BUSINESS LIVE: Bumper January budget surplus; HSBC profits hit $30.3bn; BAE Systems


The FTSE 100 closed down 56.70 points at 7662.51. Among the companies with reports and trading updates today are HSBC, BAE Systems, Rio Tinto, Heathrow, and Tate & Lyle. Read the Wednesday 21 February Business Live blog below.

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FTSE 100 closes down 56.70 points at 7662.51

Bereaved families stump up £6.3bn in inheritance tax since April 2023

The Treasury raked in £6.3billion from inheritance tax receipts in the period from April 2023 to January 2024, new data from HM Revenue & Customs shows.

The inheritance tax take for the period was £400million higher than by the same point a year earlier.

The Footsie closes soon

Just before close, the FTSE 100 was 0.73% down at 7,662.79.

Meanwhile, the FTSE 250 was 0.04% higher at 19,116.89.

‘Nvidia is the only stock that matters for many investors at the moment’

Dan Coatsworth, investment analyst at AJ Bell, comments on Nvidia:

Nvidia is the only stock that matters for many investors at the moment. It drove last year’s strong market gains in the US and became the go-to name for anyone wanting to play the AI theme.

Investors have a habit of fixating on a single stock and Nvidia was passed the baton from Tesla which for several years enjoyed its moment in the sun amid the early stages of the electric vehicle boom. It is natural to see a pullback after the initial euphoria and so Nvidia’s results tonight could be the catalyst either for another rally in growth stocks or a market correction.

Sentiment is widely hinged to Nvidia so if its shares fall by a lot in a short period, investors could temporarily lose interest in the market and we could see contagion across the mega cap tech space.

But if it provides enough evidence that AI is supercharging its profits and there are still plenty more opportunities, then we could see investors load up for more, and that positivity could extend to other parts of the market.

Octopus says EV drivers can charge for FREE with new energy tariff

Electric vehicle owners could charge their motors up for free with a new energy deal from Octopus Energy – but it only currently applies to three car models.

The Power Pack deal could save drivers more than £850 a year compared to charging cars on a variable-rate electricity tariff which is subject to the Ofgem price cap, Octopus said.

Housebuilder Vistry defends hiking boss’s pay amid shareholder opposition

(PA) – Housebuilder Vistry has defended the decision to hike the pay package of its boss despite shareholders revolting against the deal.

Vistry said it recognised the concerns people have but was standing by the pay policy.

The company came under pressure in August when new proposals were narrowly approved by shareholders.

Some 45% of votes were cast against the policy which more than doubles the annual bonus that the company’s chief executive can receive, and adds 50% to potential long-term incentives.

It means boss Greg Fitzgerald’s maximum pay package will grow from £3.4million to £5.4million, provided he meets all his targets.

Mr Fitzgerald was paid £2.5million in 2022.

In an update to shareholders on Wednesday, Vistry said the remuneration committee, which is in charge of setting pay levels, “understands that the reasons for the number of votes cast against was primarily concerned with the step up in maximum opportunity for the CEO (chief executive officer) which was in excess of usual levels within the FTSE 250”.

It said the committee “acknowledges these concerns”, but maintains the view that the new policy is aligned with a “highly performance oriented” framework, with pay levels that incentivise bosses to create value for shareholders.

Sir Jim Ratcliffe labels Man United’s organisation ‘not good’

Sir Jim Ratcliffe believes Manchester United‘s culture isn’t geared up to achieve success in a damning assessment following his £1.3billion investment.

The Ineos billionaire saw his purchase of a 27.7 per cent stake in the Old Trafford club confirmed on Tuesday but gave a withering assessment of the set-up he will aim to transform.

Petrol has shot up by 3p a litre in just three weeks – here’s why

The price of fuel has shot up by more than 3p-a-litre in just three weeks, new analysis shows.

The RAC said the average price of a litre of petrol increased by 3.3p from 140p on 29 January to 143.3p at the beginning of this week.

Aldi to create 5,500 new UK jobs this year

(PA) – Aldi is to create 5,500 new jobs this year as the supermarket chain continues its expansion across the UK.

The UK’s fourth largest supermarket group said it is hiring for roles including store assistants, manager and cleaners across new shops.

Aldi UK is also recruiting across its 11 regional distribution centres and for head office positions.

The retailer said store and warehouse assistant will receive a starting salary of £12 an hour, rising to £12.95 nationally, with those within the M25 receiving £13.55, rising to £13.85.

It currently has more than 1,000 stores and employs more than 45,000 workers.

The business has said it plans to grow to 1,500 stores in the coming years, after previously setting a goal of 1,200 shops by the end of 2025.

Giles Hurley, chief executive officer at Aldi UK, said: “Our colleagues work incredibly hard and are without a doubt a huge part of our success at Aldi.

“We continue to welcome more and more customers to Aldi stores every week, not just because of our unbeatable prices and British sourcing, but also our amazing colleagues.

“We are looking forward to welcoming even more colleagues up and down the country to Team Aldi during 2024 as we progress towards our goal of making affordable, quality food accessible to everyone.”

Close Brothers Group shares top FTSE 350 fallers

Top 15 falling FTSE 350 firms 21022024

Top FTSE 350 risers at lunchtime are…

Top 15 rising FTSE 350 firms 21022024

Stocks to watch: Getting off the Magnificent Seven tech bandwagon

If you weren’t invested in the Magnificent Seven tech stocks, investing in equities in 2023 was a bit like treading water in treacle. Heavy going.

Rio Tinto and Glencore profits slump on lower commodity prices

Two of Britain’s largest mining groups reported lower earnings for 2023, following a slump in commodity prices.

Glencore saw its net income plunge by three-quarters to $4.3billion last year, while Rio Tinto revealed post-tax profits tumbled by 19 per cent to $10billion.

Dominic Raab lands job at private equity mining investor

Dominic Raab has been hired as a ‘senior strategic adviser’ at a Pall Mall-based private equity firm focused on mining sector investments.

Appian Capital Advisory has appointed the former deputy prime minister and foreign secretary as a senior strategic advisor on global affairs.

Pawnbroker H&T Group acquires pledge book from Maxcroft

Pawnbroker and retailer of pre-owned jewellery H&T Group has acquired a selection of assets from Essex-based Maxcroft Securities for £11.3million in cash.

H&T shares rose 2.7 per cent or 10.00p to 380.00p on Wednesday, having fallen over 14 per cent in the last year.

Interpol partners with AI-focused Windward amid maritime crime clampdown

BAE Systems sales top £25.3bn amid global surge in defence spending

BAE Systems profits surpassed expectations last year as governments continued ramping up military spending to counter heightened geopolitical threats.

Europe’s largest defence contractor’s sales rose by 9 per cent at constant currency levels to £25.3billion in 2023, £2billion ahead of guidance, thanks to increasing trade across all sectors.

Currys backer Redwheel warns of UK market decline

Currys’ biggest shareholder has warned that the stock market is not fit for purpose.

Redwheel, which owns 14.6 per cent of the London-listed firm, backed the decision by the electrical retailer’s board to reject a £700million takeover offer by US hedge fund Elliott Partners.

Heathrow returns to profit for the first time since the pandemic

Heathrow Airport posted its first adjusted profit in four years on Wednesday, buoyed by strong travel demand in the final quarter of 2023.

The airport, one of the busiest hubs in the world, said adjusted pre-tax profit came in at £38million for the year ending 31 December, against a £684million loss a year earlier.

No dividends were paid in 2023 and none are forecast for this year, but Heathrow said shareholder payouts could be on the cards in 2024, subject to financial performance.

National Express crashes 25% after results delay

The company behind National Express lost as much as a quarter of its value after it delayed its annual results.

The bus, coach and rail operator, which has changed its name to Mobico Group, had planned to publish its figures for 2023 on Thursday next week.

But the company will now do so ‘before the end of March’, it says, after its auditor Deloitte warned that it needed more time to complete its work on the German arm of the business.

HSBC posts record $30.3bn profit despite ‘messy’ final quarter

Market open: FTSE 100 down 0.5%; FTSE 250 flat

The FTSE 100 is in the red this morning on the back of disappointing earnings updates from HSBC Holdings and Glencore , while investors await US Federal Reserve’s last meeting minutes for clues on its policy outlook.

HSBC has lost 6.6 per cent to hit the bottom of FTSE 100, after the lender missed market estimates for annual profit.

Glencore has shed 3.8 per cent as the miner said lower commodity prices had halved its earnings last year, and slashed its payout to investors, as the company saves to fund the acquisition of a 77 per cent stake in Teck Resources’ metallurgical coal business.

Financials and base metal miners have dropped 3.6 and 1.6 per cent, respectively, to lead declines among sectors.

Superdry soars 17% on reports US investor is in talks to buy the troubled fashion chain

Shares in Superdry surged more than 17 per cent after reports that a US investor is in talks about a deal to buy the troubled fashion chain.

New York investment management firm Davidson Kempner is in discussions with Superdry co-founder and chief Julian Dunkerton over potentially backing a deal to take the brand private, according to Sky News.

Heathrow posts first profit in four years

Heathrow Airport has posted its first adjusted profit in four years, buoyed by firm travel demand in the last quarter of 2023.

The airport, one of the busiest hubs in the world, saw adjusted profit before tax come in at £38million for the 12 months to 31 December, compared with a £684million loss a year earlier.

Heathrow added that no dividends were paid in 2023 and forecast none for this year, but said that it was a possibility.

January borrowing and tax figures ‘mixed news for Jeremy Hunt’

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘January’s public finance figures were mixed news for Jeremy Hunt, who had a boost to his coffers, but not one that’s big enough for a Budget bonanza. January tends to be a positive month for tax receipts, so a surplus was always on the cards. In the end, the month delivered £16.7 billion – the biggest January figure since records began 31 years ago – but behind the OBR forecast of £18.2 billion.

‘It offers a few inches of headroom for Hunt, but not enough for a Budget of dramatic tax cuts. However, he does have the opportunity to wiggle into some moves for particular groups, and make changes to ISAs that help support specific groups. .

‘ISAs are part of the furniture – in a good way. They’ve been around for 25 years and are well-established and well loved. Of course, like anything we’ve been wedded to for 25 years, we can always think of ways they could improve. But while small changes would be welcome, the government needs to beware of major reforms that would end up over-complicating things.’

New report confirms UK debanking fears: Customers being dumped because of opinions or lifestyles

HSBC results ‘marred’ by ‘ugly quarter’

Richard Hunter, head of markets at Interactive Investor:

‘HSBC has again flexed its financial muscles with a leap in profits, despite an ugly final quarter which was marred by a large impairment relating to its Chinese operations.

‘Despite the overall strength of the numbers, the share price reaction overnight highlighted some of the concerns which the group is likely to be facing in the coming months. The likely reduction of interest rates globally could remove a plank from a core growth area of late, while the rather messy performance in the fourth quarter could potentially lead to some rather more negative momentum.

‘Indeed, in the group’s own outlook, HSBC is forecasting slow growth for the first half of the year, followed by a gradual recovery, while inevitably the parlous state of the Chinese economy in general and the real estate sector in particular are ominous headwinds.

‘Even so, HSBC is managing to shield itself from economic attack through its sheer size, while also remaining mindful on the importance of continuing to grow the business, especially in areas where it has particular strength. Among the bank’s immediate strategic objectives are to grow its international businesses while also diversifying its revenues, especially in the likes of its wealth businesses in Asia.

‘Apart from the longer term potential for the key Chinese market, the group has also identified areas such as India and Vietnam as being some of the fastest growing economies at present, while the building economic connections between Asia and the Middle East, notwithstanding any geopolitical conflicts, are also emerging opportunities for HSBC with its sprawling footprint.

‘HSBC’s sheer scale and power not only provide an economic shield, but also enable investment in further growth, shareholder returns and fresh areas of fee income such as within its various wealth management businesses. The shares have mirrored the Asian experience overnight and have opened sharply lower in early trade, recognising a disappointing final quarter which took much of the sheen from what was otherwise a strong set of results.’

Rio Tinto lifts dividend despite profit slip

Rio Tinto suffered a 12 per cent profit slump last year, in line with forecasts, but the miner has paid a better-than-expected final dividend on the back of easing cost pressures.

The FTSE 100 firm underlying earnings came in at $11.8 billion for 2023, down from $13.4 billion a year earlier, mostly due to lower prices for aluminium and its minerals division. That was largely in line with the LSEG consensus estimate of $11.7 billion.

Rio declared a final dividend of 258 cents per share, up from 225 cents per share in 2022 and ahead of the LSEG estimate of 247 cents per share.

The £135m man: That’s how much Pascal Soriot has been paid in 12 years at AstraZeneca… with more to come

‘BAE Systems continues to move from strength to strength’

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

‘BAE Systems continues to move from strength to strength, with both its full-year revenue and underlying operating profits coming in ahead of its prior guidance. The group manufactures heavy-duty military equipment like fighter jets, aircraft and submarines, and recent global events are keeping demand for its products strong.

‘Despite being a UK-based company, a whopping 42% of its sales came from the US last year, making it the largest single contributor. On an absolute basis, US military spending trumps any other country in the world, so having a large exposure here is proving very beneficial and has helped the group bring in a record £37.7bn worth of orders in 2023.

‘But BAE Systems isn’t stopping there. The UK’s largest defence contractor sealed the deal on its £4.4bn acquisition of US-based Ball Aerospace last week, which should further increase its footprint on the other side of the pond. Ball has unique positions in critical space and nuclear deterrence technologies, and the deal looks like a good strategic fit.

‘The new business should enhance top-line growth and margins, contributing positively to the group’s expectations for sales and profits to rise at double-digit rates this year. Against a backdrop of elevated global tensions and rising military budgets, the sky’s looking bright for this jet-maker.’

BAE Systems hikes dividend as earnings jump

BAE Systems has hiked its dividend after the British defence group’s earnings soared 14 per cent last year, as the Ukraine war continues to drive government military spending.

The group said it expect further growth in 2024 as government orders for defence equipment surge due to rising geopolitical tensions.

Underlying earnings per share at the country’s biggest defence contractor came in at 63.2p, compared with a consensus forecast of 62.5p, and its guidance of a 10 to 12 per cent rise.

The company, whose biggest customers are the United States, Britain, Saudi Arabia and Australia, recorded sales of £25.3billion last year, up 9 per cent on 2022.

For this year, BAE, which makes submarines and Typhoon fighter jets in Britain, said it expected earnings per share to grow by 6 to 8 per cent on sales which are forecast to rise 10 to 12 per cent.

‘Our performance, combined with our global footprint and record order intake, means we’re well-positioned for sustained growth in the coming years,’ said CEO Charles Woodburn.

HSBC profits hit $30.3bn

HSBC has posted a record pre-tax profit for 2023 at $30.3billion, missing market forecasts after gains from higher interest rates were offset by a hefty $3 billion charge from its stake in a Chinese bank.

The lender’s profits were up 78 per cent from a year earlier but worse than a $34.1billion broker estimate.

But HSBC has rewarded investors with a fresh $2 billion share buyback, and said it would consider a special dividend of $0.21 per share in the first half of 2024 once its Canada disposal is complete.

However, the record-high annual profit was marred by a $3 billion impairment on the bank’s stake in China’s Bank of Communications.

Monzo’s £4bn valuation woe: Digital bank not worth much more than it was three years ago

Monzo is eyeing a valuation of £4billion in its latest funding round – not much more than it was worth three years ago.

The online bank is set to finalise a deal in the next two weeks to raise as much as £350million from old and new investors, according to reports.

Tax under the microscope ahead of Spring Budget

Rachael Griffin, tax and financial planning expert at Quilter:

‘With the government’s spring budget now just two weeks away, the impact of its current tax policy has been laid bare this morning as new HMRC figures reveal PAYE income tax and NIC1 receipts for April 2023 to January 2024 were £336.2 billion, which is £22.7 billion higher than the same period last year.

‘This soaring increase in tax take has persisted despite the fact that these figures include the first month of the government’s 2% cut to National Insurance from 12% to 10% for the main rate of Class 1 employee NICs. Though time will tell whether the cut to NI will cause a slowdown in the rate at which this increase in tax take grows, the fiscal drag effect caused by the frozen income tax thresholds coupled with inflation driven wage growth will likely keep the number ticking up.

‘The cut to NI allows basic rate taxpayers to save a maximum of £754 a year. However, this saving is already being eaten into as households face increased costs elsewhere, such as the increase to council tax which will hit from April. The changes mean the average Band D household will now face an annual bill of £2,168, a rise of £103 compared to the current financial year.

‘Given the pressures on households, rumours suggest the government is considering a further cut to either income tax or NI during the budget. Polls suggest the Conservatives are struggling, so we can expect they will pull out all the stops at the budget in an attempt to sway voters as we near the election. Should a further cut materialise as part of this, we could see tax revenues fall considerably.

‘Inheritance tax had been hitting the headlines as an area for potential change, including suggestions of total abolition, but those rumours have since gone quiet. Given inheritance tax receipts for April 2023 to January 2024 were £6.3 billion, £0.4 billion higher than the same period last year and on track for another record breaking year, the government is likely to leave it well alone. Though higher house prices and frozen thresholds have seen more people caught by the IHT net in recent years, ultimately, it impacts relatively few families but brings in a tidy sum to boost government coffers which it will be unwilling to relinquish – particularly if other tax cuts are on the table.’

UK records biggest budget surplus since 1993

Britain recorded its biggest monthly budget surplus since 1993 in January at £16.7billion as tax receipts soared to £111.4 billion for the month, fresh data from the Office for National Statistics shows.





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