UK Output Weakness Adds to BOE's Challenge

UK Output Weakness Adds to BOE's Challenge

0907 GMT - The Bank of England will have a tough decision to make at its next policy meeting after business activity unexpectedly slumped in August, says Rhys Herbert, senior economist at Lloyds Bank. The composite purchasing managers' index was dragged by worse-than-expected output in goods and services, and last month's retail sales suggest further weakness in the coming months, Herbert says in a note. The sluggish output is accompanied by difficulties in recruiting that lead to wage growth, he notes. "The Bank of England will need to consider [this] carefully in its next decision for interest rates," he says. ([e-mail]; @joshualeokirby)

COMPANIES NEWS:

Reckitt Benckiser CFO to Retire; Shannon Eisenhardt Tapped as Replacement

Reckitt Benckiser Group said Chief Financial Officer Jeff Carr will step down on March 31, and that Shannon Eisenhardt will take up the role on Oct. 17.

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Costain 1H Pretax Profit Fell on Higher Costs; Mulls Dividend

Costain Group said that first-half pretax profit fell on the back of higher costs and that it is considering the payment of an interim dividend.

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Bluejay Mining Raises GBP600,000 Through Share Placing

Bluejay Mining said it has raised 600,000 pounds ($763,920) through a private share placing, which will be used on its wholly-owned Hammaslahti project in Finland.

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Angling Direct Sees FY 2024 in Line With Market Views, Buoyed by UK Sales Momentum

Angling Direct expects its fiscal 2024 performance to be in line with market views, driven by continuing U.K. sales momentum and growth in European sales during the first half, it said Wednesday.

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Pebble Beach Systems 1H Pretax Profit Fell on Higher Costs; Backs 2023 Views

Pebble Beach Systems Group said that pretax profit for the first half of 2023 has slightly dropped on the back of increased expenses but added that is in line to meet the board's expectations for the year.

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Tracsis Expects Revenue, Earnings to Rise Amid Growth Across Units

Tracsis said financial results for fiscal 2023 are expected to come in line with its expectations, with revenue and earnings rising on year on strong performance across divisions.

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Wynnstay Appoints Rob Thomas as Finance Director Designate

Wynnstay Group said that it has appointed Rob Thomas as finance director designate with effect from Oct. 2.

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Ithaca Energy Improves Full-Year Cost Guidance, Backs Production Views

Ithaca Energy said has improved its cost guidance for the year while backing its production guidance after pretax profit in the first half-year dropped significantly on the prior-year when profits were boosted by bargain purchases from acquisitions.

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Hitachi-Thales Deal Won't Hurt Competition in Urban Signalling Systems, UK Regulator Says

The U.K.'s competition watchdog said Wednesday that Hitachi Rail's proposed acquisition of Thales's transportation-systems business won't reduce competition in the supply of communications-based train control signalling systems in the U.K.

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Bluebird Merchant Ventures Shares Rise After Catalyse Buys Southern Gold's Stake

Shares of Bluebird Merchant Ventures rose as much as 24% in early trade after the company said Catalyse Capital is buying Southern Gold's 17.8% shareholding in the company.

MARKET TALK:

Sterling, Gilt Yields Fall as UK PMI Data Point to Weak Economy

0903 GMT - Sterling and gilt yields drop after provisional U.K. purchasing managers' data showed contractions in both manufacturing and services sector activity in August. "A renewed contraction of the economy already looks inevitable, as an increasingly severe manufacturing downturn is accompanied by a further faltering of the service sector's spring revival," says Chris Williamson, economist at S&P Global Market Intelligence in a press release accompanying the data. The data "will add to speculation that rates could soon peak," he says. GBP/USD falls 0.4% to a one-week low of 1.2673 after the data, from 1.2727 beforehand, according to FactSet. The 10-year gilt yield drops 15 basis points to 4.516%, from 4.560% before the data, according to Tradeweb. ([e-mail])

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Ocado Retail's Price Cuts Could Help Cool Food Inflation

0838 GMT - Ocado Retail's new price cuts show efforts to boost demand amid stiff competition from German discounters Lidl and Aldi, Interactive Investor head of investment Victoria Scholar says in a note. The joint venture between Marks & Spencer Group and Ocado Group has lowered prices of 200 items by an average of 8% following a previous reduction in June, Scholar says. This could help to cool food inflation, she notes, adding however that food prices remain sharply above headline inflation, which is likely to prolong the challenging inflationary backdrop in the U.K. ([e-mail])

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Hochschild Mining Could See Investor Interest Return, Berenberg Says

0833 GMT - Hochschild Mining has seen investor interest drop in the last few years amid operational issues, but it is now time to revisit the investment case, Berenberg analyst Richard Hatch writes in a research note. First, the precious-metals miner finally received the modified environmental impact assessment for its Inmaculada mine in Peru recently, which materially de-risks its operational and financial outlook, Hatch says. Second, the new Mara Rosa mine in Brazil will come online in 1H 2024, offering rising production and falling costs, he says. Finally, Hochschild's balance sheet is close to peak leverage, and "with Mara Rosa ramping up and the Pallancata [mine in Peru] returning, we forecast free cash-flow yield of 10% in 2025", Hatch says. Berenberg rates the stock a buy with a 130-pence price target. ([e-mail])

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Tracsis Seen as Showing Resilience in Adverse UK Rail Market

0823 GMT - Tracsis is expecting to report growth in fiscal 2023, which is no mean feat given continuing difficulties in the U.K. rail industry, Berenberg analyst Robert Chantry writes in a research note. The main driver was strong divisional growth in the rail, technology and services unit due to the delivery of large multiyear software-as-a-service contracts. "This looks supportive of Tracsis' product capabilities, given that it has been able to grow despite the widely documented ongoing industrial disputes in U.K. rail," Chantry says. The U.K. provider of technology and services for the transport industries is expected to see its adjusted Ebitda margin fall due to increased investments, which in turn could help drive further growth, he says. Berenberg rates the stock a buy with a 1,390-pence price target. ([e-mail])

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Marks & Spencer's Transformation Could be Key to FTSE 100 Potential Return

0804 GMT - Marks & Spencer's appealing transformation could pave the way back to FTSE 100 index in the upcoming reshuffle, Interactive Investor's head of markets Richard Hunter says in a note. The retailer, which was demoted in September 2019, is benefiting from a robust food business and an improving clothing and home division, which now targets modern mainstream customers, he adds. "Not only is the new look appealing to shoppers, but investors have also been attracted and the shares have risen by 77% so far this year," Hunter adds. M&S could replace Persimmon, which is likely to lose its place amid the turmoil in the housebuilding sector. ([e-mail])

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Reckitt Benckiser CFO Change Adds to Continuity Concerns

0758 GMT - Reckitt Benckiser Group's change of chief financial officer supports concerns around lack of continuity at the company, Jefferies analysts Molly Wylenzek and Feng Zhang write in a research note. After four years as CFO, Jeff Car is set to retire in March, with current CFO of Nike Consumer, Brand & Marketplace Shannon Eisenhardt set to replace him. "While we expect the market will not be completely surprised to see a change in the CFO role, the change reinforces our concerns around a worrying lack of longevity and continuity on the Reckitt Benckiser Group executive committee," the analysts say. Jefferies rates the stock a hold with a 5,640-pence price target. ([e-mail])

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Reckitt Benckiser's New CFO Has Robust Sector Credentials

0655 GMT - News of Reckitt Benckiser CFO Jeff Carr's retirement is disappointing as he was well-liked by investors, RBC analysts James Edwardes Jones and Emma Letheren say in a note. However, the consumer-goods company's appointment of Nike's Consumer, Brand & Marketplace CFO Shannon Eisenhardt to replace Carr is intriguing given her robust consumer background, they say. She leads the finance function for the Nike geographies, global direct business, and marketing, they note. Eisenhardt will join the group as CFO designate in October. RBC has an outperform rating on the stock and a price target of 7,700 pence. ([e-mail])

Contact: London NewsPlus, Dow Jones Newswires;

(END) Dow Jones Newswires

08-23-23 0524ET