Three things you need to know as the UK financial markets open, from Tony Cross.
#1. Deflationary pressures to weigh on profits at Bunzl
A trading statement from Bunzl LON:BNZL ahead of the year end has been issued today, noting that revenues are set to be around 3% higher at a constant exchange rate, driven by acquisitions, with volumes in the second half continuing to carry momentum,
However deflationary pressures are set to be more persistent than previously anticipated and this will have a slight impact on operating profits. All told, management see the year as being one of significant progress, underpinned by margin improvement and there’s a strong pipeline extending into 2025, too.
#2. Land Securities acquires majority stake in Liverpool shopping mall
A note from Land Securities LON:LAND this morning regarding the company’s acquisition of a 92% stake in shopping mall Liverpool ONE for an overall consideration of £490m. The acquisition is in line with Landsec’s objective to grow its investment in major retail destinations, recycling the proceeds from its £464m of non-core sales earlier in the year. Upon refinancing the existing secured debt on the asset, is expected to add c. 1.3p to EPS on an annualised basis.
#3. Capita eyes margin improvement but NI hike to cost £20m
Capita LON:CPI published a trading and operating update today, highlighting good margin progression, up 50bps and noting that the profit outlook for the year remained unchanged. Adjusted revenues were down 8% for the first 11 months although this was as a result of exiting lower margin contracts, a strategy the company intends to persist with.
The changes to National Insurance in the recent budget will cost £20m on an annualised basis although cost savings in the medium term will mitigate this and the Board is increasingly confident in delivering its 6-8% medium-term operating margin target
