BUSINESS LIVE: Marston's boosted by job cuts; Travis Perkins slashes profit forecast; FirstGroup lifts expectations

Just before close, the FTSE 100 was 0.09% up at 7,634.79.

Meanwhile, the FTSE 250 was 0.29% lower at 17,915.04.

Volkswagen will cease production of its smallest and least expensive new car by the end of 2023 in the latest example of auto makers consolidating their model line-ups ahead of the transition to electric vehicles (EVs).

The VW Up, the German automotive giant’s compact city car and cheapest model in the company’s range will be axed after 12 years, the company has confirmed.

ExxonMobil has bought a rival for $60billion in stock, just days after its married head of shale oil was arrested at a hotel in Texas on sexual assault charges.

The oil and gas corporation has acquired Pioneer Natural Rescources in an all-stock transaction valued at $59.5 billion, or the equivalent of $253 per share.

Finance giant Hargreaves Lansdown is launching a basic, no-frills pension for people who want an easy way to invest for retirement but are unsure how to get started, This is Money can reveal.

Its Ready-Made Pension Plan involves saving into a ‘growth phase’ fund, then shifting cash to a ‘de-risk phase’ fund during the eight-year run-up to retirement, for a total 0.75 per cent annual fee.

PageGroup has cut its annual forecast due to employers scaling back hiring and more jobseekers rejecting offers.

The recruiter now anticipates making operating profits of £125million to £130million this year, compared to previous guidance of £137.6million and discounting £5million in one-off cost-cutting measures.

(PA) – Next is closing on a deal to buy high street rival Fat Face, according to reports.

The FTSE 100 clothing giant is putting the finishing touches to a deal to acquire Fat Face for around £100million, Sky News reported on Wednesday.

Next and Fat Face both declined to comment.

It comes around three years after Fat Face was taken over by its lenders.

Last year, it was reported that the retail business, which has around 180 UK shops, had hired investment bankers in order to strike a sale.

It would be the latest in a flurry of deals by Next, which saw it buy Made.com, Joules and Cath Kidston since last year.

Earlier this year, the company also increased its stake in Reiss to become the majority shareholder in the business.

Last month, Next increased its profit guidance for a third time this year after seeing sales boosted by warm weather and rising wages.

Next reported a better-than-expected 5.4% jump in total sales over the six months to July, compared with the same period last year, and a 3.2% increase in sales of its brands at full price.

On Wednesday, shares in Next were 1.9% lower.

Protections for scam victims risk being watered down and delayed, charities and consumer groups will warn today.

A new redress system for victims tricked into transferring money to scammers is due to come into force next year.

America’s economy could be thrown into turmoil by the war between Israel and Hamas, analysts have said – warning that the dollar could be impacted and oil prices swiftly affected.

The conflict may lead to higher inflation in the United States, which would be a significant problem for President Joe Biden going in to the election year.

(PA) – The City watchdog has censured collapsed bond scheme London Capital and Finance (LCF) for “unfair and misleading” promotions, but let it off without a fine.

The Financial Conduct Authority (FCA) said fining the business would simply divert away money that could otherwise go to long-suffering investors.

LCF collapsed in early 2020 after it was unable to meet the payments it had promised to bondholders.

The company promised high returns on investments in its bonds. It said the funds raised – around £237million at the time of its collapse – were being invested on bondholders’ behalf.

However, after it collapsed, around 11,600 people, many of them saving for retirement or already retired, were unable to get their money back.

Some were able to get payments from the Financial Services Compensation Scheme (FSCS), but most were not eligible, causing the Government to step in with a special fund to bail out the savers.

On Wednesday, the FCA said LCF’s promotions “presented a misleading picture” which made its bonds “appear a far more attractive investment than they were”.

They were not told about hidden charges, and the high risk involved, the FCA said.

The FCA said LCF also used investors’ money to fund “seemingly independent comparison websites” which showed its bonds next to other investments with lower rates of return.

Therese Chambers, joint executive director of enforcement and market oversight, said: “LCF’s use of financial promotion led to bondholders, many of whom were vulnerable, investing in unsuitable, high-risk products.

“We recognise our censure will not provide solace to those investors who lost out. But it is important we set out what went wrong at LCF and how their promotions misled people into parting with their money.”

A band called Easy Life says it will change its name – after being threatened with legal action by the parent company of no-frills airline easyJet.

The indie five-piece, from Leicester, were hit with a lawsuit by Sir Stelios Haji-Ioannou’s easyGroup, which accused the band of ‘riding on the coat tails’ of the brand and demanded damages.

Marston’s expects operating profitability to improve more than expected in fiscal 2024, after the pub group cut jobs at its head office in an effort to reduce costs.

The Wolverhampton-based group, which reported a 10.1 per cent rise in like-for-like sales for the 52 weeks to 30 September, said it reduced head office headcount costs by about £5million this year.

FirstGroup has upgraded its annual earnings guidance following strong demand for its rail and bus services over recent months.

The transport business now expects adjusted operating profits for the 2024 financial year will be around £14milion to £20million above previous guidance, while adjusted attributable profits will be approximately £7million to £10million higher.

Travis Perkins shares fell sharply on Wednesday after the group downgraded its annual profit forecast by around 27 per cent.

The building materials supplier now expects its 2023 adjusted operating profit to be in the range of £175million to £195million, down from the £240million it forecast in June – itself a 12 per cent downgrade.

A married couple who allegedly oversaw the collapse of Patisserie Valerie after a £94million hole was discovered in the accounts appeared in court charged with fraud.

Chief financial officer Christopher Marsh, 49, and his wife Louise, 55, are accused of ‘inflating’ figures in the bakery chain’s annual accounts for three years, starting in October 2015.

(PA) – Building supplies company Travis Perkins warned that it will miss profit expectations this year as it faces “challenging conditions.”

The business told shareholders on Wednesday to expect an adjusted operating profit of between £175-195million this year.

That would be a lot lower than the £236million and £250million that analysts had previously said they think the business would make.

Travis said that both the housebuilding sector was weak as well as demand for home improvements and repairs.

The company’s merchanting segment, which includes brands the BSS, Keyline, and CCF brands, had done well in the early part of the third quarter, but in September there was a “notable deterioration.”

That business unit saw revenue drop 3.4% in the third quarter, with overall group revenue down 1.8%.

“Market conditions remain challenging with continued weakness across new build housing and domestic RMI (repairs, maintenance, improvement),” said chief executive Nick Roberts.

“Deflation on commodity products has also been greater than we had anticipated. In this environment, our priority has been to ensure that we deliver for our customers, both on service and pricing, as we seek to retain and grow our customer base for the medium to long term.”

Mitie Group has forecast higher annual profit after the British outsourcing firm won and extended a number of ‘significant’ new contracts, while also benefiting from its cost cutting measures to improve margins.

The London-listed company expects operating profit before other items for the year ended 31 March 31 2024 to be at least £190million, compared with £162million reported for fiscal 2023.

The FTSE 100 is flat in early trading as gains in heavyweight energy stocks are offset by a slump in luxury firm Burberry following underwhelming results from sector bellwether LVMH.

Energy shares lead sectoral gains, adding 1 per cent as oil prices tick higher on lingering worries about supply disruptions due to the ongoing Middle East turmoil.

Shares of Burberry are down 3.7 per cent after French luxury giant LVMH tumbled 6.1 per cent after its third-quarter revenue showed signs of a slowdown in growth.

Travis Perkins has slumped 10 pper cent as it downgraded its annual profit forecast by as much as 27 per cent, citing ongoing tough conditions in the new-build and renovation markets.

PageGroup is down 4.8 per cent after the global recruiter forecast full-year profit below market expectations.

Adam Vettese, analyst at eToro:

‘Marston’s latest trading update is evidence not only that its strategy is working but also that the wider pub sector is recovering from the pandemic.

‘The pub chain’s strong first-half moment has carried it into the second half of the year, leaving sales up more than 11% year-on-year in the 52 weeks to the end of September.

‘While the firm hasn’t shared any profit predictions with us in this update, the fact it has locked in its food and energy costs for much of next year and managed to shave off roughly £5m in headcount costs will help profitability.

‘Over the past few years, Marston’s strategy has been to shun city centres, which tend to be volatile, in favour of suburban premises. On the basis of this update, that strategy is paying off.’

Sir Elton John has backed a music tech business that helps artists receive fairer royalty payments.

The pop legend and his husband, David Furnish, have invested in the latest £4.1million funding round for Audoo, which counts Abba’s Bjorn Ulvaeus and Sir Paul McCartney among its investors.

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

‘The surge of optimism, fuelled by hopes the Fed will go easier with its interest rate policies and buoyed by expectations of fresh stimulus in China, appears to have plateaued.

‘A little more caution is returning, as investors look ahead to tomorrow’s snapshot of inflation in the United States. The surge in equities was fuelled by comments from Fed decision makers indicating a careful policy approach given sharp rise in borrowing costs.

‘But the rally appears to be taking a breather for now, with the FTSE 100 lower in early trade. With 10-year and 30-year Treasury yields having dipped back, it has been giving more support to stock markets. If interest paid on investments in the debt markets falls, investors look for the potential of greater returns elsewhere.

‘However, investors are highly sensitive to data and if US inflation shows any signs of tripping up in its downwards path, it is set to be unsettling and could upset expectations of a more dovish stance from the Fed.’

The International Monetary Fund has warned that a surge in oil prices caused by war in the Middle East could hobble the already ‘limping’ global economic recovery.

The president of the World Bank, Ajay Banga, said the conflict was ‘an economic shock we don’t need’.

PageGroup has cautioned that full-year profits are unlikely to meet analyst expectations after the recruiter suffered falling fees amid a slugging job market.

The FTSE 250 firm forecast profits for the year to 31 December of £125million to £130million, below market expectations of £137.6million.

CEO Nicholas Kirk said: ‘Looking ahead, due to a slower end to the quarter, there is a heightened degree of uncertainty in the short term.

However, we have a highly diversified and adaptable business model, a strong balance sheet, and our cost base is under continuous review and can be adjusted rapidly to match market conditions.

‘Given these fundamental strengths, we believe we will continue to perform well in these challenging markets, and we are confident in our ability to implement our new strategy driving the long-term profitability of the Group.

‘We are also seeing the benefits from our investments in innovation and technology, where Customer Connect is supporting productivity and enhancing customer experience, and Page Insights is providing real time data to inform business decisions.’

FirstGroup has lifted its forecast for fiscal 2024 profits on the back of strong passenger numbers and increased leisure travel during the summer period.

The company, which operates Avanti West Coast, Great Western Railway, South Western Railway, expects fiscal 2024 adjusted operating profit to be ahead of its earlier forecast by about £14million.

Graham Sutherland, FirstGroup CEO, said: ‘Over the last few months, we have successfully built on the strong financial performance we reported at our full year results in June.

‘Our updated outlook for FY 2024 reflects a strong performance in our First Rail division, which is testament to the hard work and capabilities of our teams.

‘In First Bus, we are delivering sustainable revenue growth as passenger volumes increase and we continue to benefit from the actions we have taken to transform the business.’

Travis Perkins has downgraded its annual profit forecast by as much as 27 per cent, with Britain’s biggest supplier of building materials blaming ongoing tough conditions in the new-build housing and renovation markets.

The group said it now expected 2023 adjusted operating profit to be in the range of £175million to £195million, a 12 per cent downgrade from from previous expectations of £240million.

‘Market conditions remain challenging with continued weakness across new build housing and domestic repair, maintenance and improvements,’ chief executive Nick Roberts said.

Marston’s expects operating profits to improve by more than initially forecast in 2024 after the pub operator slashed £5million of costs with job losses earlier this year.

Pub groups in Britain have been grappling with high costs of raw materials, energy and labour as inflation remains stubbornly high. However, costs have started to ease over the past couple of months.

Wolverhampton-based Marston’s, which reported a 10.1 per cent rise in like-for-like sales for the year to the end of December, is targeting an improvement of at least 200 basis points to operating profit margins over the next two-three years.

Of this, 50 basis points has been achieved through the cost reduction.