AO World lifts forecasts, Compass posts solid full-year growth

Stocks to watch

Electrical retailer AO World lifted full-year forecasts after a surge in interim earnings. The company said it now expected adjusted profit before tax of £39m - £44m, compared with the previous range of £36m - £41m. Interim profits for the six months to September 30 rose 30% to £17m despite a tough summer hit by lower pricing and weak demand for cooling products.

Compass Group reported a 10.6% improvement in full-year revenue on Tuesday, to $42.2bn, with underlying operating profit rising 16.4% to $2.998bn, supported by a 30-basis-point improvement in its operating margin to 7.1%. The FTSE 100 company said it invested $2.6bn in growth initiatives through the 12 months ended 30 September, while returning $1.5bn to shareholders through dividends and buybacks, and maintaining a strong balance sheet with net debt at 1.3x EBITDA. Looking ahead, Compass said it expected high single-digit profit growth in 2025, driven by organic revenue growth above 7.5% and further margin progression.

Newspaper round-up

Britain’s financial sector watchdog is “incompetent at best, dishonest at worst”, according to a damning report by MPs and Lords which called for a big shake-up. An examination of the Financial Conduct Authority, which took almost three years and collected evidence from 175 fraud victims, whistleblowers and the regulator’s former staff, found “there are very significant shortcomings to the FCA”. – Guardian

Casinos and bookmakers in Great Britain will be forced to pay a £100m-a-year levy to fund research, education and treatment of gambling harms, under government plans to be announced as soon as this week. Labour is understood to be poised to rubber-stamp the previous government’s proposal to do away with a voluntary system that allows industry operators to choose how much to donate to tackle damage caused by gambling and which organisations should receive the money. – Guardian

A giant oil discovery in the Falkland Islands is even bigger than originally thought, it has emerged. An independent report into the North Falkland Basin has upgraded estimates of recoverable oil resources from 791m barrels to 917m – twice the annual output of the entire North Sea. Rockhopper Exploration, the company planning to drill in the field, said it planned to extract 532m barrels, up from a previous estimate of 312m. Most of the remainder could be recovered under further plans. – Telegraph

Partners at BDO have been given a 12 per cent pay rise after a record year for Britain’s fifth-largest audit firm, despite the industry regulator’s scathing review of its work. For the first time, BDO’s annual revenue surpassed £1 billion having turned over £1.02 billion in the 12 months to the end of June, almost 9 per cent more than the £935 million it posted in its previous financial year. – The Times

Lord Sugar’s commercial property business, which he runs with his two sons, swung back to a profit last year as the valuation of its portfolio began to stabilise in line with the wider market. The value of Amshold Limited’s buildings, which includes a Premier Inn hotel in Brentwood, Essex, and an Iceland supermarket in Leyton, east London, slipped a further £1.2 million between July 2023 and June this year to £85.7 million. – The Times

US close

Major indices kicked off the holiday-shortened trading week with some solid gains on Monday as markets seemingly celebrated Donald Trump's pick for Treasury boss.

At the close, the Dow Jones Industrial Average was up 0.99% at 44,736.57, while the S&P 500 advanced 0.30% to 5,987.37 and the Nasdaq Composite saw out the session 0.27% firmer at 19,054.84.

The Dow closed 440.06 points higher on Monday, matching gains recorded in the previous session.

Stocks traded higher as sentiment got a boost from news that president-elect Donald Trump had tapped hedge fund manager Scott Bessent to take over as Treasury secretary, in line with the view that the new administration will zero in on boosting economic growth and cutting costs.