BUSINESS LIVE: BoE base rate decision; ITV sees advertising market recovery; John Wood rejects a takeover bid

John Moore, senior investment manager at RBC Brewin Dolphin:

‘Yesterday’s announcement of a further rejected offer for Wood was an interesting setup for today’s trading update – especially in the context of previous private equity bids and shareholder unrest.

‘What unites recent events surrounding the company is the belief that a smaller, leaner structure will help Wood realize its full potential.

“Today’s update shows some progress in that direction, and the management team is patiently working this out for the company to ensure it maximizes value – while others see faster change as critical.

“As always, the truth will probably lie somewhere in the middle. Estimates point to an improving earnings picture and Wood’s simplification program reveals savings, but more can be done – regardless of where the future of the business lies.”

Millions of British consumers are left in the dark about a mysterious company being investigated by the City Watchdog over rules preventing naming, MPs were told yesterday.

Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), revealed the investigation was ongoing as he defended proposals to lift the veil of secrecy.

Rathi is at war with ministers, including Chancellor Jeremy Hunt, and the financial sector over plans to make it easier for the FCA to name companies they are investigating.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘There were no major surprises from BAE Systems in today’s update. Defense spending remains high across all sectors and key markets of the group. In fact, it is expected that many governments will continue to increase their defense budgets amid escalating global tensions.

‘The recent approval of an additional US aid package to Ukraine, and Britain’s commitment to increase its defense spending to 2.5% of GDP by 2030, should provide further positive momentum for the group , because it seems that the country will gain good momentum. part of these additional expenses.

‘The orders placed with BAE usually also have a long cycle, spread over several years, which gives the group insight into multi-year income. An enviable asset in uncertain times.

‘That has led BAE to reaffirm all its full-year guidance, calling for revenue and underlying operating profit growth of 10-12% and 11-13% respectively. These growth figures are being driven by the group’s acquisition of Ball Aerospace, which was completed in February this year. The integration of the company is progressing well, with the recently renamed Space & Mission Systems company having already secured a number of key contacts.

‘The current three-year £1.5 billion share buyback program is moving full steam ahead and is now 90% complete after less than two years. And thanks to the impressive cash generation, this will likely be followed by another three-year buyback program of the same size, putting additional money back into the pockets of shareholders.”

BAE Systems expects to meet expectations for higher profits this year and has predicted ‘further positive momentum’ following a recent government pledge to increase defense spending.

The FTSE 100 group’s order book, like those of many Western defense companies, has grown over the past two years as governments responded to increased geopolitical risk in the wake of the war in Ukraine and amid rising tensions with China.

Britain’s largest military contractor said it was sticking to February forecasts that earnings per share would grow 6 to 8 percent in 2024, while revenue would be 10 to 12 percent higher.

It said it would benefit from the recent approval of the US additional aid package to Ukraine and Britain’s pledge in April to spend 2.5 percent of GDP annually by 2030.

“With our global presence and broad portfolio of high-quality technologies and services, any further expansion of the current AUKUS program would expand our long-term opportunity pipeline,” the company said in a statement ahead of its annual general meeting later today.

ITV expects the struggling advertising market to improve in the second quarter, with revenues rebounding by around 12 percent in the second quarter – four times the level achieved in the first quarter.

The broadcaster expects that advertising sales will be boosted by the European Football Championship that starts in June.

ITV, which broadcast Bates vs The Post Office in January, on Thursday reported a 6 per cent fall in total external revenue in the first quarter to £727 million.

Oil industry engineer Wood Group has rejected a takeover bid from foreign predators after becoming the latest London-listed company to be targeted.

The company has rejected a £1.4 billion bid from Dubai rival Sidara because it “fundamentally undervalued” the company, Wood said. The rejection came as it emerged that Bristol chipmaker Graphcore is a target for Japanese investment giant SoftBank.

The Bank of England will publish the latest decision of its Monetary Policy Committee on UK interest rates at 12 noon. Market forecasters expect the bank to keep the base interest rate at the current level of 5.25 percent.

Current market consensus suggests that the BoE, together with the European Central Bank, will wait until June, but before the US Federal Reserve pulls the trigger on interest rate cuts.