London’s FTSE 100 gave up earlier gains to trade flat by midday on Thursday at 7,079.17 points after the Bank of England kept interest rates on hold at 0.1% and maintained the QE programme at £895 billion.
A record jump in inflation failed to stir policy makers at the BoE, who are steadfastly maintaining the mantra that price rises are transitory.
The Bank expects inflation to hit 4% this winter and still to be above 3% this time next year, so consumer pockets and cash savings are still going to take a big hit. It also conceded that the gas price crunch has elevated inflationary risks heading into 2022.
COMPANY NEWS
Consumer goods giant Reckitt Benckiser (RKT) reported that trading since its last update at the end of July was in line with expectations, and it was confident of delivering a small increase in like-for-like net revenues for the full year together with an operating margin of around 23%.
The company also confirmed the disposal of its Chinese infant formula and child nutrition business after a strategic decision in February by the new chief executive to focus on more attractive markets in North and South America. The shares softened 0.7% to £58.33.
Royal Mail (RMG) posted an upbeat trading update for the period to August, with domestic parcel volumes ‘re-basing at a significantly higher level than pre-Covid’ thanks to the surge in ecommerce since the pandemic.
As a result, the firm is predicting a higher operating margin in the second half and a full year margin of 8%, driven by a small increase in revenue growth. The shares traded sideways at 482.8p.
Pubs group Mitchells & Butlers (MAB) reported that like-for-like sales since full indoor trading resumed in mid-May were running at 97% of pre-Covid levels up to the middle of this month, with trading in the last eight weeks actually topping 2019 levels.
The firm noted stronger activity in its suburban and food-led pubs, particularly at the more premium end of the market, suggesting consumers are prepared to spend that bit more when they go out. The shares added 1.5% to 266.6p.
Rival pub group Fuller, Smith & Turner (FSTA) reported trading for the seven weeks to mid-September at 86% of pre-Covid levels, slightly weaker than Mitchells & Butler.
While its rural pubs and hotels had benefited from an increase in ‘staycations’, its central London pubs are only just seeing punters return as people return to office working. The shares were flat at 730p by lunchtime.
Furniture retailer DFS (DFS) posted a 47% rise in full year sales to June to over £1 billion, and a 180% increase in pre-tax earnings to almost £100 million, as the pandemic drove strong customer demand for interior furnishings.
Growth in new orders was ‘significantly’ higher than revenues thanks to market share gains, and the firm ended the year with a much bigger order book which it will work through in the first half of this financial year. The shares rose 2.2% to 273.5p.
SMALLER COMPANY NEWS
Shares in Seraphine (BUMP) slumped 26.5% to 199.5p after the posh maternity-to-nursing wear brand warned first half sales growth and full year profits will disappoint, pinning the blame for a recent growth slowdown on supply chain issues which impacted product availability and halted positive sales momentum.
While Seraphine experienced a strong first quarter to 4 July with year-on-year sales growth north of 50%, trading in the second quarter has been ‘more challenging than the board anticipated’.
Shares in financial services group Acquis Exchange (AQX:AIM) edged 2.5p higher to 720p after it reported a 37% increase in first half revenues to June thanks to an increase in membership and a higher level of monthly usage in terms of chargeable orders.
The firm’s share of pan-European secondary trading jumped from 4.5% a year ago to 5.8% and hit a new monthly record of 6.2% in July.
On the M&A front, the auction for waste management firm Augean (AUG:AIM) was won by infrastructure investment group Eleia with a bid of 372p per share, beating the 361p offer from Morgan Stanley Infrastructure Partners and ending the takeover race.
Social housing operator Civitas Social Housing (CSH), whose shares have slumped since the publication in August of a bearish note by a short seller - and have subsequently been relegated from the FTSE 250 index - issued a rebuttal of the allegations saying they were based on ‘factual inaccuracies, incorrect assumptions, erroneous comments and assertions which are not grounded in fact’.
The firm said it had ‘great confidence in the company’s assets, revenues, business model and strategy’ and would publish a full a full response in due course. Shares dropped a further 4.7% to 90.9p.
Replacement window and door maker Safestyle (SFE:AIM) posted a 73% surge in sales to £73 million and a return to profit in the first half to June thanks to a recovery in volumes and a big improvement in gross margins.
Due to ongoing supply chain disruption and rising costs, the firm stuck to its full year guidance rather than raising forecasts. Shares climbed 5.6% to 54.8p.
Fuel technology firm Velocys (VLS:AIM) hit an important milestone, registering £8.2 million of revenues and £3.3 million gross profit from its first major commercial contract.
The company has a number of projects on the go in the US, the UK and Japan to produce sustainable aviation fuel with a fund raising planned for its Mississippi operation. The shares cheapened 3% to 4.85p.
