FTSE 100 Live Wednesday
- Greggs cuts profit guidance
- Spectris backs £4.1bn bid
- Direct Line deal completes
Market update: IT firms and Greggs reverse, FTSE 100 banks rally
10:05 , Graeme EvansProfit downgrades by Greggs and Bytes Technology today shook mid-cap confidence in a session when the FTSE 100 index continued its progress.
The FTSE 250-listed bakery chain trimmed profit guidance after it said customers bought fewer hot sausage rolls and steak bakes during June’s warm weather.
The shares slid 14% or 281p to 1694p as the group reported slower like-for-like sales growth of 2.6% in the half-year to 28 June. Analysts at City bank Jefferies said this implied growth of about 1% in June.
They said: “While obviously disappointing that full-year expectations are nudging back, we do not see this as a reflection on the underlying health of the business.”
The bank, which had a price target of 2650p prior to today’s warning, expects an acceleration in like-for-like sales in the second half.
Bytes Technology, which provides software, cloud and AI services to organisations including HMRC and the NHS, lost a quarter of its value after warning that first half gross profit will be at a similar level to last year.
The shares fell 126.1p to 382.4p after the Microsoft reseller said economic conditions led to some deferral of customer buying decisions.
It also highlighted the impact of changes in its corporate sales division as it looks to build a business closer to customer needs.
Peel Hunt, which has a price target of 638p, regards the issues as transient and has backed management to return the business to 10%-plus operating profit growth.
The update hit confidence across the sector as Softcat fell 7% or 119p to 1608p and Computacenter dropped 5% or 134p to 2320p.
The FTSE 250 index slid 0.5% or 108.24 points to 21,634.92, whereas the FTSE 100 index lifted 10.16 points to 8795.49.
Top flight risers included Glencore, which improved 7p to 298.3p, and BP after a gain of 8.75p to 377p.
Banking stocks also fared well after Santander last night announced that it is buying the TSB business for £2.65 billion. Barclays, which had been seen as a bid contender, rose 6.95p to 336.65p and NatWest advanced 8.2p to 509.6p.
Among the fallers, Next reversed 280p to 12,260p and housebuilder Persimmon fell 30p to 1268.5p.
In the FTSE All-Share, Topps Tiles jumped 11% or 3.8p to 37.9p after reporting improved momentum in the third quarter. Adjusted sales were 10.1% higher, an acceleration compared to 4.1% growth in the first half.
Greggs shares down 13% on hot weather sales warning
09:12 , Graeme EvansGreggs shares are down 13% or 251p to 1724p after the baker said customers have been buying fewer hot sausage rolls and steak bakes during the heatwave.
Hargreaves Lansdown analyst Derren Nathan said: “Sausage rolls may not be the first thing consumers yearn for when temperatures get into the 30s and that’s been the case for Greggs.
“While cold drink sales were up in June, when customers flake in the heat, flaky bakes aren’t first choice on the menu and footfall declined for the month.
“That’s taken the sheen off like-for-like sales, which were up a respectable 2.6% in the first half. But with annual cost inflation anticipated at 6%, today’s trading update conceded that full-year operating profit could be modestly below the levels seen in 2024.”
Mark Crouch, eToro market analyst, highlighted other factors alongside the weather. He said: “Inflation may be easing, but wallets are still under pressure, and Greggs’ value proposition may be losing a bit of its bite.”
Warnings hit Greggs and Bytes Technology shares, Glencore up 2%
08:35 , Graeme EvansThe FTSE 100 index is up by 0.3% or 29.28 points to 8814.61, while the FTSE 250 index has fallen 27.07 points to 21,716.09 after profits warnings by Greggs and Bytes Technology.
The bakery chain fell 13% or 253p to 1722p after cutting profit guidance due to the impact of hot weather on June sales. The shares started the year above 2800p.
IT software business Bytes Technology lost a quarter of its value, falling 129.3p to 379.2p after warning that first half gross profit will be at a similar level to last year.
The Microsoft reseller said: “Trading across the first months of the year has been impacted by a challenging macroeconomic environment, leading to some deferral of customer buying decisions, particularly in the corporate sector.”
The update impacted the shares of Softcat and Computacenter, which fell 6% or 107p to 1620p and 4% or 94p to 2360p respectively.
In the FTSE 100, mining stocks Glencore and Anglo American rose by 2% and Standard Chartered lifted 28.5p to 1210.5p. The biggest faller was medical products business Convatec, which declined 4% or 12.2p to 259.8p.
Heathrow substation fire report released
08:03 , Graeme EvansThe fire that caused the chaotic shutdown of Heathrow airport in March was likely caused by the “catastrophic” failure of a component at an electricity substation.
Britain's National Energy System Operator (NESO) issued a report on the incident on Wednesday.
The fire led to a loss of electricity to Britain’s biggest airport, resulting in its total closure for most of Friday March 21, as well as to more than 70,000 other customers. Around 270,000 passenger journeys were affected.
Aviva completes Direct Line takeover
07:52 , Graeme EvansInsurance giant Aviva today hailed the completion of its £3.7 billion takeover of FTSE 250-listed Direct Line.
Aviva’s deal to buy the Churchill and Privilege owner was first announced in December.
Chief executive Amanda Blanc said: "The completion of the acquisition of Direct Line brings together some of the country's best-known and admired insurance brands and brilliant people to better serve the needs of now 20 million UK customers.
“The transaction builds on the excellent progress we've made at Aviva over the last five years, accelerates our capital-light growth strategy, and puts us in a very good position to deliver strong returns for shareholders.
“That is why this deal made such sense for us and we are excited at the further opportunities this creates for Aviva's growth."
KKR trumps rival in battle for Spectris
07:43 , Graeme EvansPrivate equity giant KKR today seized control of the Spectris takeover battle by unveiling a new offer worth a total of £4.1 billion or 4000p-a-share.
The improved proposal, which has the support of the Spectris board, compares with the 3763p previously tabled by rival Advent.
The FTSE 250-listed precision measurement firm’s shares were at a volume-weighted average price of 2155p in the three months prior to the bid interest.
Today’s proposal by KR is made up of 3972p in cash and an interim dividend of 28p a share.
Warm weather hits Greggs sales, profit set to fall
07:27 , Graeme EvansBakery chain Greggs today scaled back profit guidance after seeing sales growth slow due to the impact of June’s warm weather on footfall.
Like-for-like sales rose 2.6% in the 26 weeks to 28 June, which compares with an uplift of 2.9% in its previous update on 20 May.
It now expects that full-year operating profit could be modestly below that achieved in 2024.
Total sales in the 26 weeks were up 6.9% to £1.03 billion, having opened 87 new shops and closed 56. It has an estate of 2649 outlets.
FTSE 100 seen higher, Nikkei 225 falls amid tariff fears
07:03 , Graeme EvansThe Nasdaq Composite closed 0.8% lower last night as Wall Street tech stocks struggled at the start of the third quarter.
In contrast, the Dow Jones Industrial Average rose by 0.9% and the S&P 500 index finished slightly below its opening mark.
President Trump’s threat of a 35% tariff on imports from Japan weighed on the Nikkei 225, which stands about 0.4% lower.
The FTSE 100 index outperformed European peers yesterday by finishing 24.37 points or 0.3% higher at 8785.33. It is forecast to start 0.3% higher this morning.
AstraZeneca shares will be in the spotlight after the Times reported that chief executive Pascal Soriot is interested in moving the company’s stock market listing to the US.
Brent Crude stands at $67.19 a barrel and gold at $3341 an ounce. The pound is $1.373.
