Consumers appear to be showing remarkable resilience to rising prices. Results this morning from Sainsbury and Unilever indicate customers are stomaching the increases. Defying market expectations, Sainsbury said it may even increase profits this year, indicating its efforts to cut costs and compete with discounters might be paying off.
(Bloomberg) — Consumers appear to be showing remarkable resilience to rising prices. Results this morning from Sainsbury and Unilever indicate customers are stomaching the increases. Defying market expectations, Sainsbury said it may even increase profits this year, indicating its efforts to cut costs and compete with discounters might be paying off.
Here’s the key business news from London this morning:
In The City
Barclays Plc: The British bank’s traders surpassed expectations in the first quarter with a surprise increase in fixed income revenue.
- Fixed-income trading revenue rose 9%, while equities trading fell a worse-than-expected 33% to £704 million
Unilever Plc: The consumer giant beat sales growth expectations in the first quarter as consumer demand proved more resilient than expected in the face of price hikes.
- Full-year revenue growth should be at the high end of its 3% to 5% forecast range, the company said
AstraZeneca Plc: The pharmaceutical firm’s profit rose in the first quarter as the company looks to key trial readouts this year to reinforce its position as a top producer of cancer therapies.
- The drugmaker reported adjusted earnings per share of $1.92 for first quarter, more than the $1.68 analysts estimated and above last year
Sainsbury Plc: The British supermarket chain said profit could rise slightly this year as the grocer’s efforts to keep prices down draw customers in.
- Expects underlying pre-tax profit for this year to be between £640 million and £700 million, compared to a profit of £690 million in the year to March, the top end of its previous guidance
- Sainsburys said it has spent over £560 million across two years trying to keep its prices low, and has made some “bold choices” to reduce costs
In Westminster
Rishi Sunak pushed through his legislation to stop migrants from crossing the English Channel in small boats, despite objections from some of his senior MPs including two former Conservative Party leaders.
The Bank of England was the first in this cycle to raise interest rates among the major central banks, and it’s now “blazing a trail in how to shrink a balance sheet,” writes Bloomberg Opinion’s Marcus Ashworth. “There are clear lessons here for the European Central Bank which will soon have to accelerate its own quantitative easing unwind.”
In Case You Missed It
Glencore Plc’s efforts to spark an investor rebellion at Teck Resources Ltd. have succeeded, after the Canadian miner withdrew a plan to split itself in half just hours before a high-stakes vote. Now the focus shifts to whether Glencore will press its advantage with an increased takeover offer.
Flutter Entertainment Plc has secured shareholder backing to pursue an additional US listing of shares to gain access to deeper capital markets and greater liquidity, a person familiar with the matter told Bloomberg.
Finally, Japanese fashion chain Uniqlo is the latest brand to open at Covent Garden in fresh evidence that London’s premier retail space is expanding beyond the once vibrant Oxford Street.
Looking Ahead
NatWest Group Plc is among the companies rounding out the earnings week tomorrow.
The lender guided for a full-year net interest margin of about 3.2% in February, although Bloomberg Intelligence and Citi analysts expect the bank to do better. NatWest could surprise on the upside if credit losses turn out to be lower than feared in the first quarter, according to BI, with estimates compiled by Bloomberg currently forecasting a provision of £270 million.
That said, NatWest might well “top up provisional buffers if there are early signs of increasing customer defaults,” BI’s Lento Tang says.
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