Weekly review

Equity view

Safety equipment maker Halma said on Friday that it has agreed to buy Poland’s Sewertronics for up to €59m (£52m). Sewertronics' technology repairs and rehabilitates wastewater pipelines without the need to dig a trench, by inserting a lining into the pipe, which is then cured using its innovative and patented ultraviolet (UV) LED technology.

InterContinental Hotels Group’s chief executive is to step down after more than 30 years with the company, it was announced on Friday. IHG said Keith Barr, who was appointed chief executive in July 2017, will leave at the end of June to return to his native US.

Refractory specialist RHI Magnesita said in an update on Friday that its momentum of improving EBITA and margins continued through the first quarter, despite lower sales volumes, which were in line with management expectations and overall market demand. The FTSE 250 company said refractory sales volumes were 8% lower than the first three months of 2022, driven by a slowdown in construction activity that softened steel and cement demand outside of India and China.

Ithaca Energy on Friday said it had struck a deal with Shell to market the latter’s 30% stake in the giant Cambo North Sea oil and gas prospect. Shell will be able to sell all or part of its current stake. Ithaca will be eligible to buy and part of Shell’s holding not sold to a third party.

British Airways-owner IAG on Friday lifted its full year earnings forecasts on the back of strong summer demand as first-quarter profits beat expectations. The group, which also owns Iberia and Aer Lingus, now expects annual profit to be higher than the top end of its previous €1.8 - 2.3bn range published in February.

Liontrust on Thursday said it had agreed to buy GAM Holding in a recommended deal valuing the Swiss asset manager at 107m Swiss francs (£96m) GAM said clients would benefit from access to a broader range of strategies, services and stability from the combination with its UK bidder.

Travel outlet food operator SSP Group said it was expanding its North America operations through the acquisition of the concessions business of Midfield Concession Enterprise for an undisclosed sum. The deal will give the Upper Crust owner 40 new units at seven airports, expanding its total presence on the continent to more than 30 of the 80 largest airports in the USA, including for the first time at Detroit Metropolitan Wayne County, Denver International, Philadelphia International and Cleveland Hopkins International.

IMI lifted its full-year earnings per share guidance on Thursday following a "strong" performance in the first quarter. In an update for the quarter from 1 January to the end of March, the company said it now expects earnings per share of between 112p and 117p.

Troubled tech firm WANdisco is to fire around a third of its workforce as it deals with the aftermath of an accounting scandal. The company, which had 159 staff, according to its last annual report, said it would axe jobs across all regions and business areas. Its headquarters are in Sheffield and San Francisco, while it also has offices in Newcastle, Belfast, China, South Korea, Japan and Australia.

Packaging and paper group Mondi said on Thursday that its performance in the first quarter was "stable" amid softer demand. In the three months to the end of March, underlying earnings before interest, tax, depreciation and amortisation from continuing operations were €351m, broadly flat on the final quarter of 2022.

Profits at consumer health company Haleon on Wednesday came in below expectations as higher costs hit earnings margins. The maker of Advil and Sensodyne generated adjusted earnings per share of 4.2p on revenue of nearly £3bn, compared with analyst expectations for quarterly profit of 5.24p on revenue of about £2.9bn. re-tacx profit rose to £542m from £465m.

Aston Martin maintained its full-year guidance on Wednesday as it reported a narrowing of its first-quarter losses, with strong growth in deliveries of its sport utility vehicle DBX. In the three months to the end of March, losses before tax narrowed to £74.2m from £111.6m in the same period a year earlier. Meanwhile, revenue rose 27% to £295.9m and wholesale volumes were 9% higher at 1,269, driven by 59% year-on-year DBX volume growth.

Johnson Matthey announced the sale on Wednesday of Diagnostic Services, a business providing specialised detection, diagnostic, and measurement solutions, to UK-based private equity investor Sullivan Street Partners for £55m in cash. Diagnostic Services is a part of JM’s ‘value businesses’ and has been identified as non-core to the company’s growth strategy.

TI Fluid Systems posted a jump in first-quarter revenues on Wednesday as it said it was outperforming markets in all regions. In the three months to the end of March, revenues increased 15.2% from the same period a year earlier to €869.8m. TI, which manufactures and supplies automotive fluid storage, carrying and delivery systems, said growth was delivered by both of its segments and in each of the regions in which it operates.

Watches of Switzerland said on Wednesday that chief financial officer Bill Floydd will be standing down from 12 May by mutual agreement. He will be succeeded by Anders Romberg, who served as the group's CFO from 2014 to 2021. Floydd will remain available to support the transition and a handover of responsibilities until the end of October.

HSBC reinstated its dividend and announced a new round of share buybacks as it trebled first-quarter profits on the back of rising interest rates. The bank posted a pre-tax profit of $13bn for the three months to March against $4.2bn a year earlier and the $8.64bn average company-compiled analysts’ estimates.

Outsourcer and energy services company Mitie said on Tuesday that it has bought R H Irving Industrials, a specialist in security services, for £19.1m. Mitie said the deal builds on its position "as the UK's leading intelligence and technology-led security provider".

Fashion retailer Superdry confirmed on Tuesday that it is in "positive" discussions with certain institutional and other investors about a proposed equity fundraising of up to around 20%. Responding to press speculation, the company said that founder and chief executive Julian Dunkerton "intends to significantly participate in the equity raise and provide a material underwriting commitment, reflecting his confidence in the long-term prospects of the business".

Online trading platform Plus500 said on Tuesday that annual results were set to be in line with market expectations as it has continued to deliver a strong performance in FY2023. In an update ahead of its annual meeting, the company said that as outlined in the first-quarter update last month, key metrics were ahead of the final quarter of 2022.

Ukraine-focused iron ore pellet producer Ferrexpo said on Tuesday that chief executive Jim North will step down after nine years with the group to pursue other opportunities. North will leave his position with effect from 30 June, following an orderly transition process, the company said.

Economic news

The Confederation of British Industry (CBI) has appointed business ethics consultancy Principia Advisory to assist in a review of its culture, according to a report from Sky News. It comes four weeks ahead of a meeting of members to determine the organisation's future.

Activity in the UK housebuilding sector fell at its fastest rate in April since May 2020, according to a survey released on Friday, although broader construction activity rose. The S&P Global/CIPS construction purchasing managers’ index increased to 51.1 from 50.7 in March, coming in marginally above consensus expectations of 51.0. A reading above 50.0 indicates expansion, while a reading below signals contraction.

First-time home buyers are paying nearly £200 more per month on their mortgages, industry research showed on Friday, after rates soared. According to property portal Rightmove, first-time buyers with a 15% deposit are currently paying £1,056 per month, compared to £865 a year earlier. It is, however, lower than the average £1,218 per month paid in October.

Footfall jumped on UK high streets last month, industry data showed on Friday, despite the ongoing cost-of-living crisis and record inflation. According to the latest BRC-Sensormatic IQ footfall monitor, total UK footfall dipped 1.5 percentage points on March in April but was 5.3% higher than April 2022.

The UK competition watchdog has launched a wide-ranging review of artificial intelligence, it was announced on Thursday. The Competition and Markets Authority said the probe would look at so-called foundation models, which include large language models used by advanced chatbots like ChatGPT and generative AI, which can create images that are hard to distinguish from human output.

The UK new car market showed continued growth in April, marking the ninth successive month of expansion, according to the Society of Motor Manufacturers and Traders (SMMT). Its latest figures showed a rise of 11.6% to reach 132,990 registrations in the month, although the market remained 17.4% below pre-pandemic levels in 2019, when 141,583 units were sold.

Mortgage approvals jumped in March, official data showed on Thursday, indicating that the UK housing market was starting to stabilise. According to the Bank of England’s latest money and credit report, mortgage lending to individuals fell from a net flow of £0.7bn in February to net zero in March, the lowest level outside of the pandemic since June 2011.

The UK service sector saw its fastest growth in a year in April, according to a survey released on Thursday. The S&P Global/CIPS purchasing managers’ index for the sector rose to 55.9 from 52.9 in March, coming in above the first estimate of 54.9. This marked the fastest rate of growth since April last year.

Activity in the UK manufacturing sector continued to contract in April, according to a survey released on Tuesday. The S&P Global/CIPS manufacturing purchasing managers’ index fell to 47.8 from 47.9 in March, remaining below the 50 mark that separates contraction from expansion but above the flash estimate of 46.6.

Food inflation hit another record high in April, although wider shop price inflation eased, according to the latest BRC-NielsenIQ shop price index released on Tuesday. Food inflation rose to 15.7% from 15.0% in March, coming in above the three-month average rate of 15.1% and marking the highest inflation rate in the food category on record.

International events

The US economy created more jobs than expected last month, according to figures released on Friday by the Bureau of Labor Statistics. Non-farm payrolls rose by 253,000 from March, comfortably beating expectations for 180,000 jump.

Retail sales in the eurozone fell by 3.8% in March on an annual basis, worse than the 3.1% forecast as the cost-of-living crisis continues to hit consumer spending power, according to official data released on Friday. Sales fell 1.2% on a month-on-month basis.

German factory orders plunged in March, official data showed on Friday, missing expectations and reversing previous gains. According to Destatis, the Federal Statistics Office, new orders in manufacturing fell 10.7% month-on-month, and by 11% on March 2022. That compares to a month-on-month increase of 4.5% in February. Analysts had been expecting a far more modest fall, of around 2.2%.

Growth in China’s services sector was a little weaker than expected in April, according to figures released on Friday. The Caixin services purchasing managers’ index dipped to 56.4 from 57.8 in March, coming in below consensus expectations for a reading of 57.0. Still, it remained above the 50.0 mark that separates contraction from expansion for the fourth month in a row.

US jobless claims rose moderately during the preceding week. According to the US Department of Labor, in seasonally adjusted terms, first time unemployment claims increased by 13,000 to 242,000 over the week ending on 29 April.

An important measure of price pressures emanating from the jobs market jumped past forecasts in the US at the start of 2023. According to the US Department of Labor, in seasonally adjusted terms, unit labour costs rose at a quarter-on-quarter pace of 6.3% in the first quarter.

The European Central Bank went ahead and hiked interest rates again, noting that the inflation outlook continued to be too high for too long. But the lags in policy transmission to the economy were uncertain, so the governing council would continue to act in a data-dependent manner, the ECB said in its policy statement.

Factory gate prices in the euro area fell back by more than expected at the end of the first quarter, amid a decline in energy prices. According to Eurostat, producer prices in the single currency bloc fell at a month-on-month pace of 1.6% in March, as energy prices retreated by 4.8%.

Chinese factory activity slipped in April, according to survey data released on Thursday. The China Caixin manufacturing purchasing managers index, which covers smaller and export-oriented businesses compared to the official PMI, fell to 49.5 from 50 in March, pointing to a contraction in factory output for the first time since January, Caixin and S&P Global said.

The Federal Reserve hiked short-term official interest rates as expected, but left the door open to a pause in its tightening cycle. In its policy statement, the Federal Open Market Committee also stated that the country's banking system was "sound and resilient", while reiterating its "strong" commitment to inflation returning to its 2.0% target.

Reporting by staff and contributors for Sharecast.com.