United Kingdom

MARKET REPORT: BT languishing in FTSE100 doldrums

BT was languishing in the FTSE100 doldrums after a mixed update and big news from a major rival made shareholders fret. 

The telecoms giant was the biggest faller on the blue-chip index after it reported a drop in first-quarter turnover and profits. 

BT was hit by earnings in its global division, which serves large corporate customers. 

Concern: The telecoms giant was the biggest faller on the blue-chip index after it reported a drop in first-quarter turnover and profits

In the spring of 2020, many of these clients were spending big because of the sudden need for their staff to work and do conference calls from home. 

Growth in this area of the business has now stalled as the Covid recovery gets under way – and the effects even offset a bounceback in the lucrative BT Sport arm as restrictions were lifted in pubs and Britons flocked to watch the Euros in the company of other football fans. 

BT boss Philip Jansen insisted the firm was 'on the front foot now', adding: 'Customer satisfaction is the highest it's ever been in global, so no need to panic, we're very alert to it. It needs to come back and we're hopeful it will come back in the second half.' Profits fell 4 per cent to £536m in the three months to July, while revenues fell slightly to £5.1billion. 

Since Jansen has taken over, BT has ploughed £12billion into rolling out cutting-edge fibre-optic cables. At the same time, it is carving out £2billion in savings, largely by slashing thousands of jobs and reducing its number of offices from 300 to 30. 

But aside from its numbers, BT was also blindsided by an announcement released shortly before the company put out its update – as Virgin Media O2 said it would upgrade its entire network serving 15.5m premises to full-fibre over the next seven years. BT fell 6.6 per cent, or 12.05p, to 171.9p last night. It was closely followed by hip and knee replacement maker Smith & Nephew, which said business was still not back to normal. 

The widespread cancellation of elective surgeries across the world since Covid broke out has stymied the medical device group. The shares slid 6.3 per cent, or 99p, to 1464.5p, while mining engineer Weir Group fell 6 per cent, or 113.5p, to 1790p even as it reinstated its dividend. 

The FTSE100 as a whole had a stronger day as a slew of big-name firms put out much more optimistic financial figures on another results 'super Thursday'. 

The blue-chip index rose 0.9 per cent, or 61.79 points, to 7078.42, while the FTSE250 edged up 0.2 per cent, or 44.01 points, to 23050.46. 

While BT suffered, there was far better news for a number of companies in yet more proof that businesses finally have some breathing room and are able to ramp their operations back up. 

At the other end of the scale on the Footsie, investors cheered pest controller Rentokil (up 6.8 per cent, or 35.6p, to 563p) as first-half earnings jumped and it said profits would be higher than expected for the full year. 

One-off revenues for big disinfection contracts – which were in hot demand during the height of the pandemic – predictably tapered off. 

There was good news in the events industry as conference and trade show organiser Informa (up 5.7 per cent, or 27.8p, to 511.8p) also raised forecasts. 

The Footsie-listed group – which runs events such as the Monaco Yacht Show and China Beauty Expo – reckons it will pull in revenue of £1.8billion in 2021, up from previous estimates of £1.7billion, in the wake of a 'progressive return' of in-person events in North America, China and the Middle East. 

Informa's peer Relx (up 3.2 per cent, or 66p, to 2100p) was cautious but upbeat about the appetite for business events in the coming months. 

The world's largest caterer, Compass, climbed 3.7 per cent, or 55p, to 1553.5p after it said it expects to be trading at around 80 per cent to 85 per cent of pre-Covid levels in the final quarter of the year.

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