BUSNESS LIVE: Wage growth slows; BT slashes pension deficit; Vodafone profits slump

Babcock has maintained an annual growth guidance as the global threat environment continues to drive demand for defense equipment and maintenance work.

The engineering group posted underlying operating profit growth of 27 per cent to £154m during the six months to the end of September, helped by revenue from its contract to build frigates for Poland and after winning contracts in France and Australia .

A turnaround plan for the company, which designs and manufactures warships and weapons handling systems as well as supporting Britain’s nuclear submarines, has coincided with a surge in demand for military equipment due to the war in Ukraine.

Chief executive David Lockwood said: ‘We have made a good start to the year, as we continue to build on the exciting momentum we see across the Group.

‘We are delivering for our customers, reducing risk and positioning ourselves for growth through a series of important new global collaboration agreements.

‘We have a clear capital allocation policy, which provides the Group with the flexibility it needs to take advantage of the growing number of value creation opportunities we see in the future. “We are reinstating our dividend after a four-year hiatus, reflecting our confidence in the future, and our expectations for the full year remain unchanged.”

According to British Land, demand for office space in the City of London has recovered as employers seek high-quality properties.

Occupancy rates across its portfolio have reached more than 96 per cent and the Square Mile is “performing particularly well”, the FTSE 250 firm said yesterday as it revealed first-half results.

The owner added that hiring in the city in the third quarter soared 5 percent above the long-term average.

The UK water watchdog has confirmed the financial penalties and payments facing the sector in this financial year, which has been marked by strong criticism of companies’ management of leaks, wastewater and pollution.

Ofwat said the “majority of businesses” will be forced to return cash to customers, with the industry handing out just over £70m in total.

Thames Water will return the most to customers, with a final determination of £73.8 million, far surpassing Anglian Water in second place with a total of just over £27 million.

However, not all businesses will be forced to hand back cash, as millions of pounds will be awarded to United Utilities and Wessex Water.

Thomas Pugh, economist at RSM UK:

‘The slowdown in wage growth in September, from 8.2 percent to 7.9 percent, helps justify the MPC’s decision to keep interest rates at 5.25 percent, but it is still too high for the MPC declares that its job is done.

‘Indeed, private sector wage growth excluding bonuses, the measure that most reflects underlying wage pressures, slowed from 8.1 to 7.9 percent. Just as important for households is that real wages grew by 1.4 percent, the fastest rate since March 2022.

‘That, combined with a big increase in government support for low-income households, should give a small boost to consumer spending in the fourth quarter and prevent the economy from falling into recession at the end of the year.

‘Meanwhile, experimental labor market data produced by the ONS until its new labor force survey is ready, showed the unemployment rate remained at 4.2%. But job openings fell for the 16th straight month and jobless claims rose by nearly 18,000, suggesting the labor market continued to slowly relax.

‘However, employment barely increased, suggesting that the number of people working in the UK is still below its pre-pandemic level in contrast to the eurozone, where employment has increased by almost 3%, and the US, where it is almost 2%. higher. That is one of the main reasons for the UK’s poor performance.

“Overall, labor market easing appears to be slowly feeding into easing pressure on wages, which should convince the MPC that it just needs to be patient to see wage growth and inflation return to lower levels.” instead of resuming.” rate hikes.’

UK interest rates will be cut in May and fall to 4.25 per cent by the end of next year, analysts at Morgan Stanley have predicted.

The Wall Street bank’s prediction points to a series of cuts that are faster than those anticipated by the broader market, and could mean relief for millions of struggling borrowers.

There have been divisions at the Bank of England over when the first cut should come.

The Bank’s chief economist, Huw Pill, said last week that it “doesn’t seem totally unreasonable” to expect this to happen next August.

Vodafone saw its operating profits fall 44.2 per cent in the first half of the year to €1.7bn (£1.5bn), as a result of business disposals, “adverse” currency movements and poor performance. weakest of its associated businesses and joint ventures. .

But the telecoms giant reported an acceleration in services revenue in the second quarter after Germany, its biggest market, returned to growth.

Vodafone, which announced the sale of its Spanish business and the merger of its British unit with Hutchison’s Three in the last six months, reiterated its forecast for adjusted profits to remain broadly stable at around £12bn for the full year.

Chief Executive Margherita Della Valle said Vodafone had achieved better revenue growth in almost all of its markets in the first half of its financial year.

“Our attention to customers and the simplification of our business is beginning to bear fruit, although there is still much to do,” he said.

BT Group has valued its pension funding gap at £3.7bn, well below £8bn in 2020, and the telecoms firm has said its annual contribution amounts will remain unchanged .

BT will pay £600m into one of the country’s largest pension schemes each financial year until 2030, plus £180m under an asset-backed funding deal.

Otto Thoresen, chairman of the BT Pension Scheme, said it remained on track to be fully funded by 2030, due to a framework agreed in 2020.

“The BTPS remains on track to deliver on its commitments to its members, despite high levels of macroeconomic volatility and uncertainty,” it said in a statement.

“Our deficit is reducing, funding levels have improved and we remain on track to be fully funded by 2030.”

Heathrow Airport has become the fourth busiest airport in the world after an excellent half-year.

Some seven million passengers traveled through west London airport last month. This represented a 19 percent increase compared to October 2022, when 5.9 million flew through the airport.

UK wage growth slowed to 7.7 per cent in the three months to September, in a further boost to the Bank of England’s fight against inflation.

Data from the Office for National Statistics shows wage growth was in line with forecasts in the third quarter, slowing from 7.9 per cent in the previous three months, when the rate was at its highest level since it began data collection in 2001.

Separate data shows the labor market was largely unchanged during the quarter.