Babcock underlying profits rise in H1, Ferguson upgrades FY expectations after Q1 profit surge

London open

London stocks were set to rise at the open on Tuesday following positive sessions in the US and Asia.

The FTSE 100 was called to open 31.2 points higher at 7,274.3 after having closed 1.54% higher on Monday at 7,232.28.

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UK defence engineering firm Babcock reported a rise in underlying interim profit, but expressed caution over the Omicron coronavirus variant and ongoing inflation and supply chain constraints.

Underlying pre-tax profit for the six months to September 30 came in at £98.7m compared with £58.2m a year ago. Revenue rose to £2.2bn from £2.05bn.

Ferguson said its expectations for annual results had increased after the plumbing and heating distributor reported a surge in first-quarter profit. Operating profit for the three months to the end of October rose 64.2% to $739.0m as reported revenue increased 26.6% to $5.37bn. On an adjusted basis, operating profit rose 58.5% to $767.0m.

Revenue growth in the second quarter has been similar to the first, Ferguson said in a trading update. Growth is likely to ease in the second half but the company said its full-year expectations had increased. It did not publish guidance.

Recruitment firm PageGroup said on Tuesday that positive momentum seen during 2021 had continued at both a regional and global level the two months ended 30 November, leading the group to modestly hike full-year operating profit guidance.

In October, PageGroup stated constant currency growth was up 16% versus 2019, while November growth was up 26% against its pre-Covid comparative. As a result, the FTSE 250-listed group now expects full-year operating profits to be in the region of £165.0m, up from £155.0m, assuming no further "unexpected events" impact trading.

Newspaper round-up

China's politburo has signalled measures to kickstart the faltering economy as the crisis gripping the country's debt-laden property sector continued to blight prospects for growth. President Xi Jinping's senior leadership committee rubber-stamped a plan from the central bank on Monday for more targeted lending to businesses and outlined support for the housing market. - Guardian

A Chinese takeover of one of Britain's only listed lithium miners poses a threat to the national interest and must be stopped by ministers, MPs and shareholders have said. Jiangxi-headquarted Ganfeng Lithium is on the cusp of securing enough support from investors in Bacanora Lithium to take control of the London-based business for £285.0m. - Telegraph

Vodafone and Orange are reported to have discussed a merger to create Europe's biggest telecoms operator but abandoned the tie-up owing to French opposition. The talks, between the middle of last year and early 2021, did not progress because the French state, which owns 23% of Orange, was cautious about losing control and the prospect of the combined company's headquarters moving to London, according to BFM TV. - The Times

The vice-chair of Yorkshire Building Society is facing a call to resign over her role pushing through the sale of the fellow member-owned firm LV= to a US private equity buyer, amid concerns that it could kickstart a wave of demutualisation. Gareth Thomas, chair of the all-party parliamentary group for mutuals, said there were serious questions over Alison Hutchinson's position on the board of the building society while pursuing the sale of another big customer-owned firm. - Guardian

Tesla has lost its $1.0trn valuation for the first time since October amid a new investigation by US regulators. The electric vehicle maker's shares have fallen 23% since its record closing high of $1,229 on 4 November. The Securities and Exchange Commission has opened an investigation over whistleblower claims on solar panel defects, Reuters reported. - Telegraph

US close

Wall Street stocks traded higher on Monday as market participants seemed to become relaxed about the new Covid-19 omicron variant.

At the close, the Dow Jones Industrial Average was up 1.87% at 35,227.03, while the S&P 500 was 1.17% firmer at 4,591.67 and the Nasdaq Composite saw out the session 0.93% stronger at 15,225.15.

Reopening plays like United, Delta Airlines, Carnival and Wynn Resorts all traded higher despite news that the Covid-19 omicron variant had now been discovered in at least 15 US states, according to the Centers for Disease Control and Prevention's director Dr Rochelle Walensky.