WH Smith lifts full-year guidance, Babcock sells oil and gas aviation business

Stocks to watch

WH Smith on Wednesday lifted full year guidance but warned that 2022 profits were expected to be at the lower end of expectations as the travel sector’s path of recovery from the Covid pandemic remained uncertain. The high street and travel newsagent said group sales in the eight weeks to August 28 were 78% of 2019 levels before the pandemic struck. Results for the year to August 31 were forecast to be slightly ahead of expectations. Travel revenue was 64% at 2019 levels and high street revenue was 84%. Total second half sales were at 65% of those from two years ago.

Defence contractor Babcock International said it had sold its oil and gas aviation business to CHC Group for £10m as part of its disposal programme to cut debt. The Aberdeen-based business provided offshore oil and gas crew transportation services in the UK, Denmark and Australia and generated revenue for the year to March 31 of £154m and a pre-tax loss of £2m and underlying operating profit of £2m. At March 31, 2021, it had gross assets of £256m net assets excluding cash of £21m and net lease liabilities of £142m.

Newspaper round-up

The furlough scheme should be extended to protect workers in industries that continue to be damaged by the pandemic, business groups and unions have said as the job subsidy programme that has supported more than 11 million employees entered its final month. Aviation industry workers and staff at Britain’s airports should be allowed to remain on furlough until next year when travel restrictions are likely to be lifted and the airline industry returns to normal, they said. - Guardian

The UK’s financial watchdog is warning banks to review their potential exposure to financial crime in Afghanistan amid fears of resurgent terrorist activity in the country following the withdrawal of foreign troops. Hours after the last evacuation flight left Kabul airport, the Financial Conduct Authority issued a notice reminding financial firms to guard against money-laundering risks after US military operations were wound down and the Taliban took control of the country. - Guardian

The rogue chief executive of Arm Holdings’ Chinese division has “declared independence” from its UK parent company, an analyst has claimed, after it revealed a host of new chip designs in a bid to win over Beijing. Allen Wu, who leads Arm China, vowed at a conference to launch breakaway designs for artificial intelligence microchips amid a feud with its Cambridge-based owner, which is one of the world's leading chipmakers and is considered a crown jewel of British tech. - Telegraph

The chief executives of the world’s biggest businesses are preparing to go on an acquisition spree as confidence in the global economy returns to levels not seen since the start of the pandemic, a survey has found. A poll of 1,325 business leaders in the world’s largest economies, including 150 in Britain, found that 87 per cent were looking to do deals in the next three years to help boost and transform their businesses. Mergers and acquisitions, joint ventures and strategic alliances were identified as the main strategies for expansion and business transformation by 67 percent of leaders of companies turning over at least $500 million (£365 million) in Britain. - The Times

A post-pandemic makeover is on the cards for 30 Boots shops as it tries to win back shoppers who have switched to buying cosmetics online. The retailer is revamping regional stores from Aberdeen to the Isle of Wight by introducing beauty consultation areas and new brands including Drunk Elephant, Mac and Fenty Beauty, the cosmetics range by the pop star Rihanna. The business is also recruiting 100 “beauty specialists” who can give personalised make-up advice to customers who want to buy a variety of brands, in contrast to the department store model of using brands’ representatives. - The Times

US close

Wall Street stocks closed slightly lower on Tuesday but the S&P 500 still managed to make August its seventh consecutive winning month.

At the close, the Dow Jones Industrial Average was down 0.11% at 35,360.73, while the S&P 500 was 0.13% weaker at 4,522.68 and the Nasdaq Composite saw out the session 0.04% softer at 15,259.24.

The Dow Jones closed 39.11 points lower on Tuesday, extending losses recorded by the blue-chip index in the previous session.

A number of data points were in focus on Tuesday.

First off, average home prices in major metropolitan areas across the US soared 18.6% year-on-year in June, according to the S&P CoreLogic Case-Shiller national home price index, the largest annual gain in history.

The 10-City composite rose 18.5%, up from 16.6% in the prior month, while the 20-City composite was 19.1% higher year-on-year, up from 17.1% in May. Phoenix, San Diego, and Seattle saw the steepest price increases of the 20 cities in the survey, while prices in every city, except Chicago, were at all-time highs.