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LONDON BRIEFING: AB Foods says Primark has "very strong Christmas"

24th Jan 2023 07:53

(Alliance News) - Stock prices in London were expected to open flat on Tuesday, after data showed UK government borrowing continued to break monthly records.

UK public sector borrowing - excluding public sector banks - in the final month of 2022 reached its highest December figure since monthly records began in 1993, according to the Office for National Statistics.

Borrowing hit GBP27.4 million, which was GBP16.7 billion higher than the previous year, and GBP9.8 billion higher than the latest official forecast from the Office for Budgetary Responsibility.

Still to come in Tuesday's economic calendar, there are a slew of flash PMI releases from EU, UK, Germany and US.

In early corporate news, AB Foods left annual expectations unchanged after a positive Christmas for Primark, while Henry Boot predicted a slightly miss on annual pretax profit.

Here is what you need to know at the London market open:




FTSE 100: called up 5.7 points, 0.1%, at 7,790.37


Hang Seng: Hong Kong market shut for Lunar New Year holiday.

Nikkei 225: closed up 1.5% at 27,299.19

S&P/ASX 200: closed up 0.4% at 7,490.40


DJIA: closed up 254.07 points, or 0.8%, at 33,629.56

S&P 500: closed up 47.20 points, or 1.2%, at 4,019.81

Nasdaq Composite: closed up 223.98 points, or 2.0%, at 11,364.41


EUR: higher at USD1.0891 (USD1.0870)

GBP: higher at USD1.2405 (USD1.2368)

USD: lower at JPY130.07 (JPY130.62)

GOLD: higher at USD1,934.75 per ounce (USD1,922.40)

OIL (Brent): lower at USD88.05 a barrel (USD88.82)

(changes since previous London equities close)




Tuesday's key economic events still to come:

10:00 CET EU flash purchasing managers' index

09:30 CET Germany flash PMI

09:30 GMT UK flash PMI

09:45 EST US flash PMI

10:00 EST US Richmond Fed business activity survey

16:30 EST US API weekly statistical bulletin

08:55 EST US Johnson Redbook retail sales index


Consumer confidence in Germany improved at the start of 2023, according to the latest Growth for Knowledge data. GfK forecasts a reading of minus 33.9 points for its consumer sentiment tracker in February, up 3.7 points from a revised figure of minus 37.6 in January. "With the fourth increase in a row, the positive trend in consumer sentiment is consolidating. Even though the level is still very low, pessimism has eased recently", explained GfK consumer expert Rolf Burkl. The brighter outlook is mostly due to falling prices of energy, including gasoline and heating oil, GfK noted.




Davy raises DS Smith to 'outperform'


Panmure raises Shaftesbury to 'buy' - price target 459 pence


Panmure cuts Unite Group to 'hold' - price target 1,038 pence




Primark-owner Associated British Foods said revenue in the 16 weeks to January 7 was up 20% year-on-year, reaching GBP6.70 billion from GBP5.57 billion. Trading at discount fashion shop chain Primark has been good across all markets, AB Foods said, and is ahead of expectations after a "very strong" Christmas sales period. It noted pricing actions in its Food businesses will lead to annual profit growth, but at a lower margin. AB Sugar's operating result is likely to be "broadly" in line with last year, owing to the reduction in UK sugar crop. Overall, AB Foods said its expectations for group annual results remain unchanged. It expects "significant" sales growth, with adjusted operating profit and adjusted earnings per share to be lower than the previous financial year.




LondonMetric Property said it has added GBP2.4 million in annualised rent since September 30, having taken on 62 occupier initiatives. This includes lettings and lease re-gears on 24 assets, which amounted to GBP1.9 million, and rent reviews on 38 assets, adding GBP500,000 in rent. "We continue to see strong occupational activity across our portfolio from a very wide range of industries. This is allowing us to capture significant rental increases as well as negotiate longer lease lengths on shorter dated income," said Chief Executive Andrew Jones. A high number of rent reviews are expected to be settled in the next six to 12 months, with LondonMetric on track to capture GBP8 million in logistics rental reversion, as guided in its previous results.




Pub operator Marston's said like-for-like sales in the 16-week period to Saturday of last week were 13% ahead of the previous year, including the hit from Omicron. On a like-for-like basis, sales in the eight weeks to November 26 were 6.8% ahead of a year before, as previously reported. In the eight weeks after that, like-for-like sales were 19% ahead. The Wolverhampton, England-based pub chain also noted like-for-like sales were 4.5% ahead of financial 2020. the firm also noted its electricity costs are now hedged for the entirety of the current financial year to September. It left earnings guidance unchanged. "Whilst we still have certain cost challenges to navigate in 2023, we are well-positioned to continue to progress our strategy and are encouraged by the level of consumer resilience experienced to date," said CEO Andrew Andrea.


Henry Boot said 2022 was its best year ever at an underlying profit level, but a fall in the value of its UK commercial property investment portfolio will lead to pretax profit coming in "slightly" below market consensus of GBP48.1 million for the year. "It is too early to predict the outturn for 2023, however overall, the group expects this year to be more challenging than 2022," the builder and property developer said. The firm also said that HBD, alongside Barnside Group, completed the sale of East logistics scheme in Preston, in a GBP30 million transaction. This represents a premium of 10% to the last reported book value.


By Elizabeth Winter, Alliance News senior markets reporter

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