BUSINESS LIVE: Food price inflation slows; Abrdn profits dip; Smith & Nephew eyes margin gains

Morrisons is looking at selling its bakery business which produces more than 50,000 tons of products every year in a move to reduce debt, it was claimed today.

The chain is said to be exploring the sale of Rathbones bakery – a factory based in Wakefield, West Yorkshire, that supplies baked goods to Morrisons supermarkets.

London and Manchester have retained top 30 places in toughly-contested world city rankings, with the British capital climbing to second spot.

The closely-watched Schroders 2024 Global Cities Index upgraded London from third to second place behind US powerhouse San Francisco, and ahead of San Jose and Hong Kong in third and fourth respectively.

Schroders highlighted London’s ‘economic performance and its innovation ecosystem’ as drivers of its 8.7 out of 10 grading, helping to offset its ‘comparatively weaker transport infrastructure score and environmental score compared to other top-tier cities’.

UK shares have inched higher at the open, boosted by the gains in mining stocks and some upbeat earnings updates, while investors exercise caution ahead of key inflation figures from Europe and the US later in the week.

While the domestic economic data calendar is light this week, consumer prices data out of the US and the Europe will be widely watched, which could influence the monetary policy path globally.

Market participants are now awaiting comments from the Bank of England Deputy Governor Dave Ramsden at a speech later in the day.

Smith & Nephew has advanced 3.9 per ecnt to the top of the blue-chip index, as the medical equipment maker forecast an improvement in profit margin this year after beating market estimates for 2023 earnings.

However, limiting gains on the index, Croda International is down 1.3 per cent, after the chemicals supplier forecast lower 2024 profits, hit by persistently weak volumes at its Crop Protection and Industrial Specialities units.

John Moore, senior investment manager at RBC Brewin Dolphin, said:

‘Financial services markets are changing more rapidly than ever and, with that, abrdn has been in more or less a constant state of flux for the past few years.

‘This challenging backdrop is reflected in today’s mixed results, which has some signs of bright spots but also highlights areas for improvement.

‘Interactive Investor remains the stand-out performer and the growing diversification of abrdn’s business is helping to steady the ship.

‘However, another transformation programme introduces a degree of uncertainty and the uncovered dividend feels too high at its current level for the period of change the company is going through.’

Amazon has joined America’s oldest stock market index in the first reshuffle since the pandemic.

The online retail giant entered the Dow Jones Industrial Average yesterday having seen its shares rise 15 per cent so far this year, taking gains this decade to 90 per cent. But they barely shifted yesterday, inching down 0.03 per cent.

Jacob Rothschild’s death yesterday at 87 could result in a Succession-style battle between his heirs for his sprawling property and investment empire.

A colossal figure in the City, he bestrode the Square Mile for several decades.

More over-65s than ever before are using contactless for payments, data suggests.

Today, 80 per cent of 85 to 95-year-olds pay with contactless, a new report from Barclaycard shows.

Women hold more than two in five board positions at the country’s biggest listed companies – but ‘step-change’ is still needed to get more into the most powerful jobs.

The proportion of boardroom jobs held by women in the FTSE 350 increased by two percentage points last year to 42.1 per cent, according to the Government-backed FTSE Women Leaders Review.

This is up from the 24.5 per cent recorded when the report was launched in 2017.

British medical equipment maker Smith & Nephew expects profit margins to improve in 2024 after beating market expectations for 2023 earnings, driven by robust sales at its orthopaedics and wound management segments.

The company, which makes orthopaedic implants and prosthetics, wound dressings, and other surgical technologies, said its trading profit margin for 2024 was expected to be at least 18 per cent, higher than the 17.5 per cent achieved in the previous year.

Medical equipment makers have witnessed strong demand as people, especially older adults, return for elective surgeries such as joint replacements deferred during the pandemic.

Smith & Nephew’s trading profit came in at $970million for the year ended 31 December, compared with the average analysts’ expectation of $966million, according to a company-provided consensus.

The company expects revenue to increase 5 to 6 per cent on an underlying basis in 2024, compared with the 7.2 per cent growth achieved in the previous year.

Abrdn has reported a dip in full-year operating profit for 2023, as it pursues deep cost cuts to revive performance.

The British fund manager reported adjusted operating profit of £249million for the year, down 5 per cent on £263million the previous year and in line with forecasts of £242million.

The Edinburgh-based fund firm also announced a full-year dividend of 14.6 pence per share, unchanged on 2022.

Abrdn laid out plans to cut 500 roles in January, after worse than expected net outflows of client cash in the second half of 2023. Net outflows for the year were £13.9billion, compared to £10.3billion of outflows in 2022.

One of Britain’s best known fund management firms, Abrdn has suffered years of clients pulling cash and has fallen out of Britain’s blue chip FTSE 100 stock index.

Chief executive Stephen Bird is attempting to drive a turnaround by shedding jobs, reducing its range of funds and expanding into mass-market investing, following the takeover of online platform interactive investor in 2022.

Food inflation has slowed to its lowest rate since May 2022 amid easing energy and fertiliser costs and fierce competition among retailers, figures have revealed.

Food prices were 5 per cent higher than a year ago in February – a marked drop from January’s 6.1 per cent and below the three- month average of 6 per cent, according to data from the British Retail Consortium (BRC)-Nielsen Shop Price Index.

Price drops for meat, fish and fruit helped to drive a slowing of fresh food inflation to 3.4 per cent from January’s 4.9 per cent, well below the three-month average of 4.6 per cent and the lowest since February 2022.