Asos flags bottom-end operating profit, Close Bros statutory profit slides

London open

The FTSE 100 is expected to open 16 points lower on Tuesday, having closed down 0.78% on Monday at 7,623.99.

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Fast fashion giant Asos has revealed that operating profits for the full year will come in at the bottom end of expectations and free cash flow will be significantly lower than guidance. In a detailed fourth-quarter trading update, the online retailer said that adjusted like-for-like sales were down 15% in the three months to 3 September, slightly worse than the 14% decline seen in the third quarter. Adjusted gross margins for the second half as a whole were up just 150 basis points year-on-year, below previous guidance of a 200bp improvement, due to the investment in promotional activity to reduce inventory levels. As a result, "EBIT is expected around the bottom of the guided £40m to £60m range, with free cash inflow in H2 now expected to be c.£60m excluding refinancing costs (previously £150m), principally as a result of timing effects that will reverse in September and October."

Close Brothers Group reported a decrease in its full-year statutory operating profit before tax on Tuesday, to £112m from £232.8m, largely impacted by provisions related to Novitas. However, the group saw 3% income growth in banking, with a loan book growth of 5% reaching £9.5bn, and strong net inflows of 9% in Close Brothers Asset Management. The group proposed a final dividend of 45p per share and remained optimistic about the 2024 period, emphasising its stable position and growth potential.

Engineering group Smiths hailed a 20% rise in annual operating profit, driven by volume growth and higher prices which offset the impact of inflation. The company on Monday said profit for the year to July 31 came in at £501m as revenue jumped 18.3% to £3bn. Smiths said it now expects organic revenue growth for 2024 within its medium-term target range of 4-6%, with growth weighted towards the second half of the year.

Newspaper round-up

Stress was one of the biggest contributors to a rise in workplace absences over the past year, according to research that found the number of workers taking sick leave has hit a 10-year high The Chartered Institute of Personnel & Development (CIPD) analysed sickness absence and employee health among 918 organisations representing 6.5 million employees, with 76% of respondents reporting they had taken time off due to stress in the past year. – Guardian

Nissan has vowed to go all-electric in the UK and Europe by 2030 as the car giant’s chief executive said “the world needs to move on” from petrol vehicles. Its commitment to the 2030 deadline comes despite Prime Minister Rishi Sunak last week pushing back a ban on the sale of petrol and diesel cars to 2035. Makoto Uchida reiterated Nissan’s EV timeframe at an announcement in London on Monday, where he unveiled the Japanese manufacturer’s latest battery-powered car design. – Telegraph

The American billionaire Ken Griffin is in talks to help fund a transatlantic takeover bid for The Telegraph led by his fellow hedge fund manager Sir Paul Marshall. Sir Paul, co-founder of the hedge fund Marshall Wace and a joint-owner of GB News, has lined up financial firepower from Mr Griffin ahead of an auction expected to begin within weeks. The discussions are said not to have been finalised and may not lead to a partnership, however. – Telegraph

Offices in London have lost almost a fifth of their value over the past year, much more than blocks in most other European countries. On average, London office values have dropped 17.1 per cent since summer 2022, having fallen in each of the past five quarters, data from BNP Paribas shows. – The Times

The health of Germany’s economy “remains bleak” amid an entrenched downturn in the country’s industrial sector, experts warned after a survey of business activity fell for the fifth month in a row. The German Ifo Institute’s business climate index fell to 85.7 this month, from a revised 85.8 reading in August, as sentiment in Germany’s construction sector slid to its lowest level since 2009. – The Times

US close

Wall Street showed signs of recovery on Monday after four consecutive losing sessions, with all three major stock indices clinching some gains.

However, the market was still overshadowed by concerns about rising bond yields and the Federal Reserve's decision to maintain high interest rates.

By the close, the Dow Jones Industrial Average had managed a modest rise of 0.13%, ending the day at 34,006.88.

That was echoed by the S&P 500, which climbed by 0.4% to settle at 4,337.44, and the Nasdaq Composite, which saw a slightly higher jump of 0.45%, closing at 13,271.32.

In currency markets, the dollar was last 0.22% stronger on sterling, trading at 81.88p, while it managed a more significant rise of 0.58% against the euro to 94.41 euro cents.