25 July 2024 • 8:15am
8:15AM
Gucci-owner tumbles after profit warning Gucci-owner Kering tumbled as trading began in Paris after it warned that profits will tumble in the second half of the year as demand for luxury goods slumps.
The French multinational dropped 10pc as it said its recurring operating income, a key profit measure, could fall by about 30pc in the period compared with the previous year.
The company is struggling with turnaround efforts at Gucci, which accounts for two-thirds of its profits.
It had issued an earlier profit warning in April because of weak demand, particularly in China.
Kering owns Gucci, which accounts for two-thirds of its profits Credit: Hollie Adams/Bloomberg 8:04AM
UK markets slump amid tech sell-off The FTSE 100 has been swept up in the global market sell-off that began with a rout on Wall Street.
The UK’s blue-chip index fell 0.8pc to 8,098.45 shortly after markets opened, while the midcap FTSE 250 fell 1.1pc to 20,859.00.
8:01AM
Hollywood strikes take shine off ITV results ITV suffered a drop in revenues in the first half of the year as an advertising boost from England’s Euros campaign was offset by the impact of Hollywood strikes.
Our reporter James Warrington has the details:
The broadcaster reported a 13pc drop in revenues from its production business to £869m in the six months to the end of June.
Bosses have previously warned that the walkouts by US actors and writers, which brought Hollywood to a standstill last year, will lead to around £80m of revenue being delayed to 2025.
ITV Studios has also been hit by lower demand for shows from other free-to-air broadcasters across Europe against a torrid backdrop for the sector.
The production slowdown offset strong advertising growth for ITV, which cashed in on England’s journey to the final of Euro 2024.
Total advertising revenue jumped 10pc to £889m in the first half of the year, ahead of previous expectations.
Overall, ITV reported a 3pc decline in total revenue to £1.9bn. Statutory profit before tax was £330m, a sharp increase from last year as the company cashed in on the sale of its stake in streaming service Britbox International to partner BBC.
ITV today also announced that it has bought Hartswood Films, the production company behind hit series including Sherlock.
7:56AM
Unilever sales disappoint as shoppers put off by higher prices Consumer goods giant Unilever reported worse than expected sales after it was unable to win back shoppers it had alienated in recent years with higher prices.
The maker of Dove soap and Hellmann’s condiments reported a 3.9pc rise in second-quarter underlying sales, missing an average analyst forecast of a 4.2pc increase.
Underlying price growth for the quarter was 1pc, which was lower than market expectations, but underlying volume sales growth ran ahead of estimates at 2.9pc.
Chief executive Hein Schumacher has launched a turnaround plan for the business that involves spinning out its ice cream unit, which it aims to potentially list in Amsterdam by the end of next year.
It emerged earlier this month that the Marmite maker is preparing to cut up to 3,200 jobs across Europe.
He said: “There is much to do, but we remain focused on transforming Unilever into a consistently higher performing business.”
The company maintained its underlying sales growth forecast of 3pc to 5pc, mostly driven by volume. Underlying operating margin for the year is expected to be at least 18pc, it said.
Underlying operating profit rose 17pc to €6.1bn (£5.1bn) for the six months to June while the underlying operating margin widened 250 basis points to 19.6pc, although the company expects that to slow in the second half.
Unilever chief executive Hein Schumacher is trying to turn around the business Credit: UNILEVER/FRIESLANDCAMPINA 7:47AM
British Gas profits tumble as energy crisis payments end British Gas owner Centrica revealed tumbling profits in its household supply arm after an energy crisis allowance payment was not repeated and as it said the UK was moving to a “more normalised” gas and electricity market.
Centrica said that underlying earnings in British Gas Energy slumped to £159m in the six months to June 30 from £969m a year ago.
It said that around £500m of the fall was due to the absence this year of energy crisis allowance payments.
Regulator Ofgem allowed energy suppliers to recover costs that they had racked up during the crisis, but this has now come to an end.
The wider Centrica group reported underlying earnings of £1bn for the first half of 2024, but said group profitability will be “heavily weighted” to the first half.
The company also announced that chairman Scott Wheway will step down after five years heading the board, to be replaced by senior independent director Kevin O’Byrne on December 16.
Group chief executive Chris O’Shea said:
Our core businesses continued to deliver in line with our expectations in the first half of 2024, against the backdrop of more normalised market conditions.
Against the medium-term profit objectives we set out last year, we are on track to deliver two years ahead of schedule for the majority of our businesses, and we continue to ramp up our investment programme, including in innovative technologies that will support the UK and Ireland’s net zero ambitions.
7:38AM
Centrica profits halved in blow to small investors British Gas owner Centrica revealed its profits were cut in half in the latest blow to Britain’s small investors and pension funds.
Our energy editor Jonathan Leake has the latest:
Centrica’s profits for the first half of this year fell to £1bn compared with £2.1bn in the same period last year.
British Gas, its main subsidiary, is the key cause of the decline. Its adjusted operating profit fell to £159m this year compared with £969m last year.
The news will be a blow to the group’s 500,000 small shareholders – many of whom are both customers and the original “Sids” – the name given to those who bought shares when British Gas was privatised.
It will also impact pensioners more widely – the group’s main institutional investors are UK pension funds.
British Gas dragged down Centrica profits in the first half of the year Credit: Steve Parsons/PA Wire 7:33AM
Lloyds profits better than expected as it sets aside less for bad loans Lloyds has revealed earnings dipped this year as it generated less income, although profits were higher than expected as it set aside less money for bad loans.
The banking group, which also includes brands Halifax and Bank of Scotland, said it made pre-tax profit if £3.3bn in the first six months of the year.
This marks a 14pc decline from the £3.9bn reported this time last year, however, it comes in higher than some analysts had predicted.
It set aside £44m for bad loans during the latest quarter, which was much less than the £323m analysts were expecting.
The bank also revealed that its balance sheet grew this year with both lending to consumers, including mortgages, and the amount in savings and current accounts increasing.
Lloyds chief executive Charlie Nunn said the bank delivered “robust financial results” in the first half of the year.
Lloyds Bank profits fell less than expected to £3.3bn in the first six months of the year Credit: Chris Ratcliffe/Bloomberg 7:23AM
Revolut given UK banking licence after three-year wait Revolut has been given a UK banking licence bringing an end to its long wait for regulatory approval after a series of accounting missteps.
The fintech company, which has nine million UK customers and 45m around the world, first applied to the Bank of England’s Prudential Regulation Authority for a banking licence in January 2021.
However, it was unable to secure the licence after its own auditors previously issued a qualified opinion on its accounts, saying they were unable to satisfy themselves over the “completeness and occurrence” of nearly £500m of revenue.
Revolut recently published its full inancial accounts for 2023, announcing that group revenues surpassed $2.2bn (£1.7bn), with record profits before tax of $545m (£422.9m).
It has now received its UK banking licence with restrictions from the Prudential Regulation Authority.
It now enters the “mobilisation” stage, sometimes referred to as “Authorisation with Restrictions”, which is a common step for many new banks in the UK.
Revolut chief executive Nik Storonsky said: “We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for UK customers.”
Its UK chief executive Francesca Carlesi added: “It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.”
Nik Storonsky said gaining a UK banking licence was an ‘important milestone’ Credit: Piaras Ô MÃdheach/Sportsfile 7:08AM
European markets poised to fall amid stocks sell-off European markets are on track to open lower as a slump in global tech stocks sent investors fleeing into less risky assets, including short-dated bonds, the yen and Swiss franc.
Asian shares were hammered overnight, with the the FTSE 100 poised to open lower by 0.3pc, the Cac 40 in Paris set to drop 1.1pc and the Dax in Frankfurt on course to fall 0.4pc.
Chinese stocks, iron ore and oil prices dropped further after the country’s central bank sprang a surprise cut in longer-term interest rates, only stoking further worries about the world’s second-largest economy.
The sell-off in stocks saw investors ramp up bets on rate cuts globally, with futures implying a 100pc chance of a Federal Reserve easing in September.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1pc, while Japan’s Nikkei tumbled 3.3pc, exacerbated by a 11pc plunge in Nissan Motor after its quarterly profit slumped 99pc.
Taiwan’s markets were closed for a second day due to a typhoon.
Chinese blue-chips slid 0.9pc with the Shanghai Composite index falling 0.9pc to a five-month low. Hong Kong’s Hang Seng plunged 1.7pc, finding little support from Beijing’s latest easing step.
On Wall Street, the Nasdaq lost almost 4pc – the worst one-day fall since 2022 – as lacklustre Alphabet and Tesla earnings undermined investor confidence in the already lofty valuations of the “Magnificent Seven” stocks.
7:03AM
Good morning Asian markets tumbled after a tech-fuelled sell-off on Wall Street, as disappointing results caused traders to panic that a months-long rally in the sector may have been overdone.
Tokyo’s Nikkei led the retreat in equities, with a stronger yen adding to the downward pressure on exporters, while technology giants across the region were deep in the red.
5 things to start your day 1) Hundreds of thousands of mortgage borrowers face arrears crisis | Homeowners on cheaper deals risk falling behind on bills after refinancing, warns IFS
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3) Billionaire Le Pen-backer stripped of broadcasting licence over ‘fake news’ | Vincent Bolloré’s’ TV channel C8 has been accused of promoting far-Right views
4) Taxpayers must spend more on NHS health centres, says property developer | Rents on primary care sites are too low to cover cost of Labour’s plan to ease burden on hospitals
5) Abu Dhabi-backed fund invests $100m in British microchip champion | Deal comes as Gulf state aspires to become a major player in artificial intelligence
What happened overnight Asian shares dropped after US stocks suffered their worst sell-off in more than a year.
Japan’s benchmark Nikkei 225 lost 3.1pc to 37,949.50. Australia’s S&P/ASX 200 shed 1.2pc to 7,870.40.
South Korea’s Kospi declined 1.5pc to 2,717.72. Hong Kong’s Hang Seng declined 1.7pc to 17,010.89, while the Shanghai Composite fell 0.5pc to 2,887.48.
Among the region’s technology shares, Samsung Electronics fell 2pc, while Nintendo was down nearly 2pc. Tokyo Electron tumbled nearly 5pc.
It comes after disappointing results from Tesla and Google-owner Alphabet sent US stocks plunging.
The S&P 500 lost 2.3pc, to 5,427.13 points, while the Nasdaq lost 3.6pc, to 17,342.41, on its worst day in two years. The Dow Jones Industrial Average 1.3pc, to 39,853.87.
The yield on benchmark 10-year Treasury bonds rose to 4.28pc from 4.25pc late Tuesday.