The FTSE 100 will open at 8am. Among the companies with reports and trading updates today are Asos, British Land, Smiths, Finsbury Food, PZ Cussons and AG Barr. Read the Tuesday 26 September Business Live blog below.
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‘It will take longer for Asos to turn its fortunes around’
Joshua Warner, market analyst at City Index:
“ASOS has kept on the right track since escaping the red back in June as it tries to turnaround the business by becoming more agile, simple and efficient and remained profitable and cash generative in the second half.
‘However, earnings came in at the bottom-end of its target range and cashflow will be much lower than hoped as sales remain under pressure. ASOS blamed this on “timing effects”, but it will ultimately lead shareholders to think it will take longer for ASOS to turn its fortunes around.
‘ASOS remains a recovery play as it prepares to shift to its new commercial model once inventory levels have returned to a more normal size and its shift to a faster stock model is proving successful as its test case shows products turn around three times faster than usual.
‘Accelerating the turnaround in stock will not only be key to improving profitability and cashflow, but also paving the way for ASOS to reduce net debt.’
Meta dumps Regent’s Place building
Meta Platforms has surrendered one of the two buildings it leases from FTSE 250 Britihs Land at London’s Regent’s Place, as tech companies turn cautious about office real estate due to prevailing macroeconomic uncertainties.
The property firm said the lease surrender would lead to an earnings per share dilution of about 0.6 pence for its half-year period.
British Land said it was ‘comfortable’ with current market expectations for the 2024 fiscal year despite the move by the Facebook-owner, as it saw a better-than-anticipated collection of historic Covid-19 arrears.
Smiths Group profits soar
British industrial technology company Smiths Group has posted a 20 per cent rise in operating profit for the 12 months to the end of July as demand for scanners, valves and connectors soared, helped by decarbonisation trends.
The FTSE 100 group, which makes airport security scanners as well as specialist products used in the oil and gas and hydrogen sectors, made a profit of £501million for the year and said it expected more growth next year.
Paul Keel, chief executive, said:
‘We had another strong year of progress in fiscal 2023 as we further accelerated our growth, sharpened our execution, and developed our talented people. We delivered year-on-year improvement against all five of our medium-term financial commitments, including record organic sales and EPS growth.
‘Innovation is central to our purpose of improving our world through smarter engineering, and new product launches contributed more than three percentage points to our growth.
‘We continued to invest in R&D as artificiaI intelligence and other digital technologies are playing an increasingly important role in enabling us to support our customers more effectively. We are also further building our capabilities to capitalise on the growing megatrends we are exposed to across the major markets we serve, including energy transition and the world’s ever-increasing need for better security.’
Asos sales slump
Asos sales slumped 15 per cent in the fourth-quarter sales and the group has warned second half earnings are expected to come in at the bottom-end of its guided range.
However, the retailer has said its turnaround plan is making progress.
Asos announced an overhaul of its business model last October after the economic downturn and a string of operational problems hammered its profits and shares.
The strategy is to prioritise profit over top-line growth by reducing the amount of stock Asos carries, cutting costs and improving its cash position.
Underperforming water firms to pay compensation
Underperforming water firms including Thames Water will be forced to return £114million to customers next year, industry regulatory Ofwat said on Tuesday.
David Black, Ofwat CEO, said:
‘The targets we set for companies were designed to be stretching – to drive improvements for customers and the environment.
‘However, our latest report shows they are falling short, leading to £114m being returned to customers through bill reductions. While that may be welcome to billpayers, it is very disappointing news for all who want to see the sector do better.
‘It is not going to be easy for companies to regain public trust, but they have to start with better service for customers and the environment. We will continue to use all our powers to ensure the sector delivers better value.’
