FTSE 100 Close: UK index hits new record high, Royal Mail may be for sale
- FTSE 100 hits record high
- Royal Mail targeted for takeover
- Oil prices drop, pulling Shell and BP lower
- Raspberry Pi announces IPO plans
- Burberry, Imperial Brands, and Britvic also among movers
FTSE 100 Hits Record High
The FTSE 100 saw a new record high of 8,474.41 points during intraday, supported by strong performances from the benchmark’s larger constituents.
At the close, the blue-chip index was up 17 points, around 0.2%, finishing at 8,445.
Elsewhere, though, the attention was on Royal Mail, its potential and what political ramifications a serious takeover bid may incur.
Royal Mail parent IDS up on takeover bid
Royal Mail's parent company International Distribution Services (LSE:IDS) soared 20% at one stage on the news that a new £3.5 billion bid was proposed by Daniel Křetínský's EP Group.
Trading at 317.53p the London-listed share was up around 46p or 17%.
An offer of 360p per share represents a substantial premium over previous valuations, and, evidently it is being taken seriously by the stock market.
Daniel Křetínský's offer would include a final dividend and a special dividend, to sweeten the pay-out to shareholders.
The board's inclination to recommend this offer underscores the strategic value and growth potential seen in IDS.
What it means for the Royal Mail and its universal service obligations to the British public remains to be seen, and, similarly it is also unclear how much of a political football it will become given that the UK is heading toward a general election.
Oil price drop dents Shell and BP
Crude Oil prices were on the back foot, with Brent crude falling by 1.2% to $81.38 per barrel on Wednesday.
The drop off pulled with it FTSE 100 oil producers Shell Plc (LSE:SHEL) and BP Plc (LSE:BP), which saw their shares fall by 1.45% and 1.7%, respectively.
US Inflation Slows to 3.4%
US inflation slowed to 3.4% in April, down from 3.5% in March, in line with market expectations and boosting hopes for an American interest rate cut by later this year.
Easing inflation gives investor sentiments a broad dose of positivity, even this side of the Atlantic.
Raspberry Pi confirms London IPO plan
Raspberry Pi, known for its affordable single-board computers, announced plans for an initial public offering (IPO) in London.
It has been taken as a significant boost for the London market, which has been struggling for new listings of late and, in particular, has been short of tech companies.
The announcement has been well received, and may yet support interest in London IPOs.
“In an ever more connected world, the market for Raspberry Pi's high-performance, low-cost computing platforms continues to expand,” chief executive Eben Upton said in a statement.
“We have the technology roadmap to play an increasingly significant role, and we are excited to embark on the next stage of our growth.”
Burberry sales drop as luxury demand slows
Burberry (LSE:BRBY), the luxury English fashion brand, reported a 34% drop in annual operating profit which led to a 6% decline in its share price, down to 1,115p in London.
Its revenue amounted to £2.97 billion for the year to 31 March, reflecting a 4% fall on a ‘constant currency’ basis (i.e. excluding differences in foreign exchange rates).
Giving its outlook, Burberry described “a still uncertain external environment" and said its trading is expected to remain challenging.
"Executing our plan against a backdrop of slowing luxury demand has been challenging,” chief executive Jonathan Akeroyd said.
Imperial Brands sees sharp rise in vape sales
Tobacco firm Imperial Brands (LSE:IMP) reported financial results in line with expectations, with revenue coming in at just over £15 billion for its first half.
It reported an underlying profit of £1.67 billion in the six months to 31 March, down 2.7% compared this this time last year.
Notably, vapes - or as the industry prefer to call them “next-generation products” – saw a near 17% improvement in sales with growth coming in the Europe, Africa and Asia-Pacific territories.
"In Next Generation Products (NGP), we are steadily building scale within our footprint and these efforts have resulted in net revenue growth of 16.8% on a constant currency basis,” chief executive Stefan Bomhard said in a statement.
“In the past six months, we have launched new products in all categories, including our entry into the US oral nicotine market with the new 'zone' brand.”
Britvic boosted as top brands drive growth
Britvic (LSE:BVIC), the soft drinks company, got boost of more than 10% after announcing stronger-than-expected financial results and a new £75 million share buyback program.
The company behind the Robinsons, Tango and J2O brands reported a 17% improvement in first-half profit to £100.4 million, on £880 million of revenue which was up 11% compared to the same period last year.
A ‘delighted’ Simon Litherland, Britvic chief executive, described it as an excellent performance.
“As expected, our market-leading growth comes from the combination of another strong performance from our scale family favourite brands, coupled with accelerated growth in Brazil and across multiple new growth spaces,” he said in a statement.
“We have increased the investment behind our brands by over 38% in the period.”
“I firmly believe the continued execution of our strategy and growth drivers will allow us to sustainably outperform both the market and our historical top-line growth rate.”
In London, Britvic shares were up 100.5p or 10.95% changing hands at 1,018p at Wednesday’s close.
