Yahoo Finance British Gas owner Centrica sheds £1.6bn of its value on profit warning
Pound extends post-Budget gains against the dollar as Fed policymakers voice concerns on sluggish inflation; sterling climbs 0.2pc to above $1.33
FTSE 100 retreats into the red as British Gas owner Centrica dives as much as 18pc on profit warning, its sharpest fall in 20 years
Some 823,000 customers deserted the FTSE 100 firm after its recent price hike
Second estimate of UK GDP growth confirms that the UK economy picked up the pace in the third quarter, recording growth of 0.4pc
Markets wrap: Centrica suffers sharpest share price fall in 20 years; pound extends gains against the dollar
With US markets closed this afternoon for Thanksgiving, we're wrapping up the live blog a little earlier than usual so let's have a look at what's made the headlines on the markets today.
British Gas owner Centrica has suffered its sharpest share price plunge in 20 years after the "Big Six" energy provider issued a profit warning and 823,000 customers deserted the FTSE 100 firm in the aftermath of its recent price hike.
The firm is marooned at the bottom of the FTSE 100 after plunging as much as 18pc and shedding £1.6bn of its value as shares slipped to their lowest level since 1999.
Elsewhere, the pound has extended its post-Budget gains against the dollar after US Federal Reserve policymakers stuck a cautious tone in minutes from the latest policy meeting at the central bank.
Sterling has nudged up 0.2pc to £1.3310 against the greenback but has dropped 0.3pc against the euro after a closely-watched PMI survey showed that the booming recovery in the eurozone picked up the pace in the fourth quarter.
Mitchells & Butlers cuts dividend as consumer spending and Brexit fears grow
Fears about Brexit and consumer spending have led pub owner Mitchells & Butlers to ditch its interim dividend and put its next full-year payout under review.
The decision caused investors to spit their beer out as the shares dropped more than 7pc to 239p in spite of the Harvester and All Bar One owner’s sales outpacing rivals.
Chief executive Phil Urban said the business was not as profitable as when the decision was taken to restore the dividend in 2015. This had been caused by growing concerns about consumer spending in light of Brexit and the growing cost pressures put upon the pub industry through business rates and higher wages.
Mr Urban said the move not to pay a half-year dividend - which was 2.5p a share in 2016 - was key in ensuring it could keep investing in its estate and meet other obligations such as debt repayments.
Report by Bradley Gerrard
Centrica on course for lowest share price since 1999; Mothercare the latest victim of retail downturn
Centrica is currently on course to close at its lowest share price since 1999 and since its 2013 peak, its market cap has plunged from over £20bn to just£8bn.
Hargreaves Lansdown analyst George Salmon blamed the latest dose of bad news on Centrica's business-facing units.
He explained:
"Weaker margins as a result of intense pricing pressure on both sides of the Atlantic, plus a £46m write-down, means Centrica is set to miss profit expectations.
"The group says it remains on track to hit cash flows targets this year, and that should support the dividend in February’s full year results. Beyond that, the prospects look far from certain."
Centrica isn't the only sinking stock in London this morning, however. Mothercare has become the latest big name from the retail sector to plunge on the softening UK market.
Its shares have slipped 16pc to a 14-year low after it swung to a first-half pre-tax loss.
British Gas owner sheds £1.6bn of its value on profit warning
All the many self-styled contrarian fund managers who eschew following the herd will no doubt be piling into Centrica this morning...... pic.twitter.com/5MOUpAtNFx
— Nick Reid (@Shinsei1967) November 23, 2017
Usually stocks that plunge early in trading get a bit of a bounce from investors looking to snap up shares on the cheap but Centrica is still languishing at a 17pc loss as we approach lunchtime.
That means it has shedded £1.6bn of its value in a matter of hours following that profit warning. One has to wonder how wise it was delaying its price hikes given the customer exodus in the third quarter.
City Index analyst Ken Odeluga commented that the British Gas owner has handed wary shareholders a good reason to pull the plug.
He added that next year looks quite grim too for the firm:
"The bad news about the group’s annual result is now in, but energy market pressures are unlikely to abate in 2018. That suggests another poor price return for the shares next year. We also expect the return of vocal investor criticism of Centrica’s retention of capital-hungry and sub-scale exploration and production assets."
Dunkirk and Despicable Me 3 push Cineworld revenues up 10pc
Blockbuster hits Dunkirk, It and Despicable Me 3 have helped drive Cineworld revenues up 10.6pc over the past 10 months.
The cinema chain’s box office sales climbed 5.8pc in the UK and Ireland between January 1 and November 19, and 19pc in its overseas markets, mostly in eastern Europe.
Cineworld said: “Growth continues to be driven by the expansion of our estate, the improved results from the ongoing refurbishment programme and the continuing roll-out of our premium formats.”
Retail revenues climbed around 13pc, thanks to increased admissions and new outlets. The chain now has 28 on-site Starbucks shops and 12 VIP lounges.
Read Jack Torrance's full report here
Booming eurozone hits multi-year highs in closely-watched survey
Eurozone #PMI#employment index at 17-year high in November. Record manufacturing jobs growth and decade-high services hiring. Lower unemployment on the way, will help sustain the upturn. pic.twitter.com/ckILt8fPIu
— Chris Williamson (@WilliamsonChris) November 23, 2017
Well that was quite dull so let's get a bit more excitement from across the channel where the eurozone's PMI survey has just been released.
IHS Markit closely-watched PMI survey showed that the eurozone economy is picking up momentum again in the fourth quarter with the headline figure rising to 57.5, its highest level in six-and-a-half years.
Hiring rose at its fastest rate in 17 years while business activity in the manufacturing sector jumped to its highest level since 2000.
The message from the latest survey is clear: business is booming, IHS Markit's chief business economist Chris Williamson commented.
He added:
“There are signs that political uncertainty appears to have subdued business optimism a little, but the broad-based nature of the upturn, and the rate at which rising demand is feeding through to the labour market, suggests the eurozone will see a strong end to 2017 and enter 2018 on a firm footing."
It's quite the contrast to yesterday's grim OBR forecasts for the UK growth but as our own Jeremy Warner pointed out forecasts are there to be (and often are) proved wrong and it should not be forgotten that the eurozone was late to the post-financial crisis recovery party.
Third quarter UK GDP growth confirmed at 0.4pc
0.4% quarter-on-quarter growth in GDP in Q3, unrevised from the preliminary estimate: https://t.co/sZ2OYGFsHV
— ONS (@ONS) November 23, 2017
0.4% rise in services output in Q3 on Q2, same growth as in the previous quarter: https://t.co/8txl8LjilS
— ONS (@ONS) November 23, 2017
No big surprises in the second estimate of third quarter UK GDP growth, which has just dropped from the ONS.
The figures confirmed that the UK economy picked up the pace in the third quarter, recording growth of 0.4pc.
The ONS said that quarterly household consumption growth strengthened to 0.6pc but that business investment growth softened to 0.2pc.
British Gas is hemorrhaging customers
Centrica shares slump 15% following profit warning as customer head for the door pic.twitter.com/RZi6e1DRT3
— Garry White (@GarryWhite) November 23, 2017
British Gas owner Centrica has become the latest blue-chip firm this year to see its shares tank on a profit warning but it has been on the decline for some time now.
Since its record share price four years ago, it has shed 62pc of its value and the Government's energy price cap isn't going to make trading any easier for the "Big Six" energy provider.
The company is hemorrhaging customers with 823,000 accounts lost in just four months.
Centrica, over-reaction? Surely a bid target at these levels - everyone needs heating -British Gas. One normally thinks of utilities as being stable investments. Not today @russelljones25@ZaksTradersCafe
— Ronnie Chopra (@RonnieChopra1) November 23, 2017
ETX Capital analyst Neil Wilson gave this analysis of where it all went wrong:
"In Consumer, margins are being squeezed with account losses and warmer weather but efficiency programmes are alleviating the worst. But British Gas is stilling losing customers and market share.
"In four months between the end of June to the end of October, Centrica lost 823,000 UK energy supply accounts, albeit 650,000 relate to collective switch, white-label fixed price and prepayment tariffs. Nevertheless that leaves 150,000 who have switched to an alternative provider in just four months – the price hike in September clearly had an impact. You have to wonder why Centrica rushed out its plans to reform the energy market – perhaps it’s seeing a larger number of account losses than planned."
Centrica shares plummet as much as 15pc after it loses 823,000 customers in four months
Shares in British Gas owner Centrica plummeted almost 15pc this morning after it warned profits would be lower than market expectations and said it lost 823,000 UK home customers in four months.
The FTSE 100 energy giant said full-year adjusted earnings per share would be 12.5p lower than analyst estimates of around 15.5p, partly thanks to warmer than expected weather in October and November.
Centrica said the decline in customers, between June 30 and October 31, was partly down to its decision to raise prices as much as 12.5pc in August, but blamed “collective switch, white-label fixed price and prepayment tariffs” for the bulk of switchers.
It said it still expects to meet its full-year financial targets, including adjusted operating cash flow above £2bn, but warned “trading conditions continue to be highly competitive”.
Read Jack Torrance's full report here
Agenda: Pound extends post-Budget gains against the dollar as Fed policymakers voice inflation concerns
The pound has extended its post-Budget gains against the dollar after minutes from the latest US Federal Reserve meeting showed a divide at the central bank over lagging inflation.
Sterling initially slipped yesterday on the gloomy GDP growth and productivity forecasts from the OBR but recovered as Chancellor Philip Hammond loosened the purse strings a little and steadied his position at Number 11.
With Fed policymakers’ concerns about sluggish inflation weakening the prospect of a quickening pace of interest rate rises in the US beyond December’s expected hike, the pound has rallied 0.2pc against the dollar to above $1.33.
Asia stock markets mixed after dovish FOMC minutes, Dollar dumped and bonds buoyant on Fed inflation caution. China stocks fell on concerns about new regulations. pic.twitter.com/sJeZCUkhun
— Holger Zschaepitz (@Schuldensuehner) November 23, 2017
There is a smattering of economics data for traders to digest this morning. A second estimate of UK GDP growth is expected to confirm that the economy put its foot on the accelerator in the third quarter, recording 0.4pc growth.
The FTSE 100 has lurched into red early on with British Gas owner Centrica plunging as much as 15pc, its sharpest fall in 20 years, on a profit warning.
After yesterday’s packed afternoon, it’ll (hopefully) be a quieter afternoon with US markets closed for Thanksgiving.
Interim results: Caledonia Investments, CMC Markets, Severn Trent, Worldwide Healthcare Trust, Mothercare
Full-year results: Mitchells & Butlers, Paragon Group
Trading statement: Centrica, Rotork, Domino's Pizza
AGM: Hotel Chocolat Group, Crystal Amber Fund
Economics: GDP second estimate (UK), CBI distributive trades survey (UK), Flash services PMI (EU), Flash manufacturing PMI (EU), ECB monetary policy meeting accounts (EU)
