MARKET REPORT: BT languishes in FTSE100 doldrums after mixed update and big news from big rival worries shareholders
BT languished in the FTSE100 doldrums following a mixed update and big news from a major rival that left shareholders fearful.
The telecom giant was the biggest faller on the blue chip index after reporting a decline in first-quarter sales and profits.
BT was hit by gains in its global division, which serves large corporate customers.
Concern: The telecom giant was the biggest faller on the blue-chip index after reporting declines in first-quarter sales and profits
In the spring of 2020, many of these customers were spending a lot of money because of the sudden need for their staff to work from home and hold conference calls.
Growth in this part of the business has now stalled as the Covid recovery gets underway – and the effects even offset a rebound in the lucrative BT Sport arm as restrictions in pubs were lifted and Brits flocked to the European Championship in the company of other football fans.
BT boss Philip Jansen insisted the company was ‘now at the forefront’, adding: ‘Customer satisfaction is the highest ever in the world, so don’t panic, we’re very alert. It has to come back and we are hopeful that it will come back in the second half.” Profits fell 4% in the three months to July to £536 million, while revenues fell slightly to £5.1 billion.
Since Jansen took over, BT has plowed £12bn to roll out advanced fiber optic cables. At the same time, it will save £2bn in savings, largely by cutting thousands of jobs and reducing the number of offices from 300 to 30.
But numbers aside, BT was also caught off guard by an announcement released shortly before the company released the update – as Virgin Media O2 said it would upgrade its entire network of 15.5 million buildings to all-fiberglass over the next seven years. . BT fell 6.6 percent, or 12.05p, to 171.9p last night. It was closely followed by hip and knee replacement maker Smith & Nephew, who said things were still not back to normal.
The widespread cancellation of elective surgeries around the world since the outbreak of Covid has thwarted the medical device group. Shares fell 6.3 percent or 99p to 1464.5p, while mining engineer Weir Group fell 6 percent or 113.5p to 1790p even as it recovered its dividend.
The FTSE100 as a whole had a stronger day as a slew of major companies released much more optimistic financial numbers on another ‘super Thursday’ results.
The blue chip index rose 0.9 percent or 61.79 points to 7078.42, while the FTSE250 rose 0.2 percent or 44.01 points to 23050.46.
While BT suffered, there was much better news for a number of companies in even more evidence that companies are finally having some breathing room and being able to ramp up their operations again.
At the other end of the scale on the Footsie, investors cheered pest repeller Rentokil (up 6.8 percent, or 35.6p, to 563p) as first-half earnings jumped and earnings would be higher than expected for the full year.
One-off revenues for large disinfection contracts – which were in high demand during the height of the pandemic – predictably declined.
There was good news in the events industry, as conference and trade show organizer Informa (up 5.7 percent, or 27.8 pence, to 511.8 pence) also raised forecasts.
The Footsie-listed group – which hosts events such as the Monaco Yacht Show and China Beauty Expo – thinks it will reach £1.8bn in revenue in 2021, up from previous estimates of £1.7bn, in the aftermath of a ‘progressive return’ of personal events in North America, China and the Middle East.
Informa’s peer Relx (3.2 percent, or 66p, to 2100p) was cautious but optimistic about demand for corporate events in the coming months.
The world’s largest caterer, Compass, climbed 3.7 percent, or 55p, to 1553.5p after it said it expects to trade at about 80 percent to 85 percent of pre-Covid levels in the last quarter of the year.