BUSINESS LIFE: Food price inflation is slowing; Abrdn profit drops; Smith & Nephe expects margin gains

Morrisons is considering selling its baking business, which produces more than 50,000 tonnes of products annually, in a bid 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, which supplies baked goods to Morrisons supermarkets.

London and Manchester have retained the top 30 of the closely contested world city rankings, while the British capital climbed to second place.

The closely watched Schroders 2024 Global Cities Index rose 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 driving forces behind the 8.7 out of 10 rating, offsetting its ‘relatively weaker score in transport infrastructure and the environment compared to other top cities’.

UK shares edged cautiously higher at the open, boosted by gains in mining stocks and some upbeat earnings updates, while investors are cautious ahead of key inflation data from Europe and the US later this week.

While the domestic economic data calendar is light this week, consumer price data from the US and Europe will be widely watched, which could influence the monetary policy trajectory globally.

Market participants now await comment from the Bank of England’s deputy governor, Dave Ramsden, at a speech later in the day.

Smith & Nephew has risen 3.9 percent to the top of the blue chip index as the medical equipment maker predicts an improvement in profit margins this year after beating market expectations for 2023 profits.

However, gains on the index have been limited: Croda International fell 1.3 percent after the chemicals supplier forecast lower profits for 2024, hit by continued weak volumes at its Crop Protection and Industrial Specialties divisions.

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

‘Financial services markets are changing faster than ever and so abrdn has been in a more or less constant state of flux in recent years.

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

‘Interactive Investor remains the standout and the growing diversification of Abrdn’s activities is helping to steady the ship.

‘However, another transformation program introduces a degree of uncertainty and the unfunded dividend at current levels feels too high for the period of change the company is going through.’

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

The online retail giant entered the Dow Jones Industrial Average yesterday after seeing its shares rise 15 percent so far this year, pushing gains to 90 percent this decade. But yesterday they were little changed and fell by 0.03 percent.

Jacob Rothschild’s death yesterday at the age of 87 could result in a succession battle between his heirs over his vast real estate and investment empire.

A colossal figure in the city, he rode the Square Mile for decades.

Data shows that more people over 65 are making contactless payments than ever before.

Today, 80 percent of 85 to 95-year-olds pay contactless, according to a new report from Barclaycard.

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

According to the government-backed FTSE Women Leaders Review, the share of board positions held by women in the FTSE 350 increased by two percentage points last year to 42.1 percent.

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

British medical device maker Smith & Nephew expects profit margins to improve in 2024, after beating market expectations for 2023 profits, thanks to robust sales in the orthopedics and wound care segments.

The company, which makes orthopedic implants and prosthetics, wound dressings and other surgical technologies, said its trading profit margin for 2024 is expected to be at least 18 percent, up from 17.5 percent achieved the year before.

Medical device makers have witnessed strong demand as people, especially older adults, return for elective surgeries such as joint replacements that have been postponed during the pandemic.

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

The company expects sales to grow 5 to 6 percent on an underlying basis in 2024, compared to 7.2 percent growth the year before.

Abrdn has reported a full-year operating profit decline for 2023 as the company pursues deep cost cuts to revive performance.

The UK fund manager reported adjusted operating profit of £249 million for the year, down 5 percent from £263 million last year and in line with forecasts of £242 million.

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

Abrdn announced plans to cut 500 jobs in January, following worse-than-expected net customer cash outflows in the second half of 2023. Net outflows for the year were £13.9 billion, up from £10 .3 billion in outflow in 2022.

Abrdn, one of Britain’s best-known fund managers, has suffered years of clients withdrawing cash and has fallen out of Britain’s FTSE 100 share index.

CEO Stephen Bird is trying to engineer a turnaround by cutting jobs, reducing its fund base and expanding into mass-market investing after acquiring an interactive online platform investor in 2022.

Food inflation has fallen to the lowest level since May 2022, due to falling energy and fertilizer costs and fierce competition between retailers, figures show.

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

Price falls for meat, fish and fruit helped push fresh food inflation down to 3.4 percent from 4.9 percent in January, well below the three-month average of 4.6 percent and the lowest since February 2022.