BUSINESS LIVE: Metro Bank shares plummet on fundraising reports; Competition watchdog to


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BUSINESS LIVE: Metro Bank shares plummet on fundraising reports; Competition watchdog to probe Amazon and Microsoft

The FTSE 100 is up 0.9 per cent in afternoon trading. Among the companies with reports and trading updates today are Imperial Brands, Grainger, Motorpoint and National Grid. Read the Thursday 5 October Business Live blog below.

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Big energy suppliers quietly introduce fixed tariffs

Britain’s big energy suppliers including British Gas have quietly been introducing fixed tariffs for its customers following a fall in the Ofgem price cap.

Most households were moved from a fixed to a variable tariff during the energy crisis as wholesale prices soared.

Motorpoint job cuts help car dealer weather consumer weakness

Motorpoint narrowed losses in the second quarter following a series of cost-cutting exercises, including job losses.

The online motor dealer told investors on Thursday that underlying pre-tax losses fell to around £600,000 in the three months to 30 September, from £3.1million in the first quarter.

Ford lays off 400 workers as auto strike nears one-month mark

Ford has announced another round of autoworker layoffs as the crippling UAW strike stretches into its third week.

The car giant notified around 350 workers at the Livonia Transmission Plant and a further 50 at Sterling Axle Plant, both in Michigan, not to come back to work ‘until further notice’ on Wednesday.

National Grid expects US business to lift second half performance

National Grid expects annual earnings per share to be weighted towards the second half of the year, with Britain’s energy systems operator confident of meeting full-year expectations.

The group, which also runs an electricity and gas business in New York and Massachusetts, said it expects operating profit to be broadly evenly split across the year for its UK businesses, but more heavily weighted towards the second half for its US ones.

Grainger set for record year for build-to-rent completions

Housebuilder Grainger expects to complete a record number of new rental properties in 2023 amid soaring demand for homes-to-let in the UK.

Helen Gordon, the chief executive of Britain’s biggest listed landlord, said the group expects to finish building more than 1,600 new build-to-rent houses this year.

Oxford Instruments shares top FTSE 350 fallers

Top 15 falling FTSE 350 firms 05102023

Volution Group shares top FTSE 350 Index

Top 15 rising FTSE 350 firms 05102023

EV sales falling short of binding targets forced on car makers

September saw the second highest month of electric vehicle (EV) registrations on record yet they are still falling well short of binding targets forced on car makers by the Government from next year.

Some 45,323 new EVs entered UK roads last month, which saw battery cars take a 16.6 per cent stake of all registrations in September.

The trick to transform your cash Isa into a flexible tax-beater

What’s the best thing to look for in a cash Isa?

A good savings rate is the obvious answer but there’s also a lesser-known element you might be missing that could prove very useful in keeping as much as your savings tax-free as possible.

Amazon and Microsoft to be probed by competition watchdog over cloud services

Reports: Metro Bank bosses dragged before regulator

Metro Bank’s chair and chief exec have been called before Britain’s top regulators after reports of the bank’s financing concerns sparked a sell-off of its shares, the Financial Times reports.

National Grid performance ‘in line’ with trading expectations

(PA) – National Grid has told shareholders it has performed “in line” with expectations for the past six months.

The electricity and gas distribution firm, however, added that it expects a greater contribution to its earnings per share in the new half-year.

The London-listed company said it met its financial guidance over the first six months of its financial year, to September 30.

But it said US earnings will be particularly focused towards the next half in a bid to reassure investors.

The company said in a statement: “For our UK regulated businesses, we expect contributions to operating profit to be broadly evenly split across the year.

“For our US regulated businesses, we expect contributions to be more heavily weighted towards the second half.”

National Grid added that its New York business is expected to deliver between 10% and 15% of its full-year operating profit over the past half-year after being impacted by a non-cash impairment.

The company previously saw profits for the year to March as the electricity distribution business it bought two years earlier grew strongly.

It had seen a 15% rise in underlying operating profit to £4.6billion, while reported pre-tax profit rose 4% to £3.6billion.

Imperial Brands declares £1.1bn share buyback

Imperial Brands will buy back £1.1billion shares after bumper demand and growing sales of smoking alternatives kept the tobacco group on track to meet full-year guidance.

The Golden Virginia and Gauloises owner predicts a modest single-digit percentage increase in net turnover and adjusted operating profits for the 12 months ending September 2023.

Could you get a heat pump fitted for FREE?

Homeowners interested in getting a heat pump fitted may be able to get one for free, or as little as £500 – avoiding the massive bills that have put many off replacing their gas boiler.

One of the major public objections to replacing boilers with greener heat pumps is the installation cost.

Metro Bank shares nosedive amid reports of £600m fundraise to bolster balance sheet

Metro Bank shares lost almost a third of their value on Thursday morning in response to reports that the challenger bank needs to raise £600million to bolster its balance sheet.

Sources told the Reuters news agency the bank, whose market cap was £87million when markets closed last night, is exploring options to raise cash in debt and equity financing, bringing in Wall Street giant Morgan Stanley to advise.

Responding to press speculation at midmorning, Metro Bank confirmed it is ‘evaluating the merits of a range of options, including a combination of equity issuance, debt issuance and/or refinancing and asset sales’.

‘There have long been concerns about Metro’s finances’

Head of investment at Interactive Investor Victoria Scholar:

‘Metro Bank is reportedly looking at ways to raise up to £600 million in debt and equity financing including more than £100 million from selling shares after a steep slide in its share price.

‘The stock is sharply extending losses today down around 25%, bringing its six-month loss to over 60% as investors flee the company. The UK challenger bank which was launched in 2010 is reported to have recently hired Morgan Stanley to help with advice and the potential capital raise. Last month Metro failed to secure regulatory approval to lower certain capital requirements in its mortgage business.

‘There have long been concerns about Metro’s finances – back in 2019 queues formed at some of its branches, sparked by negative comments about its financial position on social media. It also admitted in the same year it faced a major error around how it classified its loan book, sending its shares crashing down by nearly 40% in a single session.

‘Just yesterday, ratings agency Fitch placed Metro Bank on ‘rating watch negative’ reflecting its view that short-term risks to its ‘business model stabilisation, capital buffers and funding have increased’.

‘Metro floated on the stock market in March 2016 at £20 a share. Initially it rallied to a high of over £40 in 2018, but now it trades at around just a fifth of its flotation price, currently at around £4 a share, reflecting the major lack of confidence in the business among investors and its balance sheet woes.’

Metro Bank ‘exploring options’ to raise funds

Metro Bank is exploring options to raise as much £600million in debt and equity financing, reports suggest, as it works to bolster its balance sheet.

The bank’s shares are down 26 per cent in early trading, with losses nearing 50 per cent for the month.

Metro Bank was valued at £87million after the close on Wednesday. Its shares have lost about two thirds of their value since mid-February.

The fundraising could include more than 100 million pounds from selling shares, three of the sources said.

Metro Bank is also looking to refinance existing borrowings and is weighing otheroptions, such as asset sales, to reduce its funding needs, according to Reuters.

Beer robot firm Doosan set for £1bn South Korean listing

A firm behind beer-serving robots was set to make a bumper debut on the stock market in South Korea overnight – valuing it at over £1billion.

Doosan Robotics, the country’s largest maker of service robots, was due to list in South Korea’s biggest initial public offering of the year.

Market open: FTSE 100 up 0.2%; FTSE 250 adds 0.4%

The FTSE 100 has recovered some ground this morning, tracking global peers in breathing a sigh of relief as a recent rout in bonds eased, though shares of Metro Bank have slumped following reports of an urgent capital raise.

The benchmark US 10-year bond yield has retreated from 16-year highs while the US dollar softened, relieving investor anxiety.

Metro Bank shares have slumped 26.7 per cent after press reports said the British mid-sized lender is in talks for an urgent capital raise to bolster its balance sheet.

People familiar with the situation told Reuters that Metro Bank was exploring options to raise as much as £600million.

Imperial Brands has gained 1.4 per cent after the cigarette maker announced a $1.34billion share buyback programme and reaffirmed its annual forecast.

UK bond yields at 25 year high: Global borrowing costs rocket

Britain’s long-term borrowing costs surged to a 25-year high yesterday amid global market turmoil.

The yield paid on 30-year UK bonds hit 5.115 per cent, passing the level of a year ago in the wake of Liz Truss’s disastrous mini-Budget.

‘The FTSE100 remains a few points shy of breaking even for the year’

Richard Hunter, head of markets at Interactive Investor:

‘The sense of relief also permeated Asian markets overnight and followed through to the UK at the open. However, despite the bounce in opening exchanges, the FTSE100 remains a few points shy of breaking even for the year.

‘The switch from high growth stocks elsewhere globally has tended to be towards higher yielding bonds, as opposed to the dependable and somewhat defensive nature of the UK’s premier index.

‘Coupled with a seemingly intransigent view by international investors that the UK is lacking true appeal at present, any such pop in its share prices has of late tended to be of a temporary nature.

‘Indeed, the more domestically focused FTSE250 now finds itself down by 7% in the year to date on increasing concerns for the immediate economic outlook.’

National Grid expects US business to lift second half performance

National Grid expects annual earnings per share to be weighted more towards the second half of the year, with Britain’s energy systems operator confident of meeting full-year expectations.

The group, which also runs an electricity and gas business in New York and Massachusetts, said it expects operating profit to be broadly evenly split across the year for its UK businesses, but more heavily weighted towards the second half for its US ones.

National Grid expects 10 to 15 per cent of its New York business’s full-year operating profit to come in the first half ended 30 September, due to a higher non-cash environmental provision charge.

FCA bosses on the backfoot as they are taken to task over fraud

Build-to-rent giant Grainger enjoys record year

Britain’s biggest builder of homes for rent expects another record year for contruction, with the FTSE 250 group om trak for 1,600 units this year.

‘Our strong performance in delivering rental growth has continued through the remainder of our financial year. The team continue to deliver exceptional operational performance across all areas of the business and particularly in the completion and lease up of our new schemes.

‘Sales remain robust, valuations continue to demonstrate resilience, and our balance sheet remains strong. We continue to successfully execute on our growth plans which will see our post tax EPRA earnings double in the next three years.

‘We are delivering these new homes into one of the strongest occupational markets we have seen. Current leasing at our newly-opened schemes is exceeding underwriting and we continue to drive a step up in rental income across our national portfolio.

‘However, we remain mindful of protecting our customers’ rental affordability and, therefore, continue to ensure that rental growth across our portfolio moves broadly in line with wage inflation.’

Imperial boasts smoking alts growth

Imperial Brands expects full-year profits to be in line with expectations, thanks to sustained demand, higher prices and strong adoption of tobacco alternatives such as e-cigarettes.

The company also announced a share buyback of £1.1billion.

The maker of Winston cigarettes and Backwoods cigars said its net revenue growth for tobacco products improved in the second half of the year, as higher prices helped offset the relatively steeper decline in volume when compared with historic averages.

The Government on Wednesday proposed banning younger generations from ever buying cigarettes, a move that would give the country some of the world’s toughest smoking rules and hurt the sales of major tobacco firms.

Tobacco shares suffered in the wake of the announcement.

Cannes Lions festival firm Ascential targeted by private equity-backed buyout giant

CMA to probe Amazon and Microsoft cloud businesses

Britain’s competition regulator will investigate US tech giants Amazon and Microsoft’s dominance of the UK cloud market, following an Ofcom probe that identified difficulties for UK businesses accessing or switching to multiple providers.

‘The CMA will now conduct an independent investigation to decide whether there is an adverse effect on competition, and if so, whether it should take action or recommend others to take action,’ Ofcom said in a statement.

Ofcom, which started looking into cloud services last year, had said in April it was particularly worried about the practices of Amazon Web Services (AWS) and Microsoft because of their market positions, and planned to ask the competition regulator to investigate.

UK businesses have told Ofcom they were concerned about it being too difficult to switch or mix and match cloud provider, Fergal Farragher, Ofcom’s Director responsible for the Market Study.

‘So, we are referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services,’ Farragher added.





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