Leading UK shares traded cautiously higher in early deals on Thursday ahead of the Bank of England meeting in which it is expected to raise economic growth forecasts.

The UK’s benchmark FTSE 100 index gained 0.27% to 7,058.44, while the midcap FTSE 250 index traded 0.5% higher to 22,497.87, with the Bank set to announce that the country will see GDP growth at 7% in 2021, compared to the 5% forecast back in February.

However, the revised forecasts could come with a catch as, like in the US, the increasing strength of the UK economic recovery will likely cause the central bank to mull over rolling back some of its current stimulus support.

NEXT RAISES GUIDANCE

In company news, clothing retailer Next (NXT) gained 2.1% £82.98 after raising its central guidance for pre-tax profit by £20 million to £720 million for the year.

First quarter sales in the 13 weeks to 1 May were down 1.5% compared to the same period two years ago before the pandemic, largely as a result of store closures.

But the company said the last three weeks sales have been ‘exceptionally strong’ and, versus two years ago, total full price sales were up 19%. In that period, full price sales in like-for-like retail stores were up 2% and online sales were up 52%.

Despite retail stores being closed for 10 weeks of 2021, full price sales to date have been £75 million better than expected, the group said, increasing its profit guidance as a result.

Housebuilder Barratt Developments (BDEV) gained 1.1% to 774p as it expects outturn to be ‘modestly above’ its expectations after raising its forecast on completions for the full-year thanks to strong demand for homes.

Wholly owned completions for its 2021 financial year is expected to be between 16,000 and 16,250 homes and the company aims to deliver around 650 joint venture home completions.

For the period from 1 January 2021 to 2 May 2021, net private reservation rate increased to 0.83 from 0.52 per active outlet per average week year-on-year. In the period, 4,481 total home completions were delivered, up from 3,504.

ASTON MARTIN LOSSES NARROW

Luxury carmaker Aston Martin Lagonda (AML) increased 2.7% to £19.51 after reporting narrower losses in the first quarter of the year as a surge in wholesale volumes and higher prices boosted revenue.

For the first quarter, pre-tax losses narrowed to £42.2 million from £110.1 million year-on-year as revenue rose 153% to £224.4 million. The rise in revenue was driven by ‘wholesale growth and stronger pricing dynamics as dealer GT/Sport stock reduced as planned,’ the company said.

Wholesales volumes were up 134% to 1,353 to meet demand, with DBX representing 55% of units. The cash position was improved to £575 million from £489 million seen at the December end. Expectations and guidance for 2021 has been left unchanged.

Insurance company Aviva (AV.) edged 0.25% higher to 404.6p having completed the sale of its entire 40% stake in the Turkish life insurance and pensions joint venture, AvivaSA Emeklilik ve Hayat AS, to Ageas Insurance International NV.

Aviva received £122 million in cash for the sale, which included a £3 million dividend from AvivaSA received in March 2021.

MONDI’S ‘ROBUST’ FIRST QUARTER

Packaging group Mondi (MNDI) fell 1.4% to £19.61 despite reporting a '’robust’ first quarter of 2021, fuelled by its sustainable packaging solutions and higher average containerboard selling prices.

In a trading statement, the company said its underlying EBITDA for the first quarter was in line with expectations at €353 million. This figure is down 8% compared to the prior year period at €385 million, while up 14% compared to the €309 million in the previous quarter. It added that good cash generation resulted in lower net debt at the end of the quarter.

Engineering turnaround specialist Melrose Industries (MRO) gained 2.2% to 167.25p after reporting an 8% surge in sales during the first quarter of 2021, compared to the same period a year earlier.

Operating margins achieved in the first quarter of the year improved faster than expected and Melrose was cash neutral in the first quarter, a period that has traditionally been a cash outflow period.

OTHER NEWS

Wine retailer Virgin Wines (VINO:AIM) gained 3.2% to 246p after revealing it is set to surpass previous performance expectations with its online offering continuing to be in demand.

As a result of the performance, the firm’s board anticipates revenue and profitability for its 2021 financial year will be ahead of its previous expectations, with turnover for the year expected to be no less than £73 million.

Legal and professional services group Gateley (GTLY:AIM) surged 11.5% higher to 208p after it resumed its dividend on expectations for profit and revenue to be ‘significantly ahead’ of market expectations following a very strong end to the year.

Consensus market expectations for adjusted pre-tax profit is £14.7 million and for revenue is £111.7 million. Gateley confirmed plans to restart dividend payments and will pay a dividend for its current financial year in line with its previous policy of distributing up to 70% of profit after tax.

Flexible office space provider Workspace (WKP) gained 2% to 856.4p having reported a pick-up in demand as the Government's Covid-19 restrictions have lifted.

The easing of restrictions during the first quarter resulted in an increase of customer utilisation of its business centres, reaching 20% of pre-Covid levels by the end of March and 30% by the end of April.

The company has had ‘robust’ cash collection despite the restrictions on rent collection, with 92% of rent due for the fourth quarter of 2020/21 now collected. For monthly paying customers, 84% of rent due for the first quarter of 2021/22 has been collected, which is in line with the levels at the same point in previous quarters.

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Issue Date: 06 May 2021