Vodafone rises on Cevian stake, Shell consolidates, oil price above $91, Pearson’s £100m deal

Oil prices were today trading at a seven-year high of over $91 a barrel as inflationary pressures in the global economy continue.

The 1% rise for Brent crude futures comes ahead of Wednesday’s meeting of OPEC+, when officials are expected to stick with plans for a 400,000 a barrel production increase in March.

On Thursday, the threat posed by inflation in the UK economy will force the Bank of England to increase interest rates from 0.25% to 0.5%, one of four rises expected this year.

FTSE 100 Live Monday

• Vodafone shares rise on Cevian stake

• Shell consolidates shares

• Brent crude above $91 a barrel

• Ryanair kicks off price war

Could supermarkets find themselves in the public’s crosshairs?

12:22 , Oscar Williams-Grut

It is crass to talk of businesses having “a good pandemic” but supermarkets did.

Grocers enjoyed soaring sales as restaurants shut, though costs climbed too. Now costs are falling but spending remains above pre-pandemic levels. It looks like a permanent shift.

Supermarkets should be careful. The grocers could find themselves at the centre of a cost-of-living storm.

With April’s tax rises now confirmed and the energy price cap set to jump at the same time, household budgets will be squeezed to an extent they haven’t been in years. Every cost will be watched and supermarket bills will be closely scrutinized for potential savings.

If the supermarkets don’t give customers a helping hand, they could find themselves the subject of ire.

Read today’s City comment in full.

Purplebricks says it’s turned the corner after disastrous year

11:55 , Oscar Williams-Grut

The boss of online estate agent Purplebricks today claimed the crisis-hit business is back on track despite losing £20.2 million in the last six months.

Chief executive Vic Darvey told the Standard: “After a challenging few months we’ve made a number of changes to the business.

“We introduced a new pricing structure and a money-back guarantee and moved our local property agents from self-employed to employed.”

Story continues

But he warned that the costs associated with the changes “will impact profitability in the short term”.

The online estate agent has had a bad year, with shares down 75% in the last 12 months. The business was valued at £1.7 billion in 2017 but is now worth just £63 million.

Read the full story on today’s results.

Sausage dogs: Cranswick buys Grove Pet Foods

11:35 , Oscar Williams-Grut

Sausage-maker Cranswick is hoping to cash-in on the lockdown pet boom by snapping up dog food supplier Grove Pet Foods.

Grove makes dry dog food for several businesses and has around 100 workers at its Lincolnshire factory.

Meat supplier Cranswick had been sniffing around the fast-growing pet food market for some time and previously bid for Inspired Pet Nutrition, which ended up being sold to private equity firm CapVest.

It said the purchase — for an undisclosed amount — would “benefit from vertical integration opportunities and particularly our fresh poultry and pork businesses”.

Lincolnshire-based Grove makes pet food under its own name and brands Alpha Feed and Vitalin.

Record profits at science and tech recruiter SThree

11:17 , Oscar Williams-Grut

British specialist recruiter SThree has seen its profits double thanks to the post-lockdown hiring boom.

Pre-tax profit hit a record £60 million for the year to the end of November, up from £30.1 million the prior year. Crucially, it was 7% ahead of its pre-Covid 2019 figures.

The company focuses on the STEM sectors, finding roles in science, technology, engineering and mathematics. It found jobs for 22,000 skilled workers in the period, with net fees rising by 15%.

Interim chief executive Timo Lehne said the roles included“engineers building green infrastructure, developers aiding digital transformation or the scientists helping to develop the next life-changing drug”.

There has been particular demand for “our employed contractor model” as companies rebuild after the lockdown, he said.

Germany, USA and the Netherlands posted the strongest growth, with income from each market all up by around a fifth. The three countries account for 74% of the London-based company’s net fees.

Shares have jumped 48p, or 11.5%, to 465.5p.

Vodafone shares higher on activist stake

10:45 , Graeme Evans

Vodafone shares surged today as the mobile phone giant became the latest heavyweight London stock to feel the heat from an activist investor.

Cevian Capital’s stake building turns up pressure on Vodafone boss Nick Read to accelerate the pace of change after an underwhelming run for shares in the FTSE 100 index.

Read is not alone in being targeted, with the bosses of GlaxoSmithKline, Aviva, SSE and Unilever among those already dealing with attention from activist investors.

Vodafone shares rose 3% to 131.64p as the City speculated that Cevian’s interest could prompt the company to consider selling operations or to return cash to shareholders.

The shares have rallied from 112p at the start of the year but are still some 15% below their pre-pandemic peak and lower than the level seen in May. Read is due to present a trading update on Wednesday.

While Vodafone shares rose today, BT Group fell back 1% after the Financial Times reported that the owners of Virgin Media O2 are planning to launch a fibre-building joint venture in competition with BT’s Openreach division.

Telefonica and Liberty Global are reported to be in discussions with investors over a potential move to build connectivity to an additional seven million homes. BT shares have been on a strong run but fell back 1.65p to 195.35p today.

It was joined on the way down by Tesco and Sainsbury’s as the supermarkets fell 2%, but the FTSE 100 index rose one point to 7466.88 after a rebound for tech-focused stocks.

Scottish Mortgage Investment Trust led the way after Friday’s decent performance for Wall Street, with the Tesla and Amazon investor up 3% or 30.5p to 1058p.

Housebuilders were in focus after HSBC published a note highlighting seven “buy” opportunities in the sector. It said the cost of the cladding crisis was more than factored into share prices, adding that market dynamics continue to be favourable.

Top picks include Taylor Wimpey, Barratt Developments, Persimmon and Vistry, while Berkeley shares were upgraded from reduce to hold. Berkeley today rose 99p to 4220p.

The FTSE 250 index lifted 146.93 points to 21,790.23, with XP Power among those higher after two acquisitions in Germany strengthened its position in Europe’s largest market for power solutions. Shares rose 205p to 4690p.

Pearson buys accreditation business

10:23 , Oscar Williams-Grut

Pearson is spending $140 million (£104 million) on a company that trains and certifies workers in areas like cloud computing proficiency and data processing.

The FTSE 100 education group is buying the rest of Credly it doesn’t own, in a deal valuing the New York business at $200 million. Pearson first invested in 2018 and owned around a fifth of the business before today’s transaction.

Pearson is best known for making university textbooks such as Linear Algebra and Its Applications and Tort Law, but under new CEO Andy Bird it is making a bet that the fast-moving nature of the modern world means learning will no longer be reserved for just schools and universities.

Bird, a former Disney executive, is overseeing a push into subscriptions, offering a “lifelong learning” materials for individuals and companies that want to train their workforces in new areas.

He said the Credly acquisition was “another important step in accelerating our strategy”.

Credly works with over 2,000 organisations and has issued over 50 million credentials since it was founded in 2012. Revenues grew by 47% last year to reach $13.3 million.

Ryanair goes green and kicks off price war

09:35 , Simon English

RYANAIR today positioned itself as a “green” airline as it pledged to ramp up its flight numbers and kicked off a price war with rivals such as (BA).

The cut price airline made a loss of e96 million (£80 million) for the three months to December. While that was far better than the e321 million deficit for the same period a year ago, it was still worse than the company had hoped.

It blamed “media hysteria” over Omicron for passenger numbers falling below the 11 million it had expected last month. Instead just 9.5 million flew with the Irish airline famed for its garish marketing and the outspoken views of CEO Michael O’Leary.

His response today was forthright.

Ryanair has bet its future on new, bigger planes said to transport more people using less fuel.

read more here

FTSE 100 higher, Berkeley lifted by upgrade

09:20 , Graeme Evans

The FTSE 100 index has made a decent start to the week, with Scottish Mortgage Investment Trust among the stocks in recovery mode.

The Tesla and Amazon investor benefited from Friday’s strong Wall Street session to improve 3% or 30.5p to 1058p, just ahead of Vodafone after the stake building by activist Cevian.

BT Group moved in the opposite direction, falling 3% amid reports that Virgin Media 02 is planning to launch a fibre network-building joint venture. Tesco and Sainsbury’s also dipped 2% but the FTSE 100 index climbed 24.6 points to 7490.67.

Housebuilders were in focus after HSBC published a note highlighting seven “buy” opportunities in the sector. It said the cost of the cladding crisis was more than factored into share prices, adding that market dynamics continue to be favourable.

Top picks include Taylor Wimpey, Barratt Developments, Persimmon and Vistry, while Berkeley shares have been upgraded from reduce to hold. Berkeley today rose 99p to 4220p.

Shell completes shares overhaul

09:03 , Graeme Evans

Oil giant Shell is trading without its confusing dual listing of A and B shares.

The consolidation into a single line of shares took place over the weekend as part of a shake-up of its corporate structure.

The old A and B shares date back to the 2005 merger of Royal Dutch Petroleum and Shell Transport and Trading, which led to the new company being UK incorporated but headquartered and tax-resident in the Netherlands.

Shell, whose shares will still be listed in Amsterdam, London and New York, no longer uses “Royal Dutch” in its name and has aligned its tax residence in the UK.

Vodafone shares rise on Cevian stake

08:41 , Graeme Evans

Vodafone shares are 3% higher after the disclosure of stake building by activist investor Cevian Capital.

The interest of Europe’s largest activist fund, which already has FTSE 100 positions in Aviva and Pearson, ramps up pressure on Vodafone boss Nick Read to accelerate the pace of change at the mobile phone business.

Read is due to publish a trading update on Wednesday, with shares still trading below their level seen in May. The blue-chip stock finished last year at 112p but has rebounded so far in 2022 and is up another 3% to 131.4p today.

Cevian’s position, which was disclosed by Bloomberg at the weekend, is likely to lead to more speculation about deal-making activity or potential return of cash to shareholders.

Ryanair bookings improve after omicron hit

08:09 , Graeme Evans

Ryanair has reported a loss of 96 million euros (£80 million) for the December quarter after the omicron variant had a severe impact on Christmas and new year trading.

Recent bookings have improved following the easing of travel restrictions, but the Dublin-based carrier said the booking curve is still “very late and close-in”.

It said fares will need significant price stimulation at lower prices to quickly recover load factors in the current fourth quarter.

Ryanair’s full year traffic forecast remains unchanged at just under 100 million passengers, but due to Covid uncertainty the company’s full-year net loss guidance remains wider than normal at between 250 million and 450 million euros (£207 million-£374 million).

It said: “This outturn is hugely sensitive to any further positive or negative Covid news flow and so we would caution all shareholders to expect further Covid disruptions before we here in Europe and the rest of the world can finally declare that the Covid crisis is behind us.”

Calm finish to turbulent month

07:36 , Graeme Evans

A turbulent month for global markets is set to finish on a positive note, with the FTSE 100 index forecast to open 46 points higher at 7512.

The improvement follows Friday’s rebound on Wall Street as a record sales quarter for Apple helped ease some of the jitters surrounding the tech sector.

Interest rate uncertainty has put pressure on the valuations of high growth stocks at the start of the year, resulting in the tech-focused Nasdaq being 12% lower in one of its worst months since 2008.

The FTSE 100 index has been much more resilient due to its exposure to stocks in the oil and banking sectors.

Energy giants BP and Shell continue to benefit from Brent crude oil at levels above $90 a barrel, the highest in seven years due to supply constraints and geopolitical tensions.

OPEC+ ministers are meeting on Wednesday but are unlikely to change their planned 400,000 a barrel production increase for March. Brent was today trading 1% higher at $91.15 a barrel.

The banking sector has been lifted by the margin-enhancing prospect of the Bank of England increasing interest rates to 0.5% on Thursday, with City economists forecasting at least three more rises this year.