The FTSE 100 will open at 8am. Among the companies with reports and trading updates today are Halfords, Serco, Watches of Switzerland Group, The Works, Moonpig, Currys and Quiz. Read the Wednesday 26 June Business Live blog below.
> If you are using our app or a third-party site click here to read Business Live
Serco ups guidance
Serco Group has raised its annual profit forecast, with the outsourcer boosted by international immigration services contracts and acquisitions.
However, it urged caution on the potential impact of elections in the markets it operates in.
The London-listed company has benefited from acquiring immigration service firms, even as weakness in medicare services persists.
Serco, one of the suppliers which had supported the UK government’s test-and-trace programme during the pandemic, expects full-year adjusted operating profit of £270million, higher than its earlier forecast of £260million.
The company, which provides defence, security, immigration, health and transport services for governments, however, said it was mindful of multiple elections impacting its performance.
The UK, France and the United States have scheduled national elections in the coming months.
‘As we enter the second six months of the year, while mindful of a potential impact internationally from elections in 2024, we remain optimistic about the quality of our pipeline of potential new work to support our medium-term growth targets,’ CEO Mark Irwin said.
Halfords suffers ‘perfect storm of low consumer confidence and poor weather’
‘Halfords, the one-stop-shop for motorists and cyclists, has delivered full year results in line with previously lowered guidance. Strong growth in services provided by the group’s Autocentres was tempered by a low single digit uplift in retail operations.
‘The high levels of promotional activity failed to bolster the topline thereby leading to a material fall in underlying profits.
‘Halfords is sticking to its strategy of expanding the better performing services division, which benefit from higher levels of recurring revenue. This should stand it in good stead further down the line, but short-term headwinds are still blowing strong.
‘A perfect storm of low consumer confidence and poor weather has resulted in soft trading so far in the current year. Meanwhile, high freight costs and the increase in the national minimum wage are weighing on costs. The shares are trading a little below the long-term average but for now there’s no sign of a catalyst for a re-rating.’
MARKET REPORT: Deliveroo takeover stalls… but another is on its way
Deliveroo shares were given a lift as it became the latest London-listed company to be targeted for takeover.
The food delivery group – dubbed ‘Floperoo’ after its disastrous stock market float in 2021 – rose 7 per cent in early trading amid reports it has been approached by San Francisco-based rival Doordash.
However, the discussions, which started last month, ended after a disagreement over price, according to Reuters.
Halfords costs warning
Halfords has warned inflation ‘remains a material headwind’ for the motor and cycling retailer, citing a 10 per cent national minimum wage bump and ‘significant increases’ in sea freight rates since the start of the year.
It came as the retailer reported a drop in annual profit on Thursday as footfall across its stores fell due to challenging market conditions and wet weather.
The company posted an underlying pre-tax profit from total operations of £36.1million for the year to 29 March, down from £44.2million a year earlier and just shy of analyst forecasts of £36.2million.
Freight rates have soared to their highest levels outside the pandemic era, partially due to disruption in Red Sea shipping.
Halfords said it has successfully secured rates ‘well below market spot rates’, but still forecasts freight costs to be £4million to £7million higher than we anticipated at the start of the year.
It said: ‘Against this backdrop, we continue to focus on optimising the platform we have built, and controlling what we can. As such, we plan for proportionately fewer resources to be allocated to strategic transformation, as set out in more detail at the end of the Strategic and Operational review.
‘We do not expect these headwinds to persist in the long term. Consumer price inflation is easing and our core markets are expected to improve in the mid-term.
‘We remain confident that the financial targets announced at the April 2023 CMD are achievable assuming markets ultimately recover as forecast, albeit this will take longer than we envisaged last year.’
