The Bank of England will at midday publish its Monetary Policy Committee’s latest decision on UK interest rates. Market forecasters expect the bank to hold base rate at its current level of 5.25 per cent.
The FTSE 100will open at 8am. Among the companies with reports and trading updates today are ITV, Wood Group, BAE Systems and Hipgnosis. Read the Thursday 9 May Business Live blog below.
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‘A smaller, slimmed down structure is what will help Wood achieve its full potential’
John Moore, senior investment manager at RBC Brewin Dolphin:
‘Yesterday’s announcement of another rejected bid for Wood was an interesting set up for today’s trading update – particularly in the context of previous private equity bids and shareholder unrest.
‘What unites recent events surrounding the company is the belief that a smaller, slimmed down structure is what will help Wood achieve its full potential.
‘Today’s update shows some progress in that direction, and the management team is patiently trying to work that out for the company to make sure it is maximising value – while other parties see speedier change as critical.
‘As ever, the truth is likely to be somewhere in the middle. Estimates point to an improving earnings picture and Wood’s simplification programme is uncovering savings, but there is more that could be done – regardless of where the company’s future lies.’
Millions kept in the dark over City watchdog’s mystery probe: FCA defends name and shame plan
Millions of UK consumers are in the dark over a mystery firm being probed by the City watchdog because of rules that prevent it being named, MPs were told yesterday.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), revealed the investigation was under way as he defended proposals to lift the veil of secrecy.
Rathi is at war with ministers, including Chancellor Jeremy Hunt, and the financial sector over plans to make it easier for the FCA to name companies it is investigating.
‘There were no big surprises from BAE Systems in today’s update. Defence spending remains high across the group’s sectors and key markets. Many governments are even expected to continue raising their defence budgets amid escalating global tensions.
‘The recent passing of an additional aid package from the US to Ukraine, and the commitment by the UK to grow its defence spend to 2.5% of GDP by 2030 should build further positive momentum for the group, as it looks set to capture a good chunk of this extra spending.
‘The orders placed with BAE are typically long-cycle too, spread over several years, so it gives the group multi-year revenue visibility. An enviable asset to have in uncertain times.
‘That’s led BAE to reaffirm all of its full-year guidance, which calls for sales and underlying operating profits to grow by 10-12% and 11-13% respectively. These growth figures are being boosted by the group’s acquisition of Ball Aerospace which closed back in February this year. The integration of the business is going well, with the newly renamed business, Space & Mission Systems, already securing a number of key contacts.
‘The current £1.5bn three-year share buyback programme is moving full steam ahead, now 90% complete after less than two years. And thanks to impressive cash generation, it’s set to be followed up by another three-year buyback programme of the same size, putting extra cash back in shareholders’ pockets.’
BAE Systems boosted by UK defence spending pledge
BAE Systems expectst o meet guidance for higher earnings this year and has forecast ‘further positive momentum’ from a recent Government commitment to raise defence spending.
The FTSE 100 group’s order book, like that of many western defence companies, has swelled over the last two years as governments have reacted to heightened geopolitical risk in the wake of the war in Ukraine and amid growing tensions with China.
Britain’s biggest military contractor said it was sticking to forecasts given in February for its earnings per share to grow 6 to 8 per cent in 2024 on revenues 10 to 12 per cent higher.
It said it would benefit from the recent passing of the US supplemental aid package to Ukraine and the commitment Britain made in April to spend 2.5 per cent of GDP a year by 2030.
‘With our global presence and wide portfolio of high-end technologies and services, any further expansion of the current AUKUS programme would enhance our long-term opportunity pipeline,’ the company said in a statement ahead of its annual general meeting later today.
ITV eyes ad market recovery as Euros loom
ITV expects the struggling advertising market to improve in the second quarter, with revenues rebounding by around 12 per cent in the second quarter – four times the level achieved in the first.
The broadcaster expects ad sales to be boosted by the Euros football championship which kicks off in June.
ITV, which broadcast Mr Bates vs The Post Office in January, on Thursday reported a 6 per cent drop in total external revenue in the first quarter to £727million.
Oil industry engineer Wood Group rejects £1.4bn Dubai takeover bid
Oil industry engineer Wood Group has rejected a takeover bid from foreign predators after becoming the latest London-listed company to be targeted.
It turned down a £1.4billion offer from Dubai rival Sidara because it ‘fundamentally undervalued’ the company, Wood said. The rejection came as it emerged Bristol chipmaker Graphcore is a target for Japanese investment giant SoftBank.
BoE base rate decision looms
The Bank of England will at midday publish its Monetary Policy Committee’s latest decision on UK interest rates. Market forecasters expect the bank to hold base rate at its current level of 5.25 per cent.
Current market consensus suggests the BoE will wait until the summer alongside the European Central Bank – but before the US Federal Reserve pulls the trigger on rate cuts.
