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FTSE 100 Live Thursday
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Just Become an owner in a £191m takeover
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UK orders boost Deliveroo’s performance
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Nestle downgrade guide
Market update: Entain and Rentocil in demand, Deliveroo shares higher
09:58 , Graeme Evans
Recovery bets on Rentokil Begin and Entain today ensured their shares were able to run in an otherwise lackluster session for the FTSE 100 index.
Ladbrokes and BetMGM business Entain jumped 4% or 27.6p to 739.6p after upgrading earnings guidance on the back of a strong third quarter.
The UK and Ireland division returned to year-on-year growth earlier than expected, driven by betting ahead of England’s Euro 2024 final against Spain.
NFL prime-time TV fixtures also contributed to revenue with the company forecasting earnings at the top of the £1.04 billion-£1.09 billion guidance range.
The shares are still down 25% this year, having fallen this week on speculation that this month’s Budget will include a £3 billion tax raid on the industry.
Rentokil front it also pared some of its recent heavy losses, rising 7% or 24.5p to 365.6p on relief that its trading performance was no longer hampered.
Its previous update in September revealed lower-than-expected volumes in North America, after resources were stretched to prepare for the peak season.
The pest control firm said today that North American revenue rose 1.4% in the third quarter and it has stepped up efforts to rebalance its cost base.
The shares are still 14% lower in the year to date, having traded above 600p in 2023.
Weaker mining stocks meant the broader FTSE 100 index failed to gain further upside after yesterday’s 1% interest rate advance.
The top flight margin was 10.86 points higher at 8339.93, indicating a warning ahead of the expected back-to-back interest rate hike by the European Central Bank.
The FTSE 250 index rose 39.87 points to 21,019.37, with Chemring rose 9p to 375p after the defense products firm posted an in-line trading update and said it could reach an ambition of £1 billion in revenue by 2030.
Tate & Lyle shares weakened 15.5p to 791.5p, after rising 8% yesterday on speculation it was a takeover target for private equity firm Advent.
The food ingredient company, which is worth around £3 billion, has not commented.
Meanwhile, Delivery Shares rose 3.3p to 150.2p after it said earnings will be in the top half of its forecast range, boosted by strong UK demand.
Nestle downgrades guidance amid consumer warnings
09:19 , Graeme Evans
Consumer goods giant Nestlé has lowered its full-year guidance after reporting sales growth of 2% for nine months of the year.
Amid softer consumer demand and some reluctance towards global brands, it now expects organic sales growth to be around 2% in 2024. This compares to the 3% guidance given in half-year results.
Coffee was the biggest contributor to growth in today’s third quarter results, with mid-single digit growth driven by leading brands Nescafé, Starbucks and Nespresso.
Purina PetCare delivered low single digit growth while confectionery sales increased at a mid single digit rate, led by KitKat.
Read more here
Rentocil shares rally early on positive update
08:57 , Graeme Evans
A strong update today lifted the under-pressured shares of pest control firm Rentokil Original to the top of the FTSE 100 index.
The rise of 8% or 26.4p to 367.5p reduces the year-to-date decline to 15%.
Its previous update in September revealed lower-than-expected volumes in North America, after resources were stretched to prepare for the peak season.
Rentocil said today that North American revenue increased 1.4% in the third quarter and that it has accelerated efforts to rebalance its cost base.
CEO Andy Ransom told investors: “In North America, we recognize that the business is underperforming and we are focused on delivering the operational improvements required.
“We are expanding our initiatives to increase organic growth and are acting to mitigate cost overruns.”
It left 2024 revenue and margin guidance unchanged, with Ransom backing the North American division to “lead a very resilient and growing market”.
Rentokil and Entain shares fall in the FTSE 100, Tate & Lyle shares fall back
08:33 , Graeme Evans
The FTSE 100 index failed to build on yesterday’s 1% advance, with pressure on mining stocks causing it to fall 5.64 points at 8323.43 in London’s top flight.
Alongside weaker Glencore and Rio Tinto shares, Mondi is down 94p to 1296p as investors reacted to the paper and packaging company’s latest update.
Meanwhile, Rentokil Front shares rose 27p to 368.1p after positive third-quarter results with no change to full-year guidance.
Gaming group Entain also improved by 4% or 28.2p to 740.2p after upgrading full year earnings guidance.
The FTSE 250 index is 7.60 points lower at 20,971.90.
Tate & Lyle shares are 21.5p lower at 785.5p, after rising 8% yesterday on speculation it is a takeover target for private equity firm Advent.
The FTSE 250 company, which is worth around £3 billion, has not commented.
Meanwhile, Deliveroo shares are up 6.7p to 153.6p after it said earnings will be in the top half of its forecast range.
Just Become the owner of N Brown in a £191m takeover
08:05 , Graeme Evans
N Brown, the fashion group that owns the brands Jacamo, Simply Be and JD Williams, has backed a £191 million takeover by the son of its former long-established chairman Lord Alliance.
A company owned by entrepreneur Joshua Alliance, who is also a non-executive director of the Manchester-based group, has offered 40p a share in cash, compared to last night’s closing price of 27p.
The Alliance family already owns around 60% of N Brown’s shares.
The offer vehicle said reasons for the offer included N Brown’s low trading liquidity and the UK fund manager’s limited appetite for small-cap consumer stocks.
Read more here
Deliveroo UK orders grow 2% in third quarter
07:58 , Graeme Evans
Deliveroo said today that annual earnings will be in the top half of its guidance range of £110-130 million.
Gross transaction value rose 5% in the three months to 30 September, with the UK and Ireland division up 7% following order growth of 2%.
Growth in transactions for the financial year is expected to be between 5% and 9%.
Founder and chief executive Will Shu believes his company is able to capture the “significant growth potential in an industry that is still maturing”.
He added: “There are many exciting opportunities ahead for the on-demand delivery industry.”
The shares have risen 16% to 147p this year, having rallied from 125p in early August.
Europe is set for back-to-back interest rate cuts
07:38 , Graeme Evans
The European Central Bank’s interest rates are set to fall for the third time this year when policymakers announce their decision later today.
The quarter point reduction in the deposit rate to 3.25% follows a range of weak economic data and signs of inflation returning to target.
Deutsche Bank economists said the first back-to-back cut of the cycle signaled a pivot toward faster easing.
Despite this, the bank does not expect the ECB to move away from the current ‘data dependent, converging’ approach to policy.
After today, Deutsche Bank sees the ECB cutting at every meeting until rates reach 2.25% in April.
Cash earnings get Euro 2024 boost
07:22 , Graeme Evans
Gaming business Ladbrokes and BetMGM Entain today raised earnings guidance due to forecast performance in the third quarter.
The ten most popular betting games in the period were the final three games of Euro 2024 and seven televised NFL games for the first time.
Entain’s UK and Ireland division returned to year-on-year growth earlier than expected, with net gaming revenue up 2% in the three months.
BetMGM joint venture revenue in the United States increased by 18%.
Entain’s underlying earnings for this year are now expected to be towards the top of the £1.04 billion-£1.09 billion guidance range.
CEO Gavin Isaacs said: “My first few weeks as CEO of Entain have reaffirmed my view that this is a very good business operating in a very attractive global industry.”
The FTSE 100 is set to extend a rally, European interest rates in focus
07:03 , Graeme Evans
The FTSE 100 index is expected to rise a further 28 points to 8358, after closing last night 1% higher on hopes of a faster pace of interest rate cuts.
Today’s advance comes after a strong session on Wall Street in which the Dow Jones Industrial Average closed 0.8% higher and the S&P 500 index rose 0.5%.
The technology-focused Nasdaq also rose steadily after a confidence-shaking warning from semiconductor equipment firm ASML Holdings the previous day.
Today’s events include the expectation of another quarter point cut on the main policy rates of the European Central Bank.
The pound continues to trade just below $1.30, while Brent Crude is little changed at $74.40 a barrel.
