Livebusiness Live: Wetherspoon’s returns to profit; CAA to probe August meltdown; GSK sells Haleon stake
By Live Commentary Updated: 10:31 BST, 6 October 2023
The FTSE 100 is up 0.3 per cent in early trading. Among the companies with reports and trading updates today are JD Wetherspoon, GSK, De La Rue and AssetCo. Read the Friday 6 October Business Live blog below.
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Wetherspoon bounces back to profit as boss rails against Covid curbs
JD Wetherspoon has swung back to profit as an absence of Covid-related restrictions continued to provide a boost to sales. Tim Martin’s business, one of the UK’s largest pub chains with 826 venues, revealed it made pre-tax profits of £42.6million for the year ending 30 July.
Metro Bank shares hit record low: Lender seeks up to £600m lifeline
Shares in troubled lender Metro Bank plummeted by more than a quarter yesterday on reports that it was seeking hundreds of millions of pounds to shore up its finances. Investors took fright as Metro confirmed that it was exploring options including a share issue, new borrowing and the sale of assets.
Wetherspoon toasts ‘promising post-pandemic sales revival’
Neil Shah, director at Edison Group:
‘As JD Wetherspoon toasts to fiscal cheer this Friday, investors join the revelry with the pub chain’s return to profitability. The 10.6% revenue rise to £1,925million alongside a notable like-for-like sales uptick of 12.7% year-on-year highlights a promising post-pandemic sales revival. ‘The diversified sales boost, led by a 17.7% food sales increase, facilitated a pre-tax profit of £42.6 million, a significant rebound from last year’s pre-tax loss. Despite the positive stride, the company did stress the threat of potential future lockdowns, emphasising the fragile recovery terrain the hospitality sector navigates.’
Market open: FTSE 100 up 0.3%; FTSE 250 adds 0.4%
London-listed shares are trading higher at the end of a turbulent week, as investors await monthly US jobs data for more clues on the Federal Reserve’s interest rate trajectory. Soaring government bond yields on expectations of higher interest rates have roiled equity markets this week, putting both the indexes on track for their worst week in seven.
Following a mixed jobs reports earlier this week, focus would now be on the more comprehensive September US non-farm payrolls data, due later in the day, for clues on whether the Fed would keep rates higher for longer.
Metro Bank has rebounded 7.6 per cent after touching a record low on Thursday on reports that the mid-sized lender was exploring options to raise as much as £600million. JD Wetherspoon has gained 1.9 per cent after the pub group posted higher sales in the first nine weeks of its financial year on strong demand.
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‘Wetherspoons seems to be moving in the right direction’
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club:
‘Wetherspoons seems to be moving in the right direction, following a very difficult few years. Like-for-like sales are growing, profits are recovering and debt is coming down. All-in-all, a solid performance. The rise in energy and food costs over the last 18 months has posed major headaches for Wetherspoons and put pressure on margins. However, inflation now appears to be moderating which should bode well for profits in 2024.
Despite these rising costs, Wetherspoon’s has been committed to maintaining low prices. This is helping to keep customers loyal, as shown by the robust like-for-like sales growth. These value credentials are critical, and should mean the group is better placed than many of its peers to weather any downturn in consumer spending. 2023 was supposed to be an annuss horribilis for the UK consumer but spending has held up much better than expected. Whether this can continue into 2024, as the impact of interest rate hikes really starts to bite, remains to be seen. But all-in-all, given easing cost pressures and Wetherspoon’s value credentials, it looks well set for the year ahead.’
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CAA to probe August meltdown
The UK Civil Aviation Authority has launched an independent review into the air traffic control technical issues experienced on 28 August that led to chaos over the bank holiday weekend. The air traffic control services meltdown saw many hundreds of flights delayed and cancelled, and left many Britons stranded abroad. Jeff Halliwell, who will chair the independent review panel, said: ‘This event had a significant impact on many passengers, businesses and the aviation industry and it is clear lessons need to be learnt. ‘I am looking forward to working with industry and passengers to tackle this review to really understand how the incident occurred, how it was managed and identify any recommendations.’
GSK raises £886m from selling Haleon stake
GSK has raised £885.6million from a stake sale in its spun-off consumer healthcare business Haleon at 328p a piece. The London-listed drugmaker has sold around 270 million shares, bringing down its holding in the world’s largest standalone consumer healthcare firm to 7.4 per cent from 10.3 per cent.
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Wetherspoon’s returns to profit
JD Wetherspoon has returned to an annual profit, thanks to easing costs pressures and strong demand for its lower-than-average priced drinks and food. The pub group posted a profit before tax of £42.6million for the year to 30 July, swinging from a £30.4million loss in the prior 12 months. Tim Martin, chairman of J D Wetherspoon: ‘Wetherspoon continues to perform well. In the first nine weeks of the current financial year, to 1 October 2023, like-for-like sales increased by 9.9%, compared with the nine weeks to 2 October 2022. ‘As we said last year, perhaps the biggest threat to the hospitality industry is the possibility of further lockdowns and restrictions. Share or comment on this article: Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
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