Tui considers slashing winter schedule over omicron fears – live updates

Europe’s energy crunch is deepening as freezing weather forces companies to rely on fossil fuels to keep the lights on.

German power for next year – a European benchmark – climbed as much as 8.3pc to a new record of €180.25 a megawatt-hour. UK day-ahead power surged 40pc to £284 a megawatt-hour.

Power prices have been under strain in recent months amid surging demand, while low wind speeds have exacerbated the problem and increased reliance of gas-fired power plants.

Europe is now facing sub-zero temperatures, meaning electricity producers are having to resort to burning even more coal and gas.

Stagecoach has said it’s still in talks with National Express to hash out a merger as passenger numbers continue to increase steadily from the pandemic.

The two sides are discussing a deal that would see National Express shareholders take a three-quarters stake in the combined business.

If it goes ahead, the merger would create a new group controlling around 30pc of the UK bus market.

Stagecoach said it had a “positive outlook” regardless of whether it continues as usual, or is absorbed into National Express.

The firm pre-tax profit increased nearly sixfold to £31m as passengers started to travel again across the country in the six months to the end of October.

However, passengers were still travelling less than before the pandemic. Last month journeys stood at 70pc of 2019 levels and have dropped a little further because of Storm Arwen and new Covid guidance.

Sterling is hovering above its yearly low against the dollar as investors wait for US jobs data and the Bank of England’s interest rate decision next week.

The pound edged up 0.06pc to $1.3236. Against the euro, it shed 0.2pc to 85.2p.

Money markets are pricing in a 58pc probability of a 15 basis points increase next week, down from a 70pc probability just two weeks ago.

Many traders had seen a rise as a done deal, but the emergence of the omicron variant has cast new speculation that the Bank could opt to hold off again.

Meanwhile, a report on US job openings later today is expected to provide fresh evidence of a tightening labour market.

Even goblins and elves can’t escape supply chain troubles, it seems, as Warhammer figures have become the latest victim of the global distribution crunch.

Games Workshop, which makes the pugilistic figurines, slumped as much as 8.5pc this morning after it said freight costs and foreign exchange headwinds had hit profitability.

The Nottingham-based firm said operating profit before royalties was estimated to be down around £15m for the six months to the end of September.

It’s a setback for Games Workshop, which saw its shares surge 83pc in 2020 as lockdowns boosted demand for hobbies. The shine is beginning to wear off, though, with the stock down 18pc so far this year.

British pharmaceutical firm Clinigen Group is being snapped up in a £1.2bn take-private deal.

The London-listed company has agreed a takeover by investment firm Triton that will see shareholders receive 883p per share – a 41pc premium to its price prior to news of the talks emerging. A previously announced final dividend will also be paid out.

Shares in Clinigen jumped 11pc after the deal was confirmed, rising above the offer price.

The company, based in Burton-on-Trent, specialises in acquiring the rights to niche commercial drugs and expanding their distribution. It also helps patients get access to treatments that aren’t licensed in their countries.

Clinigen has long been a takeover target, with activist investor Elliott disclosing a 5pc stake earlier this year.

Investment management giant Man Group has unveiled plans to buy back up to $250m (£189m) in shares as it looks to hand back cash to shareholders.

The FTSE 250 firm said it will launch the first tranche of $125m today, with the programme running through to Dec 7 2022.

Analysts at Shore Capital described the move as an “excellent use” of capital at the current share price.

Shares jumped 5.5pc following the announcement.

A steady recovery in travel has handed a much-needed boost to catering group SSP, which delivered full-year revenues ahead of expectations.

The company, which owns Upper Crust and Ritazza, said revenues had continued to recover over the summer and autumn, averaging 66pc of 2019 levels in the first nine weeks of the new financial year.

SSP said the emergence of the omicron variant meant there was some uncertainty over the outlook for the winter months, but it said it was confident in its ability to handle short-term volatility.

Shares climbed as much as 4.8pc before paring gains to rise 0.8pc.

Pain from the Evergrande crisis is spreading further through China’s property sector, with rival Kaisa now teetering on the brink of restructuring.

Shares in Kaisa were suspended in Hong Kong today amid growing questions over its ability to make repayments – its second suspension in the last month.

It comes after the heavily-indebted property firm announced on Friday that it had failed in a bid for a debt swap that would buy it crucial time.

It’s the latest sign of crisis in China’s debt-riddled real estate sector, which was plunged into chaos since Beijing launched a drive last year to curb excessive debts and rampant consumer speculation.

Let’s take a closer look at Berkeley, which is leading the FTSE 100 risers this morning.

The housebuilder, which is focused on London and the south east, delivered upbeat results for the first half of the year, with profits up more than a quarter to £290.7m.

The blue-chip firm has cashed in on a boom in the UK housing market, delivering 1,828 homes directly over the period and another 395 through joint ventures.

Berkeley is now expecting volumes to grow 50pc above pre-pandemic levels by 2024/5. The firm lifted its full-year profit forecasts and raised guidance for the coming years to a 5pc annual growth rate.

The FTSE 100 is now up 0.3pc, extending its gains since the beginning of the week, though the rally has lost some momentum.

AstraZeneca is among the biggest drivers of the gains, alongside trusty stocks including British American Tobacco, Reckitt Benckiser, Diageo and Unilever.

This helped offset declines for oil majors BP and Shell.

Housebuilder Berkeley is this morning’s biggest winner, gaining 4.6pc after hiking its profit forecasts for the year.

Meanwhile, the domestically-focused FTSE 250 is up 0.4pc, led by Upper Crust owner SSP, which beat revenue estimates for the full year.

Holiday group Tui is pinning its hopes on a travel rebound next summer after revealing an annual loss of more than £2bn.

The company said it’s close to breaking even in the final three months of the financial year, with a quarterly underlying loss of €97m (£82.7m).

But Tui said it’s reviewing whether to cut the rest of its winter programme following the emergence of the omicron variant and the fourth wave of the pandemic.

It reported an annual loss of €2.5bn, slimmed down from losses of €3.2bn a year ago. Tui said the first quarter of the new financial year is 93pc booked, though it is still running almost a third below pre-pandemic levels.

The group hopes summer 2022 will see a rebound close to 2019 bookings, but stressed customers are continuing to book later and at short notice.

Shares dropped 5pc following the update.

The chief executive of housebuilding giant Taylor Wimpey is parting ways with the company after 14 years at the helm.

Pete Redfern, who joined the FTSE 100 company two decades ago, will step down once his successor has been found. Taylor Wimpey said the recruitment process was “advanced”, adding it was considering both internal and external candidates.

The departures comes amid a slump in the homebuilder’s share price, which is 29pc below its pre-pandemic peak despite the recent housing boom.Taylor Wimpey has also been touted as a potential takeover target amid reports activist investor Elliott has taken a stake.

Mr Redfern said: 

It has been a privilege to work at Taylor Wimpey for the last two decades and to lead a business of which I am so proud, working with so many exceptional people both within the business and through our partnerships.

The business is in excellent health and is well positioned for strong future growth. Accordingly, I am confident that now is the right time for fresh leadership as Taylor Wimpey starts the next chapter.

The FTSE 100 has inched higher at the open, taking a break from its strong rally since the start of the week.

The blue-chip index is up 0.1pc at 7,349 points.

Chris O’Shea, chief executive of Centrica, said:

We are pleased to continue to bring focus to Centrica’s portfolio with these transactions, which are aligned with our strategy to reduce our exposure to carbon intensive oil and gas exploration and production in a way that maximises shareholder value.

With the disposal of these largely oil producing assets to buyers who will be able to meet the material decommissioning costs, we can now focus on realising value for our shareholders from Spirit’s remaining gas reserves.

Spirit will effectively be in run-off, and we will not explore for new hydrocarbon reserves; rather, we will focus on ensuring Spirit can fund its decommissioning liabilities whilst pursuing opportunities to leverage existing infrastructure to help the UK on its path to net zero.

Centrica’s sale of its Norwegian North Sea assets is a long time coming – the plan was first proposed in 2019, but was put on ice as a result of the pandemic.

Still, it comes at an opportune moment for the energy giant, as investor scrutiny over environmental issues begins to mount on the sector.

Last week Shell said it was pulling out of the controversial Cambo oil field development west of Shetland. That decision came after activist investor Third Point called for a break-up of the business, with its renewable division split from its legacy oil and gas operations.

Good morning. 

British Gas owner Centrica has inked a deal to offload oil and gas assets in the North Sea as it looks to accelerate its move towards net zero.

The sale of Spirit Energy’s Norwegian operations is an eagerly-awaited achievement for the company, which first unveiled plans to offload its 69pc stake back in 2019.

The overall value of the deal is £800m, with Centrica expected to take home proceeds of roughly £560m.

Boss Chris O’Shea said the sale would put the oil assets in the hands of buyers who can fund the decommissioning costs, allowing Centrica to focus on creating value from Spirit Energy’s remaining gas reserves.

5 things to start your day 

1) 2G and 3G to be phased out by 2033 in blow to smart meter roll out  The energy industry will have to upgrade older mobile networks to 4G

2) Amazon hit by IT issues wreaking havoc on US home deliveries  Companies that use Amazon’s web services, such as Netflix, Disney+, Tinder, Coinbase and RobinHood, were also affected

3)  Steep pay rises for public sector workers pose risk for inflation and NHS, says Treasury  The Chancellor’s plans could hamper efforts to recruit more staff in the NHS and amplify the effect of inflation

4) Apple poised to become first $3 trillion company  Report claims Tim Cook struck secret $275bn deal to spend more in China to appease Beijing

5) First plant-based Covid vaccine moves a step closer  GlaxoSmithKline to co-produce a Covid jab grown only in plant cells in bid to catch up to rivals

What happened overnight 

Asian stocks were broadly up Wednesday afternoon after a strong lead from Wall Street, but fears lingered over China’s debt-hobbled property sector.

In Hong Kong, Chinese real estate company Kaisa Group Holdings suspended share trading just before the opening bell, “pending the release by the Company of an announcement containing inside information”, according to a filing with the exchange.

By mid-afternoon in Hong Kong, the Hang Seng Index was up 0.13pc, while Shanghai was up by more than 1pc.

In Tokyo, the benchmark Nikkei 225 index was up by 1.4pc at the close, to end at 28,860.62.

Coming up today

• Corporate: Numis, SSP Group, TUI Group (Full-year results); Berkeley Group; Stagecoach (Interim results); McColl’s (Trading update)
• Economics: Mortgage applications(US)