BUSINESS LIVE: Supermarkets lead as FTSE 100 jumps 1.5%; Thames Water plots £1.1bn extra green spend; Asda profits soar

Hipgnosis Songs Fund shares took off on Monday after the music rights investor confirmed it had received a larger rival takeover offer.

Hornby sales were hit by delays in the wake of attacks on shipping in the Red Sea in the first three months of the year.

The Margate-based model railway maker blamed an 8 per cent year-on-year decline in its fourth quarter sales on Easter falling earlier, while Red Sea delivery delays meant ‘high value containers’ had to be moved from March into April.

If you are hunting for income, the case for investing in solar energy funds seems to be simple, even if the weather is not particularly sunny.

But, even though many investors appear to have been spooked by the aggressive rate-hiking cycle seen in the last couple of years, the argument remains straightforward.

(Reuters) – Wall Street’s main indexes rose on Monday after steep losses in the previous session as easing Middle East tensions buoyed risk appetite, while investors looked ahead to an action-packed week with major tech earnings and a key inflation print.

The Nasdaq and the S&P 500 ended lower on Friday as Netflix shares weighed after a dour quarterly earnings report, with both the indexes suffering six straight sessions of declines last week, their longest since October 2022.

Some megacap growth stocks edged higher in early trading, with Meta Platforms, Amazon.com and Apple up between 0.6% and 1.5%.

Nvidia advanced 2.8%, rebounding from a 10% drop in the last session.

“The market got over-sold on Friday because of Netflix earnings, it was primarily a tech-driven decline,” said Jay Hatfield, CEO and portfolio manager at InfraCap.

“We’re headed into megacap earnings and so people are starting to realize that Netflix is not very indicative of what’s going to happen with other megacap stocks.”

Tesla, Meta Platforms, Alphabet and Microsoft will be in focus this week as the companies gear up to deliver their quarterly numbers, whose performance could further test the rally in U.S. stocks.

Five mortgage lenders have announced they are increasing rates, in the latest blow to home buyers and those looking to remortgage.

Barclays, HSBC, NatWest, Accord and Leeds Building Society have today contacted mortgage brokers informing them they will be upping rates from tomorrow.

Tyman saw its shares skyrocket on Monday after the London-listed doors and windows supplier revealed a takeover deal agreed with US-based Quanex Building Products.

The cash and share deal, which values the British firm at around £788million, will see Tyman become the latest to delist from the London Stock Exchange after being bought out by a US rival.

(PA) – Model trains maker Hornby has said some deliveries have been delayed as a result of shipping attacks in the Red Sea.

Margate-based Hornby, a more than 100-year-old business which specialises in toys and collectibles, said its sales have fallen in recent months.

Group sales over the first three months of the year were 8% less than the same quarter a year ago, it revealed.

This decline was partly driven by delays to deliveries via the Red Sea, with the movement of some container ships being pushed back from March to April.

Ongoing attacks along key trade routes in the Suez Canal have had a knock-on effect to international shipping, forcing some container ships to re-route and driving up freight costs.

Iran-backed Houthi rebels are behind the attacks in what they say is a campaign of solidarity with Palestinians in Gaza amid the Israel-Hamas conflict.

Other retailers like Pepco Group, which owns Poundland, and fashion chain Next have flagged heightened freight charges and delays due to disruption in the Middle East.

Asda profits soared by 24 per cent last year, thanks to rising food and clothing sales and a boost from the six million customers now using its loyalty card app.

Britain’s third-biggest supermarket group, which is owned by brothers Zuber and Mohsin Issa and TDR Capital, posted adjusted earnings before nasties and after rent of just under £1.1billion on total sales, excluding fuel, of £21.9billion.

Heathrow travellers are facing a Bank Holiday getaway nightmare after a three-day strike was declared by workers serving up to 70 airlines in a pay dispute.

The Unite union warned today that planes would be delayed and grounded during the 72-hour walk-out planned to begin at Britain’s busiest airport on May 4.

Mobico Group’s finance boss will stand down in two months’ time after accounting issues prompted another hefty full-year loss.

James Stamp became chief financial officer of the transport firm in November 2022 but will leave at its annual general meeting on 11 June following a difficult tenure.

Tesla has been forced to cut prices in the US and across the world just days after it said it would make 10% of its global workforce redundant, as it struggles with falling sales and higher competition in the EV market.

Prices of cars in the US, Germany and China were slashed over the weekend, and prices of bespoke Tesla software were also cut in the US.

The chief executive of vape maker Chill Brands has been suspended amid allegations regarding the use of inside information.

London-listed Chill Brands told shareholders on Monday it had enlisted law firm Fieldfisher to investigate the allegations involving boss Callum Sommerton.

Chill Brands said it had started the search for an interim chief executive, but the suspension of Sommerton does not constitute disciplinary action, or imply any assumption of guilt or that any decision has been made.

Heat pump installations have failed to meet Government targets for the second year in a row, with critics saying high prices are still putting consumers off.

The Government’s Boiler Upgrade Scheme (BUS) gives grants of up to £7,500 to households for fitting a heat pump to their property.

A number of UK motorists are now prioritising buying a set of shiny new wheels instead of a house, a new report finds.

Over a third of UK drivers told Auto Trader that buying a brand new car is now a bigger milestone than purchasing a property, mainly because it’s more attainable.

Richard Hunter, head of markets at Interactive Investor:

‘Technology stocks were in the firing line at the end of a testing week, with some of the recent froth being blown off after what has been a stellar rise for those stocks which have an AI slant.

‘Given its lesser reliance on tech stocks, the FTSE100 powered ahead in early exchanges, in an echo of the market moves of 2022 when high growth shares were eschewed in favour of more stable, defensive and value stocks, all of which are to be found in abundance in the UK’s premier index.

‘Meanwhile, the week ahead is one which is littered with any number of corporate earnings, not least of which are first quarter numbers from Lloyds Banking, Barclays and NatWest. The recent pick up of corporate activity as reported by the likes of Morgan Stanley and Goldman Sachs bodes well for Barclays in its investment banking arm, while the general pressure that was heaped upon the US banks in terms of Net Interest Income could also feature on this side of the pond.

‘However, the strength of the UK banking sector could also result in further focus on shareholder returns, with the possibility of higher dividend payments and share buybacks likely to underpin sentiment if announced. There could also be some kind of update on the rumoured NatWest offer to retail investors, which had previously been rumoured to be taking place in the summer.

‘Elsewhere, the retail and housebuilding sectors will also be scrutinised in what has been a patchy period of late for both, with updates from Primark owner Associated British Foods, Persimmon and Taylor Wimpey.

‘In the meantime, the retail sector more broadly soared in early trade after a raft of broker upgrades to the likes of Marks & Spencer, Sainsbury, B&M European and Next, with Ocado also rising by association.’

The chief executive of Tesco is in line for a record-breaking £10m pay day this year.

In the largest amount ever awarded to a British supermarket boss, Ken Murphy will take home a salary of £1.4m and performance-linked bonuses of £8.6m.

Mobico made another annual loss last year as ‘industry wide labour scarcity, lower productivity, market volatility in energy prices and persistent high inflation’ left it facing a £99million onerous contract provision charge related to its German rail business.

The National Express-owner’s statutory operating loss narrowed from £173.5million in 2022 to £21.4million, with improved sales also offset by £30million in restructuring costs.

Revenues were up 12.2 per cent for the year, thanks to passenger volume improvement, but adjusted operating profits fell from £197.3million to £168.6million.

Mobico said it expects to post an adjusted operating profit of £185million to £205million for 2024.

Boss Ignacio Garat said: ‘Our 2023 results are below the expectations we set ourselves at the beginning of the year.

‘The delays  due to the additional work relating to the German Rail business was regrettable but it is now concluded.

‘Although Group revenue growth was encouraging, driven by passenger demand and actions taken to recover inflation, this has not translated into an improvement in reported profitability.’

Asda profits soared by 24 per cent last year, reflecting a 7.1 per cent rise in total sales, as Britain’s third biggest supermarket group also slashed its debt pile.

Asda, owned by brothers Zuber and Mohsin Issa and private equity firm TDR Capital, said 2023 adjusted EBITDA after rent, its preferred profit measure, was just shy of £1.1billion, on total sales, excluding fuel, of £21.9billion.

Like-for-like sales rose 5.4 per cent.

Monthly industry data has, however, shown Asda consistently underperforming its bigger rivals – market leader Tesco and No. 2 Sainsbury’s.

Data from market researcher Kantar, published last month, showed Asda had a 13.8 per cent share of Britain’s grocery market, down 50 basis points on the year.

Asda has been burdened by finance costs due to high levels of debt since the Issas and TDR bought the business from Walmart in a £6.8billion deal in 2020 which left the US giant retaining a 10 per cent stake.

Net debt at the end of 2023 was £3.8billion, net of more than £1billion of cash on the balance sheet.

It said more than 90 per cent of this debt is secured on fixed rates of interest and it is ‘fully committed to further deleveraging’.

Royal Mail will hold fresh talks with investors this week as a billionaire dubbed the Czech Sphinx plots another bid for the 500-year-old postal service.

The top brass at Royal Mail owner International Distribution’s Service are understood to be in regular discussions about the approach from billionaire Daniel Kretinsky and have been holding talks with shareholders.

IDS will be keen to canvas the opinion of other investors ahead of any further offers.

Thames Water has proposed another £1.1billion of environmental project spending over the next five years in efforts to win the support of regulators, as it fights for survival amid a £16billion debt pile and the looming threat of nationalisation.

The provider was thrown into crisis last month when an existing business plan was branded ‘uninvestible’ by its owners.

The new plan will see Thames Water, which supplies about a quarter of the British population, said the rise in expenditure would go on projects benefiting the environment and would come without a further increase in customer bills than the increase already set out.

While that may help win over the regulator Ofwat, the company also needs to win support from its shareholders, who in March refused to invest a £500million equity lifeline.

Thames Water boss Chris Weston said the updated business plan focused on its customers’ priorities.

‘We will continue to discuss this with our regulators and stakeholders,’ he said added.