First-half profits fall at Diageo, WPP unveils 2024 targets

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The FTSE 100 is expected to open 19 points higher on Tuesday, having closed down 0.03% on Monday at 7,632.74.

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First-half profits at Diageo fell by more than a tenth as weakness in the Latin American and Caribbean (LAC) regions persisted, but the drinks giant pointed to improving trading conditions in the latter part of the financial year. Reported operating profit fell by 11.1% to $3.3bn, with the operating profit margin shrinking by 329 basis points to 30.3%. Organic operating profits were down 5.4%, but if LAC was excluded they would have grown by 0.9%. Looking ahead, despite "continued global economic volatility", Diageo said the rate of profit decline would ease compared with the first half, while organic sales growth would pick up.

WPP unveiled its strategy for 2024 at its capital markets day on Tuesday, focusing on AI, creative transformation, and growth. The FTSE 100 advertising giant said it aimed to achieve revenue growth of at least 3%, a 16% to 17% operating profit margin, and at least 85% adjusted operating cash flow conversion. WPP said it was planning to invest around £250m annually in proprietary technology to support its artificial intelligence and data strategy.

Travel food outlet operator SSP Group on Tuesday held full-year guidance after a strong rise in first-quarter sales as rail and air passenger numbers continued to recover after the Covid pandemic. The Upper Crust and Ritazza coffee chain owner said like-for-like sales for the three months to December 31 rose 14.3% to £788m. On a total basis they were up by 21%. SSP still expects like-for-like sales growth for the full year of between 6% - 10%, net contract gains in the region of 5% (with a further contribution of around 2% from acquisitions), underlying core earnings of £345-£375m and underlying operating profit within the range of £210-235m.

Newspaper round-up

The UK has fallen to its lowest-ever position in Transparency International’s corruption perceptions index, which ranks countries by experts’ views of possible corruption in public services. The UK fell from 18th (out of 181 countries) in 2022 to 20th in 2023, its lowest position since the research was revamped in 2012. It means that, according to the research, Britain is seen as more corrupt than Uruguay and Hong Kong. – Guardian

Elon Musk, Neuralink’s billionaire founder, said the first human received an implant from the brain-chip startup on Sunday and is recovering well, in a post on Twitter/X on Monday. The US Food and Drug Administration (FDA) had given the company clearance last year to conduct its first trial to test its implant on humans. – Guardian

BP is facing fresh demands to scrap “irrational” net zero commitments championed by former chief executive Bernard Looney, after an activist investor claimed they have left shareholders £40bn poorer. The FTSE 100 oil giant was on Monday accused of pursuing an unrealistic strategy by Bluebell Capital Partners, the investor that has taken a minority stake in BP after previously taking on blue chip heavyweights Glencore and Danone. – Telegraph

EY has started to track more closely how often its UK staff are coming into the office amid concerns that many of its accountants and consultants are ignoring its hybrid working guidelines. In recent weeks some senior partners and team managers at the Big Four firm have been granted access to anonymised swipe card entry data showing how frequently its 21,000 UK staff are attending its offices. – The Times

The government’s decision to scrap VAT-free shopping for tourists is costing the economy £11.1 billion in lost GDP and deterring about two million foreign visitors each year, according to an analysis by the Centre for Economics and Business Research (CEBR). The number of tourists coming to the UK still remains around one million visitors short of pre-pandemic levels and spending by tourists in real terms has also failed to recover fully. – The Times

US close

US stock markets performed strongly on Monday, kicking off a busy week on the front foot, with both the Dow and S&P 500 continuing to set fresh record highs and the Nasdaq Composite nearing its all-time peak.

The Dow finished 0.6% higher at a new high of 38,333.45, while the S&P 500 gained 0.8% to another new record of 4,927.93.

Meanwhile, the Nasdaq Composite is now under just 3% from its all-time closing high of 16,057.44 reached in November 2021, while the Nasdaq 100 continues to set new records.

Helping lift risk appetite was optimistic comments from investment giant BlackRock, which upgraded its stance on US stocks from 'neutral' to 'overweight', predicting that the upward trajectory of the S&P 500 should continue for the next six to 12 months as inflation eases and the Federal Reserve finally cuts interest rates.

Investors were largely shrugging off further escalation in the Middle East, after new attacks on shipping in the Red Sea by Houthi rebels and a drone attack on a US service base killed three American soldiers.