Croda warns over margins, Unite hikes full-year dividend

London open

The FTSE 100 is expected to open 11 points lower on Tuesday, having closed down 0.29% on Monday at 7,684.30.

Stocks to watch

British speciality chemicals company Croda International on Tuesday warned of lower operating margins after posting a slump in 2023 profits due to customers destocking and a weak macroeconomic environment. Pre-tax profit for the year to December 31 fell 69.7% to £236.3m. The company, which supplies the consumer and life sciences industries, said it expected group adjusted operating margin to be two to three percentage points lower and adjusted profit before tax to be between £260m and £300m in full year 2024.

Student accommodation provider Unite Group has announced an 8% increase in its full-year dividend after delivering record adjusted earnings for 2023, though reported profits dropped by more than two thirds as a result of big losses related to changes in property valuations. Adjusted earnings were up 13% year-on-year at £184.3m, helped by 99.8% occupancy and 7.4% rental growth for the 2023/24 academic year. However, IFRS profit before tax slumped by 71% to £102.5m, dragged lower by a £61.2m revaluation loss compared with a revaluation profit of £119.2m in 2022.

Smith & Nephew's 2023 results showed strong revenue growth on Tuesday, with a 6.4% increase in fourth-quarter revenue, and a 7.2% rise for the full year on an underlying basis to $5.55bn. The company said its 12-point plan was progressing well, contributing to improved trading profit margins and setting the stage for continued financial success. Looking ahead, Smith & Nephew said it expected positive operating leverage and benefits from its plan to outweigh headwinds, with 2024 guidance anticipating underlying revenue growth between 5% and 6%, and a trading profit margin of at least 18.0%.

Newspaper round-up

A top US antitrust watchdog sued to block the country’s largest-ever supermarket merger on Monday, alleging the deal would raise prices for millions of shoppers. The Federal Trade Commission argued that Kroger’s $24.6bn takeover of rival grocer Albertsons would narrow consumer choice and weaken the quality of products on shelves. – Guardian

Newly published documents show that a “toxic culture of disbelief” persists at the top of the Post Office when it comes to wronged post office operators, MPs have been told. Post Office board members complained of being “tired and constantly distracted by historical issues, short-term crisis management and funding issues”, minutes of one of their meetings last year show. – Guardian

Rishi Sunak’s raid on workers and businesses will cost the country an extra £100bn in taxes by the end of this decade just as surging net migration piles more pressure on public services, the Institute of Fiscal Studies (IFS) has warned. The respected think tank said Britain’s tax burden would jump by 2030 as frozen tax thresholds mean inflation pushes more people into higher brackets and corporation tax weighs on businesses. – Telegraph

The UAE-funded takeover of The Telegraph could be blocked under proposed laws that would grant Parliament a veto on foreign state ownership of the British news media. An amendment that would require approval from both the House of Commons and the House of Lords for such deals has been tabled to the Digital Markets, Competition and Consumers Bill. – Telegraph

Homebase could soon be sold to new owners after talks were held with a number of potential buyers. Hilco Capital, which bought the troubled DIY and garden chain for £1 in 2018, is believed to have held discussions with a number of parties, including The Range and B&M European Value Retail, the discount retailers. – The Times

US close

US stocks finished with small losses on Monday, as early gains were quickly erased with the Dow Jones Industrial Average and S&P 500 both retreating from record highs ahead of a busy week for economic data.

The Dow fell 0.16% from the 39,131.53 all-time closing high reached last Friday, while the S&P 500 slipped 0.38% after hitting a new peak of 5,088.8.

The Nasdaq, which continues to trade close to its highest-ever level, also slipped 0.13%.

The macroeconomic calendar was relatively light, with new home sales being the only major publication.

New home sales rose 1.5% in January, according to the Census Bureau, hitting a seasonally adjusted annualised rate of 661,000. While that fell short of market expectations for a reading of 680,000.