BUSINESS LIVE: BT names new CEO; Pearson profits soar

Rishi Sunak declared war on Just Stop Oil today as he vowed to ramp up exploitation of North Sea oil and gas reserves.

The Prime Minister vowed to approve hundreds of new licences to drill for fossil fuels off the UK coast as he seeks to hit Labour over the cost of living.

FTSE 250 landscaping group Marshalls has warned that its results for 2023 will be lower than previously expected amid a slowdown in housebuilding and homeowners cutting back on refurbishments.

The company told shareholders:

The sustained high levels of inflation, increasing interest rates and weak consumer confidence means that the Board anticipates the Group’s performance in the second half will be below its previous expectations.

Given the ‘challenging trading conditions’, Marshalls said it has implemented a numver of measures ‘to align capacity and costs with demand’.

This included the closure of its factory in Carluke a reduction in shifts and capacity in other facilities, and a restructuring of the Marshalls commercial team.

These changes are expected to result in the loss of some 250 jobs, on top of the 150 roles already slashed in the second half of last year.

Marshalls shares have fallen by 8 per cent to 254p this morning.

Adam Vettese, analyst at eToro:

‘Pearson is ticking along nicely, registering growth in every key financial metric despite the challenging economic environment.

‘Sales, profit and cash have all grown robustly, while the balance sheet is in a strong position, even if net debt has risen slightly, although that’s largely down to increased tax and dividend payments.

‘The education company’s digital transformation programme is clearly paying off, turning it into a more modern and relevant business offering materials fit for today’s classroom.

‘Pearson is a solid business and is performing well, and we believe it has decent growth potential over the coming years.’

BT has appointed non-executive director Allison Kirkby as its next chief executive, replacing Philip Jansen by the end of January next year ‘at the latest’.

Ms Kirkby, 56, has been on BT’s board since 2019 and served as chief executive of Swedish telecoms firm Telia Company since early 2020.

She will be paid a basic salary of £1.1million, plus a bonus of up to 200 per cent of salary and other share awards, in line with Jansen’s remuneration, the telecoms group said.

Wizz Air is facing a shareholder rebellion at its annual meeting this week over amendments to a pay plan that could hand boss Jozsef Varadi a £100 million bonus.

Proxy adviser Pirc has told investors to vote against the reward as well as last year’s pay scheme and the re-appointment of two directors.

A third of shareholders in the Hungarian budget airline voted against the £100 million bonus package when it was put forward in 2021.

Steve Clayton, head of equity funds, Hargreaves Lansdown:

‘Marshalls is one the UK’s leading producers of building materials and recently made a major expansion by acquiring Marley roofing products.

‘Rising interest rates are taking their toll on construction activity though and Marshalls have today warned that their business is suffering. Underlying sales are down 13% and half-year profits are now seen falling by a quarter as demand to new-build housing and discretionary markets like paving and garden stone projects fades.

‘The group are battening down the hatches, making a further 250 roles redundant.

‘The group’s actions will conserve cash but also limit the level of sales margins that can be achieved for the rest of the year.

‘The market reacted badly, marking the stock down 9%. Shares in other building-related businesses were hit too, with Travis Perkins notably weak, down some 3% in early trade.’

Head of investment at Interactive Investor Victoria Scholar:

‘Pearson reported adjusted operating profit in the first half up 44% to £250 million while sales increased by 5% to £1.8 billion. Assessment and qualifications sales were a bright spot with sales up 7% along with workforce skills sales up 9% and English language learning sales up 44%.

‘However virtual learning sales fell by 15% and high education sales fell 2%. The education publisher said it is confidence about achieving its full-year expectations.

‘Pearson has been repositioning itself towards digital education services and is harnessing artificial intelligence to support its Pearson+ service as well as other technological tools. It has also been focusing on upskilling and reskilling demand which have all helped to boost profitability.’

London-listed stocks are treading water in early trading, while Pearson leads the FTSE 100 after the global education group reiterated its outlook.

Pearson has added 3.6 per cent after the global education group beat market expectations with 44 per cent growth in profit in its first half and said it was on course to hit annual and mid-term targets.

Industrial metal miners are up 0.3 per cent, tracking commodity prices, while heavyweight energy stocks are up 0.1 per cent.

Marshalls has slumped more than 11 per cent after the group flagged that a recovery in market conditions is unlikely in the second half of the year and also said it would potentially cut around 250 jobs

Senior profits were boosted in the first half by a recovery in the British auto and aircraft parts supplier’s flexonics business, which makes fluid conveyance and thermal management components for land vehicles and power and energy applications.

The engineering firm made a profit before tax of £13.5million for the six months to the end of June, compared with £11.1million a year earlier.

The Bank of England is under pressure to hit the pause button on interest rate rises amid predictions that its own inflation forecast will be revised down to ‘almost zero’.

Traders expect the Bank this week to raise its benchmark base rate by another quarter percentage point to 5.25 per cent – the 14th rise in a row.

It has raised the cost of borrowing from 0.1 per cent in December 2021 to tame runaway prices, which took off after Russia’s invasion of Ukraine sent food and energy bills soaring.

Capita chief executive Jon Lewis will retire by the end of this year, with Adolfo Hernandez set to replace him as leader of the outsourcing giant.

Lewis will step down from the top role and as a director on the board but will remain in the business until next July to ensure an orderly transition, Capita said in a statement.

Pearson profits soared in the first half as the London-listed education group enjoyed strong demand for English language learning, exams and qualifications.

Adjusted operating profits jumped 44 per cent to £250million in the six months to the end of June, having also been bosted by cost cutting efforts.

Pearson told investors it is on course to hit annual and mid-term targets.

A new consumer duty has come into force, setting a higher bar for financial firms and giving customers more certainty that the product they are taking out does exactly ‘what it says on the tin’.

Overseen by the Financial Conduct Authority, the Consumer Duty sets higher and clearer standards of consumer protection across financial services, requiring firms to put customers’ needs at the heart of what they do.

The impacts of the new duty will be far-reaching, weaving through the design of financial products through to the way firms treat their customers.

Britain will grant hundreds of new oil and gas licences in the North Sea as part of efforts to become more energy independent, the government confirmed this morning.

Two new carbon capture usage and storage clusters would be set up in North East Scotland and the Humber regions.

‘Now more than ever, it´s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses,’ Prime Minister Rishi Sunak said.

BT has named the chief executive of Swedish telecoms company Telia, Alison Kirby, as its new boss, replacing Philip Jansen when he steps down in January next year.

Kirkby has been a non-executive director at BT since 2019.

Jansen confirmed his exit earlier this month, having set plans in motion to cut jobs, become leaner and complete the roll-out of a national fibre network.