Weekly review

Equity view

Convenience food maker Greencore said adjusted annual profits were set to be at the upper end of guidance as it worked to mitigate supply-chain and labour issues in the UK caused by Brexit and the Covid pandemic. The company on Friday said trading had been driven by an increase in demand for takeaway food and new business wins during the fourth quarter.

Business information provider Euromoney said on Friday that adjusted profit before tax for the year ended 30 September was expected to be “significantly ahead” of analysts expectations, before the impact of IAS 38. The FTSE 250 company said that reflected continuing strong growth in subscriptions in pricing, data and market intelligence, people intelligence, and the continuing turnaround in asset management.

Capita has agreed to sell its Secure Solutions and Services (SSS) business to NEC Software Solutions UK, it announced on Friday, for £62m on a cash-free, debt-free basis. The FTSE 250 outsourcing giant described SSS as a provider of software solutions and managed services to the emergency services and justice sectors.

Cybersecurity firm Darktrace tumbled on Friday after shareholders sold 25m shares in a placing. KKR Dark Aggregator LP, Summit DT CLN Holdings 4 and Balderton Capital SFI SLP sold the shares at 750p each.

Wealth and asset manager Mattioli Woods named David Kiddie as chairman on Friday, succeeding Joanne Lake no later than 21 January 2022. Kiddie joined Mattioli Woods' board as a non-executive director in January 2021 and has over 35 years' experience in asset management and investment oversight across different asset classes, having held a number of senior roles at BNP Paribas Investment Partners UK, AMP Capital Investors, ABN AMRO Asset Management and Rothschild Asset.

UK commercial property company CLS Holdings said it had secured two “significant” leases at its assets in Munich and Hamburg. The City of Hamburg has taken 4,183 square metres of space at Nagelsweg 37-39 on a 15-year lease. The second lease is for 2,225 sqm on a five-year term at Lochhamer Schlag 1 in Gräfelfing, near Munich, with FUTRUE, an international healthcare group comprising 20 companies and with more than 70 drug approvals.

Diageo said it made a strong start to the financial year with sales rising in all regions despite supply chain problems. The drinks company said its North American business is performing strongly based on resilient consumer demand, robust off-trade activity and good momentum in the on-trade business. Africa, Asia Pacific and Latin America are performing well though volatility is likely to continue, Diageo said. Sales at airports and other travel hubs remain disrupted.

3i Infrastructure said most portfolio companies had met or exceeded income expectations in the six months to September 29. Income and non-income cash was in line with expectations at £56m, up from £48m a year ago.

Tritax Big Box REIT has raised around £300m in a placing, subscription and retail offer as it looks to accelerate its development plan. The company, which invests in and develops large-scale logistics real estate, had announced the placing late on Wednesday. It said it expects to accelerate its investment into pre-let development projects, speculative developments and to make further investment in drawing down of land and associated infrastructure works.

School buses operator Firstgroup said on Thursday that its Greyhound subsidiary had been awarded an initial funding grant of $84.6m from the US Department of the Treasury. Firstgroup stated that Greyhound received the funding as part of the Treasury Department's coronavirus economic relief for transportation services scheme (CERTS).

AstraZeneca said on Wednesday that its newly-acquired Alexion business will buy the remaining shares of drug maker Caelum Biosciences for up to $500m. The company said it was buying Caelum for CAEL-101, "a potentially first-in-class fibril-reactive monoclonal antibody (mAb)" for the treatment of light chain (AL) amyloidosis.

Online auction platform Auction Technology has now received all antitrust and regulatory clearances - including from the UK’s Competition and Markets Authority - for its acquisition of LiveAuctioneers. The company announced in June that it had agreed to buy the US arts and antiques marketplace for $525m. It said on Wednesday that it now expects the deal to complete "shortly".

SSE announced on Wednesday that its renewables division has signed an agreement with Pacifico Energy, one of Japan's largest developers of renewable energy, to create a joint ownership company to pursue offshore wind energy development projects in Japan. The FTSE 100 power generator said the move to enter Japan's growing offshore wind market would help support the further expansion and diversification of SSE Renewables' longer-term growth pipeline.

UK fashion retailer Next lifted full-year guidance for the fourth time this year after a better-than-expected rise in interim profits as customers flocked to its stores once they reopened from Covid pandemic lockdowns. The company on Wednesday forecast pre-tax profit of £800m, up 6.9% from 2019 and £36m ahead of previous guidance of £764m. Full price sales for the rest of the year were expected to be 10% higher from 2019. However, it also warned over rising prices and staff shortages in the run-up to Christmas.

Life assurance business Abrdn said on Wednesday that it had sold 10.65m shares in asset manager HDFC on the National Stock Exchange of India and the Bombay Stock Exchange. Abrdn sold the shares in HDFC, a joint venture between the Housing Development Finance Corporation and Standard Life Investments, at an average price of RS 2,873.79 (£28.60), which will result in it receiving approximately RS 2.70bn (£268.0m), net of taxes and expenses.

Smiths Group reported a return to revenue revenue growth and an increased final dividend as markets recovered from the Covid-19 crisis. The FTSE 100 engineering group's headline operating profit from continuing operations rose 14% to £372m in the year to the end of July as revenue fell 6% to £2.41bn from a year earlier. On an underlying basis profit rose 7% and revenue fell 2% with revenue growing in the final quarter.

Plumbing and heating products supplier Ferguson on Tuesday posted a rise in annual profits and warned that it also expected a tapering in the second half of the current year on tougher comparatives. The company, formerly known as Wolseley, posted a 46.4% rise in pre-tax profit to $1.89bn for the year to July 31, boosted by home improvement demand during the Covid-19 pandemic.

AstraZeneca said on Tuesday that its Saphnelo (anifrolumab) drug has been approved in Japan for the treatment of adult patients with systemic lupus erythematosus (SLE). The approval by the Japanese Ministry of Health, Labour and Welfare was based on efficacy and safety data from the Saphnelo clinical development programme, including the TULIP Phase III trials and the MUSE Phase II trial.

Close Brothers reported a sharp rise in annual profit and a hefty dividend increase as the financial services group benefited from rising income and lower impairments. Operating pretax profit rose 88% to £265.2m in the year to the end of July from a year earlier as operating income increased 10% to £952.6m. Impairment losses on financial assets fell 51% to £89.8m and banking profit more than doubled to £212.5m from £99.2m.

Greencoat UK Wind said it was buying the Andershaw wind farm in the UK from Norway's Statkraft for £121m. The acquisition will be funded using the company's revolving credit facility and gearing will increase to £1.050bn of outstanding debt, equating to 30% of Gross Asset Value, Greencoat said on Tuesday.

Hikma Pharmaceuticals said it was buying US firm Custopharm from Water Street Healthcare Partners for $375m on a debt and cash-free basis, with a further $50m payable on meeting certain commercial milestones. California-based Custopharm, a generic sterile injectables company with a differentiated product portfolio and R&D pipeline, currently markets its products in the US through its commercial arm Leucadia Pharmaceuticals.

United Utilities said on Monday that trading has been in line with its expectations and that it expects to report a rise in first-half revenue and underlying operating profit amid rising water consumption. The company said current trading is in line with its expectations for the six months ending 30 September 2021. Group revenue for the period is expected to be up 4% on the first half of last year, "mainly reflecting higher consumption, only partially offset by the known regulatory revenue reduction," it said.

Workspace Group has exchanged contracts to acquire Stapleton House, also known as 'the Old Dairy', in Shoreditch, for a total of £43.38m, it announced on Monday. The FTSE 250 company said the property provides 57,000 square feet of net lettable space adjacent to Workspace's business centre, ‘the Frames’, which opened in 2017 following a major refurbishment project.

Insurance group Prudential has raised $2.4bn from its raising in Hong Kong after offering new shares in the company HK$143.80 (£13.51) each, the company said. The majority of the net proceeds, around $2.25bn, was expected to be used to redeem existing high-coupon debt and the rest would contribute to investments in Asia and Africa.

Non-life specialty insurance company Randall & Quilter announced the appointment of Andy Pinkes as the global chief executive officer of its legacy insurance business on Monday. The AIM-traded firm said the appointment followed the recent announcement of Gibson Re, a Bermuda-domiciled sidecar with $300m of capital, which the company said would allow it to support $2bn of legacy insurance reserves.

Economic news

UK manufacturing growth eased to a seven-month low in September amid supply chain issues and labour shortages, according to a survey released on Friday. The IHS Markit/CIPS manufacturing purchasing managers’ index fell to 57.1 from 60.3 in August. Still, it came in above the preliminary reading of 56.3.

Company directors’ confidence in the UK economy has plummeted, according to a survey published on Friday, as costs continue to mount. The Institute of Directors’ Economic Confidence Index slid to -1% in September from highs of 27% in June and 22% in July. It is the first time the index recorded a negative score since January 2021, at the start of the third national lockdown.

Ofgem has enlisted the expertise of a City advisory firm, it emerged on Thursday, to be on standby should the retail energy crisis worsen. Sky News reported that Teneo has been retained by the energy regulator to step in as a special administrator, in case a larger retailer goes under.

The UK economy grew more than initially estimated in the second quarter, according to figures released on Thursday by the Office for National Statistics. The economy expanded by 5.5% between April and June on a quarterly basis, up from a preliminary estimate of 4.8% growth. This left GDP 3.3% below pre-pandemic levels, up from a previous estimate of 4.4% below.

UK car production fell 27% in August, making for the second consecutive month of decline, as the global chip shortage continued to have an effect on the industry. According to the Society of Motor Manufacturers and Traders (SMMT), 37,246 cars were made in the UK in the month, with the shortage of semiconductors leading to production stoppages, as well as the timing and length of some manufacturers’ summer factory shutdowns.

Annual house price growth eased in September, according to data from lender Nationwide on Thursday, as affordability became more stretched. On an annual basis, growth fell back to 10% in September from 11% in August with the average price of a home “little changed” at £248,742, compared to £248,857.

UK households are feeling more downbeat about their finances, a survey showed on Wednesday, as a post-lockdown surge in confidence faded and living costs surged. The Scottish Widows Household Finances Index, which measures overall perceptions of financial wellbeing, dipped to 44.0 in the third quarter from 44.7 in the second and 42.0 in the first.

Mortgage approvals ticked lower in August as demand continued to ease from the highs seen during the stamp duty holiday, official data showed on Wednesday. According to the latest money and credit report from the Bank of England, there were 74,500 mortgage approvals for house purchase in August. That was down on July’s 75,100 and the lowest since July 2020. It was, however, above consensus, with most analysts looking for 73,000, and remains above pre-pandemic levels.

Retail prices are rising as cost pressures feed into consumers' shopping baskets with more to come, industry figures showed. Food prices rose 0.1% in September from a year earlier - the first rise in six months, the British Retail Consortium said. Price rises were led by ambient food where inflation accelerated to 0.8% from 0.3% a year earlier.

UK motorists are continuing to panic-buy petrol leaving filling stations empty within hours of fuel arriving, the petrol station trade body said. Brian Madderson, chair of the Petrol Retailers Association, said as soon as a tanker arrived at a filling station the news spread on social media and motorists empty it.

International events

Consumers in the US grew a bit more confident last month but remained depressed overall, perhaps the most closely-followed sentiment survey revealed. The University of Michigan's consumer confidence index edged up to a level of 72.8 for September from 70.3 in August.

Activity in America´s manufacturing sector picked up slightly last month despite the myriad supply-side afflicting the sector, the results of a closely-followed survey revealed. The Institute for Supply Management's services sector Purchasing Managers' Index picked up from a reading of 59.9 for August to 61.1 in September.

The latest round of Australia-EU free trade talks have been postponed, a European official confirmed Friday, after Canberra's decision to cancel a major French submarine contract caused fury in Paris. "The FTA trade round has been postponed for a month until November," an EU official in Canberra told Agence France-Presse.

Manufacturing activity in the euro area slowed by the most since April 2020 during the preceding month, as supply issues continued to wreak havoc, the results of a closely-followed survey revealed. IHS Markit's Eurozone Purchasing Managers' Index retreated from a reading of 61.4 for August to 58.6 in September.

Factory sector activity in the Chicago region cooled just a tad more quickly than anticipated in September, the results of a closely-followed survey revealed. Market News International's regional business barometer slipped from a reading of 66.8 to 64.7. Economists had penciled-in a dip to 65.2.

The number of Americans filing for unemployment benefits unexpectedly rose last week amid a surge in claims in California, according to figures released by the Labor Department on Thursday. US initial jobless claims pushed up by 11,000 from the previous week’s unrevised level to 362,000. Economists had been expecting a decline to 335,000.

Germany's labour market continued to improve in September, albeit by a bit less than during the preceding months. According to the Federal Labor Agency, the number of unemployment claims dropped by 30,000 during the month while the rate of unemployment was unchanged at 5.5%.

A batch of key surveys for Chinese economic activity in September yielded mixed readings, although economists said that overall they appeared to indicate that further weakness may lie ahead. The official factory sector Purchasing Managers´ Index fell from a reading of 50.1 for August to 49.6 in September (consensus: 50.0).

Euro area residents' confidence in the economy edged higher unexpectedly last month, the results of a closely-followed batch of surveys revealed. The European Commission's Economic Sentiment Index improved from a reading of 117.6 for August to 117.8 in September.

China’s Evergrande is to sell part of its stake in Shengjing Bank for $1.5bn, as the embattled firm looks to raise cash and paydown creditors. The heavily-indebted property developer said it was selling a 19.93% stake in the bank to the state-owned Shenyang Shengjing Finance Investment Group.