BUSINESS LIVE: BHP misses forecasts on interest rate hike warning

REIT investors in Home REIT have made a dramatic change in their business model as the company tries to prop itself up.

In a near-unanimous vote at a meeting at the city’s office of public relations firm FTI, shareholders approved a plan to shift real estate owners’ focus on owning homes for vulnerable residents, such as the homeless.

Instead, the decision would allow the country to invest in all kinds of housing.

John Moore, senior investment manager at RBC Brewin Dolphin:

“Despite the reorganization and restructuring, Wood’s income from continuing operations is at last year’s level at this time and today’s results offer some potential for recovery and, if implemented, better times for shareholders.

Apollo’s well-publicized bid was arguably a costly and ultimately distracting exercise, the outcome of which increased pressure on the board to formulate a vision for years to come.

The main tasks for the new CFO will be to further reduce debt, improve cash generation and profit margins and further streamline the company. On the positive side, Wood’s end markets remain robust, but growth will be difficult to achieve and as a result, self-help will remain the key driver of shareholder returns.”

London-listed shares are trading higher this morning as the FTSE 100 has reached a six-week low driven by gains in defeated cyclical sectors.

The FTSE 100 could go on a seven-day losing streak if the gains last through the end of the trading session.

Profits are driven by cyclical sectors, including construction and materials, precious metals mining and defense.

John Wood Group is up 2.6 percent after the oilfield services and engineering firm raised its guidance for core adjusted annual earnings.

Meanwhile, defensive indices from the pharmaceutical and personal care sectors were among the fallers in the early hours, suggesting an increase in risk.

Supermarket sales growth slowed in August due to lower inflation and pressure on demand from the uncertain, unusually wet weather.

Data from market researcher NIQ shows supermarket sales grew 7.2 percent by value in the four weeks to August 12 – the lowest growth since January and lower than the 8.9 percent in the July dataset.

On a volume basis, sales fell by 3.8 percent.

Tesco saw turnover increase by 9.7 percent in the twelve weeks to August 12, with its market share rising to 26.8 percent.

Discounters Aldi and Lidl, with sales up 22.2 and 16.5 percent respectively, and Marks & Spencer, with sales up 11.5 percent, were the only other grocers to gain market share during this period.

Last week, M&S raised its earnings outlook.

Lookers, which has agreed to a £504.2 million takeover by Global Auto Holdings, saw sales rise an inch in the first half of the year amid macroeconomic challenges.

The dealership group, which sells new and used cars and vans and also offers after-sales services, saw sales grow 8 per cent to £2.42 billion in the six months to 30 June, while underlying profit before tax fell 2.3 per cent to £46.1 million.

John Wood Group has revised its revised annual core earnings estimates upward following strong growth at the UK oilfield services and engineering firm’s business units.

In addition, the company also announced that Chief Financial Officer David Kemp would retire, but would remain in this position until a successor is named.

Ken Gilmartin, CEO, said:

“When we announced our growth strategy in November last year, we set out a plan that will enable Wood to fulfill its considerable potential, and I am pleased that our results reflect the clear progress we are making.

“We started the year well, delivering growth in revenue, EBITDA, headcount and our pipeline, while fostering our inspirational culture, as evidenced by our highest-ever employee net promoter score.

“Looking forward, we are confident that our actions, the business model we have implemented and the market growth opportunities we have aligned with will support the momentum we are building in our business. Therefore, we are raising our expectations for the full year in terms of sales and EBITDA.”

Watchdogs have approved the £54bn acquisition of cloud storage company VMware by chipmaker Broadcom.

The Competition and Markets Authority said the merger of the two US companies would not harm the UK computer market. It is the largest deal ever approved by the regulator.

The CMA said Broadcom could not use the deal to harm rivals in the industry, or use the merger to spy on competitors using VMware software.

The BHP Group’s earnings fell short of expectations in the past financial year and the London-listed mining giant has warned that higher interest rates will continue to hamper demand in the developed world in the coming months.

Underlying attributable profit for the Anglo-Australian business for the year ended June 30 fell from $21.32 billion a year earlier to $13.42 billion, beating the $13.89 billion forecast.

BHP announced a final dividend of $0.80 per share, compared to $1.75 per share a year ago, representing a payout ratio of 59 percent and the third-largest full-year ordinary dividend in the company’s history. That was lower than Macquarie analysts’ expectations of a 65 percent payout.

CEO Mike Henry said:

Demand for commodities has remained relatively robust in China and India, even as developed world economies have slowed significantly. In the short term, China’s trajectory depends on the effectiveness of recent policy measures.

“We expect vibrant growth in India, with strong construction activity supporting an expansion of steel production capacity.

“In a broader sense, there is increasing global recognition of the importance of critical minerals and strategies to drive supply and demand investment, presenting opportunities and challenges.”