Weekly review

Equity view

Land Securities has agreed to sell 6-9 Harbour Exchange in East London to Blackstone European Property Income Fund (BEPIF) for £196.5m. The sale price reflects a net initial yield of 3.99%.

Online trading platform IG Group said on Friday it has successfully completed a comprehensive debt refinancing exercise and the implementation of a long-term funding structure. IG has issued £300m worth of unsecured bonds due 2028 and agreed a new £300m committed revolving credit facility with an initial maturity of three years. The company said it has the ability to request an increase in the RCF size to £400m and to request two maturity extensions of one year each, all subject to bank approval.

Diversified Energy on Friday said it had sold undeveloped US shale gas acreage in Texas for around $72.8m. Net to Diversified, the sale includes nearly $33.7m for 22,729 net acres of predominantly undeveloped Haynesville Shale leasehold, and $3.6m for 38 gross Haynesville Shale wells on the acreage.

Housebuilder Redrow said on Friday that 2022 full-year results were expected to be close to pre-Covid levels. Redrow said the value of net private reservations in the 19 weeks to 5 November was 2% higher year-on-year at £672.0m, while private revenue per outlet per week was £309,000, up from £298,000 last year.

Luxury fashion brand Burberry said on Thursday that revenues are now back at pre-Covid levels, as it reported a jump in interim pre-tax profit and reinstated its dividend. In the 26 weeks to 25 September, pre-tax profit rose to £191m from £73m in the same period a year ago, while adjusted pre-tax profit came in at £180m versus £36m. Revenues grew 45% to £1.2bn.

British insurer Aviva said it was meeting its commitment to give back at least £4bn to shareholders after pressure from Swedish activist investor Cevian. The company on Thursday said it had completed £450m of a £750m share buyback, with at least £4bn to be returned by the 2022 half year, and added that it would also meet a £300m cost savings target next year.

TI Fluid Systems tumbled on Thursday after BC Omega - which is indirectly controlled by investment funds advised by Bain Capital - sold 40m shares in the company in a placing. The shares were sold to institutional investors via an accelerated bookbuild at 250p each, raising gross proceeds of £100m.

Auto Trader said on Thursday that it has achieved its highest ever six-monthly revenue and profits following solid performances from both the trade and retail segments. In the six months to 30 September, pre-tax profit rose to £150m from £66.2m, with revenue up 82% at £215.4m. Basic earnings per share came in at 12.63p, up 126%.

UK broadcaster ITV said it expected advertising revenue to hit new records this year, as the economy opened up after the impact of the Covid pandemic. The company said it expected revenues to rise 11% - 13% in the fourth quarter and 24% over the year.

Indivior was under the cosh on Wednesday after US alternative asset management firm Scopia Capital sold 20m shares in the opioid addiction treatment maker in a placing. The shares were placed at 250p each and the placing represents around 2.8% of the issued share capital.

Ibstock has completed the refinancing of its March 2023 £215m revolving credit facility, it said on Wednesday, diversifying its credit sources at attractive rates, while also achieving a significant extension of its debt maturity profile. The FTSE 250 brickmaker said the existing facility had been replaced with the issue of £100m of private placement notes from Pricoa Private Capital, with maturities of between seven and 12 years at an average total cost of funds of 2.19%, and a £125m revolving credit facility with a syndicate of five banks.

Payments company Network International said it had sold its 50% stake in Transguard Cash for $74m (£54.6m). Transguard Cash provided end-to-end ATM and cash-management services for banks and retailers in the UAE “which as an entirely cash focused business, is not aligned with the group's digital payments strategy” Network said on Wednesday.

Housebuilder Persimmon said it was on track to grow new home completions by 10% this year and targeted a return to pre-pandemic trading levels by 2022. In a trading update for the period from July 1 – November 8, Persimmon said the average private new home sales reservation rate per site was around 16% ahead of 2019.

Rolls-Royce said on Tuesday that following a successful equity raise, it has now established its small modular reactor (SMR) business as part of the UK government’s net zero strategy. The aerospace and defence giant said the business has been established "to bring forward and deliver at scale the next generation of low cost, low carbon nuclear power technology".

Sales, marketing and support services group DCC hailed "strong" growth on Tuesday as it reported a jump in first-half profit and revenue and said full-year results were on track to meet market expectations. In the six months to 30 September, pre-tax profit rose to £115m from £102.1m in the same period a year ago, with revenue up 26.8% at £7.5bn. DCC said revenue grew across all four divisions, despite the global volatility in commodity pricing, supply chains and inflation.

Estate agent Savills lifted its full-year profit expectations on Tuesday as it highlighted strength in the UK and Asia Pacific. Savills said that since June, it has continued to trade strongly, particularly in the UK and Asia Pacific regions. It has also started to see the anticipated levels of recovery in Continental Europe and the Middle East and North America, albeit the latter regions have yet to return to 2019 activity levels.

JD Sports Fashion on Monday hit back at reports over a meeting between the retailer’s boss Peter Cowgill and Footasylum chief Barry Brown in an industrial estate car park, leading to claims they may have broken UK takeover rules. The duo were filmed at the weekend sitting in a black Mercedes at Bridge Hall industrial park in July, leading to a probe by the Competition and Markets Authority (CMA) into the meeting, separate to its review of JD Sports’ £90m takeover of its smaller rival.

Playtech confirmed on Monday that it has received a preliminary takeover approach from shareholder Gopher Investments. Responding to press speculation, the gambling software developer said it is in "early stage and ongoing" discussions with Gopher.

Asset manager Abrdn said on Monday that it is currently in talks with private equity firm J.C. Flowers & Co about a potential acquisition of fund platform Interactive Investor. In a very brief statement, the company said there can be no certainty the discussions will result in a transaction and a further announcement will be made as and when appropriate.

UK defence contractor BAE Systems maintained guidance for annual earnings growth and said the recent controversial pact agreed between Britain, Australia and US could be beneficial. The submarine and fighter jet maker said it still expected earnings to grow by 3% to 5% year on year, adding that it had mitigated the impact of global supply chain constraints due to the long-lead positions on its programmes.

Economic news

The Competition and Markets Authority has launched an investigation into whether or not a capacity sharing agreement with respect to driver-accompanied freight shipments on the Dover-Calais route between ferry operators P&O Ferries and DFDS had the potential to "prevent, restrict or distort" competition within the UK. The CMA, which noted the investigation was under Chapter I of the Competition Act 1998, stated it had not reached a view as to whether there was sufficient evidence of an infringement of competition law for it to issue a statement of objections to any party under investigation.

The Water Services Regulation Authority confirmed on Thursday that £67.0m would be repaid to companies or customers as a result of water company performance against their 2020-21 performance commitments. Ofwat said the largest outperformance payment would be made to Severn Trent Water, which will receive £25.0m, while Thames Water and Southern Water will return £53.0m and £46.0m to customers, respectively.

UK house prices have continued to climb, a leading industry survey showed on Thursday, supported by a shortage of homes coming to market. According to the latest RICS UK Residential Market Survey, a net balance of 70% of respondents reported a rise in prices, with the trend predicted to continue over the next three months and the year ahead. It compares to an upwardly-revised net balance of 69% in September, and is the first increase in the house price balance since May.

Sterling has fallen to its lowest level against the dollar this year, weighed down by weaker-than-expected economic growth figures. Data from the Office for National Statistics published on Thursday showed UK GDP had grown by 1.3% between July and September. That was significantly lower than the 5.5% seen in the second quarter, and below analyst expectations for 1.5%.

UK economic growth slowed in the third quarter amid supply chain issues, according to figures released on Thursday by the Office for National Statistics. GDP grew 1.3% between July and September, down from 5.5% in the second quarter and missing expectations for 1.5% growth. That leaves quarterly GDP 2.1% below where it was in the last quarter of 2019, before the pandemic hit.

Supply chain disruptions and a slump in consumer confidence are set to see the UK economy stagnate in the medium-term, a major economic think tank said on Tuesday. The National Institute of Economic and Social Research (NIESR) said in its quarterly update that it expected UK GDP growth to come in at 6.9% in 2021 and 4.7% in 2022 as the economy rebounded from the Covid-19 pandemic, but to then fall to just 1.7% in 2023 and 1.3% in 2024.

Grocery price inflation has surged to a 14-month high, industry data showed on Tuesday, further squeezing already under-pressure household finances. According to retail consultancy Kantar, like-for-like grocery price inflation was 2.1% in the four weeks to 31 October. In the 12 weeks to October end, it was 1.5%.

Retail sales jumped last month, industry data showed on Tuesday, as consumers splashed out on Halloween and got festive shopping underway. According to the latest BRC-KPMG Retail Sales Monitor, total sales grew by 1.3% in October compared to the same month a year earlier, or by 6.3% when compared to October 2019. On a like-for-like basis, retail sales were down 0.2% year-on-year.

Retail experts Springboard revealed on Monday that footfall across UK retail destinations declined 9.3% week-on-week in the seven days ended 6 November. Springboard said the greatest drops were in high streets, down 10.9%, and shopping centres, 11.6% lower, versus a drop of only 3.1% in retail parks.

International events

US consumer sentiment unexpectedly deteriorated in November amid growing worries about inflation, according to a preliminary reading from the University of Michigan. The Michigan sentiment index fell to 66.8 from 71.6 in October and 76.9 in November 2020.

Industrial production in the single currency area dipped in September, dragged down by a drop in the output of capital goods, a key ingredient of long-term growth. According to Eurostat, in seasonally-adjusted terms, total output declined by 0.2% in comparison with the month before, just as expected.

Swiss chemicals group Sika has agreed to buy German rival MBCC Group - the former BASF construction chemicals business - for CHF5.5bn. Sika said the deal is highly complementary across almost all of its core technologies, applications, and solutions, and will be accretive to its earnings per share from the first full year after closing. Annual synergies are expected to be between CHF160m and CHF180m by 2025.

The European Union hiked its expectations for economic growth on Thursday, saying it now expected the common currency area’s economy to expand by 5% this year, up from a previous 4.8%. That prediction was made by the European Commission for all of the EU’s 27 member states as well, and came despite new waves of Covid-19 cases, surging energy prices and supply chain difficulties across the continent.

Initial jobless claims hit another fresh pandemic-era low on Wednesday, with labour shortages and efforts to hire and retain staff putting a cap on the rate of firings and separations across the US. According to the Labor Department, which released its jobless claims report a day earlier than usual due to the Veterans Day holiday on Thursday, initial unemployment claims fell to 267,000 in the week ended 5 November from a revised print of 271,000 for the week before.

US chocolate maker Hershey has agreed to buy Dot’s Pretzels - the owner of Dot’s Homestyle Pretzels - and Pretzels Inc, for around $1.2bn deal. Hershey said Dot's Pretzels is "a perfect complement" to its growing salty snacking portfolio and would create an opportunity to reach new consumers in new occasions, advancing the company’s "snacking powerhouse vision".

The cost of living in the US rose more quickly than expected in October on the back of further spikes in energy and food prices. According to the US Department of Labor, in seasonally adjusted terms, the headline consumer price index increased at a month-on-month pace of 0.9%, which pushed the year-on-year rate up to 6.2%.

China’s factory gate prices surged to a 26-year high in October amid a power crisis, according to figures released on Wednesday by the National Bureau of Statistics. Producer price inflation rose from 10.7% year-on-year in September to 13.5%, versus expectations for 12.3%.

Wholesale prices in the US rose a tad less quickly than expected last month and price pressures were easing in some chapters "at the margin", some economists said. According to the Department of Labor, in seasonally adjusted terms, so-called final demand prices jumped at a month-on-month pace of 0.6% in October, keeping the year-on-year rate of increase at 8.6% - as expected by the consensus.

Investor confidence in Germany has surged, a closely-watched survey showed on Tuesday, beating expectations. The November ZEW Indicator of Economic Sentiment came in at 31.7, a 9.4-point jump on October’s reading and the first time since May it has risen.