Market update: Babcock tops FTSE 100, THG shares up 13%
10:18 , Graeme EvansBabcock International continued its surge up the FTSE 100 index today after annual results highlighted the group’s strength in a “new era for defence”.
Babcock maintains the UK’s fleet of nuclear submarines and also provides engineering support across the marine, nuclear, land and aviation sectors.
UK defence spending made up nearly two-thirds of its revenues haul of £4.8 billion for the last financial year, which rose 11% on an organic basis. Underlying operating profit lifted by 17% to £363 million.
The company said rising global threats and insecurity had contributed to governments across all its markets strengthening their stance on defence and security.
It underlined its confidence by increasing its medium-term margin guidance from 8% to at least 9% and boosting its annual dividend by 30%. It also launched a £200 million share buyback programme for the first time in its history.
Babcock shares have more than doubled in value this year, securing FTSE 100 status in the process. The stock rose another 12% or 126p to 1159p in today's session.
Other top flight risers included Rolls-Royce, which added 14.8p to 924p, and miner Glencore after a gain of 3.45p to 278.55p.
The FTSE 100 stood 13.18 points higher at 8772.17, having lagged yesterday’s strong gains in Europe and Wall Street.
WPP shares were bottom of the FTSE 100, down 9p to 513p after analysts at Barclays cut their price target on the marketing group to 550p.
Banking stocks also came under pressure as NatWest slipped 7.2p to 502.6p and Barclays fell 3.6p to 329.9p.
Outside the top flight, THG shares jumped 13% or 3.6p to 31.7p after the Myprotein and Lookfantastic brand owner reported “much improved” trading in its second quarter.
The nutrition division is expected to lift revenues by between 5% and 7% in the period, with the business growing at its fastest rate since the start of 2022.
Halfords fell 1.3p to 170p as an uncertain outlook at the start of the new financial year offset 2024/25 underlying profits above guidance at £38.4 million.
Amazon warehouse business backs £485m takeover
10:11 , Graeme EvansTritax Big Box today agreed a £485.2 million deal to buy a London-listed rival, fending off a competing bid by private equity giant Blackstone.
FTSE All-Share listed Warehouse REIT (Real Estate Investment Trust) said its bosses have recommended the proposed takeover by Tritax.
The deal will value Warehouse – which owns a raft of distribution sites run by companies including Amazon – at 114.2p per share.
THG shares rally amid sales momentum
09:27 , Graeme EvansTHG shares today jumped 15%, up 4.1p to 32.2p after the Myprotein and Lookfantastic brand owner reported “much improved” trading in its second quarter.
The Manchester-based group said it returned to constant currency revenues growth in the period, leading to unchanged guidance for the year as a whole.
City firm Jefferies, which has a price target of 65p, said: “The shares have had a weak run, but with momentum building and forecasts stabilised we see clear upside.”
THG’s nutrition division is expected to lift revenues by between 5% and 7% in the quarter, with the business growing at its fastest rate since the start of 2022.
Following a significant improvement quarter-on-quarter, the beauty division is expected to deliver a revenue decline of between 2% and 3%.
Miners lift FTSE 100, Babcock jumps 13% on buyback plan
08:27 , Graeme EvansBabcock International shares have jumped 13% after the defence business hiked its dividend by 30% and launched its first ever buyback of shares.
The high-flying stock, which has doubled in value this year, rose 138p to 1171p.
The FTSE 100 index rose 21.64 points to 8780.63, with Glencore up 4.8p to 279.9p and Anglo American 18p higher at 2073p.
British Airways owner IAG improved 3.4p to 330.9p and Rolls-Royce put on 9.6p to 918.8p.
Advertising and marketing group WPP fell 5p to 517p after Barclays cut its price target on the stock to 550p, with a new Underweight recommendation.
Halfords boosted by strong cycling market, braced for cost headwinds
07:49 , Graeme EvansHalfords today said underlying profits rose 6.4% to £38.4 million for the year to 28 March, ahead of previous guidance between £32 million and £37 million.
In terms of current trading, it said the cycling market has performed “very strongly” but the tyres market has exhibited further declines.
Chief executive Henry Birch said: “While inflation appears to be moderating and interest rates are falling, the negative outlook for employment and the impact of geopolitical instability continues to weigh on confidence and is keeping the savings ratio high despite rising real incomes.
“However, the year has started as expected and with levers including pricing strategy and further buying synergies we expect to be able to mitigate the substantial cost headwinds that we face in the year ahead.”
He said additional costs incurred in relation to a new warehouse management system mean the current year’s profit performance is expected to be weighted to the second half.
Babcock lifts medium-term guidance, dividend up 30%
07:23 , Graeme EvansNaval dockyards business Babcock International today upgraded medium-term guidance alongside a 17% rise in annual operating profit to £363 million.
The FTSE 100-listed group, which delivers engineering, support and critical systems to defence and civil markets, posted an 11% rise in revenues to £4.8 billion. UK defence accounted for 62% of this figure.
Babcock underlined its confidence in future prospects by upgrading its medium-term guidance, including an operating margin of at least 9%.
It also increased its dividend by 30% to 6.5p a share and launched a £200 million share buyback programme for the first time in its history.
Shares have more than doubled this year against the backdrop of increased defence spending.
Chief executive David Lockwood said: "This is a new era for defence. There is increasing recognition of the need to invest in defence capability and energy security, both to safeguard populations and to drive economic growth.
“Our specialist capabilities are increasingly relevant and, with a growing set of opportunities before us, Babcock is committed to play its part in driving prosperity alongside its customers.”
FTSE 100 lags global markets, Brent Crude price firm
07:03 , Graeme EvansThe price of Brent Crude today firmed near to $68 a barrel, having fallen sharply since Monday evening’s Iran-Israel ceasefire announcement.
US markets closed higher for a second session in a row last night, led by a 1.4% rise for the Nasdaq after oil’s price fall boosted the interest rate outlook.
The Dow Jones Industrial Average rose 1.2% and the S&P 500 lifted by 1.1%.
The FTSE 100 index underperformed yesterday due to weaker energy stocks and is forecast to open today’s session unchanged near 8769.
Asia markets are higher, with the Hang Seng index up 0.9% and the Nikkei 225 0.3% stronger.
