Proactive Investors -
- FTSE 100 is 7 points higher at 8,201
- Retail sales plunge
- BP shares sent lower after big write-off
Water companies get boost from Thames comments
Water companies are proving a bright spot today after Thames Water’s boss said the prospect that London’s supplier will be nationalised is a “long way off”.
Chris Weston, chief executive, said: “Special administration is something that is not in the interests of any of our stakeholders or the UK taxpayers.
“I can’t put any probability on whether it will or won’t happen, but it is a long way off if it were to happen and there is a lot more that we can do and will do and are focused on doing over the coming months to make sure that that does not happen.”
Water regulator Ofwat announces its initial pricing and investment determination for the sector on Thursday and how much leeway it gives Thames is seen as crucial to its survival.
Other companies, too, will be on tenterhooks over what level of price rises they can push through, but they are in much better financial shape.
Severn Trent (LON:SVT) was up 2.7% to 2,569p, United Utilities by 1.8% to 1,049p and Pennon (LON:PNN) by 2.9% to 613.5p.
FTSE 100 up 7 at 8,200p.
Wizz Air shrugs off Airbus delivery delays
Wizz Air (LON:WIZZ) has warned it expects more delays to deliveries from Airbus, but this won’t affect its expansion plans.
Talking to Reuters, boss Jozsef Varadi said the Hungary-based carrier currently has 45 aircraft grounded inspections due to checks on its Pratt and Whitney engines, but even with this disruption and Airbus delays would still grow its capacity.
The airline is still expecting “continuous deliveries of about three aircraft a month, with 20” growth in capacity next year and 20% to 25% the following year".
Shares in Wizz Air rose by 0.2% to 2,120p while Footsie was up 8 at 8,202.
PageGroup’s profits to halve by end of year
City recruiter PageGroup PLC (LON:PAGE)’s second-quarter earnings print underscored the dour market conditions of Britain’s tight labour market.
Gross profit in the second quarter declined 12% year on year and management warned of “no immediate signs of improvement”.
“As clients' recruitment budgets have tightened, they have become more risk averse which has slowed the recruitment process.
“Although salary levels remain strong, offers made to candidates were not as elevated as they were in 2022 and early 2023.”
PageGroup gave a full-year operating profit forecast of £60 million, which is nearly half of the previous full-year result.
Temporary recruitment performed comparatively better in the second quarter (falling 9.8% against permanent’s 12.8%), “s clients seek more flexible options and permanent candidates remain reluctant to move jobs”.
PageGroup shares were tossed nearly 6% lower following publication of these results.
Brits turn to ‘insperiences’ in face of gloomy weather
Retail sales may have been down across the board in June, but Barclays PLC (LON:BARC)’s monthly Consumer Spend report shows that Brits spent large on so-called ‘insperiences’ instead.
Insperiences (aka at-home experiences) such as streaming and other digital content, takeaways, and fast food deliveries surged 5.3% year on year in June.
On top of avoiding the gloomy weather, spending was encouraged by a strong entertainment roster, including hit TV shows Bridgerton and House of the Dragon, the Euros and Inside Out 2 at the cinemas.
In fact, cinemas enjoyed their busiest day of the year on June 15 thanks to the release of Disney and Pixar's Inside Out 2, noted Barclays.
Karen Johnson, head of retail at Barclays, said: “Once again, our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending.
“The sluggish demand at the start of June even caused some fashion brands to adjust their sales schedules, although I was pleased to see that the situation has since improved with the arrival of sunnier days.
“However, the dreariness didn’t dampen spending across the board, with takeaways, digital content and entertainment all benefitting from people sheltering at home, and hopefully we’ll see sustained interest in The Euros – regardless of England’s fate – and sunnier weather driving people to their local in July.”
Vistry’s secret ingredient: Partnerships
Vistry Group (LON:VTYV)’s lucrative partnership model with local authorities “helped it significantly outperform the broader housebuilding market over the first half of 2024”, said Hargreaves Lansdown (LON:HRGV) equity analyst Aarin Chiekrie.
Through this partnership model, Vistry is able to team up with local authorities and housing associations to provide affordable housing.
“These partners foot most of the bill, reducing the group’s risk and freeing up cash to deploy elsewhere in the business,” noted Chiekrie.
Vistry’s focus on affordable housing puts it in good shape to benefit from Labour’s manifesto pledge to deliver 1.5 million new homes over the next five years while reinstating mandatory housebuilding targets.
Analysts had already flagged these pledges (should they materialise into genuine policy) as a boost to housebuilders’ potential. This sentiment was echoed by Chiekrie.
“In her first speech as Chancellor, Rachel Reeves committed to new housebuilding targets and a revamp of the planning rules - the latter of which has hamstrung the housebuilding industry for some time.
“That’s brought some much-needed optimism to the sector and looks to be a tide that lifts all housebuilding ships.”