robust, but growth will be hard to come by and as a result, self-help remains the main driver for shareholder returns.’

Market open: FTSE 100 up 0.2%; FTSE 250 adds 0.6%

London-listed stocks are trading higher this morning, with the FTSE 100 lifting off six-week lows, powered by gains in beaten-down cyclical sectors.

The FTSE 100 could snap a seven-day losing streak, if gains last till the end of the trading session.

Gains aree driven by cyclical sectors, including construction and materials, precious metal miners and defence.

John Wood Group is up 2.6 per cent after the oilfield services and engineering firm raised its expectations for annual adjusted core profit.

Meanwhile, the defensive pharmaceutical and personal care sector indexes were among decliners in the early hours, indicating a risk-on move.

Supermarket sales slow

Supermarket sales growth slowed in August, reflecting lower inflation as well as a hit to demand from unsettled, unseasonably wet weather.

Market researcher NIQ data reveals supermarket sales on a value basis grew 7.2 per cent in the four weeks to 12 August – the lowest growth since January and down from 8.9 per cent in its July data set.

Sales on a volume basis fell 3.8 per cent.

Tesco saw sales increase 9.7 per cent over the 12 weeks to 12 August, with its market share nudging up to 26.8 per cent.

Discounters Aldi and Lidl, with sales up 22.2 and 16.5 per cent respectively, and Marks & Spencer, with sales up 11.5 per cent, were the only other grocers who gained market share in this period.

Last week, M&S upgraded its profit outlook.

Lookers sales tick higher

Lookers, which has agreed to a £504.2million takeover by Global Auto Holdings, saw revenues inch higher in the first half amid macroeconomic challenges.

The dealership group, which sells new and used cars and vans and also offers after-sales services, saw revenue growth of 8 per cent to £2.42billion in the six months to 30 June as underlying pre-tax profit slipped 2.3 per cent to £46.1million.

John Wood lifts profit expectations

John Wood Group has boosted annual adjusted core profit expectations after strong growth across the British oilfield services and engineering firm’s business units.

Separately, the company also announced that its finance chief David Kemp would retire but remain in the role until a successor is appointed.

Ken Gilmartin, CEO, said:

‘When we announced our growth strategy in November last year, we set out a plan for Wood to deliver on its significant potential, and I am delighted that our results show the clear progress we are making.

‘We have made a good start to the year, delivering growth in revenue, EBITDA, headcount and our pipeline, all while furthering our inspiring culture, as evidenced by our highest-ever employee net promoter score.

‘As we look ahead, we are confident that our actions, the business model we have implemented and the market growth opportunities to which we have aligned, support the momentum we are building in our business. As such, we are increasing our full year guidance for the year for revenue and EBITDA.’

CMA gives approval to £54billion tech tie-up

Watchdogs have cleared the £54billion takeover of cloud storing business VMware by chipmaker Broadcom.

The Competition and Markets Authority said the merger of the two American companies would not damage the computer market in the UK. It is the biggest deal ever approved by the regulator.

The CMA said Broadcom would not be able to use the deal to harm rivals in the industry or use the merger to spy on competitors who use VMware software.

BHP misses forecasts with rate hike warning

BHP Group profits missed forecasts in its last financial year and the London-listed mining giant has warned higher interest rates will continue to hamper demand in the developed world in the months ahead.

The Anglo-Australian firm’s underlying attributable profit for the year to 30 June fell to $13.42billion from $21.32 billion a year earlier, missing forecasts of $13.89billion.

BHP declared a final dividend of $0.80 per share, down from $1.75 per share a year ago, equivalent to a 59 per cent payout ratio and the third-largest full-year ordinary dividend in the company’s history. That was down from expectations by Macquarie analysts of a 65 per cent payout.

Chief executive Mike Henry said:

‘Commodity demand has remained relatively robust in China and India even as developed world economies have slowed substantially. In the near term, China’s trajectory is contingent on the effectiveness of recent policy measures.

‘We expect buoyant growth in India with strong construction activity underpinning an expansion in steelmaking capacity.

‘More broadly, there is increased recognition of the importance of critical minerals and strategies across the globe to incentivise investment in supply and demand, which provides opportunities and challenges.’

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