Below are the key morning headlines from today’s papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.
Housebuilder Crest Nicholson Holdings (CRST) sent shudders through the sector on Wednesday as it blamed Brexit for a Home Counties sales crunch which could wipe more than £30 million off annual profits. Crest’s key markets in London and the affluent commuter belt have been on the front line of the uncertainty over the UK’s exit from the EU, with buyers sitting on their hands amid mounting fears of “no-deal” disruption. The builder’s shares tumbled 7%, or 22.8p, to 300.2p as Crest warned an autumn pick-up in sales had fallen flat and a “turgid” second-hand market is also hampering the sale of its new-build homes. Crest’s warning comes after Bellway (BWY) said its biggest fear over the market was faltering consumer confidence around Brexit, while London-focused Telford Homes (TEF) shares were also hit last week as it said customers were taking a “wait-and-see” approach as March 29 looms. Shares in listed builders fell with firms with more exposure to dearer homes such as Persimmon (PSN) and Berkeley Group Holdings (The) (BKG) worst hit. Persimmon was down 2% and Berkeley off 3%. Barratt Developments (BDEV) fell more than 1% despite saying today it had started the year in a “strong position, with a good sales rate”. Peel Hunt’s Gavin Jago has a target price of 330p on the stock and said “bid speculation may increase if the shares fall significantly below this level”. Shore Capital analyst Robin Hardy added: “The problem is really one of affordability, although the industry is keen to blame Brexit. “Bellway yesterday acknowledged that Brexit actually barely registers outside London, so we still believe that that is not the core of the issue for the housebuilders but a raw lack of affordability.”
Cost of living squeeze eases as UK inflation falls to 2.4%. Weakening price pressures take pressure off the BoE to consider raising interest rates any time soon. So with Brexit approaching a crescendo, the Bank can sit tight, even though wages are rising.
Pearson (PSON) is still struggling to turn around its key US arm, but thinks it will return to profit growth this year. The education group, best known for owning the Financial Times until 2015, has endured a miserable run until recently, with profit warnings smashing the share price and questions being raised about chief executive John Fallon’s abilities. The news was better today, as a nine-month trading update reported revenue up 2% at the core business, which includes the UK and Australia. Sales in the US were flat, however, with the higher education unit seeing a fall of 3%. That business is regarded as vital to Pearson’s future, but has been buffeted by lower education spending in America
The Office for National Statistics reports that average house price growth dropped to 3.2% per year in August, down from 3.4% in July. That’s the slowest increase since August 2013. The ONS blamed a “sustained slowdown” in the south and east of England, with prices dropping by 0.2% per year in London. The average UK house now costs £233,000, although London prices are still much pricier, at an average of £486,000.
The boss of ASOS (ASC) was bullish on Wednesday as he revealed plans to plough more cash back into the business to turbocharge it after a jump in profits and sales. Investors have voiced concerns this year, reflected in the share price, about Asos’s aim to spend up to £250 million a year in the next few years to help build warehouses in Europe and the US. The business, started 17 years ago and now selling more than 87,000 branded clothes and its Asos Design brand in more than 200 markets, said its “substantial” investment continued apace. Chief executive Nick Beighton said: “Investment is important for future growth and we’re eyeing up a much bigger prize than where we’re currently at. We’re ramping up our capabilities faster than ever before.”
British retailers are gritting their teeth at the prospect of even higher business rates. They are due to rise next year in line with today’s inflation reading, meaning an extra £180m total bill according to the British Retail Consortium. Helen Dickinson, chief executive of the BRC, argues the current system is simply unfair, as shops are already struggling to cope with web-based rivals like Amazon.
Mediclinic International (MDC) said core profits fell by 8% in the first half of the year. It has blamed fewer-than-expected patients admissions in Switzerland and South Africa. The South African firm last year tried to take over UK-based Spire, which however rejected the offer, saying it ‘undervalued the group and its prospects’.
Airline Flybe Group (FLYB) lost more than a third of its market value today after it issued another profit warning, blaming higher fuel prices, a weaker pound and lower demand for flights. The low-cost UK carrier said it will now make an adjusted loss of around £12million for the year to the end of March 2019. This is a smaller loss than last year’s £19.2million, but is worse than market forecasts, and comes despite a £10million one-off boost to its accounts. Flybe’s shares crashed 36 per cent to 20.37p in morning trading following the update.
Sales of cars across Europe crashed by nearly a quarter last month as a new emission testing regime caused a bottleneck in supply. Data from the European Automobile Manufacturers' Association (ACEA) trade body, which covers the EU 27 nations, revealed that vehicle registrations in September fell 23.5pc compared with the same month a year ago, dropping by 336,000 to 1,091,200. The slump is largely blamed on the new emissions testing regime - known as WLTP - which checks the amount of pollution pumped out by cars in conditions closer to real world driving than the laboratory tests used previously.
