BUSINESS LIVE: CMA probes eight housebuilders; Bunzl buys Nisbets; Hipgnosis legal woes

The FTSE 100 is down 0.3 per cent in early trading. Among the companies with reports and trading updates today are Bunzl, Hipgnosis and Begbies Traynor Group. Read the Monday 26 February Business Live blog below.

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CMA’s planning system criticism ‘something of a vindication for housebuilding firms’

Oli Creasey, property analyst at Quilter Cheviot:

‘This morning’s announcement from the CMA regarding the housebuilding market have two separate headlines, with the second being more painful for housebuilding companies than the first.

‘Up first is the conclusion from the CMA’s report that places the blame for slow house-building (the country habitually misses its target for new home deliveries) largely on the planning system that it describes as protracted and unpredictable, as well as under-resourced. That may not be a surprise for anyone who has tried to navigate the planning permission system in recent times, but is something of a vindication for housebuilding firms. The original study was also looking into the industry’s use of landbanks, with early suggestions being whether builders were stockpiling land and artificially slowing delivery. The conclusion instead is that land-banking is a consequence of the slow planning process – i.e. it might make sense to carry multiple years’ worth of land on balance sheet if planning takes years to complete. Housebuilders will be relieved that their strategy has avoided this blame.

‘However, the other headline – that housebuilders may have shared information regarding pricing, incentives and sales rates – is more troubling. While it is not named as a primary factor in the under-delivery of new homes, it is still possible that firms are found to have broken the law, and fines may be levied as a result.

‘It is difficult to judge the probability of this outcome. While the property market does not have a reputation for arch-secrecy, it’s also unlikely that a series of “smoking gun” emails will be found in senior executives’ email accounts. How strong a conclusion the investigation comes to, and what the impact on the housebuilding firms will be, remains to be seen.’

Fury at £1bn ‘toaster tax’ facing Brits under plans to boost recycling

MPs and industry chiefs have warned new Government ‘Net Zero’ proposals could see Britons hit by a £1billion ‘toaster tax’.

The Department for Environment, Food and Rural Affairs is currently consulting on plans to change rules to drive up the re-use and recycling of waste electrical goods.

Bunzl acquires family-owned Nisbets for £339m but warns on margins

Bunzl has acquired an 80 per cent stake in catering equipment firm Nisbets for £399milion, as the group’s takeover strategy continues to power a rise in profits.

The final sale price may increase, with a further earn-out amount payable depending on the group’s financial performance in 2024, while the FTSE 100 firm also has the option to buy the remaining 20 per cent stake in Nisbets in the future.

Ocado Group shares top FTSE 350 fallers

Top 15 falling FTSE 350 firms 26022024

WAG Payment Solutions shares top FTSE 350 risers

Top 15 rising FTSE 350 firms 26022024

CMA warns homebuilding industry requires ‘substantial intervention’

Britain’s housing market needs ‘substantial intervention’ to ensure more high-quality properties are built, the competition regulator has advised.

The Competition and Markets Authority said the undersupply of new homes was caused by a ‘complex and unpredictable’ planning system and the ‘limitations’ of private speculative development.

Revolut still waiting for UK banking licence

Revolut is still waiting for a UK banking licence almost a year after claiming approval was ‘imminent’.

The financial app said on March 1 last year that it would be given the green light by regulators ‘any day now’.

Holidaymakers will face higher air fares this summer due to a lack of planes, Ryanair boss Michael O’Leary warns

Housebuilders under the regulatory spotlight

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

‘Housebuilder stocks have fallen as the CMA launches a probe into the sector. Concerns include poor customer outcomes from the quality of new homes, with faults on the rise over the last ten years.

‘A major trigger for the investigation is accusations that some major housebuilders are sharing confidential and commercially sensitive information relating to sales prices and sales rates.

‘Other criticism is levelled at the UK’s overly clunky planning processes, which are contributing to the under-supply of new homes. Seeing rules streamlined could help some of the big listed names shift more houses, but it could also increase competition.

‘The accusations of poor build quality and anti-competitive practice will be of more immediate importance, as findings against either strike could lead to margin degradation in the short term, but this is far from guaranteed.’

Market open: FTSE 100 down 0.1%: FTSE 250 off 0.2%

London-listed stocks are trading lower this morning, with the FTSE 100 dragged 0.1 per cent lower as base metal miners lose ground on weak copper prices.

There are also declines in homebuilders following the UK antitrust watchdog’s investigation into the sector, which has further pressured equities.

Industrial metal miners are down 1.8 per cent, tracking declines in copper prices on the back of a firmer dollar and rising inventories in top consumer China.

Homebuilders are down 2.2% and lead sectoral declines after the Competition and Markets Authority said it has started an investigation into eight firms to see whether any commercially sensitive information was being shared among the companies.

Investors await comments from Bank of England Deputy Governor Sarah Breeden and chief economist Huw Pill, due later in the day, for clues regarding the timing of interest rate cuts.

Among individual stocks, Wincanton has jumped 10.5 per cent after CEVA Logistics, a unit of French shipping firm CMA CGM, raised its offer to buy the firm to about £604.7million.

Bunzl is down by more than 5 per cent after the business supplies distributor warned its operating margin this year would be slightly below 2023 levels.

DIY investors can now purchase new gilt issues

Investors are now able to invest in newly-issued gilts on the primary market for the first time.

Investment platforms Hargreaves Lansdown and Interactive Investor are the first platforms to announce they will allow DIY investors to participate in government debt auctions to purchase new gilts.

‘Steady Eddy’ Bunzl lifted by acquisitions

Matt Britzman, equity analyst, Hargreaves Lansdown:

‘Bunzl’s the steady eddy you may never have given a second look. Far from a glamourous headline setter, Bunzl gets on with its business of selling essential goods and finding margin accretive acquisitions – and it’s very good at it.

‘There was some revenue weakness over the past year, a mix of volumes coming down in some geographies and normalising prices. A lot of Bunzl’s pricing is correlated with inflation, so as costs for the underlying raw materials come down so does Bunzl’s top line. The key thing to remember is revenue’s still around 28% higher than 2019 levels. Looking forward, volumes should come back but the pricing weakness is a potential headwind for the new year.

‘Strong cash generation and improving margins were highlights of last year. Acquisitions continue to do a lot of the work. There’s added risk with this approach, but in a heavily fragmented industry the deal pipeline is plump and Bunzl’s an expert at finding businesses with good margins at decent prices.

‘As a defensive growth business, there’s a lot to like. If Bunzl can contain the ongoing pricing weakness, then the pipeline of accretive acquisitions can do its job to prop up margins over the coming year.’

Investors will be encouraged to pledge more money towards female-led start-ups

Investors will be encouraged to pledge more money towards female-led start-ups under plans backed by the Government.

Women founders receive just 2 per cent of all UK venture capital – a statistic that has remained stubbornly low.

Bunzl buys Nisbets for £399m

Bunzl has bought catering equipment and consumables distributor Nisbets in the UK for £339million, the distribution group said on Monday as it warned operating margin this year would be slightly below 2023 levels.

The London-listed company said it witnessed a slower-than-expected start to the year in North America, but expected to deliver a slight growth in 2024 revenue helped by a slew of acquisitions made last year.

It also acquired Finland-based company Pamark, Bunzl said in a statement.

Heathrow denies it is shelving plans for a third runway as passenger numbers continue to swell

Heathrow has denied that it is shelving plans for a third runway as passenger numbers continue to swell.

Europe’s busiest airport has pushed back against reports that chief executive Thomas Woldbye wanted to scrap the expansion and was in the process of disbanding the team in charge of it.

In a statement last night, Heathrow said the claims, which were first reported by The Sunday Times, were ‘wrong’ and ‘not reflective’ of its strategy.

CMA probes eight housebuilders

Britain’s competition watchdog has started an investigation into eight homebuilders after it found evidence that indicated potential sharing of commercially-sensitive information among competitors.

The Competition and Markets Authority said the sharing of sensitive information could be influencing the development of sites and the prices of new homes.

‘While the CMA does not consider such sharing of information to be one of the main factors in the persistent under-delivery of homes, the CMA is concerned that it may weaken competition in the market,’ the regulator said in a statement.

The companies include Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow , Taylor Wimpey and Vistry.

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