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BUSINESS LIVE: Taylor Wimpey ups expectations; Just Eat losses narrow

por Ernestine Hebblethwaite (2022-08-26)

The FTSE 100 is down 0.4 per cent in early trading. Among UK companies with reports and updates are Taylor Wimpey, Hiscox, Rolls-Royce and Keywords Studios. Read the Wednesday 3 August Business Live blog below.

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Harry Wise
Host commentator

Mike Sheen
Host commentator


Market open: FTSE 100 down 0.4%; FTSE 250 off 0.2%

London-listed stocks have inched lower at the open as investors maintain a cautious stance over the pace of monetary policy tightening.
Global markets have been volatile after a trio of Federal Reserve policymakers signalled on Tuesday that there would be no let-up in the tightening campaign, while investors assessed the fallout of U.S. House Speaker Nancy Pelosi's Taiwan visit, which has angered China.
The FTSE 100 is down 0.4 per cent, while the FTSE 250 is down 0.2 per cent. Both indexes have inched lower for a third day after clocking strong gains in July.


Avast shares soar as CMA approves $8.6bn takeover deal

Avast shares are up more than 40 per cent at the open after the Competition and Markets Authority confirmed it had provisionally cleared cybersecurity company NortonLifeLock's $8.6billion takeover.
Following a more detailed Phase 2 investigation, the CMA said it concluded that the deal does not raise competition concerns in the UK.


How overpaying your mortgage by £20 a month can save you thousands

Homeowners are striving to ease the pain of spiralling mortgage costs as further rate hikes loom. 
The Bank of England is set to bump the base rate up to 1.5 per cent tomorrow, with some experts tipping 1.75 per cent.

Our calculations show how much money borrowers with a £200,000 mortgage, taken out over 25 years on a 3.5 per cent rate, could save.


The 'yawning gap' between Taylor Wimpey's share price and trading performance

Richard Hunter, head of markets at interactive investor: 
'The yawning gap between trading performance and share price performance continues, with Taylor Wimpey being the latest to highlight this disconnect with a strong showing.
'The company has reported strong demand for the year, with current and future trading following the same trend. There are few signs of house price growth slowing, underpinned by a national housing shortage, interest rates at historically low levels and widespread mortgage availability. Indeed, the group has highlighted that house price growth has fully offset build cost inflation, where is currently running between 9% and 10%.
'However, the sector has been under pressure following the removal of the stamp duty holiday and a revamped Help to Buy scheme, with overarching concerns emanating from the general outlook for the UK economy.
'Stretched government finances leave little room for tax reductions, adding to the inflationary pressure of food and energy prices which threaten to worsen the cost of living crisis which is being increasingly experienced by households. In addition, housebuilders have been hot by the cost of remediation on legacy housing, for which Taylor Wimpey has set aside an additional provision of £80 million.
'For the moment, the general caution has yet to filter through to the housebuilding sector in terms of actual trading, and Taylor Wimpey is no exception. The company has reported pre-tax profit which is comfortably ahead of expectations, and up by 16.3% on the previous year. Group completions are ahead of guidance, the average selling price on those completions is ahead by 3.1% and the value of the order book has increased from £2.6 billion to £2.8 billion.
'At the same time, operating profit margin has risen to 20.4% from 19.3% and remains well in sight of the 21% to 22% target. The group was 89% forward sold for the year for this reporting period, and the group has guided that full-year operating profit will be at the top end of the current consensus range.
'Demand remains healthy in terms of reservations and viewings, with the pipeline of further completions on track despite some pressure arising from bottlenecks in the planning system, while the land grab for new opportunities remains a competitive arena.
'The company’s general progress comes against strong comparatives from the previous year, where the carry-over of completions after the release of lockdown restrictions flattered some of those earlier numbers. The balance sheet also remains in good health, enabling a £150 million share buyback programme to be completed over the period, and also an increase to the dividend which leaves the projected yield on the stock at a punchy 7.5%.
'Trading is strong and the outlook upbeat, as evidenced by the market consensus of the shares which remains resolutely positive, coming in at a strong buy. Share price performances have far from reflected this optimism across the sector as a whole, however.
'Despite the initially positive reaction to the numbers, Taylor Wimpey shares have declined by 28% over the last year, as compared to a gain of 4.3% for the wider FTSE100, underlining that caution rather than hope remains the watchword for this beleaguered sector at present.'


Thames Water offers customers incentive to switch to metered bill

Thames Water is offering customers a financial incentive to switch to a metered bill early.
Water meters allow you to track your usage. As a general rule of thumb, if you have more bedrooms than people in your home you could save money. 

Thames Water aims to roll out water meters to all households by 2035. It is writing to customers to offer them the chance to switch early to cash in on any savings.


US private equity giant KKR slumps to £677m loss amid slowdown in dealmaking

KKR has suffered the biggest hit to its balance sheet since March 2020 after posting a loss of £677million for the second quarter.
The drop-off for the private equity giant comes after a turbulent few months for global markets and a slowdown in dealmaking, which has hit the New York firm's vast portfolio.
KKR's latest quarterly results revealed a 7 per cent fall in the value of its private equity holdings, while its fee-related earnings were down 2 per cent year-on-year to £377million.

The drop-off for the private equity giant comes after a turbulent few months for global markets and a slowdown in dealmaking, which has hit the New York firm's vast portfolio.


Ex-Mulberry star designer Emma Hill sells bust bag brand to leather goods firm Pittards

Mulberry’s former star designer Emma Hill has sold her upmarket bag brand after it collapsed into administration in June.
The luxury goods company’s ex-creative director quit Mulberry in 2013 and founded Hill and Friends with Georgia Fendley. 
But in June the business, which sells leather handbags and accessories for as much as £595, appointed administrators to sell its brand and assets after the business went bust. 

As part of the deal Hill, pictured with model Alexa Chung, will join Pittards as a consultant.