22nd Sep 2026 07:57
(Alliance News) - Smiths Group reports an annual profit decline but reports it has kicked off a new buyback, while Kingfisher has lifted its guidance.
Here is what you need to know before the London market open:
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MARKETS
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FTSE 100: called up 0.3% at 10,766.61
GBP: down at USD1.3369 (USD1.3382 at previous London equities close)
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ECONOMICS
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Andy Burnham will insist the UK is not "on the slide" and attempt to draw a line under 10 years of post-Brexit turbulence as he makes his United Nations debut as UK prime minister. He will address the UN General Assembly in New York on Tuesday after his first face-to-face talks with US President Donald Trump. Burnham will say he has a "really upbeat message" about the UK, although he acknowledged there were long-term issues which needed to be addressed to improve living standards.
The prime minister's trip to New York comes ahead of the Labour Party conference later this month, a crucial first budget of his premiership in October and the unveiling of his 10-year plan for the country. He told reporters accompanying him on the visit: "The plan for Britain is about 'what is our direction over the next 10 years and how do we make life more affordable for people'. That is my main priority, that's what people are looking for. "I hear people saying the country is on the slide – we're the fastest growing in the G7, there's lots to be proud of, there's a lot right with the country and I'm going to give a really upbeat message when I speak."
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UK public sector borrowing was loftier than expected in August, data on Tuesday showed, on an increase in spending. The Office for National Statistics said public sector net borrowing amounted to GBP18.27 billion in August, up from GBP15.35 billion a year prior and GBP2.04 billion in July. Borrowing in July is typically lower than other months due to the timing of additional receipts from self-assessed income tax. The August reading was higher than expected, as the FXStreet-cited consensus had pencilled in borrowing of GBP15.7 billion. "Borrowing rose by around a fifth compared with August 2025, as spending increased more than government income from taxes and other receipts, partly reflecting the impacts of inflation," the ONS said. The ONS noted that borrowing in the financial year up to August amounted to GBP77.3 billion, down 2.7% from 12 months earlier but GBP8.1 billion above an Office for Budget Responsibility forecast. The OBR provides forecasts for the UK economy and public finances. UK Chancellor John Healey will face pressure to raise taxes or cut spending at next month's budget, as soaring borrowing costs because of the Iran war and weaker growth has wiped nearly GBP12 billion off the UK government's fiscal headroom, according to a report on Monday. The latest KPMG economic outlook estimated that Healey could be left with headroom of about GBP12 billion in the autumn, down from GBP23.6 billion at the time of the spring forecast. It said rising borrowing costs on the UK's debt after the Middle East conflict has already cut about GBP9 billion off the headroom, with sluggish growth and expected downgrades from the OBR likely to reduce it by about another GBP2 billion. The budget, the first under Burnham's new government, will be announced on October 28. The next batch of borrowing data is released a week prior.
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BROKER RATINGS
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RBC cuts Burberry to 'sector perform' (outperform) - price target 1,200 (1,400) pence
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COMPANIES - FTSE 100
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Smiths Group says a new share buyback has kicked off, but reports that annual profit declined in tough market conditions. The engineering company's pretax profit in the year to July 31 amounted to GBP245 million, down 23% from GBP317 million a year prior, though revenue increased 2.1% to GBP1.94 billion from GBP1.90 billion. Operating costs were 6.3% higher at GBP1.65 billion, Smiths says. Revenue beats the company-compiled consensus of GBP1.92 billion, but it grows 1.2% on an organic basis, shy of expectations of a 1.4% hike. Chief Executive Officer Roland Carter says: "2026 was a year of significant strategic progress. We transformed our portfolio and unlocked over GBP3 billion of value which repositioned Smiths as a focused, premium industrial engineering company. We delivered a resilient performance with growth in revenue, profit and margin, and strong cash generation in the face of ongoing macro uncertainty." Carter continues: "As we enter FY2027, underlying market conditions remain challenging, but our robust order book and business momentum underpins our expectation of organic revenue growth." Smiths expects organic revenue growth of around 4% for the new year, "and further increasing our operating margin into our medium-term target range". It has a "strong conviction" in achieving its 21% to 23% operating margin target, and 5% to 7% organic revenue growth view. In financial 2026, the margin improved slightly to 20.6% from 20.5%. Smiths has upped its final dividend by 5.4% to 33.5 pence per share, giving it a total dividend of 48.5p, also up 5.4% from 46.0p. It's been a year of change at Smiths Group, with the industrial engineering company selling its Detection and Interconnect businesses. Smiths adds: "The portfolio reshaping has enabled enhanced returns to shareholders, with GBP2.6 billion returned in the past five years. Following the completion of the FY2025 GBP500 million share buyback programme in December, a further GBP1 billion related to the proceeds from the sale of Smiths Interconnect has now been returned. A further GBP1.5 billion is still to be executed in relation to the Smiths Detection proceeds and is expected to be substantially completed by end of calendar year 2027."
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Kingfisher says it saw a "solid" first half performance, and it has lifted annual profit guidance but says the "consumer environment remains mixed". The do-it-yourself retailer's brands include B&Q, Screwfix and Castorama. Total sales in the six months to July 31 amounted to GBP6.86 billion, a rise of 0.8% from GBP6.81 billion a year prior, helping profit surge 18% to GBP400 million from GBP338 million. It maintained its interim dividend at 3.8p per share. "We delivered a solid H1 performance, growing sales, gross margin and profits through market share gains and continued momentum across trade, e-commerce, marketplace and group sourcing. We are building a stronger, more resilient Kingfisher, with our strategic priorities creating new growth opportunities and strong financial discipline supporting performance across the business," CEO Thierry Garnier says. "While the consumer environment remains mixed, our consistent delivery, strategic progress and opportunities ahead give us the confidence to upgrade our guidance." Kingfisher now sees adjusted pretax profit for the full year between GBP595 million and GBP635 million, its guidance range lifted from GBP565 million to GBP625 million. Adjusted pretax profit in the first half climbed 9.9% to GBP404 million. Kingfisher sees free cash flow between GBP480 million and GBP520 million for the full year, lifting its outlook from GBP450 million and GBP510 million.
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Pest control and hygiene firm Rentokil Initial has struck a deal with Bain Capital to sell lake and pond management company SOLitude Lake Management. The deal, which also includes its Vertex Aquatic Solutions division, is worth USD230 million. Rentokil expects net proceeds after tax of around USD180 million. "The transaction further reduces leverage within our target range, supporting our capital allocation priorities to invest in organic growth and bolt-on M&A, pay a progressive dividend and then return surplus capital to shareholders," Rentokil says. The transaction is expected to be completed in the fourth quarter of the year. CEO Mike Duffy adds: "This transaction supports our strategy of building a platform for sustainable profitable growth through greater simplification of the organisation and specifically prioritising our highest opportunity markets and categories. The disposal further strengthens our balance sheet as we look to accelerate growth and improve margins and free cash flow and deliver on the clear opportunity for shareholder value creation."
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An activist investor has demanded a vote to get a seat on the Whitbread board, saying the hotel company has "materially underperformed its peers and the wider market". Corvex Management, which owns some 7% of Whitbread, wants to install its partner James Gemmel to the board. "Whitbread has materially underperformed its peers and the wider market over multiple time horizons and is trading at a significant discount to its peers. In Corvex's view, the board's recent strategy review failed to address Whitbread's underlying challenges and was poorly received by the market," Corvex says. "Corvex is not seeking control of Whitbread and is not demanding a sale of the company. It is asking for a single seat on the board, to work in a collegiate and constructive manner with no predetermined agenda, to benchmark the company's current strategy against every credible alternative to establish a pathway that maximises value for all." Back in May, Corvex urged the Premier Inn owner to put itself up for sale. In a damning letter to Whitbread management, the New York-based activist hedge fund called the status quo "untenable" and said that the need to pursue "meaningful strategic and structural reform had become unignorable".
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COMPANIES - FTSE 250
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Target Healthcare REIT hails its best annual performance since its float, and the care home investor expects to up its dividend for the new financial year. EPRA net tangible assets per share at the June 30 year end amounted to 122.1 pence, up 6.4% on-year from 114.8p. It reports a total accounting return, which also factors in dividends paid, of 12%, beating financial 2025's 9.3%. "With a total accounting return of 12.0%, these results represent the group's best annual financial performance since its IPO in 2013. The inflation-linked rental uplifts embedded in the leases, combined with stable valuation yields over the year, drove a notable improvement in like-for-like capital value. Returns were further enhanced by the net impact of the group's investment activity during the year," Chair Alison Fyfe says. Target Healthcare REIT's annual dividend amounted to 6.032p per share, up 2.5% from 5.884p. For financial 2027, its dividend target is 6.212p, which would represent a 3.0% hike. Fyfe says: "Whilst the investment market remains competitive, the care home market itself is structurally undersupplied. Patient investing, particularly in competitive markets, remains key both in terms of delivering sustainable financial returns and in the construction of a balanced portfolio carefully weighted to those factors and characteristics that are expected to ensure that the properties remain attractive to investors, tenant operators and residents over the long-term."
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OTHER COMPANIES
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SThree reports "a further quarter of sequential improvement" in net fees, as the science, technology, engineering, and mathematics-focused recruitment firm says market conditions remain mixed. Net fees in the third quarter to August 31 fell 2% on-year to GBP79.2 million, easing from a 6% decline in the second quarter. CEO Timo Lehne says: "Our Q3 performance showed continued sequential improvement, with six of our 11 Contract markets delivering new business growth and supporting a 5% increase in our contractor order book. As Contract revenue is recognised over the life of each contract, it strengthens visibility over future net fees and gives us greater confidence in the trajectory of performance. We are seeing encouraging signs of stabilisation, supported by growth in the USA and moderating declines in several markets." SThree expects annual adjusted pretax profit of GBP12 million, ahead of prior guidance of GBP10 million. "This outperformance primarily reflects a focus on working capital efficiencies and other one-off benefits, which are not expected to recur," it adds.
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By Eric Cunha, Alliance News news editor
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Related Shares:
BurberryKingfisherSmiths GroupRentokil InitialTarget Healthc.SThreeWhitbread