BT posts fall in profits, Sage reports first half growth

London open

The FTSE 100 is expected to open 22 points higher on Thursday, having closed up 0.21% on Wednesday at 8,445.80.

Stocks to watch

Telecoms giant BT reported a 31% drop in annual profits after taking a £488m impairment of goodwill in the year to 31 March. Reported pre-tax profit totalled £1.19bn, down from £1.73bn the year before, on revenues that were just 1% higher at £20.80bn. Normalised free cash flow was down 4% year-on-year at £1.3bn but ahead of guidance. The company said it now expects to double normalised free cash flow over the next five years, rising to £1.5bn this year, £2.0bn in 2027 and £3.0bn by the end of the decade. "Having passed peak capex on our full fibre broadband rollout and achieved our £3 billion cost and service transformation programme a year ahead of schedule, we've now reached the inflection point on our long-term strategy," said chief executive Allison Kirkby.

Sage Group reported a strong first half on Thursday, with underlying total revenue increasing 10% to £1.15bn, and underlying operating profit ahead 18% year-on-year at £254m. The FTSE 100 software firm recorded an 11% increase in underlying annualised recurring revenue, reaching £2.25bn, alongside progress in expanding its global cloud offer with the acquisition of Bridgetown Software and the introduction of its AI product, Sage Copilot. Looking ahead, Sage anticipated organic total revenue growth for the 2024 financial year to align with the first half, and expected operating margins to continue trending upwards as it focussed on efficient scaling.

Newspaper round-up

The British digger maker JCB, owned by the billionaire Bamford family, continued to build and supply equipment for the Russian market months after saying it had stopped exports because of Vladimir Putin’s invasion of Ukraine, the Guardian can reveal. Russian customs records show that JCB, whose owners are major donors to the Conservative party, continued to make new products available for Russian dealers well after 2 March 2022, when the company publicly stated that it had “voluntarily paused exports” to Russia. – Guardian

Marks & Spencer is teaming up with a recycling technology group to enable the retailer to trace what happens to its drinks bottles, cartons and other plastic packaging. The Polytag system prints an invisible tag on to containers, which can be picked up by electronic readers located at recycling centres. Products featuring the tags will begin appearing on shelves in the next three months. – Guardian

Car salesmen face a shortage of petrol vehicles under Rishi Sunak’s net zero crackdown, one of Britain’s biggest dealership chains has warned. Vertu Motors said sales of electric cars had “stalled” in the UK, raising the risk that manufacturers will miss sales targets mandated by law. Under the zero emissions vehicle (ZEV) mandate, 22pc of carmakers’ sales must be electric this year with the target rising annually until it reaches 80pc in 2030. – Telegraph

Smart water meters must be made compulsory across all households to protect the UK against climate change, the National Infrastructure Commission (NIC) has warned. The government agency is urging ministers to ramp up the roll-out of devices, as it claims water supplies were becoming one of the country’s biggest challenges. Without smart water meters, the NIC said the UK is at heightened risk of drought. – Telegraph

A challenger consultancy firm has been picking up staff recently cast aside by the Big Four as it readies itself for a rebound in merger and acquisition activity. DSW Capital, owner of the Dow Schofield Watts brand, has “invested significantly in recruitment” over the past 12 months. – The Times

US close

Wall Street stocks closed higher on Wednesday as market participants digested April's all-important consumer price index report.

At the close, the Dow Jones Industrial Average was up 0.88% at 39,908.88, while the S&P 500 advanced 1.17% to 5,308.15 and the Nasdaq Composite saw out the session 1.40% firmer at 16,742.39.

The Dow closed 349.89 points higher on Wednesday, extending gains recorded in the previous session as investors thumbed over last month's producer price index, which revealed that US producer prices rebounded more than expected last month after a downwardly revised fall in March, with the annual rate of inflation rising to its highest level in a year.

The Bureau of Labor Statistics said its producer price index increased by 0.5% month-on-month in April, compared with a downwardly revised fall of 0.1% in March, more than expected and bumping the annual rate of inflation up to its highest level in a year.

However, attention quickly turned to today's consumer price index, which revealed consumer goods and services prices increased 0.3% in April, according to the Bureau of Labor Statistics, principally due to higher oil prices and housing costs.