MARKET REPORT: Babcock soars as investors welcome its upbeat outlook and proposal to reinstate dividend

Defense group Babcock rose highest on the FTSE 250 ranking after investors welcomed the optimistic outlook and the announcement that it will reinstate a dividend.

The company, whose Rosyth shipyard in Scotland has built aircraft carriers for the Royal Navy, aims to grow sales by at least 5 percent over the next three to five years. Sales rose 8 per cent to £4.4 billion in the year to the end of March.

Babcock also reiterated his plan to pay a dividend for the first time in three and a half years by the end of next year. Shares rose 14.6 percent, or 46 pence, to 361.6 pence.

However, there was less to cheer about the contract it won from the Ministry of Defense (MoD) in 2019 to build five Type 31 frigates for the navy after it said it would take a £100m one-off hit due to higher costs.

In April it entered a formal dispute process with the Ministry of Defense over such charges and warned it may need to set aside between £50m and £100m. The hit meant profits for the year to the end of March fell from £182.3m to £6.2m.

The FTSE 100 rose 0.8 percent, or 57.85 points, to 7646.05, but the FTSE 250 fell – by 0.1 percent, or 10.79 points, to 19,311.73.

It was a mixed set of results for Vistry after the homebuilder warned of a slowdown in the market as higher mortgage rates made it more difficult for first-time buyers to get up the real estate ladder.

The group has built 2,847 homes at the end of the first six months of 2023. This was 22 percent less than the 3,219 in the same period a year earlier.

It reiterated its forecast that profits would exceed £450 million this year, and shares fell 0.2 percent, or 1.5 pence, to 789 pence. Dunelm had a strong end to the fiscal year as customers got their hands on discounted products.

Fourth quarter sales rose 6 percent to £381 million in the 13 weeks to July 1.

Sales were also up 6 percent to £1.6 billion in the year to July 1.

It said full-year earnings should beat the £188 million figure predicted by analysts. Shares gained 1.5 percent, or 17p, to 1130p.

Stock watch – Portmeirion

Pottery firm Portmeirion said sales and profits would take a hit as its North American retail customers remained cautious about orders amid economic turmoil.

The maker of Royal Worcester porcelain expects to have made £44 million in sales in the six months to the end of June, 3 percent less than in the same period a year earlier.

It said results for 2023 would fall short of the £113m revenue and £9.3m profit analysts had expected. Shares fell 25.6 percent, or 101 pence, to 294 pence.

Scottish battery cell maker AMTE Power warned it could fall under administration and its shares would be suspended from trading on AIM unless new funds were raised.

The company said its financial situation was becoming “increasingly critical” and a resolution is needed in the coming business days.

If more money doesn’t come in, it could result in shareholders being wiped out, AMTE added. Shares fell 47 percent, or 3.87 pence, to 4.38 pence.

Traders rushed to Hikma Pharmaceuticals after a tornado damaged a US facility owned by its rival drugmaker Pfizer. Shares were up 5.7 percent, or 111.5p, to 2063p.

Anglo American welcomed the start-up of its new copper mine in Peru, as production in the three months to the end of June was 11% higher than in the same period a year ago.

The results contrasted sharply with those of Antofagasta, which this week cut copper production targets following water shortages in drought-stricken Chile, while Rio Tinto said it had fallen short of iron ore targets.

Shares in Anglo American rose 3.3 percent, or 77p, to 2380p, Anto-fagasta added 2.7 percent, or 39.5p, to 1526p, and Rio Tinto rose 1.5 percent, or 78p, to 5174p.

Private equity firm 3i posted gains after its net asset value rose 4.1 percent to 1,814 pence in the three months to the end of June.

All eyes were on Action, the discount retailer that makes up the bulk of its investment portfolio, as its turnover rose 33 per cent to £4.5 billion in the six months to July.

But stocks, up 45 percent so far this year, fell 0.2 percent, or 3 pence, to 1950 pence.