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The FTSE 100 is up 0.5 per cent in early trading. Among the companies with reports and trading updates today are Burberry, Imperial Brands, Vertu Motors, Compass Group and Henry Boot. Read the Wednesday 15 May Business Live blog below.

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Keller Group shares top FTSE 350 risers

BUSINESS LIVE: Burberry hit by luxury slowdown; Imperial lifted by higher prices; Vertu cheers market revival

Eurozone GDP grows 0.3% in first quarter

The eurozone economy grew by 0.3 per cent in the first quarter of the year, suggesting a slow recovery is now underway after six straight quarters of stagnant or negative growth, Eurostat has confirmed.

In the previous quarter, however, growth was confirmed at -0.1 per cent, indicating that the bloc was in recession, as many economists had long predicted.

The economy shrank by 0.1 per cent in both the third and fourth quarters, meeting the traditional definition of a recession of two consecutive quarters of negative growth.

Among the biggest euro zone countries, Spain was the strongest performer in the first quarter with 0.7 per cent growth while Germany, France and Italy were all at or just below the euro zone average.

Why working from anywhere is the future for small businesses

Remote working has become the norm for many businesses.

More businesses are transitioning to a hybrid approach, by working from home a few days a week or moving into a co-working space.

Experian shares rise sharply as credit data giant lifts sales guidance

Experian shares rose sharply on Wednesday as it forecast a bumper financial year ahead after profits were boosted by strong demand for new products.

The credit data firm’s organic revenue grew 6 per cent to $7.06billion (£5.6billion) in the year to 31 March, at the top end of its expectations and beating analysts’ consensus growth estimate of 5.5 per cent.

Golden Virginia owner Imperial bolstered by higher tobacco prices

Higher tobacco prices helped Imperial Brands achieve its best organic sales growth in more than a decade.

The Golden Virginia and Rizla brand owner revealed net revenues from tobacco and next-generation products rose by 2.8 per cent in the six months ending March.

‘Boring’ is good for Imperial shareholders

Chris Beckett, head of equity research at Quilter Cheviot:

‘Imperial delivered a set of results this morning that can be described as a little bit boring. However, for such a cheap stock in such an unloved sector, boring is exactly what you need to help drive the share price higher. Profits were up around 3% for the tobacco group, driven almost completely by price increases. Volumes continue to decline, but not at a rate that will cause huge concern, although the US is a slight worry.

‘Ultimately Imperial is a mature company operating in a mature sector, so all the focus from investors will be on the cash returns, which Imperial continues to do very well. Its interim dividend has increased 4% to offer an 8% yield, while the share buyback equates to roughly 6% of the market cap. The business has reiterated its guidance which supports our expectation that the share buyback will be reloaded when the current programme ends, and thus rewarding shareholders in the process.

‘For those that are willing to take on exposure to the tobacco sector, Imperial offers a compelling story for investors with such strong shareholder returns that appear to withstand the trend of consumers moving away from traditional tobacco.’

Market update: FTSE 100 up 0.5%; FTSE 250 adds 0.4%

The FTSE 100 has opened to another record high this morning, led by Experian on upbeat annual revenue forecast, while investors await US consumer price inflation data due later today for clues on the Federal Reserve’s first interest rate cut.

Experian is the top gainer on the FTSE 100 with a 8.3 per cent jump after it forecast annual organic revenue growth of 6 to 8 per cent for fiscal year 2025.

Investors are on guard for US CPI, due at 12.30pm London time, to assess the timeframe in which the Fed might begin lowering rates.

Positive sentiment is pushed further after Fed Chair Jerome Powell reiterated on Tuesday that the US central bank is unlikely to hike rates.

Burberry is the top loser on the FTSE 100 with a 3.7 per cent drop after the luxury brand reported a 34 per cent drop in annual operating profit.

Compass Group is down 2.3 per cent despite the catering firm first-half profit slightly ahead of market view.

Burberry profits plummet amid luxury slowdown and China weakness

Burberry profits slumped by more than a third last year as the fashion giant fought to reposition its brand against slowing luxury demand and weakness in its key market of China.

Annual operating profits fell 34 per cent to £418million in the year to 30 March, as like-for-like sales fell 12 per cent in the final quarter and wiped out gains made earlier in the year.

Fourth quarter weakness was led by the group’s Asia Pacific region, where sales fell 17 per cent amid a 12 per cent drop in the number of Chinese customers.

More car and home insurance customers pay monthly to dodge big bills

Almost three-quarters (71 per cent) of car and home owners are paying for insurance monthly to avoid high annual bills – even though this means paying more overall.

This is a rise from 70 per cent in March 2023 and 66 per cent in March 2022, according to exclusive research from premium finance firm Premium Credit.

Owners of period homes spend TWICE as much on maintenance, says Zoopla

Homeowners who live in period properties are spending an average of nearly £700 each month on repairs and upkeep, according to a new study by Zoopla.

The property portal revealed that period homeowners are spending more than twice as much in upkeep costs compared to non-period households.

Experian lifted by demand for new products

Credit data firm Experian expects annual organic revenue growth of 6 to 8 per cent for fiscal year 2025, encouraged by strong demand for its new products and robust performance across its portfolio.

The company also said it expected good margin expansion, in the range of 30 to 50 basis points at constant currency, for the year.

Boss Brian Cassin said: ‘FY24 growth was at the top end of our expectations. Total revenue growth from ongoing activities was 8% at actual exchange rates and 7% at constant exchange rates.

‘Organic revenue growth was 6%, we raised margins and delivered US$1.9bn of operating cashflow.

‘Looking further ahead, we expect the combination of economic recovery, continued new product and vertical market expansion as well as productivity gains from technology cloud transition to elevate our financial performance.

‘We anticipate strong organic revenue growth, good margin accretion and reduced levels of capital expenditure.’

Tesco boss pockets £10m in biggest ever pay deal at a UK supermarket

Tesco’s chief executive took home record-breaking pay of nearly £10million last year – the largest earnings deal ever dished out to a British supermarket boss.

Ken Murphy pocketed £9.9million as his £1.4million salary was topped up by bonuses and other awards and benefits.

His total was more than double the £4.4million he collected the previous year and takes his total haul since taking the reins of the country’s largest grocer in October 2020 to more than £20million.

Burberry: ‘The question now will be how quickly demand picks up’

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

‘Burberry’s latest figures leave a lot to be desired, amid slowing demand for luxury. Issues were especially pronounced in mainland China in the fourth quarter, while the Americas saw broad-based declines throughout the year.

‘Not only does this highlight the extent of consumer caution across the globe, it also puts a spotlight on some Burberry-specific issues. Refreshing the store estate is all well and good, but only if those costs and charges can be recouped by selling the clothes they hold.

‘While Burberry’s brand repositioning has come a long way, it’s not yet sharp enough to slice through to the core of the even more resilient end of the luxury market. That said, there will be relief that these results weren’t any worse than expected following recent downgrades in expectations.

‘Slowing trends are being seen across the board in the sector, so these weaker results aren’t a total bolt from the blue.

‘The question now will be how quickly demand picks up, and that of course is in the hands of the economy.’

Compass Group lifts profit guidance

British catering firm Compass Group has raised its 2024 profit forecast after first-half earnings beat market expectations, as new businesses and higher pricing helped offset inflationary headwinds.

The world’s largest caterer, which operates in more than 30 countries and serves corporate cafes, schools, universities, hospitals and old-age homes, has been benefiting from new businesses looking to outsource their canteen operations while grappling with elevated costs of food and labour.

Compass expects its 2024 underlying operating profit growth towards 15 per cent, compared to an earlier forecast of 13 per cent and analyst expectations of 14 per cent.

‘Beyond 2024, we expect to sustain mid to high single-digit organic revenue growth, ongoing margin progression and profit growth ahead of revenue growth,’ chief executive Dominic Blakemore said.

Burberry: ‘Over-reliance on wholesale has harmed the brand’s image and margins, despite boosting sales’

Yanmei Tang, analyst at Third Bridge:

‘Burberry is among the brands that have been affected by a slowdown observed across the wider luxury industry. High-end customers become pickier about what they buy.

‘Burberry is struggling to clearly define and elevate its brand identity, resulting in confusing messaging and poor sales growth. There is too much reliance on a new creative direction rather than making operational changes.

‘Burberry needs to take risks by launching innovative products to succeed. But they also face investor pressure and resource constraints as a standalone brand compared to giants like LVMH and Kering.

‘Burberry heavily relies on wholesale for revenue and will need to use promotions due to financial pressure. Predictions suggest continued challenges in 2024, with the US wholesale business likely to decline further. Over-reliance on wholesale has harmed the brand’s image and margins, despite boosting sales.

‘Setting ambitious targets to double leather goods sales and increase outerwear sales by 50% is unrealistic given the competitive pressures and operational challenges.’

Axe stamp duty on British shares, says Flutter boss as the gambling giant heads for the US

Flutter’s boss – who is moving the company’s main stock market listing to New York – said axing stamp duty on share trading would make London more competitive.

Peter Jackson, chief executive of the gambling company behind Paddy Power and Betfair, said more could be done to bolster the stock market and stop firms fleeing over the Atlantic.

Flutter is ditching its primary listing in London this month and after investors backed its plan to move its main share trading hub to New York.

Vertu cheers used car market revival

Car dealership Vertu Motors cheered record revenues £4.7billion for the year to the end of February, up from roughly £4billion last year, as the group enjoyed a solid revival in used car prices.

Chief executive Robert Forrester said: ‘It was pleasing to see the Group successfully navigating a difficult period of trading with declining used car values in the last few months of 2023. 

‘Used vehicle prices and margins have now stabilised and there has been strong cash generation from lower working capital reducing net debt below market expectations.’

He added that Vertu’s new financial year has started strongly, demonstrating ‘the robustness and strength of the group’s operations’.

Imperial lifted by higher tobacco prices

Cigarette maker Imperial Brands profits ticked higher in the first half, thanks to increased sales of tobacco alternatives and higher prices.

Adjusted operating profit grew 2.8 per cent on a constant currency basis to £1.67billion for the six months to 31 March, in-line with analyst forecasts.

Boss Stefan Bomhard said: ‘Investment in consumer capabilities, more agile ways of working and further progress with our performance culture have made Imperial Brands a stronger business better able to deliver an acceleration in financial delivery.

‘This is demonstrated in the first half with the strongest organic top-line growth in more than ten years, amid a challenging external environment.

‘In tobacco, stronger brands and improved sales execution have enabled us both to consolidate the market share gains in our priority markets achieved in recent years and to deliver a strong price mix of 8.6%.

‘In Next Generation Products (NGP), we are steadily building scale within our footprint.’

Hundreds of jobs at risk as Anglo slashes funding for Woodsmith potash mine

Hundreds of jobs are at risk in North Yorkshire after the future of the UK’s most ambitious mining project in a generation was thrown into doubt.

Anglo American said it would slash funding at the Woodsmith fertiliser mine as part of a radical strategy to convince shareholders it was right to reject two takeover bids from rival miner BHP.

Chief executive Duncan Wanblad has spent weeks plotting a survival plan that includes breaking up the company, including hiving off its diamond arm De Beers and platinum mines.

Burberry profits hammered by luxury slowdown

Burberry profits slumped by more than a third last year as the group repositioned its iconic brand in the face of continued weak luxury market demand.

Adjusted operating profit fell by 34 per cent to £418million in the year to 30 March, as like-for-like sales fell 12 per cent in the final quarter and wiped out gains made earlier in the year.

Chief executive Jonathan Akeroyd said that while the financial results underperformed the company’s original expectations, it had made good progress refocusing its brand.

‘We are using what we have learned over the past year to fine tune our approach, while adapting to the external environment,’ he said, adding that he remained confident Burberry could be the ‘Modern British Luxury’ brand.

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