AB Foods shares fall 4%, FTSE 100 lower

The FTSE 100 index is 30.08 points lower at 7882.12 during a session of contrasting results-day fortunes for Whitbread and Associated British Foods.

Shares in Premier Inn owner Whitbread rose 4% or 123p to 3248p after its full-year figures, whereas Associated British Foods lost 4% or 78.5p to 1991.5p.

The downbeat reaction to half-year results from Primark-to-Ovaltine business AB Foods is offset by a 27% rise for shares over the past year.

Richard Hunter, head of markets at Interactive Investor, said: “AB Foods is steering a steady course through the persistent inflationary storms, with Primark remaining a key driver in the group’s recovering fortunes.”

The FTSE 250 index fell 68.11 points to 19,158.83, with pressure on ASOS shares continuing after analysts at Liberum reiterated their “sell” rating. The stock, which has been the target of short sellers, dropped 9.2p to 740p.

Over 2,000 jobs on the line as Ocado to shut Hatfield facility

Ocado is set to shut one of its biggest fulfilment centres, putting at risk the jobs of some 2,300 staff who work there.

The online retailer said its Hatfield site was the oldest in the network and is responsible for handing around 20% of its weekly orders.

Ocado said it had begun a consultation with staff and hoped to redeploy “as many as possible” to other sites, including its proposed hub in Luton.

CEO Tim Steiner said: “As the online grocery channel grows, our new, enhanced fulfilment centres and technologies will drive a step change in customer experience and efficiency.

“With this capacity coming online, now is the right time for us to halt operations at our oldest facility at Hatfield

“We have many brilliant Hatfield-based colleagues who have been with us for a long time and are a big part of our journey. We want to keep as much of this talent and experience within the business as possible and expect to retain a large proportion of colleagues impacted.”

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Travis Perkins bemoans weak housebuilding market as sales slide

Travis Perkins warned of weakness in the new build housing market as it posted a drop in revenues.

The builders’ merchant said total sales fell 2.8% in the first three months of 2023, while merchanting sales fell 4.7%.

Travis Perkins said: “As expected, trading volumes in the Merchanting business were impacted by weakness in the new build housing and domestic repair, maintenance and improvement markets.”

CEO Nick Roberts said: “The timely actions taken to prepare our businesses for a lower demand environment mean that we continue to expect to deliver a full year performance in line with market expectations.”

Primark owner ABF eyes southern US for fashion chain expansion as inflation eats into sugar business

Associated British Foods, the owner of Primark, said it was expanding the budget fashion chain into the southern states of the US today, as it reported a dip in half-year adjusted group operating profit.

The measure slipped 3% at constant exchange rates to £684 million, from group revenue of £9.6 billion, up 17%. The company, which is also a major sugar producer, said inflation was “intense and volatile” in the period and that it takes longer to recover the effects of higher input prices through its food business.

At Primark, a weaker pound in the period eroded margins in the UK and operating profit fell, but the impact was offset by the chain’s international earrings from US and Ireland, where revenue converted into sterling gets an uplift from such patterns in exchange rates. Sales at the chain rose almost a fifth to £4.2 billion, while operating profit fell to £351 million from £414 million in the same period a year ago.

George Weston, chiefexecutive, said: “Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well invested stores. We have had a very strong contribution from new stores opened in the period, and today we are announcing plans for the development of our Primark business in southern states of the US.”

ABF It stood by ts guidance for the full-year.

Premier Inn owner profits grow as independent hotels decline

Premier Inn owner Whitbread’s profits increased above pre-pandemic levels, as it said “the structural decline in the independent hotel sector” helped its budget hotels gain market share.

Profit was £888 million on revenue of £2.6 billion, with £2.5 billion of that revenue coming from the Premier Inn UK division.

“These are a fantastic set of results,” CEO Dominic Paul said. “Whilst the recovery in market demand in conjunction with a structural decline in the independent sector has provided a helpful backdrop, it is the combination of our own initiatives and our clearly differentiated business model that has sustained our brand strength and delivered such an impressive operational and financial performance.”

FTSE 100 seen lower, focus on US earnings

London shares continue to lack direction after Wall Street’s major indices finished broadly unchanged yesterday.

The S&P 500 index and Dow Jones Industrial Average were flat, while the tech-focused Nasdaq lost 0.3% due to uncertainty ahead of tonight’s release of figures from mega-caps Google owner Alphabet and Microsoft.

Their shares have risen 20% and 17% respectively so far this year, with any earnings disappointment set to prompt investors to reassess expectations for the rest of the year.

Facebook owner Meta Platforms is due to report tomorrow evening and Amazon on Thursday.

The updates come against heightened worries over the economic impact of tighter monetary policy and whether the Federal Reserve will announce another interest rate hike at its May meeting.

In the UK, CMC Markets expects the FTSE 100 index to open 22 points lower at 7890.

The top flight finished just two points lower yesterday after a late recovery in the Brent crude price benefited oil stocks BP and Shell.

Red signal for Hornby as train maker swings to loss

Hornby’s hopes for profitability were derailed today when the model train maker said it expected to swing to a loss for the year. That compares to the £1.4 million profit after taxation the firm made last year.

Hornby said: “We expect to report a modest underlying loss before tax this year on account of increased overheads (in an inflationary environment) and as a result of lower than anticipated sales versus budgets.”

The company said it was encouraged by stronger trading in the first months of 2023, but that they did not go far enough to recover the shortfall in sales at the tail end of 2022.

Public sector borrowing second-highest for March in history

Net public sector borrowing last month was the second-highest for March since records began in 1993, at £21.5 billion.

The figure brings annual public sector borrowing to £139.2 billion, which is 5.5% of GDP. That figure was £13.2 billion below the Office of Budget Responsibility’s (OBR) forecasts for the year.

During the month, the Government received £81.0 billion in taxes and other income, up 2% year-on-year, while it spent £104.7 billion, up 16.8%. Much of the increase was due to energy bill support.