Rolls-Royce is making a habit of taking the top spot on the FTSE 100 leaderboard and today was no exception after some bullish comments from Deutsche Bank.
The engine maker’s recent results, which showed a doubling of operating profits to nearly £1.6 billion in 2023, were evidence that the group’s restructuring plan was “starting to deliver on promises”, according to Christophe Menard, an analyst at the German bank.
The group, which makes engines for long-haul passenger jets and nuclear propulsion systems for the Royal Navy’s submarine fleet, issued a forecast for the current year that was stronger than expected, promising operating profits of up to £2 billion, and said that by 2027 it was targeting profits of up to £2.8 billion.
Menard said he was confident that Rolls was on track to meet these targets, given the company’s “aggressive start to cost savings”, which include plans to scrap up to 2,500 jobs by the end of next year. He stuck by the bank’s “buy” rating on the stock and suggested that the shares should be worth 465p. Those shares, which have risen by about 150 per cent since this time last year, closed up a further 12p, or 3.3 per cent, at 370½p, their highest level in more than five years.
However, another decent performance from Rolls was hardly going to make up for a bleak batch of corporate results that weighed on the senior index, which retreated 58 points, or 0.8 per cent, to 7,624.98, while the FTSE 250 declined 150 points, or 0.8 per cent, to 19,013,58.
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St James’s Place, which announced that it was taking a shock £426 million hit to cover refunds of its customers, languished at a 11-year low of 505¾p having dropped by 18.6 per cent, or 115⅓p.
Persimmon and Berkeley Group fell 39p, or 2.9 per cent, to £13.31½ and by 95p, or 2 per cent, to £45.52, respectively, as Taylor Wimpey’s disappointing results piled pressure on to housebuilders. Taylor Wimpey, which reported a halving in profits for 2023, closed down 6¾p, or 4.8 per cent, at 133¾p.
Further bad news from China’s Country Garden, the developer, which said that a liquidation petition had been filed against it, elevated concerns about the country’s struggling property sector, a big user of industrial metals. That and a stronger dollar took a toll on metals prices. Anglo American fell by 52½p, or 3 per cent, to £17.10; Fresnillo slid by 16¼p, or 3.5 per cent, to 451½p and Antofagasta lost 25p, or 1.4 per cent, to £17.73½.
Elsewhere, takeover fever gripped the insurance sector after it emerged that the Belgium-based Ageas was considering a bid for Direct Line, sending the FTSE 250 motor insurer’s shares up 38¾p, or 23.8 per cent, to 202¼p. That helped to prop up Sabre Insurance, a smaller rival that rose 3¼p, or 2.1 per cent, to 159¼p.
HICL Infrastructure, a FTSE 250 investment group, moved up 3p, or 2.5 per cent, to 124½p after it revealed a new £50 million share buyback and said it was selling its entire stake in the US Northwest Parkway toll-road project for about $232 million, representing a 30 per cent premium to the company’s valuation at the end of December.
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Another decent performer was RHI Magnesita, the maker of heat-resistant bricks and wall linings used in furnaces, which advanced 86p, or 2.4 per cent, to £36.74, after its full-year revenues of €3.5 billion beat consensus estimates.
Animalcare Group, a small veterinary sales and marketing business, rose by 30½p, or 15.8 per cent, to a 13-month high of 223p after saying it had disposed of its majority stake in Identicare, its British pet microchipping business, for nearly £25 million.
EnSilica delivered an impressive rise of 9½p, or 15.5 per cent, to 71p after the technology company, whose low-power microchips have applications in aircraft, cars, heart monitors and mobile phones, said it had bagged a “significant” order for its custom-made chips with an unnamed “major electronics manufacturer”.
Talks start on NatWest stake sale
The government has commenced talks with brokers about helping to sell its shares in NatWest as it presses on with plans to return the bank to full private ownership.
The state, which in 2008 became NatWest’s biggest shareholder when it rescued Royal Bank of Scotland, as the group was then called, said in November that it wanted to reduce the size of its shareholding in the business by selling NatWest stock directly to the public as early as June.
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According to Bloomberg, the government is in the early stages of talks with a number of brokers, including AJ Bell and Hargreaves Lansdown, about helping it to sell the shares to retail investors.
The Treasury started cutting its stake in the FTSE 100 company in 2015 and ministers are aiming to have sold all of it by 2026. At present it holds a 32.9 per cent stake in the business.
This month NatWest, which reported a pre-tax profit of £6.2 billion for 2023, confirmed the permanent appointment of Paul Thwaite as its chief executive after months of uncertainty, paving the way for the Treasury’s plan to go ahead. Thwaite, 52, had been named as interim boss in July when Dame Alison Rose was forced to leave over the Nigel Farage account closure scandal.
NatWest shares closed up 2¾p, or 1.2 per cent, at 236½p last night.
Wall Street report
Indices edged lower before today’s consumer inflation data that could influence the timing of the US Federal Reserve’s long-awaited interest rate cut. The Dow Jones industrial average fell 23.39 points, or 0.1 per cent, to 38,949.02