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FTSE 100 Live 28 February: St James's Place shares tumble, Vodafone in €8 billion Italy sale

FTSE 100 Live (Evening Standard)
FTSE 100 Live (Evening Standard)

A boost for Vodafone turnaround hopes and the annual results of Taylor Wimpey are among today’s blue-chip highlights.

The London market also heard from consumer healthcare group Reckitt Benckiser and the loss-making pair of Aston Martin Lagonda and Just Eat Takeaway.

Meanwhile, the wrong weather conditions have contributed to a profit warning by car parts-to-bicycles retailer Halfords.

FTSE 100 Live Wednesday

  • St James's Place shares slump

  • Vodafone in £7bn Italy deal

  • Taylor Wimpey profits slide

  • Halfords slashes forecasts

US stocks sink but Beyond Meat bucks trend

15:10 , Simon Hunt

Stocks slid in the opening minutes of trade on Wall Street as investors braced for the prospects of interest rates staying higher for longer ahead of fresh inflation data tomorrow.

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The Dow Jones Industrial Average and the Nasdaq Composite fell more than 0.5%, while the S&P 500 dipped 0.3%.

One notable exception was vegetarian food business Beyond Meat, which saw its stock jump more than 40% after investors were enthused by its new turnaround plan, triggering a short seller squeeze.

But the stock is still down some 80% from its 2019 IPO price.

FTSE Reshuffle: easyJet set and Kier Group promotion, Endeavour mining and Tullow Oil relegation

14:07 , Simon Hunt

EasyJet is set to land back in the FTSE 100 as pent-up travel demand continues, while Endeavour Mining likely to leave the topflight amid CEO departure and higher costs weighing on the business.

Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: ‘’While recovering pre-pandemic form is still proving highly elusive, easyJet’s continued progress has cheered investors, with shares up 9% year to date.

“The ‘revenge travel’ trend is still proving strong, with people still determined to see more of the world again after being cooped up at home during the Covid crisis. Consumers still appear to be ring-fencing chunks of disposal income to spend on airfares, seat upgrades and treats on board, with the desire to travel higher up wish-lists than home purchases like furniture and TVs.

“The company has shown particular prowess at selling extras to customers on flights, and that helped first quarter revenue jump 22%, with losses narrowing again.”

Little has changed at St James's Place, say critics

11:39 , Simon Hunt

CEO Mark FitzPatrick said, in his first set of results since taking the top job in December: “We recognise that this is a disappointing outcome for everyone.”

SJP was fined £250,000 by the City watchdog in 2003 for “serious” inadequacies in its record keeping.

Critics say little has changed and that the problems at SJP are part of a wider shift away from traditional financial services providers with high charges that hit client returns.

Yesterday Abrdn, the merged Aberdeen Asset Management and Standard Life business, fell to a £6 million loss as clients withdrew £17.6 billion of funds. Numis said in a note: “It is disappointing to see another piecemeal warning/major adverse development to the investment story in our view, rather than seeing these issues dealt with comprehensively on one occasion.”

FTSE 100 falls despite Vodafone and Rolls-Royce progress, JD Sports higher

10:20 , Graeme Evans

Vodafone boosted the recovery of its shares today by revealing a deal to sell its Italy operation for an enterprise value of eight billion euros (£6.8 billion).

The proposed sale to Swisscom is part of a turnaround plan that has already seen boss Margherita Della Valle strike deals to offload operations in Spain and merge with Three in the UK.

Shares jumped 3.5% or 2.4p to 70.8p, extending gains since the stock’s two-decade low earlier this month to 12%.

The mobile phone giant was joined at the top of the FTSE 100 index by JD Sports Fashion, which put back 3.65p to 118.55p.

The rebound came as UBS said a valuation at the bottom of JD’s 10-year range created a buying opportunity for a company with a “better-than-encouraging” medium-term growth outlook. The City firm gave the shares a 178p target.

Other retail stocks also fared well as discounter B&M European Value put on 8p to 525.2p and Marks & Spencer cheered 3.1p to 242.9p.

Rolls-Royce joined them on the risers board as the FTSE 100’s best performing stock of the past year benefited from more favourable broker comment.

Deutsche Bank’s improved target price of 465p helped shares put on another 5.3p to 363.9p.

The gains failed to inspire the wider FTSE 100 index, which dropped 36.35 points to 7646.67 amid weakness in the commodities sector.

Warehouse owner Segro was among the fallers, down 8p to 841.2p after it carried out a £907 million City fundraising at a 3.4% discount to last night’s closing price.

The placing, which drew strong support at 820p, will give Segro the firepower to add profitable growth opportunities to its development pipeline.

The FTSE 250 index dropped 136.46 points to 19,027.20, with easyJet 5p lower at 554.1p despite its imminent FTSE 100 promotion in next month’s reshuffle.

SJP shares crash 30%

09:13 , Simon English

SHARES in St James’s Place crashed 30% today as the once grand member of the insurance establishment set aside £426 million for possible refunds to clients.

SJP was founded in 1991 by Sir Mark Weinberg with the backing of Jacob Rothschild, the financier who died a few days ago at 87.

The business set itself up as a provider of elite financial advice to wealthy clients but was always dogged by allegations that its charges were excessive.

Regulatory scrutiny and customer complaints have increased over the years.

Today SJP reported a loss of £9.9 million compared to a profit last time of £407 million. The dividend has been more than halved to 23.83p with future payouts clearly at risk.

The provision of £426 million has been “established for potential client refunds linked to the historic evidencing and delivery of ongoing servicing”.

CEO Mark FitzPatrick said, in his first set of results since taking the top job in December: “We recognise that this is a disappointing outcome for everyone.”

SJP was fined £250,000 by the City watchdog in 2003 for “serious” inadequacies in its record keeping.

Critics say little has changed and that the problem at SJP are part of a wider shift away from traditional financial services providers with high charges that hit client returns.

Yesterday Abrdn, the merged Aberdeen Asset Management and Standard Life business, fell to a £6 million loss as clients withdrew £17.6 billion of funds.

Alan Miller, founding partner of SCM Direct, said: “The two dinosaurs - SJP and Hargreaves that have been feasting on their clients for years through exorbitant fees and charges are facing slow and remorseless extinction. They only have themselves to blame.”

Fitzpatrick says the outlook for his industry is “challenging”.

As the shares tumbled 32% to 422p, he added: “"It has been a challenging backdrop for UK savers and investors, but it is at times like these that advice really makes a difference, helping people stay on course to meet their long-term financial goals. Against this background, the hard work of everyone in our SJP community to keep delivering for clients has driven a resilient business performance where we've achieved continued strong net inflows underpinned by high client retention, strong investment performance, and record funds under management.”

St James's Place slides in weaker FTSE 100, Halfords down 23%

08:34 , Graeme Evans

The FTSE 100 index is down 21.87 points to 7661.15 amid heavy results-day falls for the shares of Taylor Wimpey, Reckitt Benckiser and St James’s Place.

The wealth manager’s slump of 28% or 173.9p to 447.1p came as it revealed a loss due to the impact of setting aside £426 million for client refunds.

Worse-than-expected fourth quarter figures by Reckitt caused the consumer healthcare group’s shares to fall by 9% or 510p to 5328p. Taylor Wimpey lost 2% or 3.5p to 137p despite signs of an upturn in market conditions.

Vodafone’s Italy deal meant shares led the FTSE 100 index, up 2p to 70.4p alongside gains for JD Sports Fashion and NatWest.

The FTSE 250 index fell 67.45 points to 19,096.21, with Aston Martin Lagonda down 2.6p to 173.9p following annual results. In the FTSE All-Share, the profits downgrade by Halfords caused its shares to slump 23% or 46.4p to 154.2p.

Weak sales in China help push Aston Martin to another year of losses

08:06 , Simon Hunt

Aston Martin posted another year of losses this morning as it was hit by weak sales in China, one of its biggest markets.

The firm said “wholesale volumes in APAC were impacted by lower sales in China, which decreased by 47% compared to 2022, which more than offset growth in wholesale volumes,” adding: “China continues to be a market where we see significant opportunity for long-term growth.”

Total car sales fell 20% in Asia in 2023, but rose 30% in Europe and the Middle East. But there were signs of a rapidly weakening market in North America, with car sales down 25% and SUV sales down 50% in the fourth quarter.

The firm posted a loss for the year of £240 million, smaller than the previous year, while revenues rose 18% to £1.6 billion.Aston shares fell 2% to 172p.

Reckitt Benckiser misses expectations for the fourth quarter as cold and flu sales falter

07:57 , Michael Hunter

Reckitt Benckiser missed City expectations for the fourth quarter, when sales of flu and cold treatments slowed.

The maker of Nurofen and Strepsils reported a drop in like-for-like sales of 2%, hit by strong comparisons from the previous year, when demand for medicines shifted more into the the fourth quarter from the third.

Overall, the multinational consumer goods giant reported annual operating profit of £3.4 billion, down 1.9% for 2023. Net revenue for the year rose 3.5% to £14.6 billion

Chris Licht, CEO, called the last quarter “unsatisfactory” in part because “of the shape and phasing of the colds and flu season” and “a voluntary recall in our nutrition business”.

The recall involved Nutramigen, a baby food, three batches of which tested positive for a bacterial contamination.

Licht also said on a conference call that there was “an understatement of trade spend” in two Middle Eastern markets, which he said was “an isolated incident by a small group of employees ... and we have taken necessary disciplinary action”.

The understatement meant Reckitts’s full year net revenue performance was £55 million lower than previously expected in terms of its forecasts, rather than booked revenue. It said the impact, from “an under-reporting of liabilities” ... “is fully reflected in our Q4 results”

The employees have left the business and “did not have any oversight outside of their geography”, it added.

Just Eat impairment leads to €1.8 billion loss amid 'lower than expected order levels'

07:39 , Simon Hunt

Just Eat posted a €1.8 billion loss after a huge write-down in the value of its investments and the amortisation of its technology.

The food delivery giant said it would have posted a small profit were in not for the impairment.

The firm said: “The impairment in the United States and Canada was mainly driven by lower-than-expected order levels in the short-to-medium term resulting from market competitiveness.”

Overall revenue for 2023 slid 7%, led by 18% and 16% slides in sales in Southern Europe and North America. Revenues were broadly flat in the UK.

Housing market slowdown halves profit at Taylor Wimpey

07:31 , Michael Hunter

FTSE 100 house builder Taylor Wimpey revealed the extent of the impact of the housing market slowdown this morning.

Its operating profit halved to £470.2 million, with revenue down by over a fifth to £3.5 billion for 2023.

The drop came for a year when mortgage costs steadily rose, in line with hikes in interest rates from the Bank of England, which took the base cost of borrowing to 5.25% by August, a 16-year high.

Even as mortgages got less affordable, constricting demand for home loans, house prices kept rising. The   UK average selling prices on private completions rose 5.1% to £370,000 with the overall average selling price up 3.5% to £324,000.

Chief executive, Jennie Daly, pointed to some signs of improvement in the market:

“It is still early in the year and the macroeconomic backdrop remains uncertain, however it is encouraging to see some signs of improvement in the market, with reduced mortgage rates positively impacting affordability and customer confidence.”

On the Competition and Markets Authority’s probe into house builders – announced on Monday and which will look into allegations that eight firms shared commercially sensitive information – the company said:

“Taylor Wimpey notes the new investigation opened by the CMA under the Competition Act 1998, and we will cooperate fully in relation to this.”

Voda in £7 billion Italian deal

07:30 , Simon English

VODAFONE today said it is in talks with Swisscom about a sale of its Italian arm for e8 billion – almost £7 billion.

That’s the “enterprise” value of the deal, which includes the value of the debt.

In a short statement Voda said: “Vodafone has engaged extensively with several parties to explore market consolidation in Italy and believes this potential transaction delivers the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders.”

Those shareholders have been frustrated of late, with the stock down 33% in the last year to 67p, which leaves the business valued at £18 billion.

The company was worth three times that just a few years ago.

This deal would be the first major move by CEO Margherita Della Valle since she landed the top job in January 2023. She replaced an under pressure Nick Read.

Vodafone has 300 million customers in 17 countries.

Bitcoin momentum continues, FTSE 100 seen broadly flat

07:18 , Graeme Evans

Bitcoin is above $57,000 for the first time since November 2021, meaning the cryptocurrency has doubled in value since October.

Fuelled by recent regulatory approval for exchange-traded funds, the digital asset is now trading within 20% of its record high set just over two years ago.

On Wall Street, stock markets have struggled for direction ahead of today’s second estimate of US GDP and tomorrow’s release of the Federal Reserve preferred measure of inflation.

The S&P 500 index closed 0.2% higher but the Dow Jones Industrial Average lost 0.3%, with Asia markets also in the red this morning.

The FTSE 100 index lost one point in yesterday’s session and is forecast by IG Index to open four points higher at about 7687.

Halfords slashes profits forecasts as three ‘core markets’ falter

07:17 , Michael Hunter

Halfords, the cycling and motoring accessories retailer, has issued a profit warning this morning, saying three of its four “core markets” have “ seen a further material weakening”.

That means it now expects annual profit for the financial year ending March 29 of between £35 million and £40 million, down from previous forecasts of £48 million and £53 million.

It blamed “a combination of continued weak customer confidence and unusually mild and very wet weather,” which reduced footfall into stores and sales of winter products.

The company added: “Whilst we have reduced our profit guidance as a result of very challenging and exceptional short-term market conditions, we remain confident in our strategy and longer-term growth prospects. When our core markets recover, the platform we have built leaves us exceptionally well-placed to succeed.”

Recap: Yesterday's top stories

06:49 , Simon Hunt

Good morning from the Standard City desk.

In almost any other industry on earth, news that you got an £800,000 bonus would surely be a sign of magnificent performance.

The fund management sector is different, to the delight of abrdn CEO Stephen Bird and his presumably equally delighted family.

Funds under management dipped to £494.4 billion. Profits are down. Bird says there is “significant work ahead” as if he just rocked up yesterday.

It is hard to see why anyone would buy those funds or indeed the shares.

(The rule on fund management firms is that if they are good you buy its stock and avoid the overpriced goods it is punting to the public. In this case it is hard to see that either is a bargain.)

The bonus to Bird does suggest that the allegations from last year that he mistreated staff have gone nowhere and so are probably untrue.

Still, the business still looks like it is going nowhere slowly.

As only analyst put it: “I agree with the analyst who said that abrdn faces a slow and gradual decline where the only way out is to break itself up or be taken over by a larger bank or asset management company..”

Sadly, that sounds about right.

Here's a summary of our other top headlines from yesterday: