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FTSE 100 Live: Darktrace cuts earnings outlook, Barratt Developments results, oil near $90, shares fall

 (Evening Standard)
(Evening Standard)

An oil price near to $90 a barrel kept traders on the sidelines today during a bleak session for the FTSE 100 index.

Global growth fears have been stoked by Brent Crude’s highest level since November, driven by Saudi Arabia’s latest production cut.

On the corporate front, WH Smith, Halfords, Barratt Developments and Darktrace have updated investors on their performances.

FTSE 100 Live Wednesday

  • Barratt Developments order book slides

  • FTSE 100 struggles amid oil price worries

  • Halfords benefits from motoring demand

Airlines call for Nats to pay cost of air traffic control failure

Wednesday 6 September 2023 15:22 , Daniel O'Boyle

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Airlines are demanding to be reimbursed for the cost of the August bank holiday air traffic control (ATC) failure.

Industry body Airlines UK said its members should not “carry the can every time we see disruption of this magnitude”.

National Air Traffic Services (Nats) said a technical glitch on August 28 prevented it from automatically processing flight plans, causing widespread disruption.

More than a quarter of flights to and from UK airports were cancelled that day, affecting around 250,000 people.

Read more here

FTSE recovers, but still down

Wednesday 6 September 2023 14:25 , Daniel O'Boyle

The FTSE 100 has picked up from its lows today, but is still down for the day.

NatWest picks boardroom veteran Haythornthwaite to succeed under-fire chair Sir Howard Davies

Wednesday 6 September 2023 14:09 , Daniel O'Boyle

Boardroom veteran Rick Haythornthwaite will be NatWest’s new chair, taking over from under-fire Howard Davies in April of next year.

Davies had already planned to retire next year, but pressure on him to exit ramped up following the controversy over Nigel Farage’s bank account with NatWest-owned Coutts. Farage called for the heads of all of NatWest’s board, after it was revealed that Coutts had kept a dossier of his political positions, which were a factor in shutting his account with the high-net-worth bank.

Now, NatWest has revealed that David will exit at the end of April, to be replaced by Haythornthwaite, who has previously been the chair of Ocado, Mastercard, Centrica and Network Rail. He will initially join the board as an independent director in January, before Davies exits.

Read more here

Ann Summers aims to boost lingerie shop numbers as UK sales climb

Wednesday 6 September 2023 13:35 , Daniel O'Boyle

The Ann Summers lingerie and sex toys chain plans to open more stores after sales stormed back above the £100 million mark.

In the first set of results since former boss Jacqueline Gold died in March the company said it wants to open four to five more before the end of 2024. It currently has 88 branches, including five in London.

Ann Summers has 88 stores and wants to open more (Ann Summers)
Ann Summers has 88 stores and wants to open more (Ann Summers)

In finacial results for the year to June 2022 filed at Companies House the company, owned by Vanessa Gold and the Estate of Jacqueline Gold, said: “Our stores performed strongly, exceeding our expectations.”

It is the latest in the sector to report good demand to return to physical shopping post-lockdowns. Bravissimo last month said High Street stores remain an “important” part of its business.

Read more here

Virgin Money closes flagship branch

Wednesday 6 September 2023 12:53 , Simon English

VIRGIN Money is closing its flagship store on Kensington high street and directing customers to the nearest Post Office.

In a letter to customers the bank said it was a “a difficult decision” and “we’re sorry if this is disappointing news”.

Virgin had made a big play of the branch, presenting it as a high-tech store that could fulfill all bank needs.

It opened in April 2017 and has been modernised since.

A spokesman said: “We’re led by customer demand, and the pace of the shift to digital banking means the branch network needs to evolve. Any decision to close a branch is driven by customer usage and our Kensington High Steet branch has been significantly quieter, with transactions there decreasing by 43% since March 2020.”

A survey by the Competition and Market’s Authority in August rates Virgin Money and RBS as the worst banks in the UK for customer service.

Monzo came top.

Insurers urge ‘extreme caution’ by Government over potential pension changes

Wednesday 6 September 2023 12:27 , Daniel O'Boyle

The Government should exercise “extreme caution” when exploring options for gold-plated pensions, the Association of British Insurers (ABI) has warned.

As part of a package of consultations and calls for evidence issued following Chancellor Jeremy Hunt’s Mansion House speech, the Government sought views on how changes to the defined benefits (DB) pension market could encourage further investment in the UK economy.

DB pensions are often described as gold-plated because they promise pension savers a certain level of income when they retire, based on their salary.

Read more here

UK construction sector propped up by commercial work as housebuilding slumps

Wednesday 6 September 2023 11:38 , Daniel O'Boyle

UK housebuilding fell at the second sharpest rate since 2009 last month, aside from the pandemic, according to a closely-watched survey.

The latest latest S&P Global/CIPS construction purchasing managers’ index scored 50.8 in August, down from 51.7 in July.

Any score above 50 indicates that output has increased, while a score below 50 means it has fallen.

Overall output among construction firms increased in August, driven by a sustained good performance for the commercial building and civil engineering sectors.

Read more here

More Wagamamas on the way, says TRG

Wednesday 6 September 2023 11:03 , Simon Hunt

Wagamama owner The Restaurant Group today upped its profits forecast as it prepared to accelerate store openings of the popular Japanese-themed chain.

The firm said it was now preparing to open 8-10 new Wagamama sites per year in the UK, up from a previous plan of 6-7 per year after sales in the six months to July climbed 7% and it unveiled a “moderate increase” in its earnings outlook.

CEO Andy Hornby told the Standard: “We currently have around 160 sites and we see the potential for around 220.

“We will be going to areas almost entirely away from city centres such as in suburban London but the majority will be outside the M25.”

The picture was less rosy for TRG’s other brands such as Chiquito and Frank & Benny’s, which together saw sales down 3% over the period. The firm said it had “accelerated the rationalisation of the estate,” which would see the number of sites slashed to 76 from 116 last year. Hornby promised staff would be redeployed to Wagamama restaurants where possible.

TRG shares held flat after markets opened.

(Mike Egerton/PA) (PA Archive)
(Mike Egerton/PA) (PA Archive)

Howard de Walden Estate reports improved rental income

Wednesday 6 September 2023 10:49 , Joanna Bourke

The Howard de Walden Estate, which owns swathes of Marylebone, has said demand for shops and Harley Street medical buildings is “often” outstripping supply although that has not been enough to stop the property portfolio value slipping.

Chief executive Mark Kildea said after two years of pandemic disruption, the 12 months to March 2023 was a period of “continued recovery” at the company.

Total group rental income increased 9.2% to £147.8 million as the estate benefited from not having any Covid-19 lockdowns. Revenue profit before tax, which strips out the impact of real estate revaluations, improved 16.7% to £74.9 million.

Read the full story HERE

Ashmore says markets are ready to turn

Wednesday 6 September 2023 10:46 , Simon English

EMERGING markets fund manager Ashmore saw another $11.5 billion disappear from its funds this year as investors remained cautious.

But it says the cycle has turned and this year will be better.

CEO Mark Coombs said: “Ashmore has delivered meaningful investment outperformance for clients this year and momentum is building as the recovery in Emerging Markets continues. There is mounting evidence that the negative cycle has turned and, while the recovery may not be a straight line, it is well-supported by improving fundamentals across the larger emerging countries.”

Most fund groups have struggled lately due to markets being moribund at best, volatile at worst.

Ashmore shares rose 3.5p to 196p today. They are down 8% this year.

It has funds under management of $56 billion. Profits fell 6% to £112 million. Ashmore insists its assets are undervalued and that emerging markets will see much higher economic growth than the UK, the USA and Europe.

There is a growing debate in the City about whether active fund managers can outperform robots that simply track markets.

Ashmore is paying a final dividend of 12.1p a share.

Oil price worries dent FTSE 100, Bakkavor upgrade boosts shares

Wednesday 6 September 2023 10:17 , Graeme Evans

An oil price close to $90 a barrel ensured traders stayed on the sidelines during a bleak session for the FTSE 100 index today.

The latest spike for Brent Crude followed confirmation by Saudi Arabia and Russia that they intend to extend their voluntary supply cuts to the end of the year.

The oil benchmark, which had been $72 a barrel in June, yesterday broke the $90 threshold for the first time since November and stayed close to the mark today.

UBS Global Wealth Management thinks a year-end $95 a barrel is possible, noting the recent decline in US crude inventories and this year’s record oil demand driven by summer air travel and reopening of China’s economy.

The prospect of elevated oil prices keeping inflation higher for longer meant European shares suffered another bout of worries over the peak for global interest rates.

As well as the latest pressure on central banks, the likelihood of higher pump prices has done little for hopes of rebuilding consumer spending power.

The FTSE 100 index fell by a larger-than-expected 0.8% or 62.65 points to 7,375.28, marking its third session in a row of losses.

Blue-chip fallers included luxury goods group Burberry, which dropped 2% or 52p to 2136p, and the contract catering firm Compass after a decline of 37.5p to 1975.5p. Rolls-Royce gave up some of its recent gains by weakening 2% or 4.9p to 214.3p.

The midcap FTSE 250 index also suffered a poor session with a drop of 0.7% or 126.95 points to 18,364.47. The latest interest rate uncertainty meant US-focused publisher Future was among the heaviest fallers, down 20p at 752p.

One of the best performances came from supermarket prepared food supplier Bakkavor, which rose 4p to 103p after adding £4 million to the City’s profit forecasts.

The guidance for a 2023 haul of at least £89.4 million follows restructuring savings, a strong performance in the UK and a post-Covid volume recovery for its China business.

Broker Peel Hunt, which has a price target of 115p, also highlighted the benefit of improved trading visibility due to an easing of cost pressures.

Barratt sees homes order book value falls as conditions set to remain tough

Wednesday 6 September 2023 10:09 , Joanna Hodgson

The chief executive of Barratt Developments, Britain’s largest housebuilder, has called the UK planning system “ineffective” alongside revealing the value of the firm’s forward order book has dropped by over a third.

David Thomas also cautioned the group expects the backdrop “will continue to be difficult over the coming months”.

The industry has seen tough conditions throughout 2023, with demand dented by higher borrowing costs with mortgage bills soaring. The Help to Buy scheme being withdrawn has also made it tougher for many people to get on the property ladder.

Thomas told the Evening Standard: “A number of buyers, mainly first-time ones, have postponed purchase decisions. In London and the South East we have seen some of the biggest challenges, and affordability is a big factor in that.”

Read more here

Darktrace CFO hails strong sales as M&A war chest set to grow

Wednesday 6 September 2023 09:18 , Simon Hunt

The CFO of Darktrace today sought to reassure investors the cybersecurity firm was performing well and was ready for acquisitions after it cut its earnings outlook.

The earnings cut, which revises 2024 EBITDA down from 22% to 17-19%, came as a result of an accounting adjustment following a change in the payments structure for sales commissions, which led to a drop in free cash flow.

Darktrace CFO Cathy Graham told the Standard: “Fundamentally there is an underlying improvement in the business…we would have increased our margins guidance range.

“But we said we don’t want to have an inflated metric so we’re going to redefine our metric in the most prudent way we can.

“It’s not a result of performance, it’s a result of redefinition. It’s not a policy decision it’s just what the rules say.”

Darktrace also today said it was planning to increase its revolving credit facility from the current level agreed with HSBC Innovation Bank in a bid to give it greater bandwidth for acquisitions.

Graham said the move was “to provide us with more flexibility if we were to for example see an acquisition.”

“What this does is say let’s upsize that a little in case you run across something. It’s not our strategy, it’s opportunistic.”

Run-up to general election marked by income stagnation, says think-tank

Wednesday 6 September 2023 09:17 , Daniel O'Boyle

Working-age households are set for a year of income stagnation in the run-up to the next general election, with the current parliamentary term on track to be the worst for living standards growth since at least the 1950s, according to a think-tank.

The Resolution Foundation, which is focused on improving living standards for those on low to middle incomes, said that “never in living memory have families got so much poorer over the course of a Parliament”.

Typical, working-age, household incomes are on course to be 4% lower in 2024-25 than they were in 2019-20 – which is considerably worse than the 1% income fall recorded between 2005-06 and 2010-11, researchers said.

The report looked at comparable UK data going back to the middle of the 20th century.

Read more here

FTSE 100 under pressure, Darktrace falls 7%

Wednesday 6 September 2023 08:33 , Graeme Evans

The FTSE 100 index has fallen by a larger than expected 58.48 points to 7379.45, reflecting uncertainty over the growth outlook after oil prices touched $90 a barrel.

Stocks in the red included housebuilder Barratt Developments, which dropped 7p to 436.3p after posting annual results. The blue-chip fallers board was topped by Burberry and Rolls-Royce following declines of around 2%.

The FTSE 250 index lost 94.72 points at 18,396.70, with cyber security firm Darktrace the worst performing stock after its annual results left shares 7% or 24.4p cheaper at 344.8p.

WH Smith also retreated 3% or 42p to 1442p and emerging markets fund manager Ashmore lost 4.1p to 188.2p in the wake of their respective updates.

In the FTSE All-Share, Halfords rose 3% or 6.4p to 193.2p and Restaurant Group by 0.9p to 44.6p after their trading statements.

Market snapshot as FTSE 100 falls

Wednesday 6 September 2023 08:25 , Daniel O'Boyle

The FTSE 100 fell again this morning, back below 7400, with Rolls-Royce and Burberry among the big losers.

Take a look at today’s key market data.

Halfords reduces cycling emphasis as revenue grows

Wednesday 6 September 2023 07:59 , Daniel O'Boyle

Halfords said that cycling now makes up only 25% of its business, as it aims to focus on less discretionary sources of revenue amid an uncertain economic outlook.

The retailer said motorists were looking for  cheap repairs, helping Halfords’ autocentre sales rise by 16.6% on last year, while retail motoring sales were up by 7.5%.

Cycling sales fell, by 2.7%, with Halfords noting that this part of the business was “adversely affected by unfavourable weather and low consumer confidence”.

Halfords has forecast a return to earnings growth (Halfords/PA) (PA Media)
Halfords has forecast a return to earnings growth (Halfords/PA) (PA Media)

Looking ahead, Halford expects profit for the year to  come to between £48 million and £58 million, with first-half earnings affected by foreign exchange swings, but second-half profit set to be much better.

Investec analyst Kate Calvert said: “Good progress continues to be made with its strategy to become a one-stop-shop for motoring and return to growth. We believe this is not reflected in its valuation. “

Darktrace cuts earning outlook and looks to take on more debt

Wednesday 6 September 2023 07:18 , Simon Hunt

Cybersecurity business Darktrace today cut its earnings outlook for 2024 as it said it was preparing to take on more debt.

The Cambridge-based business said it was now guiding to an FY 2024 Adjusted EBITDA range of 17.0% to 19.0%, down from the 22% it guided in a trading update in July.

It said its planned to increase its rolling credit facility beyond the level currently agreed with HSBC Innovation Bank and was in touch with a number of banks in connection with this.

Darktrace blamed the drop in earnings on a change in policy for sales commissions, which would see payments made up-front rather than over two instalments. The firm confirmed its revenue guidance for 2024.

The firm’s revenue rose 31.3% to $545 million in the year to the end of June, while net profits rocketed to $59 million.

Analysts at investment bank Jefferies said: “Experienced sales leaders are now introducing comp plans that are closer aligned to US software norms, including paying sales commissions up front rather than 50% up front previously.

“This change has accounting implications. But changes that are merely timing differences and ones that ultimately improve the quality of the financials.”

Oil near $90 after supply cuts, FTSE 100 seen lower

Wednesday 6 September 2023 07:13 , Graeme Evans

Brent Crude futures today remained near to $90 a barrel after yesterday’s move by Saudi Arabia to extend its voluntary production cut until December.

The reduction of one million barrels per day and a cut of 300,000 barrels by Russia added to the tight supply outlook, sending the price above $90 for the first time since November in trading yesterday. The benchmark had been as low as $72 in June.

The oil price movement has heightened inflation jitters and kept alive speculation about the possibility of further interest rate rises.

European markets fell for a second successive session yesterday, with CMC Markets expecting the FTSE 100 index to open 26 points lower at 7412 this morning.

US markets finished in the red last night, led by declines of 0.6% and 0.4% respectively for the Dow Jones Industrial Average and S&P 500 index. Technology stocks showed some resilience to leave the Nasdaq Composite near to its opening mark.

Morning refresh: What you need to know to start the day

Wednesday 6 September 2023 06:39 , Simon Hunt

Good morning from the City desk of the Evening Standard.

The demise of Wilko ramped up a gear yesterday after administrators said another 1,332 jobs would be cut and 52 more stores close next week. Bargain retailer B&M said it had struck a £13 million deal to save 51 Wilko stores, but it won’t be keeping the branding in a sign the name could leave the British high street for good.

Across the pond, it turns out it won’t cost you an arm and a leg to get a stake in Arm when its new York IPO comes around. The British chipmaker said it will sell its shares for between $47 and $51 in a bid to raise a little under $5 billion which would value it at around $52 billion, significantly lower than some analyst predictions of as much as $70 billion.

Here’s a summary of our other top headlines from yesterday:

And...a huge 30,000 sq ft “Pocket Planet” attraction is to open on Oxford Street in a former New look store

This morning we’re expecting results from cybersecurity firm Darktrace, investment manager Ashmore and property business Barratt Developments.