BUSINESS LIVE: AstraZeneca ups profit guidance; BAT vape sales soar; Unilever cheers volume growth

Just before close, the FTSE 100 was 0.34% lower at 7,602.51.

Meanwhile, the FTSE 250 was 0.11% higher at 19,126.39.

The property market has spent much of the past 18 months in the doldrums as higher mortgage rates dented home buyers and sellers’ ambitions.

But suddenly things have started to pick up. Mortgage rates have eased back a bit, house prices have edged up and buyers look a bit more interested.

Arm Holdings shares have surged more than 60 per cent, putting them on track for their best day since market debut in September, powered by strong forecasts on demand for its technology to design chips for artificial intelligence features.

The stock surge was set to add roughly $50billion to the British chip designer’s market value at $125.27, taking it past the $100billion level. Only 9.5 per cent of Arm’s outstanding shares are publicly traded, making it susceptible to sharp moves.

‘Arm blew forecasts out of the water for 2024 in terms of revenue expectations and investors have also cheered the company’s strong cost control measures as it surfs a wave of demand for chips for the cloud server market in particular,’ said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

(PA) – London’s Mondi has proposed creating a more than £10billion packaging giant in a renewed approach for rival DS Smith, it was revealed on Thursday.

Three years after reportedly mulling an approach for the business, Mondi has expressed interest in combining with its rival, DS Smith said.

The news sent shares in DS Smith soaring, up by as much as 15% at one point. But details are scant, and a potential deal still appears to be some way off.

“The board of DS Smith notes the recent media speculation and confirms that it has received a highly preliminary expression of interest from Mondi plc regarding a combination with DS Smith,” the business said in a statement to investors.

“The board of DS Smith understands that Mondi is considering a possible offer for DS Smith although no proposal has been received at this stage. There can be no certainty as to whether any proposal will be made or the terms of any such proposal. A further announcement will be made if and when appropriate.”

The deal would combine two packaging companies with a combined market value of around £10.4billion as the share prices stood on Thursday.

It is not the first time such a tie-up has been mooted. In February 2021, Bloomberg reported that Mondi was weighing a £5billion takeover of its rival.

At the time, the packaging industry was benefitting from a pandemic-era boom in online deliveries, which caused a jump in demand for the packaging that orders come in.

Sky has unveiled price hikes averaging 6.7 per cent on most of its broadband, phone and pay TV deals from 1 April.

Yodel is engaging with ‘interested parties’ to consider ‘strategic options’ for the group, a spokesperson told This is Money on Thursday amid takeover specualtion.

The parcel delivery firm said the talks with interested parties were already in the ‘final stages’.

A regulatory probe into the historical sale of loans by the UK motor finance industry could prove to mirror to the PPI scandal and result in billions of pounds of compensation.

Some analysts fear the surprise Financial Conduct Authority review, launched last month, represents a ‘powder keg’ that threatens the future of the country’s motor finance sector.

Primark is injecting a further £75million into its UK store estate, with plans to refresh and expand certain stores and open new ones across the country.

The fast-fashion retailer is opening new stores in Bury St. Edmunds, Teesside Park, and Glasgow Fort this year.

It is astonishing that the 60 per cent tax trap laid a whole decade-and-a-half ago remains.

In April 2009, against a backdrop of emergency financial crisis measures, Chancellor Alistair Darling announced the personal allowance would start to be removed at a rate of £1 for every £2 earned above £100,000.

Compass Group hailed a ‘strong start’ to the financial year after posting double-digit percentage growth across all regions.

The world’s biggest catering business reported organic revenue increased by 11.7 per cent in the three months ending December.

The UK’s used car market grew by 5.1 per cent in 2023, thanks to re-energised supply, levelling prices and a record year for electric vehicle (EV) sales.

The Society of Motor Manufacturers and Traders (SMMT) latest figures show there were 7,242,692 used car transactions last year, with driver’s turning to more affordable second hand motors after feeling the pinch from rising costs of living.

NatWest has appointed former Credit Suisse executive Emma Crystal as the new boss of its wealth management division, which includes Coutts.

Crystal, who is currently UBS’s sustainable finance group lead, is replacing Peter Flavel, who left last summer amid the Nigel Farage ‘debanking’ row.

More than half of Britain’s workforce are working overtime every day as employees’ changing work patterns hit their work-life balance, new data shows.

Roughly one in five UK employees are working at least two hours over their contracted hours on a daily basis, while 51 per cent worked at least 30 minutes, research from insurance firm Canada Life claims.

SSE has maintained profit expectations for the year despite a double-digit slump in its renewables performance, as poor weather hampered output.

The FTSE 100 power generator and network operator’s renewables output in the first three quarters of its financial year was around 15 per cent below expectations on the back of ‘mixed weather’, short-term plant outages and the ‘rephasing of flexible hydro output’.

Watches of Switzerland revenues were squeezed in the third quarter as shoppers splashed their disposable cash on fashion, hospitality and travel rather than watches.

Group revenue across the UK and Europe fell 7 per cent to £222million, while total group revenue edged down 1 per cent to £397million.

Unilever chief executive Hein Schumacher has branded the group’s competitiveness and performance ‘disappointing’ after posting lacklustre financial results.

The Magnum and Dove maker saw its full-year underlying operating profit edge up 2.6 per cent to €9.9billion (£8.5billion), while its underlying operating margin rose by 60 basis points to 16.7 per cent.

British American Tobacco plunged to a £17.1billion pre-tax loss last year after recording a higher-than-expected impairment charge on its US business.

The Dunhill and Lucky Strike cigarettes manufacturer reported a £15.8billion loss from operations in 2023, compared to a £10.5billion profit the previous year.

Holidaymakers are being urged to buy travel insurance before any big trips – especially to the US, where medical claims average £15,000 and can easily snowball into a monster £90,000.

The peak holiday booking season is from December through until February, according to the ATOL traveller protection scheme.

Demand for low and non alcoholic drinks continues to rise as consumers stay dry beyond January, says Ocado.

Data shared with This Is Money shows that searches throughout January for alcohol alternatives were up significantly from the previous year.

The housing market is heating up with increasing numbers of people looking to buy or sell, according to two separate reports.

The latest survey by the Royal Institution of Chartered Surveyors (Rics) showed that estate agents and surveyors are seeing rising numbers of buyer enquiries as well as more sellers coming to market.

London-listed stocks are trading higher this morning, with the FTSE 100 supported by a string of upbeat results from industry giants including Unilever and British American Tobacco, while industrial metal miners climb on a softer dollar.

Shares in Unilever are up 3.1 per cent after the Dove soap maker reported a rise in fourth-quarter sales and launched a $1.6billion share buyback program.

The broader personal care, drug and grocery stores index rose 1.7 per cent on the news, leading sectoral gains.

British American Tobacco has advanced 4.6 per cent to the top of FTSE 100 after the Dunhill maker forecast low-single digit organic revenue growth in 2024, and a full-year profit beat.

Shares in catering group Compass climbed 2.5 per cent on a rise in first-quarter organic revenue and better-than-expected like-for-like volume.

Snap shares fell by more than a third yesterday as it grapples with an advertising slowdown – leaving founder Evan Spiegel and his wife Miranda Kerr nursing losses of £200million.

The social media giant saw shares fall 35 per cent after Wall Street was left frustrated by its latest quarterly performance.

Uber has posted its first ever full-year profit as demand for its cabs soars.

The San Francisco-based company reported a profit of £870million for 2023 – after a loss of £1.4billion the year before.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:

‘Unilever’s performance in 2023 was uninspiring, with notable weakness in Europe and ice cream, driven in part by market share losses to private label competition.

‘Unilever’s new CEO, Hein Schumacher, recognises that the group could and should be doing better. His ‘Action Plan’ is designed to reinvigorate performance through more impactful innovation, productivity savings and an improved culture, with an enhanced focus on the top 30 Power Brands.

‘The success of this Action Plan is too early to judge, but investors should not expect quick fixes. The plan isn’t just about cutting costs and increasing efficiency. It’s designed to make Unilever a more innovative business, with stronger, faster growing brands. This requires increased brand and marketing investment, and will not be quick or easy to achieve.

‘Overall, there is a lot to like in new CEO, Hein Schumacher’s Action Plan. But it is hard to escape the conclusion that the environment for Unilever and its peers has become much tougher in recent years.

‘Cost of living challenges mean private label brands have never been more appealing, meaning Unilever is having to work harder just to maintain market share, let alone grow it. This Action Plan feels like it has more substance than past initiatives, but it needs to succeed to stop the business going backwards.’

Summer Colling, healthcare analyst at Citeline:

‘AstraZeneca’s solid FY2023 revenue figures of $45.8B are in line with, albeit slightly lower than, Evaluate’s $46.8B estimate.

‘As expected, Q4 2023 sales were driven by the company’s oncology assets Tagrisso, Imfinzi, and Lynparza, its diabetes asset Farxiga, and sales of Ultomiris in the rare disease market, which have all helped to offset plummeting sales from AstraZeneca’s COVID-19 medicines.

‘Tagrisso remains the company’s leading oncology asset, having racked up sales of $5.8B in FY2023, also in line with Evaluate’s $5.9B estimate. Tagrisso sales in RoW were negatively affected in Q4 by the recent reclassification of Australian government rebates and also continue to be affected by the mandatory price reduction in Japan.

‘As expected, sales of Imfinzi in China were boosted by the new launch in biliary tract cancer, which helped to offset the effect of the anti-graft campaign launched by central government departments.

‘Sales of Farxiga in Europe do not appear to have been affected by the EMA’s recent recommendation to update product information for diabetes medicines containing dapagliflozin to reflect the risk of vulvovaginitis, balanitis and related genital infections.’

Unilever met expectations for underlying quarterly sales growth in 2023 after the consumer goods giant raised prices at a slower rate and achieved its first increase in sales volumes for 10 quarters.

The company said it expects a ‘modest improvement’ in underlying operating margin for the full year, and that underlying sales growth will be within its multi-year range of 3 to 5 per cent.

Boss Hein Schumacher said: ;Today’s results show an improving financial performance, with the return to volume growth and margins rebuilding. However, our competitiveness remains disappointing and overall performance needs to improve.

‘We are working to address this by improving our execution to unlock Unilever’s full potential.

‘In October, we set out a Growth Action Plan focused on three priorities: delivering higher-quality growth, stepping up productivity and simplicity, and adopting a strong performance focus.

‘The new leadership team has embedded the action plan at pace. We have increased investment behind our 30 Power Brands, accelerated portfolio transformation, and are driving a sharper performance focus with clear and stretching targets across the whole organisation.

‘We are at the early stages of this work and there is much to do but we are moving with speed and urgency to transform Unilever into a consistently higher performing business.’

British American Tobacco has forecast low-single digit organic revenue growth for the year ahead, as falling smoking rates in the US weigh on double-digit gains in its ‘new categories’ segment which includes products such as vapes.

The maker of Dunhill and Lucky Strike cigarette reported a 5.2 per cent rise in full-year profits for 2023, beating analyst expectations.

CEO Teadeu Marroco said its plans to revive performance in the US were showing early signs of progress, and it was investing further.

‘We expect these investments, together with the U.S. macro-economic pressures, will impact 2024,’ he said.

Germany reinforced its status as ‘the sick man of Europe’ as the once-mighty industrial sector clocked up its longest downturn since the aftermath of reunification three decades ago.

Europe’s largest economy and one-time driving force said official data showed that output fell a further 1.6 per cent in December.

AstraZeneca expects higher revenue and profits in 2024, with the drugmaker betting on strong uptake of its infant RSV shot and resilient demand for its cancer and rare blood disorder drugs.

Strong sales of AstraZeneca’s cancer treatments and rare disease drugs, coupled with resilient demand in emerging markets, have since fuelled its growth.

The London-listed company said it expects total revenue and core earnings per share (EPS) to increase by a low double-digit to low teens percentage this year.

For 2023, AstraZeneca reported revenue of $45.81billion and core EPS of $7.26.

For the fourth quarter, it reported core EPS of $1.45 on total revenue of $12.02billion, compared with forecasts of a $1.50 per share profit on revenue of $12.01billion.