BUSINESS LIVE: Kingfisher outlook warning; Henry Boot eyes market improvement; Mobico German rail hit

The FTSE 100 is flat in early trading, supported by the strength of the oil giants, although sentiment is subdued as markets await another major inflation push in the US later this week.

British shares closed higher last week, with the FTSE 100 index posting its highest close in a year, as investors cheered the Bank of England and the US Federal Reserve for interest rate cuts this year.

Energy stocks led the sector gains, up 0.6 percent as crude oil prices rose on concerns about tighter global supply due to escalating conflicts in the Middle East and between Russia and Ukraine.

Shares of Kingfisher fell 1 percent after the home improvement retailer warned about its prospects, saying current year profits would fall short of analyst expectations.

The FTSE 250 fell 0.5 percent, led by a 10.4 percent decline in Mobico after the transport company trimmed the lower end of its annual profit outlook.

Mark Crouch, analyst at investment platform eToro, said:

‘Kingfisher has published a worrying set of results this morning. The multinational DIY retailer has issued what is now a third profit warning in the past six months, with consumers shelving plans for DIY home improvement, undermining Kingfishers’ bottom line.

“The company’s French and Polish regions significantly underperformed in what continues to be a challenging period for the retail sector.

‘The performance in Britain and Ireland provided some reassurance for investors, with B&Q, TradePoint and Screwfix all delivering modest sales and market share growth. To this extent, the DIY retailer continues to expand its Screwfix stores across all regions in a bid to capitalize on the success of the popular brand.

‘Rate cuts can’t come soon enough for Kingfisher, which like the housing market is in trouble and struggling to achieve any growth.

‘While the company has maintained positive cash flow and an attractive dividend, investors will be all too aware of the company’s declining profits – which, if continued, will increase pressure on margins and threaten future returns to take.’

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘B&Q owner ‘Kingfisher is still largely in recovery mode, with performance hurt by cost-of-living headwinds and a struggling housing market. It’s the third warning in six months about its earnings outlook, as it fell 25% for the full year.

‘There was hope that with interest rates on the horizon and the stabilization of UK house prices, demand for DIY products and services would recover, but the company says the delay between house sales and renovation projects getting the green light recovery is further on the horizon.

‘The bright spot appears to be online sales, with the revamped marketplace platform also offering third-party products, boosting e-commerce sales in Britain and the Iberian Peninsula beyond expectations.

‘In France, however, subdued consumer confidence and a weak housing market remain a drag and the floor space for the Castorama chain is now being reduced, while the store network is being restructured and modernized to compete with rivals such as Leroy Merlin.’

One of the country’s largest investment platforms has called for an all-party commitment to abolish stamp duty on share trading to boost the city and wider economy.

Richard Wilson, the chief executive of Interactive Investor, urged the main parties to pledge to scrap the ‘absurd’ levy in their manifestos for the next general election.

Property developer Henry Boot expects market conditions to improve this year as the Bank of England begins its interest rate cutting cycle.

The group achieved annual results in line with expectations for 2023, with pre-tax profits 18 percent lower than the previous year, and maintained forecasts for the year ahead.

‘Our focus on high-quality land, commercial real estate development and residential construction in prime locations ensured that demand for our premium products remained resilient and ensured that Henry Boot performed relatively well against the backdrop of a slowing economy, rising interest rates, high inflation and declining volumes. in our key markets.

‘Whilst limiting our ability to drive developments forward in one respect, the government’s continued failure to implement much-needed reforms in an increasingly dysfunctional planning system plays into the hands of the strengths of our land promotion activities, while hampering demand from national housebuilders , which are still active, helps support. acquiring key strategic locations to support their future pipelines.

‘This, together with a number of well-timed disposals in development projects and Stonebridge Homes’ 43% increase in house sales, has contributed to a resilient performance.

‘We are not immune to the challenges the UK economy poses to the near-term trading environment and as previously reported we expect a slowdown in performance over the coming year.

‘However, the outlook for both inflation and interest rates is improving and it is starting to feel as if the UK economy has reached a tipping point, with recent mortgage rate cuts also pointing to a hopefully brighter future.’

National Express owner Mobico has cut the lower end of its annual profit outlook by around 9 percent after the British transport company flagged some accounting issues related to its German rail operations.

The company, which last month postponed its full-year results citing the accounting review, expects adjusted operating profit for the year to be between £160 million and £175 million, compared with previous expectations of £175 million to £185 million.

A Chinese battery giant could pump billions into building Britain’s biggest gigafactory.

EVE Energy is in advanced talks to build a hub for the production of batteries for electric vehicles (EVs) at Coventry Airport.

According to The Sunday Times, the company will commit to investing at least £1.2 billion in a 20 gigawatt hour factory.

B&Q owner Kingfisher has issued a warning about its prospects for the third time in six months, as the home improvement retailer said it would fall short of analyst expectations after profits fell 25 percent last year.

The group, which also owns Screwfix in Britain and Castorama and Brico Depot in France and other markets, said it was cautious about the overall market outlook due to the time lag between improving housing demand and home improvement demand.

It forecasts 2024-2025 adjusted pre-tax profits of £490 million to £550 million, below market expectations of £560 million.