The merger of Vodafone and Three today moved a step closer after the companies were told a huge 5G rollout could alleviate competition concerns.
In today’s results spotlight, Primark and Twinings owner Associated British Foods has reported a big jump in annual profits.
ASOS, meanwhile, offset more big losses by signalling an improved performance in the current financial year.
FTSE 100 Live Tuesday
- Vodafone merger gets CMA boost
- ASOS sees green shoots after big loss
- AB Foods unveils profits rise
Market update: AB Foods and utilities in demand, Burberry shares cool
10:21 , Graeme EvansA merger breakthrough for Vodafone and the strong results of Primark owner Associated British Foods today offset US election jitters in the FTSE 100 index.
London’s top flight crept 28.59 points higher to 8212.83, in line with Europe’s cautious approach given the neck-and-neck race for the White House.
Buy orders in the FTSE 100 largely focused on domestic sectors, particularly utilities after a couple of broker upgrades.
Severn Trent rose 4% or 96p to 2666p as JPMorgan lifted its price target to 2975p, while United Utilities benefited from the support of Citigroup to improve 32p to 1059p.
They were joined on the risers board by Associated British Foods, which rallied 4% or 88p to 2377p after the conglomerate behind operations in retail, groceries, ingredients and sugar posted robust annual results.
Primark operating profit rose 51% to £1.1 billion after margins recovered to 11.7%, contributing to an overall improvement of 33% to £2 billion.
Weakness in the European sugar market remains a concern, although investors were cheered today by a bigger-than-expected dividend for the year.
Vodafone shares lifted a penny to 73.2p after the Competition and Markets Authority cleared a path to the company’s Three merger in the UK.
The watchdog said the concerns it outlined in September could be overcome by a multi-billion commitment to network upgrades, including the roll-out of 5G.
On the FTSE 100 fallers board, Schroders slid 12% or 41.8p to 321.8p after reporting £2.3 billion of third quarter outflows due to the impact of market volatility in China.
The FTSE 250 index improved 73.26 points to 20,534.55, led by water company Pennon after today’s note by JPMorgan also upgraded the South West Water owner. Shares rose 26p to 565p, compared with the bank’s 700p price target.
Among the fallers, takeover speculation surrounding Burberry cooled as the luxury goods group eased 5% or 40.6p to 810.4p.
Morgan Advanced Materials recovered from the weak start seen after it reported a further deterioration in its outlook for the fourth quarter.
The maker of advanced carbon and ceramic materials for technically demanding applications later stood half a penny higher at 244p, boosted by a £40 million buyback plan.
Balfour Beatty lifted 5.6p to near record territory at 441.7p, boosted by the signing of a £575 million contract to rebuild part of Interstate 35 through Austin in Texas.
All-Share stock ASOS fell 7% or 27p to 349p, with the company’s forecast of unchanged revenue trends over the first half offsetting the chief executive’s optimism that the retailer has turned the corner after another loss-making year.
On AIM, Sosandar shares stood 0.25p higher at 10p, having initially risen 8% after the fashion chain extended its licensing partnership with Next to include its homeware ranges.
Primark margin recovery boosts AB Foods performance
09:36 , Graeme EvansPrimark revenues rose 6% to £9.4 billion in today’s results covering the year to 14 September, owner Associated British Foods said today.
This was driven by performances in growth markets such as the US and France, alongside a rise 2% in Primark’s heartland of the UK and Ireland.
The retailer, which maintained its UK market share at 6.7% during the year, is targeting mid-single digit sales growth in 2025.
The chain posted a big increase in adjusted operating profit, up 51% to £1.1 billion after margins recovered to 11.7% from 8.2% in 2023.
In the conglomerate’s other divisions, grocery sales rose 4% and adjusted operating profit by 17%. Ingredients achieved sales growth of 2% and adjusted profit up 12%, led by yeast and bakery ingredients.
Sugar sales and adjusted operating profit came in strongly ahead of 2023, although European sugar prices reduced sharply in the fourth quarter.
Shares rose 79p to 2368p today, boosted by a bigger-than-expected dividend.
AB Foods and Severn Trent among FTSE 100 risers, Schroders down 12%
08:39 , Graeme EvansThe FTSE 100 index is 1.57 points higher at 8185.81, with water companies Severn Trent and United Utilities the best performing stocks after gains of more than 2%.
Shares in Primark owner AB Foods rose 2% in response to annual results, an improvement of 51.25p to 2340.25p. Vodafone shares have settled 1.3p higher at 73.5p after the CMA signalled its intention to approve the Three merger.
On the fallers board, Schroders slid 12% or 42.8p to 321.4p after reporting £2.3 billion of third quarter outflows due to the impact of market volatility in China.
In the FTSE 250, Morgan Advanced Materials fell 10p to 233.5p after reporting a further deterioration in its outlook for the fourth quarter.
The maker of advanced carbon and ceramic materials for technically demanding applications offset the warning with a £40 million shares buyback plan.
Balfour Beatty lifted 3.4p to 439.4p, boosted by the signing of a £575 million contract to rebuild part of Interstate 35 through Austin in Texas.
All-Share stock ASOS fell 6% or 21.8p to 354.2p, despite the chief executive’s optimism that the retailer has turned the corner after another loss-making year.
On AIM, Sosandar shares rallied 8% or 0.8p to 10.6p as the fashion chain extended its licensing partnership with Next to include its homeware range.
Vodafone and Three see “path to merger clearance”
08:08 , Graeme EvansVodafone shares today opened half a penny higher at 72.7p after the CMA proposed remedies that could lead to the go-ahead of the Three merger.
The companies said today: “The merger is a once-in-a-generation opportunity to transform the UK’s digital infrastructure – which lags significantly behind its European peers – and for more than 50 million UK customers to benefit from a vastly better mobile experience.”
Vodafone and Three said their initial view of the working paper suggests it provides a path to final clearance.
The statement added: “An appropriate balance appears to have been struck by ensuring that the significant benefits of the merged company’s investments can be realised in full and at pace to the benefit of the country and its citizens, while addressing the CMA’s stated concerns.
“However, it is essential that balance is preserved through to the end of the process, reflecting that the parties have offered extensive remedies, including by making their future network roll-out fully enforceable.”
The CMA’s final decision on the merger is due on, or before, 7 December.
The companies added: “The merger will be a catalyst for positive change. It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country
“The merger is also closely aligned with the Government’s mission to drive growth and encourage more private investment in the UK. As the Government has recognised, high quality digital networks are pivotal to this, as all countries’ future prosperity and technological advancement will be underpinned by world-class connectivity.”
5G roll-out key to Vodafone-Three merger - CMA
07:46 , Graeme EvansThe merger plans of Vodafone and Three UK were today given a boost after the Competition and Markets Authority (CMA) set out remedies that could allow the tie-up to proceed.
The CMA said the competition concerns it outlined in September could be overcome by a multi-billion-pound commitment to upgrade the merged company’s network across the UK, including the roll-out of 5G, combined with short-term customer protections.
It had earlier warned that the merger could lead to higher prices for customers and harm the position of mobile virtual network operators, such as Sky Mobile, Lyca, Lebara and iD Mobile.
The CMA will now seek views on the effectiveness of the proposed remedy package.
Stuart McIntosh, chair of the inquiry group leading the investigation, said: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed.
“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger.
“A legally binding network commitment would boost competition in the longer term and the additional measures would protect consumers and wholesale customers while the network upgrades are being rolled out.”
Loss-making ASOS backs turnaround progress
07:28 , Graeme EvansFashion retailer ASOS today racked up another big loss after posting results for the year to 1 September.
The bottom-line loss widened to £379.3 million, with underlying earnings down 44.4% to £80.1 million on revenues of £2.9 billion.
However, chief executive José Antonio Ramos Calamonte said the company now had the foundations in place to deliver sustainable, profitable growth.
He said “The medicine we have taken - reducing our intake, discounting to clear old stock, and rigorously revising our operations - while necessary, has not made for attractive financial results over the last two years.
“However, we are confident we now have the right team, processes and business resilience on which to drive sustainable, profitable growth.”
Driven by a significant increase in its full-price sales mix, ASOS expects this year to see an increase its gross margin to over 46% and adjusted earnings to increase by at least 60% to the range of £130 million-£150 million.
Profits up 33% at Primark owner AB Foods, unveils special dividend
07:10 , Graeme EvansPrimark owner Associated British Foods today reported a 33% rise in annual profits to £1.96 billion, driven by revenues growth in its retail and foods businesses.
The FTSE 100-listed group, which also owns the brands Twinings and Ovaltine, announced plans to distribute a special dividend of 27p a share on top of the final dividend of 42.3p a share.
Chief executive George Weston said: "This was a year of very strong financial and operational progress across the group.
“We delivered a substantial improvement in profitability, excellent cash generation and strong returns as a result of consistent, multi-year investment and a return to some normality in our markets and supply chains.”
On Primark, he added: “Our low-cost model is as strong as ever, as we maintain our relentless focus on delivering great-value clothing and a unique store experience.”
FTSE 100 seen flat amid Wall Street's pre-election weakness
07:00 , Graeme EvansWall Street markets last night closed lower in the final session before the presidential election.
The Dow Jones Industrial Average lost 0.6%, while the S&P 500 index and the Nasdaq Composite both eased 0.3%.
The FTSE 100 index closed seven points higher at 8184 yesterday and is forecast to open at a similar level this morning.
Oil prices have held their recent gains to stand near $75 a barrel, while the pound is at $1.296.
