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Wednesday, November 30, 2022

FTSE 100 Live: BP pledges £18bn UK investment as quarterly profits surge

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Cazoo sales rise but profits squeezed

Online used car retailer Cazoo has seen its quarterly revenues top £250 million for the first time as it faced off challenging market conditions and a decline in consumer spending.

The UK start-up, founded by serial entrepreneur Alex Chesterman, sold 19,700 cars in the first quarter of 2022, more than double what it did this time last year. Wholesale vehicle sales tripled to 6,460.

Despite the rise in sales, Cazoo’s profit per car sold shrank to £124 in the first quarter and its overall gross profit margin slid to 0.5%.

Read the full article.

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Dow Jones opens higher as influential hedge fund manager warns on investment environment

In the US, the Dow Jones opened 25 points higher this morning, and has continued to gain in the minutes since the opening bell.

The Nasdaq is around 31 points lower in the first few minutes of trading.

Meanwhile the S&P 500 opened four points higher, at 4,159.78, but appears to be reversing some of those gains.

Meanwhile, billionaire hedge fund manager Paul Tudor Jones told CNBC that the environment for investors is worse than ever because the Federal Reserve is raising interest rates when financial conditions have already become increasingly tight.

“You can’t think of a worse environment than where we are right now for financial assets,” Jones said. “Clearly you don’t want to own bonds and stocks.”

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Breaking up HSBC would be bad for business, analyst warns

Proposals to break up HSBC and spin-off its Asian arm would be likely to result in a less diversified, less profitable business, a top analyst has warned.

Filippo Alloatti, head of financials (credit) at Federated Hermes, said although at present he regarded the suggestion as “just noise”, he expected a negative impact if the move to decouple the bank’s hugely profitable Asian business from its Western activities.

Reports today suggested that Ping An, China’s largest insurer and HSBC’s largest shareholder, is pushing for HSBC to overhaul its structure.

But Alloatti said: “If an Asia spin off were to happen we would regard it as negative. A less diversified, less profitable HSBC would almost be certainly downgraded by the rating agencies, given that HSBC makes the bulk of its earnings out of its Asian operations.”

He added: “Any such move would increase the complexity of the group, having to deal with listed minorities.”

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Oil sector tops dividend payers so far this year

The oil sector made the biggest contribution to the £14.2 billion of dividends paid out in the first quarter of 2022, as the astonishing rebound in oil prices delivered a dramatic turnaround in fortunes.

According to Link Group’s latest Dividend Monitor, total dividends from UK companies were down 24.9% in the first quarter as a result of some one-off factors.

But oil companies raised payouts by 29% or £505m, reversing cuts which were made during the pandemic when crude prices crashed.

BP recorded its highest quarterly earnings in more than a decade this morning.

Oil dividends are likely to top £9.5bn this year, a dramatic recovery from the £7.3bn they sank to between Q3 2020 and Q2 2021, although this is still around half of pre-pandemic levels.

According to the monitor, mining dividends were minimal in the first quarter, but will be very large in the second quarter.

All sectors increased underlying payouts during the three month period.

Companies such as AstraZeneca, which made its first increase in almost a decade, and BT, which reinstated its dividend after a two-year hiatus, signalled a post-Covid rebound.

Retailers are also showing signs of revival with large special dividends from Next and B&M European Value, while Royal Mail’s special dividend reflected strong trading thanks to an increase in internet purchases through the pandemic.

Dividends still remain scarce from the hard-hit travel and leisure industry, the monitor noted.

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Mode launches bitcoin cashback scheme in a bit to reset

Crypto fintech business Mode has sought to reset its business with the launch of a new bitcoin cashback scheme, months after an embarrassing climbdown that led to the exit of its CEO.

The company today officially launched its new bitcoin cashback product, the genisis of which was at the heart of an embarrassing issue that knocked the company’s shares last year.

The full story is online here.

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Tesco joins forces with Uber Eats for 60-minute grocery delivery

Tesco has partnered with Uber Eats to deliver groceries in 60 minutes through the supermarket’s ‘Whoosh’ service.

Tesco launched Whoosh in May 2021 and now offers the service at 200 of its Express stores, with plans to expand to 600 stores in 2022. The retailer has created 20,000 jobs to meet customer demand for online deliveries since the first coronavirus lockdown.

The new partnership with Uber Eats will cover 20 stores including in Norwich, St Albans and Letchworth.

Read the full story here.

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FTSE trading lower at lunchtime

The FTSE 100 is trading almost 63 points lower at 7,481.68 this lunchtime, thanks in part to the result of a ‘flash crash’ this morning which occurred after an error made by a Citigroup trader.

BAE Systems is leading the risers, with its shares up 3.43% during the morning’s trading. The company opened a new production facility in Manchester, New Hampshire, yesterday.

Meanwhile shares in property company Segro dropped more than 8% to lead the fallers.

The FTSE 250 is down 142 points at 20,566.59.

France’s CAC is 3.22 points higher and the DAX has dropped 2.42 points in Germany.

The pound is worth $1.25 and almost €1.19.

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Business growth has stalled in the face of inflationary pressures, the latest statistics from S&P and Markit suggest.

Its monthly measure of performance shows the index for manufacturing rising to 55.8 in April from 55.2 in March — any number above 50 shows growth.

While that was welcomed, analysts think it won’t be sustained. New orders are at the lowest for 15 months.

Rob Dobson at S&P Global said: “The improved expansion of output at manufacturers, while positive in itself, failed to mask the continued headwinds buffeting the sector at the start of the second quarter. New business growth near-stalled as a slowdown in the domestic market was accompanied by a further deterioration in export orders.”

Duncan Brock at the Chartered Institute of Procurement & Supply said: “Not one business in the survey reported paying less for their materials in April and 85% of supply chain managers reported higher costs, leading to the second highest inflationary rise in PMI history.”

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Operator of Piccadilly Lights to be sold in £463 million deal

Ocean Outdoor, the advertising company behind the iconic Piccadilly Circus hoardings and the BFI Imax wraparound space by Waterloo, is being bought out by its largest shareholder in a deal which values the company at $580 million (£463 million).

The $10.40-a-share cash offer from Atairos represents a 21.9% premium on Ocean Outdoor’s average share price over the last six months. Management are backing the offer.

Read the full story here.

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Shares in McColl’s to be suspended as rescue talks delay results

Shares in convenience group McColl’s are to be suspended after the company admitted that ongoing emergency funding talks mean it will miss the deadline to file annual accounts.

The retailer has been in talks with potential lenders about rescue funding for months. The business has been pushed to the brink of administration by supply chain issues, inflation and a £97 million debt pile it cannot afford to service.

The continued discussions with lenders mean McColl’s will miss the May 31 deadline to file its 2021 results. Shares will be suspended from June 1 as a result, once discussions with regulators conclude.

You can read more here.

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