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(Alliance News) - Stock prices in London are seen opening a touch lower on Thursday, following a mixed day in Asia and ahead of the European Central Bank's first interest rate hike in over a decade.
IG futures indicate the FTSE 100 index is to open 4.5 points, 0.1%, lower at 7,263.47. The large-cap index closed down 28.31 points, or 0.4%, at 7,267.97 on Wednesday.
In early UK corporate news, SSE backed annual guidance but noted that performance in its first quarter "slightly" topped expectations. Home furnishings retailer Dunelm said its annual profit beat market forecasts, and it has picked outgoing Whitbread Chief Executive Alison Brittain as its new chair. Advertising agency S4 Capital issued a profit warning.
Online grocer Ocado reported an interim revenue decline and widened loss, which it put down to a "contracted post pandemic and the rising cost of living crisis in UK".
Revenue in the six months to May 29 fell 4.4% to GBP1.26 billion from GBP1.32 billion a year earlier. Ocado Group's pretax loss ballooned to GBP211.3 million from GBP27.9 million.
Hitting its bottom line was depreciation, amortisation and impairment losses, wich rose 51% to GBP157.3 million.
"The significant increase in cost of living is having a significant impact on customer behaviour and will be an ongoing challenge for the remainder of the year," Ocado warned.
Following a near GBP580 million cash raise, the company said its medium-term financing needs are met. Ocado has "ample liquidity", it said.
On Tuesday, the company had said the chief executive of its retail joint-venture with Marks & Spencer will step down from the role.
Melanie Smith will leave the business at the end of next month. She has led the joint-venture since its formation back in August 2019.
Lawrence Hene, Ocado Group's chief product officer, will take on the role of interim CEO of the joint-venture.
SSE backed guidance for an annual adjusted earnings per share of 120 pence, which would represent a 26% rise from the 95.4p achieved in the year ended March 2022.
The Perth, Scotland-based electricity provider said that for the first quarter ended June, its performance "slightly exceeded our expectations".
"Progress across the various capex projects also continues at pace, with first power from Seagreen offshore wind farm expected by the end of this month and construction on Viking onshore wind farm and Dogger Bank A, B & C offshore wind farms progressing well," it explained.
Back in May, SSE began a sales process to dispose of a 25% minority stake in SSEN Transmission. On Thursday, SSE said the process now is formally under way, and it targets agreeing a sale by the end of the calendar year.
Dunelm said annual sales increased and profit has beaten market forecasts.
For the year to June 25, sales were 16% higher at GBP1.55 billion, despite a fourth-quarter decline of 6% year-on-year to GBP358 million.
Dunelm said about its fourth quarter: "Strong sales in the comparative period were driven by pent-up demand after the re-opening of our stores in April 2021, following the third national lockdown."
Annual pretax profit is expected to be higher than analyst consensus of GBP207 million, Dunelm predicted. A figure of GBP207 million will be 31% higher than the GBP157.8 million achieved in the prior year.
In addition, Dunelm said Whitbread CEO Brittain will chair the home furnishing retailer's board. She joins Dunelm's board on September 7 and will succeed current chair Andy Harrison "comfortably in advance" of the end of his nine-year term in September 2023.
Late last month, Whitbread announced that Brittain will retire after seven years as CEO of the Premier Inn chain owner, replaced in early 2023 by Domino's Pizza Group CEO Dominic Paul.
In more retail sector-related board developments, Primark owner Associated British Foods said it has named Eoin Tonge as its next finance director, taking over from John Bason by "no later than February 2023". An official date is yet to be agreed.
He is currently chief financial officer at M&S, which said it will kick off a search for a replacement. M&S said Tonge will serve his notice period, which includes the firm's interim results in November.
Elsewhere in London, S4 Capital issued a profit warning as its cost base grew.
The digital advertising firm now targets annual earnings before interest, tax, depreciation and amortisation of GBP120 million, below the current analyst forecast range of GBP154 million to GBP165 million.
For the six months to June, the Martin Sorrell-led ad agency said like-for-like revenue and gross profit/net revenue growth was in line with a full-year run rate expectation of 25%.
S4 explained: "Whilst revenue and gross profit/net revenue growth remain robust, even against very strong comparatives for Q2 2021 (prior year up 66% like-for-like), continued significant investment in hiring and consequent expansion of the company's cost base, particularly in the Content practice, have had a negative impact on first half Ebitda and Ebitda margin.
"With the pattern of profitability already significantly skewed to the second half of the year, and as previously signalled more than the usual two-thirds weighting, this means that the profitability required for the second half of the year to meet market expectations will be even greater."
On the M&A front, Go-Ahead suitor Kelsian said it will not table a bid for the transport operator, citing "volatile" equity markets in Australia, where Kelsian is listed.
Go-Ahead re-affirmed its support for a GBP647.7 million takeover from a consortium consisting of Kinetic Holding Co Pty Ltd and Globalvia Inversiones SAU.
In Tokyo, the Nikkei 225 added 0.4% on Thursday, while the S&P/ASX 200 in Sydney rose 0.5%. However, the Shanghai Composite was down 0.8% in late dealings, and the Hang Seng in Hong Kong was 1.0% lower.
The euro stood at USD1.0214 early Thursday in London, up from USD1.0202 at the European equities close on Wednesday. The ECB announces its latest interest rate decision at 1315 BST.
The bank had previously said it will hike interest rates for the first time since 2011 this meeting, tipping a 25-point rise off historic lows.
Away from interest rates, attention will be on the details of the ECB's anti-fragmentation tool, designed to limit the government bond yield spreads among member states.
Against the yen, the dollar was trading at JPY138.32 early Thursday UK time, up slightly from JPY138.05 late Wednesday.
The pound was quoted at USD1.1990 early Thursday in London, flat from USD1.1988 late Wednesday, following UK government borrowing data.
UK government borrowing increased in June, figures from Office for National Statistics on Thursday.
UK public sector net borrowing, excluding banks, amounted to GBP22.9 billion in June, up 22% year-on-year from GBP18.8 billion. The latest figure was the second-highest June borrowing amount on record, the ONS noted.
In June 2020, the figure was GBP32.2 billion.
Elsewhere, the global economic calendar has the latest US jobless claims numbers at 1330 BST.
Brent oil was quoted at USD106.20 a barrel early Thursday, down USD107.06 late Wednesday.
Gold stood at USD1,689.29 an ounce, down from USD1,707.88. Gold fell to its lowest level since March 2021 overnight.
By Eric Cunha; ericcunha@alliancenews.com
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