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What to Watch: Eddie Stobart profit warning, crunch talks for Thomas Cook, and cake maker's sales soar

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Eddie Stobart truck beside the Gloucester and Sharpness Canal, UK. Photo: Education Images/Universal Images Group via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Eddie Stobart Profit warning

Eddie Stobart (ESL.L) has warned that annual profits will be “significantly below” expectations this year.

The distributor said that “adverse performance”, an ambitious budget, and delays on a major consultancy project had cut into the company’s earnings.

On the back of the profit warning, Eddie Stobart said its leadership team has started a “wide-ranging review” into its operations and financial performance.

Last month the company admitted a £2m accounting error and suspended shares at 70p as it reviewed its books.

It said on Monday that revenue for the first six months of the year are set to be £450m and underlying earnings will be between £10m and £11m.

Last week, the company confirmed it is being lined up for a possible takeover following an expression of interest from significant shareholder DBAY Advisors. Eddie Stobart said on Monday that there was “no certainty” an offer would be made and said the company would update investors “when appropriate.”

Crunch talks for Thomas Cook

Shares in Thomas Cook (TCG.L) were under pressure in early trade on Monday as the holiday operator holds crunch bailout talks with bond holders.

The Sunday Times reported over the weekend that the Civil Aviation Authority (CAA) is preparing for the possible collapse of Thomas Cook if it cannot seal a rescue deal by October 1 when a key license is up for renewal.

It follows a report from Sky News last week that Thomas Cook is hoping to increase the size of its proposed bailout to £1bn and has warned bondholders of the risk of insolvency.

Thomas Cook agreed a £900m bailout package with shareholder Fosun last month, but the rescue package also requires the approval of bondholders.

The 178-year-old travel company has been struggling with mounting debts and a viciously competitive landscape for European travel companies.

Cake maker’s sales soar

Finsbury Food Group (FIF.L), the cake and bread maker, has announced rising sales and profits, thanks to cake bars and new vegan products.

Finsbury, which makes cakes Disney and Thornton’s Chocolates, said revenue rose by 3.8% to £315.3m and pre-tax profits rose by 203% to £13.6m.

The company said the performance was partly down to investment “automated individually wrapped cake bar capacity” to appeal to “on the go” consumers, as well as vegan brioche burger buns sold to restaurants.

Chief executive John Duffy said: “In what has been a continued challenging market environment, our sales growth and increased dividend demonstrates our ability to navigate more challenging times and our continued confidence in the prospects of the Group.

“Our achievements have been underpinned by our relentless focus on investment, efficiency and innovation, alongside our ability to harness the growth available from premium, healthy and authentic on-trend innovation.”

Oil prices surge after Saudi Arabia attack

The price of oil surged on Monday, following an attack on Saudi Arabian facilities that has ratcheted up tensions between the US and Iran.

Drone strikes hit two Saudi Arabian oil facilities on Saturday, knocking out about half of the country’s oil output. The attack has knocked out an estimated 5% of global oil supply and US President Donald Trump on Sunday authorised a release of crude from its Strategic Petroleum Reserve (SPR).

The price of oil futures spiked by 20% at the open in London, the most on record, amid the fall in supply and escalating tensions in the key oil producing region.

By 7.45am UK time, prices had settled down slightly. Brent futures (BZ=F) were up by 10% to $66.34 a barrel and crude was up 9% to $59.80 (CL=F).

Pound weakens as Johnson meets Juncker

The pound slumped after it emerged that Boris Johnson would reject any offer of a Brexit extension made by European Commission president Jean-Claude Juncker.

Johnson is due to meet Juncker for a lunchtime meeting in Luxembourg, the first time the two leaders have met since Johnson became prime minister in July.

The pound fell by 0.3% against the dollar (GBPUSD=X) on Monday, to around $1.245, after Downing Street sources said Johnson “would make clear that he would not countenance any more delays.”

Meanwhile, the British Chambers of Commerce said on Monday that the UK was set for its longest slump in business investment in 17 years.

China and oil tensions drag on stocks

Global markets were under pressure on Monday, amid the oil price surge and escalating tensions between the US and Iran.

Stocks were not helped by poor data out of China overnight too, which fuelled fears of an impending global slowdown.

“Overnight investors were served up a reminder that all is not well over in China,” Connor Campbell, a financial analyst at spread betting company SpreadEx, said.

“Fixed asset investment slipped from 5.7% to 5.5%, while retail sales missed out on the expected bounce to instead fall from 7.6% to 7.5%.

“Worst of all, industrial production slumped to 4.4% against the previous month’s 4.8% and the forecast 5.2%, doing a number on the FTSE’s mining sector in the process.”

Britain’s FTSE 100 (^FTSE) was down by 0.3%, France’s CAC 40 (^FCHI) was down by 0.7%, Germany’s DAX (^GDAXI) was down by 0.5%, and the Euronext 100 (^N100) was down by 0.5%.

Overnight in Asia, Japan’s Nikkei (^N225) closed up by 1%, the Hong Kong Hang Seng Index (^HSI) was down by 1%, and China’s Shanghai Composite (000001.SS) was flat.

What to expect in the US

US stocks future are pointing to lowe open later today. S&P500 futures (ES=F) were down by 0.4%, Dow Jones futures (YM=F) were down by 0.3%, and Nasdaq futures (NQ=F) were up by 0.7%.