Compass profits fall heavily, CRH puts in 'robust' performance

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The FTSE 100 is expected to open 27 points higher on Tuesday, having closed down 0.28% on Monday, at 6,333.84.

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Contract catering giant Compass forecast a 2.5% underlying operating margin in the first quarter of 2021 as it reported a heavy fall in profits due to the closure of half its business during the coronavirus pandemic. The company on Tuesday said pre-tax profits plunged 86% to £210m as revenues fell 19.8% to £20bn. Compass, which supplies food to a wide range of sectors including health and education, had returned to profitability in the fourth quarter and was now cash neutral. “Although the prospects of a vaccine are encouraging, the resumption of lockdowns in some of our major markets shows that we have to continue to take proactive actions to control the controllable and ensure the business can thrive despite the ongoing pandemic,” the company said.

Phoenix Group Holdings confirmed press speculation regarding the possible sale of its European businesses. The life insurer said that it had received expressions of interest from several third parties for its European unit. However, while management was now in the process of assessing a range of strategic options to maximise shareholder value, there was no certainty that a transaction would be achieved.

CRH reported a “robust” performance in the first three quarters of its financial year on Tuesday, in what it called a “challenging” trading environment, as like-for-like EBITDA rose 2% to $3.4bn (£2.55bn). The FTSE 100 company said that improvement in EBITDA came despite sales slipping 3% for the nine months ended to 30 September to $20.6bn, as its EBITDA margin improved 100 basis points to 16.6%. It was expecting full year EBITDA to top $4.4bn, coming in ahead of 2019 on a like-for-like basis.

Newspaper round-up

The governor of the Bank of England, Andrew Bailey, has warned that the economic cost of a no-deal Brexit would be bigger in the long term than the damage caused by Covid-19. Bailey said failure to agree to a deal before the Brexit transition expires at the end of December would cause disruption to cross-border trade and damage the goodwill between London and Brussels needed to build a future economic partnership. - Guardian

A stricter system of tiers to be introduced at the end of England’s lockdown will “ruin Christmas” for struggling restaurants, hotels and pubs, the hospitality industry has warned. The retail industry expressed relief that all shops will reopen on 2 December during the crucial Christmas trading weeks, alongside gyms and personal care services such as hairdressers and barbers. However, the hospitality industry bore the brunt of toughened rules. - Guardian

A London foreign exchange broker is facing a multimillion pound legal claim over its alleged links to a suspected $125m (£93m) Ponzi-like fraud being investigated by the US Securities and Exchange Commission (SEC). Equiti Capital, which denies wrongdoing, is facing a demand from investors in the scheme to repay part of the $13m in commissions it received as prime broker for complex investment products offered by a firm controlled by Mediatrix Capital. - Telegraph

Debenhams is in exclusive talks with JD Sports about a rescue takeover of the department stores chain that could secure the futures of thousands of retail workers before Christmas. It is understood that JD Sports, the FTSE 100 sportswear business, is interested in acquiring the whole of Debenhams and yesterday it entered exclusive talks with Lazard, its adviser, and administrators at FRP. - The Times

A restaurant chain co-founded by the prime minister’s adviser on food issues is considering using a controversial insolvency procedure to cut its rent bill. Leon, the self-styled “naturally fast food” chain, was launched in 2004 by Henry Dimbleby, an adviser to Boris Johnson and former Bain & Company consultant, in partnership with John Vincent, who remains chief executive, and the chef Allegra McEvedy. - The Times

US close

Wall Street stocks closed higher on Monday as another round of positive Covid-19 vaccine headlines boosted optimism among traders.

At the close, the Dow Jones Industrial Average was up 1.12% at 29,591.27, while the S&P 500 was 0.56% firmer at 3,577.59 and the Nasdaq Composite saw out the session 0.22% stronger at 11,880.63.

The Dow Jones closed 327.79 points higher on Monday, erasing losses recorded in the final session of last week that came as the US reported a record-high spike of 195,000 new cases.

News that AstraZeneca and the University of Oxford's vaccine had proven itself to have an efficacy of 70% in interim analysis, with one dosing regimen showing effectiveness of 90% and a second demonstrating 62% efficacy, had market participants feeling even more positive about a potential economic reopening in 2021.

Cruise and airline stocks were in the green on the back of the announcement.