Yahoo Finance FTSE 100 Live 7 March: Packaging firms agree terms on £5bn mega-merger, index closes up 0.2%
The UK’s largest building society Nationwide shocked the markets today with a £2.9 billion swoop for Virgin Money. It comes as the UK housing market continues its rebound, according to Halifax’s House Price Index.
Elsewhere, it was a busy morning for results with ITV, Aviva, Darktrace and Entain all reporting.
Meanwhile, the FTSE 100 has lost its Budget-day gains, down about 0.2%.
FTSE 100 Live 7 March
Nationwide to buy Virgin Money in shock deal
UK house prices up again
Aviva to return £300m to shareholders
Mondi and DS Smith agree mega-merger
17:11 , Daniel O'Boyle
FTSE 100 packaging giants Mondi and DS Smith have agreed ‘in principle’ on terms of a £5bn mega-merger.
Under the deal, Mondi would pay 373p per share of DS Smith.
DS Smith revealed last month that Mondi had made an approach for the firm to create a new packaging behemoth that would be valued at well over £10 billion.
FTSE 100 closes up 0.2%
16:41 , Daniel O'Boyle
The FTSE 100 built on its Budget gains today, picking up another 0.2% to 7,692.4.
The index was down in the morning, falling as low as 7646, before an afternoon rally.
Rentokil was the day’s big riser, up 18%. Ocado and Anglo American were other top risers.
Entain was the biggest faller.
City Comment: The London Stock Exchange's crisis is only getting worse
16:23 , Daniel O'Boyle
It would be a long stretch to call Spirent Communications a household name.
Indeed, outside the City and the world of telecoms few people are likely to have heard of it. Yet the Crawley-headquartered group is a rare global British success story in its particular field — testing 5G networks.
The business, founded just before the Second World War by an enterprising London ledger clerk called Jack Bowthorpe, floated on the London stock market in 1955. Its shares have been traded here ever since, giving investors the chance to buy into a key technology. But not for much longer.
Another S&P 500 record
15:36 , Daniel O'Boyle
The S&P 500 has hit another record high, at 5,151.
Records have become a frequent occurence this year, thanks mostly to the powerhouse performance of the “magnificent seven” tech stocks.
US stocks near another record
14:55 , Daniel O'Boyle
The S&P 500 is close to yet another record high today, ahead of comments from Jerome Powell that may reveal the path for Federal Reserve rate cuts.
The US benchmark index hit 5143, just short of the record 5146 and up 0.6% for the day.
The Dow Jones is up 0.5% today to 38842, while the Nasdaq is up 0.9% at 16,169.27, also close to a record high.
Ending national insurance will not happen ‘any time soon’, Hunt concedes
14:15 , Daniel O'Boyle
Jeremy Hunt has conceded the newly stated Conservative aim to end national insurance altogether will not happen “any time soon”, despite leaving the door open for more pre-election giveaways.
The Chancellor spent around £10 billion on the 2p cut to national insurance in his spring Budget, although experts have said the UK tax burden is still set to reach a record high.
During broadcast interviews on Thursday, Mr Hunt said he wants to “end the unfairness” of the system but that eliminating contributions altogether would be a “huge thing to do”.
First ECB cut expected in 'mid-year'
13:50 , Daniel O'Boyle
ECB Reaction - Seema Shah, Chief Global Strategist, Principal Asset Management, said: "The latest forecasts lay the foundations for a first ECB rate cut around mid-year. On their own, the downward revisions to both growth and inflation forecasts make a decent case for near-term policy rate cuts, while disappointing industrial production data from Germany only serves to emphasise the need for rate cuts. But the ECB is leaning into its hawkish nature, waiting for further evidence of fading price pressures, particularly from the wage side, before introducing monetary relief.
It is possible that the Fed’s caution with regards to their own rate cutting cycle is also stalling the ECB’s debate a little. But, with euro area economic growth now expected to be just 0.6% and inflation set to undershoot the 2% target by 2026, once the ECB starts cutting, it will cut with some urgency."
ECB revises GDP and inflation forecasts down
13:21 , Daniel O'Boyle
The European Central Bank has revised down its forecasts for both inflation and GDP.
It now sees 2024 GDP growth at 0.6%, rather than 0.8%. It sees core inflation this year at 2.6%, compared to 2.7%.
The new forecasts accompany its latest rates hold.
ECB holds rates
13:16 , Daniel O'Boyle
The European Central Bank has held its interest rates, as expected.
12:59 , Daniel O'Boyle
Profits at luxury fashion giant Prada grew to €671 million in 2023, up 44%.
The growth was thanks in part to the “exceptional momentum” of the Miu Miu brand, where sales were up 58%.
Patrizio Bertelli, Prada Group Chairman and Executive Director, commented: “We are pleased with the strong results achieved in 2023, underpinned by our brands’ desirability. The Group delivered high-quality growth in revenue and profits, building on outstanding creative momentum, further improving its profitability, and stepping up investments to support the growth of tomorrow.”
“Innovation, dynamism, and flexibility will be even more key to our success in 2024, and I am confident that our reinforced organisation will be able to further evolve the Group.”
Market snapshot: FTSE 100 flat
12:55 , Daniel O'Boyle
Take a look at today’s lunchtime market snapshot with the FTSE 100 flat
How will Nationwide’s swoop for Virgin Money impact the UK banking sector?
12:41 , Daniel O'Boyle
Nationwide Building Society has launched a proposed £2.9 billion takeover of smaller rival Virgin Money in a move that will create a UK lending giant.
The move took the City by surprise and is set to catapult Nationwide into second place in the mortgage and savings market.
Here we look at the reasons behind the potential deal and what it will mean for banking customers.
Recruiters Page and Robert Walters reduce headcount in tough labour market
12:25 , Daniel O'Boyle
Recruiters Page Group and Robert Walters both said they had reduced the number of people they put into work last year as they dealt with tougher labour markets.
Robert Walters said its headcount was down 9% to 3,980 at the end of December, while Page’s reduced by 15.7% to 7,859.
Robert Walters said its net fee income dipped 10% to £386.8 million in 2023, as its pre-tax profit fell 63% to £20.8 million in the same period.
MPs call for Post Office removal from Horizon IT scandal compensation schemes
12:17 , Daniel O'Boyle
MPs have called for the Post Office to be removed from compensation schemes linked to the Horizon IT scandal.
The Business and Trade Committee issued a report on Thursday that said the company is “not fit for purpose to administer any of the schemes of redress required to make amends for one of the biggest miscarriages of justice in British history”.
The committee has now demanded an independent body be established to help victims “through every stage of their compensation claims” – describing the current redress process as an “abject failure”.
Budget was a 'damp squib'
11:34 , Daniel O'Boyle
Andrew Goodwin, Chief UK Economist at Oxford Economics, says yesterday’s Budget ‘will do little’ for the UK’s economic or political outlook.
He says: “The UK Budget was a damp squib of small-scale measures that will do little to change the economic or political outlook, in our view. Chancellor Jeremy Hunt implemented a 2p cut in the rates of employees' and self-employed national insurance contributions, along with another freeze in fuel duty.
“These measures will be partially offset by other tax raising measures. The net loosening of policy will provide only a modest boost to our growth forecasts for 2024 and 2025, while subsequent tax rises will drag on GDP further out.”
Melrose ups profit guidance under new boss despite Boeing problems
11:27 , Daniel O'Boyle
Melrose Industries, the former conglomerate turned aerospace specialist, saw profit more than double thanks to a rebound in the aviation sector and raised profit forecasts for next year even higher.
Now under the leadership of Peter Dilnot – his first day as CEO was yesterday – Melrose reported year profits of £420 million, up from £186 million.
Next year, they could go as high as £570 million.
'Hunt should be be much bolder on British ISA'
11:20 , Daniel O'Boyle
Peter Swabey FCG , Policy & Research Director, The Chartered Governance Institute UK & Ireland (CGIUKI), comments on yesterday’s announcement of a ‘British ISA’.
He says: "We are delighted that the Chancellor has increased the annual ISA allowance by £5,000, this is exactly what we asked for when we wrote to him last week. However the stipulation that this extra portion of the ISA annual allowance will be reserved exclusively for "UK equities" will prove very difficult to administer and to enforce, and will inevitably lead to increased fees for investors, because investors will need to set up a second ISA. We urge the chancellor to drop this unnecessary complexity and instead reserve the entire ISA allowance of £25,000 for UK listed stocks. If this is done immediately it can take effect in time for the new tax year."
City Comment: Nationwide buying Virgin Money is an awful deal
11:04 , Simon English
Nationwide Building Society, a prince of the financial world since 1884, today said it would spend £2.9 billion (billion!) of members cash on Virgin Money.
We can assume Nationwide boss Debbie Crosbie is not a customer of Virgin Money, or she’d know it is worth nothing like that. (I am one. Christ.)
Nationwide is selling this deal as if it were a continuation of its mutual principles.
Advisers include three bankers from UBS, four from JP Morgan, four from Goldman Sachs and a bunch of highly paid PR folk.
Which doesn’t exactly scream of mutuality.
Is Nationwide's Virgin Money swoop out of character?
10:23 , Daniel O'Boyle
Nationwide’s deal for Virgin Money, while bold, will be seen by some as out of step for the building society, already getting heat for some controversial ads staring Dominic West which have drawn complaints from rivals including Santander.
The merger is brokered by some of the top bankers in Europe including Goldman Sachs’s Anthony Gutman, who sold Morrisons to private equity for $10 billion.
M&S joint chief Katie Bickerstaffe to step down
10:19 , Daniel O'Boyle
Marks & Spencer has said co-chief executive Katie Bickerstaffe will leave the retailer in July after just over two years in the role.
The high street giant said Ms Bickerstaffe will leave after the group’s annual general meeting to “pursue her board career” with plans to take other roles in company boardrooms.
She was appointed co-chief executive in March 2022, reporting to chief executive Stuart Machin but with responsibility for overseeing areas such as data, digital and technology.
Melrose Industries' shares lose altitude on 'headwinds' warning
09:49 , Michael Hunter
Shares in aerospace firm Melrose Industries are lower this morning after it issued a cautious outlook on the year ahead after a rebound in profit for 2023.
It warned of “headwinds from industry-wide supply chain issues” and “short-term destocking due to the phasing of commercial aircraft build rates.”
That came alongside a rebound in profit from continuing operations for last year, to to £331 million from £62 million.
Shares fell 30p to 602p.
Melrose ups profit guidance despite Boeing issues
09:46 , Simon English
Melrose Industries, the former conglomerate turned aerospace specialist, saw profit more than double thanks to a rebound in the aviation sector and raised profit forecasts for next year even higher.
Now under the leadership of Peter Dilnot – his first day as CEO was yesterday – Melrose reported year profits of £420 million, up from £186 million.
Next year, they could go as high as £570 million.
Melrose makes parts for most jets – clients include Aerospace, GE, Rolls Royce and Boeing.
Boeing’s problems with its 737 jets may hit Melrose, but only in the short term, says Dilnot, who has been at Melrose for five years.
He admitted: “The trouble at Boeing is not good for the industry at large.”
Melrose shares slipped 28pp to 603p today, but it is still valued at £8 billion, making it one of the top 50 companies on the UK stock market.
It says it is fully committed to its London listing, even though 40% of its share owners are US based.
“The market has responded well to our equity case,” said Dilnot.
A dividend of 5p -- £66 million – will be paid.
Company founders including Simon Peckham, who built the business from an acquisitive AIM listed operation, said they would step down earlier this year.
There are issues with supply due to raw material shortages.
Dilnot said: “We have upgraded guidance for 2024 and are confident about unlocking significant further potential of the business going forward.”
Mr Bates wins plaudits for ITV but ad market 'in recession'
09:43 , Simon English
A tough advertising market saw profits plunge at ITV this year with CEO Carolyn McCall pledging to “reshape” the cost base of the broadcaster behind Coronation Street and Love Island.
While ITV’s studio arm and its ITVX Streaming platform are showing signs of progress, profits crashed 60% to £193 million.
McCall says the ad market is in the worst recession “since the global financial crisis” of 2008.
Business leaders think inflation will dip to 3.3% by February 2024
09:42 , Daniel O'Boyle
UK firms expect inflation to dip to 3.3.% in a year, still ahead of the 2% target, according to a survey from the Bank of England.
The February Decision Market Panel, made up of business leaders, found year-ahead inflation expectations were 0.1 percentage points lower than in January.
Panel members said their own prices were set to rise by 4.3% in the year ahead.
Expected year-ahead wage growth remained unchanged at 5.2%. Thatis a figure that the Bank of England likely still sees as too high.
Darktrace shares pop on surprise forecast upgrade
09:36 , Simon Hunt
Darktrace shares popped this morning after the cybersecurity firm delivered a surprise upgrade in its revenue and margins forecasts for the year.
The Cambridge-based business said changes to its marketing strategy were beginning to pay off after some initial bumps in the road.
CFO Cathy Graham told the Standard the firm would now pivot towards slowing hiring in marketing and ramping up recruitment in product and R&D roles to cater to a growing range of new technologies.
She warned of a surge in AI-powered attacks but also of crime-as-a-service, which now represent the majority of attacks.
“These sophisticated attack organisations have a business model that’s very similar to software-as-a-service businesses — you can order credit card numbers in bulk and pay them to go out exploit these,” Graham said.
“It doesn’t occur to people but these are very traditional business models that you would learn at Harvard Business School being deployed on the dark web.
Darktrace reported revenues of £330 million in the second half of 2023, up 27.4% on the previous year, while net profits soared to £53 million.
Darktrace shares jumped 13% to 398p. Its stock has risen more than 50% over the past year, making it one of the strongest performers on the FTSE250.
Mr Bates wins, but ad market tough for ITV
09:29 , Simon English
A TOUGH advertising market saw profits plunge at ITV this year with CEO Carolyn McCall pledging to “reshape” the cost base of the broadcaster behind Coronation Street and Love Island.
While ITV’s studio arm and its ITVX Streaming platform are showing signs of progress, profits crashed 60% to £193 million.
McCall says the ad market is in the worst recession “since the global financial crisis” of 2008.
The studio arm won praise recently for the hit drama Mr Bates v the Post Office, though that business has required significant investment to get going.
Mr Bates was ITV’s most successful drama show in years, it said.
McCall, formerly of The Guardian and easyJet, said cost cuts of £150 million will be delivered by 2025 – a year earlier than planned.
She said: “2023 was the year of peak investment for Streaming, which together with the successful execution of our strategy and the efficiencies delivered to date have made ITV more robust. ITV has a leading, scaled, global Studios business, a high growth Streaming service and a cash generative linear advertising business. This ensures that we are well placed to grow profits from here as we continue to drive material efficiencies, invest behind our strategic priorities and deliver returns to shareholders."
McCall, one of the most high-profile women in business, reported total sales down 2% to £4.3 billion, with TV advertising down 15%.
The shares rose 3p today to 64p which leaves the business valued at £2.6 billion. The stock is down 50% on five years ago.
McCall plans more savings.
She said: “We are now in the early stages of a new strategic restructuring and efficiency programme across the Group to reshape the cost base, enhance profitability, and support the growth drivers of Studios and Streaming.”
Hugo Boss shares tumble on weaker 2025 outlook
09:05 , Daniel O'Boyle
Shares in fashion giant Hugo Boss tumbled today as it revealed that it may not hit its target of €5 billion (£4.3 billion) of sales by 2025.
Performance in 2023 was strong, as operating profits grew to €410 million and sales topped €4 billion. There was growth in all regions and divisions, with womenswear performing especially well.
But the 100-year-old designer warned its sales this year and next could be hit by “persistently weak consumer confidence, which is currently curbing global retail spending”.
“Increasing geopolitical tensions, including the unabated conflicts in Ukraine and the Middle East, pose additional uncertainty in 2024,” it added.
As a result, Hugo Boss may be “slightly delayed” in reaching its €5 billion sales target.
The shares plunged by 18% to €51.50 in Frankfurt.
Rentokil shares soar as US revenues take off
08:34 , Michael Hunter
Rentokil initial flew to the top of the FTSE 100 today, as the multinational pest control firm revealed rising revenues in its US business and upped the estimates of the cost savings it can make there.
The stock surged by over 18% to 507p. The rally came after it reported a 67% rise operating profit before tax of £493 million for 2023.
Revenue rose 45% to £5.4 billion.
The £11 billion firm also said it expected annual savings from its acquisition of US from Terminix to reach $50 million (£39.3 million)
That means total gross and net synergy targets were raised to around .$325 million and $225 million respectively
FTSE 100 slips back overall in opening trade with banks under pressure
08:24 , Michael Hunter
London’s main stock market index is easing back in opening trade, with financial stocks and miners pulling it lower.
The FTSE 100 fell 27 points to 7,652.50, a drop of 0.3%.
HSBC was the biggest single faller as shares in the UK’s biggest bank went ex-dividend, trading without further rights to investor payouts. Its stock fell 24p to 588p.
Standard Chartered was down for the same reason falling 13p to 665p.
Resource stocks were also weaker. Rio Tinto fell 153p to 4922p.
Nationwide-Virgin Money swoop a "power play"
08:21 , Daniel O'Boyle
Mortgage brokers called Nationwide’s shock swoop for Virgin Money a “power play”, that puts it in a position to challenge for the spot of the UK’s top mortgage lender.
Speaking to the Newspage news agency, Ben Perks, managing director at Orchard Financial Advisers, said: “This is quite the power play by Nationwide. This is a merger that could be greatly beneficial for the consumer, as while both lenders have decent systems and processes and they have differing criteria.
“If they can take the best bits from both we would have quite a formidable option available to borrowers. On the flip side, with this merger and the talks between Coventry and Cooperative, it looks like the number of lenders available to borrowers will reduce in 2024. Is this willingness to sell up due to Consumer Duty? Whatever the reason, at a time when borrowers need as many options as possible, it’s a shame to see lender numbers reducing.”
Graham Cox, founder at Self Employed Mortgage Hub, said: “Nationwide is firing a shot across the bows of Halifax with this acquisition, threatening their status as the UK's number one mortgage lender by market share. Nationwide's reach will also increase banking competition on the high street, which can only be a good thing for consumers, given how complacent some of the established banks are.”
Entain reviewing 'all assets' after chaotic year
08:16 , Daniel O'Boyle
Ladbrokes and Coral owner Entain has launched a review of all its brands, raising the possibility that some of its big-name betting brands could be up for sale, after a chaotic year that saw its CEO quit amid activist pressure and the firm deal with major UK gambling reforms.
Entain swung to a huge £878 million loss, mostly due to one-off items. The biggest of those was its settlement of a long-running bribery case related to a since-closed Turkish subsidiary. Underlying profits were stronger, rising to £1 billion, despite difficulties in the UK, Netherlands and Germany amid gambling reforms in each country.
Chair Barry Gibson said: “As our transformation continues the newly formed capital allocation committee has commenced a review of Entain's markets, brands and verticals. The objectives of the review are to help focus the organization, improve competitive positions and maximize shareholder value.”
Finance boss Rob Wood elaborated on the review. He told the Standard that it would focus on “prioritisation”, after recent years had been a “period of transition”. The business went on a buying spree under ex-CEO Jette-Nygaard-Andersen, with some deals upsetting shareholders.
The review, he said, is in its early stages, but covers “all of our assets” with a wide range of possible outcomes.
If all assets are under review, that would suggest that even big-hitter brands like Ladbrokes and Coral could be sold if the right offer came along. Reports earlier this week claimed smaller brand PartyPoker was likely on the auction block, but noted that a sale of Coral couldn’t be ruled out.
“I’ve been here for five or six years,” Wood said. “Every few months there’s always rumours.”
Aviva to pay out £300 million more to shareholders
07:28 , Michael Hunter
FTSE 100 insurance giant Aviva has announced plans to pay out £300 million more to investors today.
The news came alongside annual operating profit of £1.5 billion for 2023 up 9%.
There will also be bigger paydays ahead for shareholders. The £12 billion company upped its guidance for dividend payments, saying it expected to increase payouts “by mid-single digits”.
It said the move came “in light of the significant progress we have made and our confidence in Aviva's future.”
The regular dividend for 2023 went up 8% to 22.3p per share.
It also pointed to potential dealmaking, saying “surplus capital” could be used for “bolt-on M&A”
Aviva also upped the targets covering its financial performance, predicting operating profit of £2 billion by 2026.
Amanda Blanc, group chief executive, said:
"Aviva is financially strong. We are trading consistently well. Our prospects have never been better,” adding:
“We are investing substantially to make service better for our 19 million customers. All the ingredients are in place to ensure Aviva continues to deliver an outstanding performance for our customers and our shareholders. I'm certain we will.”
Nationwide to buy Virgin Money
07:08 , Daniel O'Boyle
Nationwide is set to buy Virgin Money, in a shock deal valuing the bank at £2.9 billion.
The building society is said to pay 220p per share, a 38% premium on Virgin Money’s share price.
Chairman of Nationwide Building Society, Kevin Parry said: "A combination with Virgin Money would accelerate Nationwide's strategy and create a stronger, and more diverse, modern mutual.
“The combination would increase Nationwide's scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average.”
Chairman of Virgin Money UK David Bennett said: "The Board of Virgin Money is pleased that Nationwide recognises the considerable strengths and opportunities that exist across our business, with the potential acquisition delivering attractive value for our shareholders. We are confident that a combination would support an exciting new chapter for Virgin Money to benefit from Nationwide's scale and ambition."
Halifax: House prices rise for fifth straight month
07:05 , Daniel O'Boyle
The average house price in the UK rose again in February, by another 0.4%, according to the Halifax House Price Index.
The typical price of a home is now £291,699, the country’s biggest mortgage lender said, only £1,800 off the all-time high seen in June 2022. It’s the fifth rise in a row after prices slid following a surge in mortgage rates.
Kim Kinnaird, directorof Halifax Mortgages, said: “UK house prices rose for the fifth consecutive month in February, up by +0.4% or £1,091 in cash terms, with the average house price now £291,699.
“On an annual basis, house prices were +1.7% higher than a year ago, slowing from +2.3% in January. However, these figures continue to suggest a relatively stable start to 2024 and align with other promising signs of increased housing activity, such as mortgage approvals.”
FTSE 100 set for steady open
07:05 , Michael Hunter
London’s main share index is expected to slip modestly at today’s open according to futures trade, after US stocks ended higher for the first tine in two sessions overnight.
The FTSE 100 will hand back just 3 points of its 33 point gain notched up yesterday, when it closed at 7679.31.
Asian shares were broadly higher.
The mood of measured optimism on global markets came after the chairman of the Federal Reserve, Jay Powell, signalled a US rate cut was on the cards this year in testimony to Washington lawmakers.
Recap: Yesterday's top stories
06:48 , Simon Hunt
Good morning from the Standard City desk.
So, how was the Budget for you?
That may, or may not, prove to have been Jeremy Hunt’s final “fiscal event” as the ugly jargon has it.
If the election day is later than September, as seems likely, there might be room for one last Autumn Statement mini-giveaway to pep up the voters before they trudge to the polling booth to decide Rishi Sunak’s fate.
But there is still a big difference between being a properly functioning Opposition able to fill all the frontbench shadow roles, and a wipeout leaving the Conservatives as a demoralised rump unable to build a platform for a return to government for at least two Parliaments.
So what will the verdict on Jeremy Hunt be? He has played a terrible hand decently since inheriting the shambles that followed the mini-Budget in September 2022. He probably knew that the Tories’ goose was cooked from the moment that the markets took a look at Kwasi Kwarteng’s numbers and decided they did not add up.
All Hunt could do was pick up the pieces, act like a grown up, and steady the ship with what became known as the “dullness dividend”.The gilt and currency markets have rallied though the stock market remains as moribund as ever. The economy almost, but not quite, avoided the recession that Hunt himself confidently predicted delivering the Autumn Statement in 2022.
But “it could have been worse” is not a mantra you can sell to the electorate.
Here’s a summary of our top stories from yesterday:
Southend owner Esken to be wound up after reaching deal with lender Carlyle but future of the airport is assured for now HUNT
UK’s biggest fund manager L&G sees profits slump more than expected from £783 million to £457 million in first set of results from new CEO.
Ibstock sees 30% fall in brick volumes as profits slump by almost three quarters
William Hill owner 888 set to close struggling US operation at a cost of to $50 million
Capita seeks another £100 million of savings as it swings to £100 million loss
