The packing and paper company’s shares have extended losses, falling as much as 18 per cent after it warned of a hit to third-quarter profits in a challenging market.
Mondi, a leader in sustainable packaging and paper, reported underlying profits of €223 million in the quarter, which analysts at Jefferies said was “11 per cent is below our already cut third-quarter estimate to €250 million”. Underlying profit in the second quarter was €274 million.
Mondi said demand stayed subdued and selling prices for paper fell, forcing the company to extend planned maintenance shutdowns and sharpen its operational focus. Both corrugated and flexible packaging reported lower profits than in the previous quarter, while uncoated fine paper suffered from weak demand and strong competition.
It also said new projects were expected to contribute less than expected to profits and delayed investment in a new sack kraft paper machine in Canada until markets improve.
Others in the sector were hit, with Smurfit WestRock down 5 per cent and Bunzl losing 1.85 per cent.
Housebuilding puts brake on contraction in construction
A slowdown across the UK’s construction sector eased last month as housebuilding activity picked up pace, the latest S&P Global UK construction purchasing managers’ index (PMI) showed.
The PMI reading for the sector rose to 46.2 in September, up from 45.5 in August, marking its highest level for three months. However, it remains below the 50 mark which separates contraction from growth. Civil Engineering was the hardest-hit sub-sector.
Tim Moore, economics director at S&P Global Market Intelligence, said: “Construction firms recorded lower staffing levels for the ninth month in a row, marking the longest period of job shedding since the pandemic.”
New car sales rise in best September since 2020
The new car sales rose 13.7 per cent year-on-year to 312,891 last month.
It was the best September performance since 2020, helped by the new electric car grant, figures from the Society of Motor Manufacturers and Traders (SMMT) showed.
A total of 72,779 new battery electric vehicles were sold, the highest ever monthly volume and, when combined with hybrids, means electrified vehicles comprise the majority of registrations.
Overall, the market is up 4.2 per cent in the year to date after second-biggest month of the year, with the share of battery electric cars rising to 22.1 per cent.
French market falls on prime minister’s resignation
France’s stock market fell this morning after the prime minister Sébastien Lecornu resigned less than a month into the job.
The CAC 40 dropped 2 per cent to 7,921.14, government bond yields rose, and the euro fell against the dollar and the pound.
His government also resigned hours after Lecornu announced his cabinet line-up, in a major deepening of France’s political crisis. The swift, unexpected resignation came after allies and foes alike threatened to topple the new government.
Philip Shaw, the chief economist at Investec, said: “French bond spreads have widened out, which is not surprising, but the move looks contained. You could argue Lecornu’s task was impossible given the measures he was proposing.
“The impasse is likely to continue. There is already a certain degree of uncertainty priced in. One question is does this mean we are heading to fresh elections, but at this point it’s hard to tell what Macron will do.”
President Macron has accepted his resignation, the Élysée Palace said.
Speedy Hire and HSS share jump on deal
The Speedy hire depot in Great Suffolk St, London
PHILIP TOSCANO/PA
Speedy Hire shares have jumped after the company agreed a deal with smaller rival HSS Hire Group.
Under a five-year commercial supply agreement, Speedy will become the principal equipment supplier to ProService, HSS’s digital marketplace. Speedy will also take a 9.99 per cent stake in HSS.
Shares in Speedy jumped 13 per cent, or 3p, to 27¼p, and HSS shares gained 50 per cent to 11p as it said its strategic transformation was complete.
HSS also announced the disposal of HSS Service Finance Limited to a newly formed company indirectly owned by investment funds managed by Endless, the private equity investor. It is conditional on regulatory approval.
Results for the 15 months to the end of March showed revenue rose from £312.4 million last year to £379 million. Profits fell from £6.9 million to a £130.3 million loss before tax after an impairment charge.
FTSE 100 flat but Mondi drops on warning
A Mondi warehouse in Poland
London’s leading share index edged higher this morning, helped by a rise in commodity prices.
The FTSE 100 rose 4 points to 9,495.29 after closing at its third record high of the week on Friday as global equity markets rallied on expectations that the Federal Reserve will cut interest rates later this month.
Precious metals miners Fresnillo and Endeavour advanced after the gold price rose closer to $4,000 an ounce and BP and Shell gained after Brent crude increased 1.6 per cent to $65.60 a barrel after Opec+ announced a more modest monthly increase in production than expected.
The biggest faller was the packaging and paper company Mondi, which warned on profits in the third quarter as trading conditions remained challenging. Performance was weaker than in the second quarter due to lower volumes, falling paper prices, and planned maintenance shutdowns. Analysts at Jefferies said Editba was €223 million, “11 per cent below our already cut third quarter estimate of €250 million”.
Financial and housing stocks were weaker.
Treatt recommends sweetened takeover offer
The board of the flavour and fragrance ingredients maker has recommended investors back an increased and final £173.8 million takeover offer.
Natara Global, a rival company controlled by the private equity group Exponent, is offering 290p-a-share in cash. The initial offer last month was for 260p a share.
The offer is 11.5 per cent more than the previous proposal and is nearly 30 per cent above the company’s closing share price before the first bid was announced.
Treatt’s directors, advised by Peel Hunt and Investec, said they now “consider the terms of the increased cash offer to be fair and reasonable” and will unanimously recommend that shareholders vote in favour of the deal.
Shawbrook announces London float plan
Marcelino Castrillo, the Shawbrook chief executive
SHAWBROOK
The specialist small business lender Shawbrook has announced plans to float on the London Stock Exchange in a further boost to the London market.
The company has filed documents with the Financial Conduct Authority ahead of a listing that could put a £2 billion value on the business.
As well as issuing new shares to support growth plans, the float would see private equity owners Pollen Street Capital and BC Partners sell some of their stakes. Retail investors will be able to take part in the offer.
Marcelino Castrillo, the Shawbrook chief executive, said: “The strength of our platform has enabled us to deliver a long track record of sustainable, profitable growth through a wide variety of macro conditions.”
Recent half-year results showed that Shawbrook generated a pre-tax profit of £163.1 million in the six months to the end of June on net operating income of £335.5 million.
Aston Martin warns on profits and production
An Aston Martin DBX on the final assembly line at the company’s factory in St Athan
CHRIS RATCLIFFE/GETTY IMAGES
The struggling luxury carmaker warned that full-year profits and production will be lower than expected amid “heightened challenges in the global macroeconomic environment” and the “impact of tariffs”.
In an unscheduled announcement, Aston Martin Lagonda said it expected adjusted earnings before interest and taxes “to be below the lower end of the range of market consensus” driven by the weaker volumes and pressure on the gross margin per vehicle.
It now expects total wholesale volumes in the current financial year to “decline by mid-high single digit percentage” when compared with the prior year.
“An immediate review of future cost and capital expenditures has been initiated by the management team. This will also include a review of the future product cycle plan in response to market and regulatory dynamics,” Aston Martin said.
JLR to restart some UK production
Inside Jaguar Land Rover’s vehicle manufacturing plant in Solihull in 2023
CHRIS RATCLIFFE/GETTY IMAGES
Jaguar Land Rover (JLR) is to restart some production this week after the cyberattack that forced the carmaker to shut down factories and send workers home, the BBC reports.
Manufacturing is expected to resume first at JLR’s engine factory in Wolverhampton, although it is likely to be weeks before all operations are at full capacity.
JLR was plunged into a crisis after hackers breached the company’s IT systems. Global production has been at a standstill since, although a phased restart has been expected.
The Sunday Times reported that the carmaker was finalising plans to lend £500 million to prop up its struggling suppliers. The initiative is separate to a £1.5 billion “rescue” unveiled by ministers last Saturday. The taxpayer-backed deal is still yet to be signed off despite appearances to the contrary.
Sanae Takaichi win lifts Nikkei to record
Sanae Takaichi is the newly-elected leader of Japan’s ruling Liberal Democratic Party
ASAHI SHIMBUN/ETTY IMAGES
Japanese stocks surged 5 per cent to an all-time high of 48,037.05 while the yen fell after the monetary dove Sanae Takaichi was elected as leader of the ruling party.
The victory puts her on track to become the country’s first female prime minister and stoked expectations of fiscal stimulus.
The yen fell 1.6 per cent to around ¥150 per dollar, while short-dated Japanese government bond yields slid to a two-week low as traders pared back bets on when the Bank of Japan will resume raising interest rates. Market-implied odds of a rate rise by year-end have fallen sharply.
A year ago, Takaichi criticised the Bank of Japan’s decision to raise rates as “stupid”, although her recent rhetoric has been more restrained, saying only that central bank policy should be aligned with the government.
Gold heads for $4,000 an ounce
Gold rose above $3,900 an ounce for the first time and the cryptocurrency, bitcoin, remained around its all-time high as investors turned to alternative assets amid concerns over the US government shutdown and the ability of major western economics to manage rising debt levels.
The price of gold rose to $3,937 an ounce this morning, up 1.26 per cent, while bitcoin was trading at £123,586 after its rise to a high of $125,653.32 on Sunday.
The move into safe-haven assets have been called a “debasement trade”. JPMorgan Chase said in a note last week that it reflected “the familiar pattern of dollar debasement against alternative reserve assets amid Washington dysfunction”.
Geoffrey Kendrick, the head of digital assets research at Standard Chartered Bank, said: “The shutdown matters this time around. This year, bitcoin has traded with US government risks.”
He expects bitcoin to rise throughout the shutdown and soon reach $135,000.