BUSINESS LIVE: Borrowings hit £3.1bn in July; Mobico sells US school bus business; Watkin Jones cuts forecast

Mobico Group shares soared on Wednesday after the travel industry returned to profitability and the sale of its North American school bus division was announced.

The owner of National Express said last October that it was considering selling its school bus business to reduce debt and focus on businesses with “higher return potential”.

Industry data shows Asda’s sales fell 6.4 percent in the four weeks to August 10, with the group losing 1.3 percentage points of market share over the year.

Earlier this month, Asda reported a 5.3 percent drop in second-quarter sales and chairman Stuart Rose told the Telegraph newspaper he was “embarrassed” by the group’s performance.

Business leaders are warning Sir Keir Starmer that Labour’s plans to boost union power could hurt investment in Britain.

As part of a planned overhaul of workers’ rights, Labour wants to give unions new access rights to workplaces to recruit and organise members.

Waitrose plans to open 100 new supermarkets over the next five years, the John Lewis Partnership announced on Wednesday.

The 100 new, smaller neighbourhood stores are part of the group’s £1bn investment in new stores and refurbishments.

McDonald’s has pledged to breathe new life into Britain’s high streets by creating 24,000 new jobs across the UK and Ireland in more than 200 new restaurants by 2028.

The fast food chain has announced it is investing £1bn in its biggest expansion since 2002, in a move it hopes will ‘support successful high streets’, with customers likely to see more stores than they are used to.

Student housing and build-to-let group Watkin Jones has warned the summer market will be ‘slower than expected’.

The company cut its annual profit forecast, saying “uncertainty” over the pace of rate cuts will weigh on annual results.

Wilko is set to open a new store again, after being acquired last year and rebranded under a new brand name.

The retailer, which acquired rival budget store The Range last year, has announced plans to open a new store in Uxbridge, west London, this autumn.

The pound rose above $1.30 against the US dollar yesterday, hitting its highest level in more than a year – a boost for British holidaymakers.

The pound has been supported by signs of improvement in the UK economy, while the dollar has come under pressure on fears of a slowdown in US growth.

The pound rose yesterday to $1.3052, the strongest since July last year, but remained flat against the euro at just over €1.17.

Waitrose plans to invest £1 billion in new and existing stores over the next three years.

The chain, part of the employee-owned John Lewis Partnership, said it would open 100 convenience stores across the UK over the next five years. The company currently trades from 329 stores and also trades online.

Waitrose lost some market share due to the cost of living crisis, but sector figures published in July showed it gained market share for the first time since January 2022.

According to the latest data from market research firm Kantar, published last week, the company had a share of 4.5 percent.

Two former bosses of the bankrupt department store chain BHS must pay £110m to creditors.

Dominic Chappell, the former boss of BHS who bought the company from Topshop magnate Philip Green for £1 in 2015, and his former colleague Lennart Henningson must pay fines for breaching their corporate duties.

Richard Hunter, Head of Markets at Interactive Investor:

‘A much higher government debt than expected in July, combined with a government debt that has been high for decades, could be a harbinger of a difficult budget.

‘However, the UK economy has shown resilience, surprising doomsayers, despite a brief and shallow recession earlier this year. The more domestically focused FTSE250 has responded adequately, now up 6.8% year to date.‘

Adam Vettese, Market Analyst at eToro:

‘Mobico shares have been falling for a while due to a combination of the pandemic decimating travel demand and inflation driving up costs. This morning’s update showed a 28% increase in profit and the company maintained its guidance for the year.

‘The focus will now be on cost savings and debt reduction, while cost pressures will ease. Mobico in turn will benefit from the inflation correction on prices in the second half of the year.

‘Investors may be cautious and think this is the beginning of a massive redemption story, as there is still some fat to be trimmed as the company actively seeks ways to spin off its North American school bus division.

‘Despite this, the update has been well received by the market, although there is still no dividend to be paid. Shares would need to rise by more than 50% to return to their highest price this year and shares are currently an eighth of the price of their pre-pandemic peak.’

Shares in Watkin Jones fell sharply this morning after the property developer warned that full-year profits would be lower than previously expected.

According to the group, “overall market activity over the summer was slower than expected,” which it attributed to “persistent uncertainty about the pace of rate cuts.”

Shares in Watkin Jones have fallen more than 30 percent as the company said it is “unlikely that we will complete any further transactions before the end of the financial year.”

Mobico, owner of National Express, hopes to sell its school bus division in North America.

Mobico, which reported first-half profit growth of 28.1 percent, is selling the division as part of a debt restructuring program to be rolled out in the second half of this year.

The bus division generated revenue of £1.12bn in 2023, while the group’s net debt stood at £1.24bn at the end of June.

Last year, Mobico suspended the dividend and decided not to pay an interim dividend.

Nearly £1 billion was taken off the value of BT after a rival made a major broadband deal.

Shares in the telecom giant fell more than 6 percent after it was announced that network provider CityFibre will partner with Sky next year.

The deal will allow Sky to offer broadband internet to customers connected to CityFibre’s network, which serves almost 4 million homes.

According to the Office for National Statistics, the UK government debt stood at £3.1 billion in July, beating both official and City forecasts.

The Office for Budget Responsibility had planned borrowing of just £100m for the month, while economists had predicted it would rise to £1.5bn.