LONDON MARKET PRE-OPEN: Euromoney confirms GBP1.6 billion approach

(Alliance News) - Stock prices in London are seen opening lower on Monday as fears rise that interest rate hikes by central banks could trigger a global recession.

In early company news, Primark-owner Associated British Foods said trading was in line with expectations. Casino operator Rank Group issued a profit warning. Business information publisher Euromoney Institutional Investor confirmed it has received a GBP1.6 billion takeover offer from a private equity consortium.

IG futures indicate the FTSE 100 index will open 24.55 points lower at 6,991.70. The index closed down 28.73 points, or 0.4%, at 7,016.25 Friday.

AB Foods said its third-quarter trading performance was in line with expectations, and it kept its outlook unchanged.

For the 36 weeks to May 28, revenue for the quarter increased by 32%. Sales in its Food businesses increased 10% which it said reflected price actions to recover input cost inflation and volume increases in the Ingredients arm. AB Sugar revenue for the quarter was 7% ahead of last year.

At its Primark discount fashion chain, all stores traded during the period, in contrast to last year when most stores were closed until the middle of April, it explained.

AB Foods said sales at Primark in the quarter were 81% ahead of last year and year to date were 69% ahead of the comparable period a year before.

The company highlighted that like-for-like sales at Primark have been improving since the half year, and for the quarter were 9% below pre-Covid levels three years ago. In the UK & Republic of Ireland like-for-like sales have improved markedly while in Continental Europe performance only started to improve at the end of the quarter following the removal of remaining Covid restrictions. Primark remains on track to deliver a full-year adjusted operating profit margin of around 10%, AB Foods said.

Having previously had no significant online presence, Primark will launch a trial of a Click & Collect service in the UK towards the end of the calendar year, the company said.

"We have chosen a much expanded range of children's products for this trial, which we believe has the potential to satisfy unfulfilled demand, driving footfall from both existing and new customers to deliver incremental sales in store," it explained.

Looking ahead, AB Foods said: "Our full-year outlook remains unchanged, with significant progress expected in adjusted operating profit and adjusted earnings per share for the group."

Rank Group said that, having suffered a "softer" performance in its UK venues throughout its financial third quarter, it entered its current fourth quarter with visit numbers down across Grosvenor casinos.

Rank said it has seen some improvement in Grosvenor's performance post April, but acknowledged trading has been "considerably weaker than expected". Rank attributed this to the slower-than-expected return of higher spending overseas customers to London casinos, continued softness in visitor numbers across the UK, and a lower-than-average casino win margin in the quarter to date.

As a result, Rank expects like-for-like underlying operating profit to be GBP40 million for the year ending June 30, lower than the previously guided range of GBP47 million to GBP55 million. It will release its annual results for the year ending June 30 on August 18.

Deliveroo has appointed Scilla Grimble as its new chief financial officer. Grimble, who is currently CFO at FTSE 250-listed price comparison site MoneySupermarket.com Group, is expected to commence her appointment by no later than June 2023, the food delivery firm said.

Deliveroo said Adam Miller will be stepping down as CFO on September 17, with David Hancock, currently vice president of Investor Relations, to serve as interim CFO. It gave no reason for Miller's departure.

Moneysupermarket said a search for a new CFO is underway.

Euromoney Institutional Investor confirmed a weekend report by the Daily Mail newspaper that two private equity firms were considering a bid for the FTSE 250-listed media and events group.

Euromoney confirmed it received an approach from a consortium of Astorg Asset Management and Epiris regarding a possible cash offer for Euromoney of 1,461 pence per Euromoney share, valuing the company at GBP1.6 billion.

The latest offer represents a 34% premium to Friday's closing share price of 1,094.00p.

Euromoney said the proposal follows earlier approaches from the consortium to the board regarding a possible all cash offer for Euromoney at 1,175p, 1,250p, 1,310p and 1,350p per Euromoney share.

"The board is engaged in discussions with the consortium regarding the proposal. There can be no certainty that an offer will be made nor as to the terms on which any offer might be made," Euromoney said.

The Daily Mail is owned by Euromoney's former largest shareholder, Daily Mail & General Trust.

On Friday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.1%, but the S&P 500 and Nasdaq Composite closed up 0.2% and 1.4% respectively.

In Asia on Monday, markets also were mixed. The Nikkei 225 index in Tokyo closed down 0.7%. In China, the Shanghai Composite was up 0.2%, while the Hang Seng index in Hong Kong was up 0.1%. The S&P/ASX 200 in Sydney ended down 0.6%.

A recession in the US is not "inevitable", but the economy is likely to slow, Treasury Secretary Janet Yellen said Sunday, days after the US Federal Reserve hiked interest rates, raising fears of a contraction.

"I expect the economy to slow" as it transitions to stable growth, she said on ABC's 'This Week', but "I don't think a recession is at all inevitable."

Yellen conceded that "clearly inflation is unacceptably high", attributing it partly to the war in Ukraine, which has pushed up energy and food prices. But she said she did not believe "a drop-off in consumer spending is the likely cause of a recession".

The US labor market is "arguably the strongest of the postwar period", Yellen said, and she predicted a slowing of inflation in coming months.

The US economy has recovered strongly from the Covid-19 damage, but accelerating inflation and supply-chain snarls exacerbated by the war in Ukraine have increased pessimism.

"It is becoming even more clear now that the Federal Reserve was too slow in tapering its easing program, and the global economy is paying the price now in the form of runaway inflationary pressures. The risk now is that the Fed will need to be even more aggressive at its next few meetings to put the inflation genie back in its bottle," explained CMC Markets analyst Michael Hewson.

"With few signs that the Federal Reserve is likely to be done on the rate hiking front, it's likely to be tough going for stock markets in the short to medium term, given the impact that will come from this tightening of monetary policy in terms of slowing the global economy," Hewson added.

The pound was quoted at USD1.2236 early Monday, up from USD1.2211 at the London equities close Friday.

The euro was priced at USD1.0530, up from USD1.0465. Against the yen, the dollar was trading at JPY134.90 in London, lower against JPY135.17.

Brent oil was quoted at USD113.85 a barrel on Monday morning, down from USD114.22 late Friday. Gold stood at USD1,843.82 an ounce, slightly higher against USD1,841.66.

The economic events calendar on Monday has eurozone construction output figures at 1000 BST. Financial markets in the US will be closed on Monday in observance of the maiden Juneteenth public holiday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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