FTSE 100 Live 24 July: Vodafone and Ocado shares soar, Ryanair profits over £500m

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1690187921 Flash PMI reading ‘re-ignites recession fears’

UK private sector growth for July was the lowest in six months and much slower than expected, in the latest sign that a rate hike at the Bank of England is beginning to slow the economy and may tip the country into recession.

The S&P Global/CIPS Flash PMI came in at 50.7 for the month, the lowest number since January. However, this is still above 50, which is the threshold that separates growth from regression.

Manufacturing fell again, with a reading of 46.5 down from 48.1 in June. Meanwhile, the dominant services sector continued to grow but at a slower pace with a reading of 51.5.

But there was good news about inflation, with price growth at an aggregate low in two-and-a-half years.

Chris Williamson

“The UK economy came close to a halt in July, which, along with dismal forward-looking indicators, has reignited recession fears,” said S&P Global Market Intelligence chief business economist.

Flash PMI data for July revealed a deepening slowdown in manufacturing coupled with a further cooling in the recent recovery in growth in the services sector.

“The upside to the deteriorating growth and demand picture is a further easing of inflationary pressures. Manufacturing prices are falling at an increasing rate and service-sector inflation continues to moderate. Although persistent rising wage pressures mean service-sector price growth remains subdued, survey data point to further, potentially notable, declines in consumer price inflation in the coming months.”

Manufacturers report the largest improvement in supplier delivery times since the index began in January 1992.

1690186972S4 Falling capital stock

SIR Martin Sorrell’s S4 Capital has suffered its latest setback with a brutal warning about how tech clients are cutting back on spending amid concerns about the broader economic climate.

Last year, S4 had to delay its annual results twice after PwC’s auditors said it was “unable to complete the necessary work”, an outcome Sir Martin described as “unacceptable and embarrassing”.

He vowed to restore investor confidence in the business he founded after leaving FTSE 100 giant WPP in dire circumstances.

“Net revenue in the second quarter was below budget with May and June in particular, reflecting difficult macroeconomic conditions and customers, especially those in the tech sector, remaining very cautious and focused on the short term,” S4 said today.

S4 alluded to job cuts, citing a “disciplined approach” to costs “including headcount and discretionary costs”.

Sales growth target lowered from 2-4% to 6-10%.

Shares fell 17%, 23 points, to 115p, valuing the business at £652m.

In the long term, S4 is more optimistic saying it continues to “see longer sales cycles, particularly for larger turnaround projects.”

1690185937 Vodafone is close to proposing a merger with Three and unveils a new CFO

The telecom giant is about to submit a proposal to the regulator for its mega-merger with Three, the boss of Vodafone said today, as the telecom giant has appointed a new chief financial officer.

Chief Executive Margherita Della Valle, who revealed the deal last month, said it had “started dealing” with the Competition and Markets Authority, adding: “We expect to submit a draft merger notice in the next few weeks.”

The deal is due to close in the second half of next year and will make the combined company the largest telecoms operator in the UK. But the proposal is likely to face intense regulatory scrutiny after a previous deal between O2 and Three was blocked by the CMA.

Della Valle promised the merger would create thousands of new roles, but said of the scale of potential future job cuts that it was “too early to make those calculations”.

It comes as Vodafone said today that it will be acquiring a new chief financial officer, Luka Music, who will join in September. Mucic is currently the Chief Financial Officer of the German multinational SAP Software. He replaced Della Valle, who moved to CEO after the departure of Nick Reed last year.

Vodafone reported similar sales growth of 3.7% to €10.7 billion in the three months to the end of June, as slumps in service revenue in Germany, Italy and Spain offset 5.7% growth in the UK, thanks in part to bumper price increases.

Vodafone shares rose 3.8 percent to 76.31.

1690185672 Matalan’s new boss blames ‘unseasonal’ spring weather for the slowdown

Matalan’s new boss blamed “off-season weather” for slowing sales as its profits fell in the spring.

Revenue fell 8% to £263.6m in the three months to May 27, which sent profits down nearly 90% to £2.1m.

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“The off-season weather delayed updating tanks in early spring, creating a difficult start to the season,” said CEO Joe Whitfield, who joined in March from the Co-op.

However, there were signs of a recovery at the start of the summer, with sales growing 5.5% in June amid warming temperatures.

Whitfield added, “We’re making Matalan that much stronger, building on the assets the business already has around the brand, customer loyalty and a group of engaged colleagues who want the business to thrive.”

1690183591 Big gains for Vodafone and Ocado, the FTSE 100 index is lower

Vodafone shares rose 4% after CEO Margherita Della Valle reported stronger services revenue performance in “nearly all of our markets”.

First quarter revenue increased 3.7% year-over-year on an underlying basis, driven by growth of 5.7% in the UK. With the company also appointing a new chief financial officer, shares rose 2.6p to 76.1p.

The recent improvement continued for Ocado shares, which jumped 10%, or 72.5p, to 759.5p after announcing on Saturday that it had settled a long-running patent dispute with Norway’s AutoStore.

The FTSE 100 drifted 17.91 points to 7,645.82 at the start of a busy week of corporate earnings and monetary policy decisions.

The FTSE 250 was broadly unchanged at 19202.39, with pork, poultry and deli supplier Cranswick 72p rising to 3416p after announcing a stronger-than-expected start to the fiscal year.

A snapshot of the market as stocks opened lower

Take a look at today’s market snapshot of where stocks fell this morning, with one of the year’s best performers in Rolls Royce falling the most so far.

1690183242Cranswick Exceeds Expectations As Consumers Gobble Up Hot Dogs

The sausage maker at supermarket Kranswick is set to exceed expectations as customers turn to the cheaper meat.

Revenue for the three months through June 24 was up 14.7% year-over-year, thanks to strong performances in UK Fresh Pork, Convenience and Gourmet products.

The company also said its costs are still rising, but at a slower rate.

“While the Board remains cautious about the current market and broader economic conditions, the outlook for the current fiscal year ending March 30, 2024 is now expected to be ahead of its previous projections,” the company said.

Shares rose 3% to 3,446p today.

1690183027 Ocado shares soar after winning £200m from legal battle

Ocado shares got a lift this morning after the online grocer said it had ended its legal battle with AutoStore, taking out £200m in the process.

The company underwent a years-long legal battle with the Norwegian company in a bid to protect from what it saw as infringement of its patents, fighting cases in the UK, US and Germany. The cases centered around two new AutoStore products, the Blackline bot and a software product called Router, which Ocado said infringed its patented intellectual property rights.

Ocado said: “We are very confident in the integrity of our intellectual property portfolio and the disciplined approach we have taken to build our capabilities and Ocado’s agile platform over the past 20 years. We will always vigorously protect our intellectual property.”

Ocado shares jumped 12 percent to 769 pence.

Ocado will be paid £200m in a deal with Norway’s AutoStore (Katie Collins/PA)

/ PA Media1690181620MoneySupermarket expects strong earnings growth despite mortgage slowdown

MoneySupermarket’s earnings are set to come in at the top of its guidance as customers look to switch insurance plans amid “rising premiums and pressure on consumer finances.”

This growth in insurance helped offset the slowdown in mortgages, which were affected by the huge rise in interest rates. As of Friday, the average two-year residential fixed mortgage rate was 6.80%.

The new Money Super Seven at Moneysupermarket

/ Money Supermarket

The comparison business generated revenue of £213.8m, an increase of 11%, in the first six months of the year, despite a slowdown in the financial sector which includes mortgages.

The company said: “The continued strategic progress and the actions we are taking to drive growth, gives the Board of Directors confidence that the group will reach the upper limit of market expectations for this year.”

The group also said that one in six adults in the UK, or 9 million people, receive a weekly email newsletter from Martin Lewis as they search for solutions to the cost of living crisis. Earlier this year, I launched the MoneySavingExpertGPT chatbot.

Ryanair profits soar as passengers return to the skies after the trauma of the Ukraine war

Earnings rose at Ryanair with holidays over Coronation Weekend and a strong Easter Sunday leading to a strong first quarter, at the lower-priced airline.

The Irish low-cost carrier, which flies out of London Stansted Airport, reported a profit of €663m (£573m) for the first quarter, up from €170m a year earlier, when Russia’s war in Ukraine kept travelers home.

More than 50 million people traveled with the airline in the 12 weeks to the end of June, putting it on track to maintain its crown as Europe’s largest airline by number of passengers. Seats sold, or load factor, was 95%, up from 92%. Revenue was €2.6 billion, up 40%.

She went on to call “hot fix” what she calls “ineffective air control” in Europe, where strikes once again threatened to cause summer disruption. Michael O’Leary, CEO of the company, said:

“In May, we submitted a petition to the European Commission, signed by more than a million of our customers, calling on the EU to protect ‘overflights’ during national air traffic control strikes. We believe this should reduce flight delays, reduce flight times and unnecessary CO2 emissions.

Over the past six months, the French air control alone has organized 60 days of strikes, during which time the French government. Use minimal service laws to protect domestic/domestic flights with disproportionately canceling flights. We and our clients call on the President of the European Commission, Ursula von der Leyen, to protect the single market for air travel and reduce the impact of air traffic control strikes on EU citizens.”

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