FTSE 100 rises as Melrose and Compass Group raise outlook

FTSE 100 futures

FTSE 100 futures are up 0.2% this morning, with the blue-chip index set to open at 7,766.8.

Top UK stock news

A consortium is preparing to launch a bid for Teck Resources’ metallurgical coal operations, in a move that would scupper Glencore’s (GLEN) hopes of buying the firm. Canadian mining investor Pierre Lassonde told the Financial Times that he has assembled a consortium to bid for the coal business. Glencore has been made unsolicited bids for the whole of Teck with the hope of combining its own coal operations with Teck’s before spinning them off, but Teck has been trying to fend off those approaches and find a suitable way of spinning off its coal arm as an independent business.

The chief financial officer of CK Hutchinson, Frank John Sixt, has said agreeing a deal to merge its Three mobile network in the UK with Vodafone’s (VOD) UK business is progressing but conceded it is ‘extremely difficult’ to get a deal over the line. The pair have been talking about combining their UK operations since last year. ‘It is probable as has been speculated that we will reach an understanding with our friends at Vodafone,’ the CFO told investors yesterday, but added it is ‘difficult to draw a conclusion’ on the deal.

JD Sports Fashion (JD) is preparing to name Dominic Platt as its new chief financial officer this week, according to Sky News. Platt is currently the CFO at BGL Group, which owns price comparison site Comparethemarket, and the appointment would reunite him with JD’s CEO Regis Schultz, with the pair having previously worked together at French retailer Darty. Platt would replace Neil Greenhalgh.

Keep an eye on water utilities like Pennon Group (PNN), United Utilities (UU) and Severn Trent (SVT) after the industry regulator Ofwat said they will face higher penalties from 2025 for using faulty equipment to measure pollution from storm overflow pipes and introduce binding targets to force them to reduce the amount of sewage entering public waterways.

Melrose Industries (MRO) said it is trading ‘materially ahead’ of expectations as sales, margins and profits continue to grow, prompting it to raise its guidance for the full year. The firm, which is now an aerospace-focused business after recently spinning-off Dowlais Group (DWL), said it is targeting annual sales of £3.35 billion to £3.45 billion and adjusted operating profit of £340 million to £360 million.

Compass Group (CPG) raised its outlook, launched a new £750 million share buyback and upped its dividend by almost 60% to 15.0p following a strong performance in the first half. The company saw revenue rise 25% in the first half to £15.8 billion and said operating profit jumped 41% to breach the £1 billion threshold. It is now anticipating operating profit to grow toward 30% over the full year, up from its previous goal of 20%.

TUI (TUI) said adjusted Ebit losses narrowed to EUR242.2 million in the second quarter from EUR329.9 million the year before as booking momentum continues to build. Revenue soared to EUR3.2 billion from EUR2.1 billion. Bookings for this summer are up 13% year-on-year thanks to higher prices and volumes in the last six weeks have been above pre-pandemic levels. ‘Given the latest positive booking trends, we are confident in our Summer 2023 capacity assumption of being close to normalised 2019 Summer levels,’ TUI said.

Spirax-Sarco Engineering (SPX) said organic sales grew as expected in the first four months of 2023 to keep the company on track to meet its guidance over the full year. The company is aiming to deliver double-digit sales growth in 2023. Hopes that its margin will improve in the second half are underpinned by expectations that Watson-Marlow’s margin will grow.

ASOS (ASOS) missed expectations in the first half of its financial year after sales declined more than anticipated and losses widened more than hoped as it continues to try and put the business back on the right path. It delivered £100 million of profitability improvements in the period and is eyeing another £200 million in the second, which should help it generate cash and deliver positive adjusted Ebit in the last six months of the financial year. However, it won’t be enough to recover the significant cash it burnt through in the first half, prompting a warning that it could burn through as much as £100 million in free cashflow over the full year.

JD Wetherspoon (JDW) said like-for-like sales rose 9.1% in the 13 weeks to the end of April, marking an acceleration from earlier in the financial year as bank holidays drove people to pubs. Year-to-date sales have risen 6.4%.

Smiths Group (SMIN) has appointed Steve Williams as its new chair if he is elected at its annual general meeting in November. He will replace George Buckley, who is retiring after the AGM. Williams will join the board as a non-executive director and chair designate at the start of September. Williams is currently the chair of NYSE-listed Alcoa and a non-exec at Enbridge.

National Express (NEX) has said it will change its name to Mobico Group from early June 2023. It said the new name ‘better reflects the group's international nature and its diverse range of mobility services, as it continues to lead the modal shift to mass transit.’ This will also see its stock ticker change to MCG.

Alphawave (AWE), which is currently suspended after failing to publish its results on time, warned its auditor has said it needs a ‘short amount of additional time’ to complete its audit and that its annual 2022 earnings will be reported sometime during the week starting on May 15.

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