BUSINESS LIVE: St James’s Place to cut £500m in costs; BP ups divi; StanChart profits

The general election did little to dent the UK housing market, with the sales under-offer pipeline at its highest value since 2016, according to Foxtons.

The letting agent told investors on Tuesday that trading was in line with expectations in July, with ‘little change in customer behaviour or market dynamics’ since the election at the start of the month.

At the end of June, the sales under-offer pipeline was 21 per cent higher than the prior year and its highest value since the Brexit vote in 2016.

Greggs sales surged 13.8 per cent in the first half, as a successful over-ice drinks range and dedicated pizza deals boosted the backery chain’s growth.

The Newcastle-based group, known for its sausage rolls, said its sales reached £960.6million during the six months to 29 June, growing from £844.0million a year ago. Like-for-like sales grew 7.4 per cent.

Sales growth was bolstered by the strength of the firm’s over-ice drinks range, with products such as its Mango and Strawberry Cooler now available in 500 of its locations.

Shares of Britain’s biggest wealth manager St James’s Place soared by a fifth on Tuesday after the firm unveiled a cost cutting plan worth up to £500million by 2030.

The Gloucestershire-based firm outlined the plans alongside its interim results, which showed forecast beating net inflows of £1.9billion for the period.

SJP told investors it plans to reinvest around half of the total reduction in costs, which it hopes will total £80million a year by 2026 and £100million annually by 2027.

BP raised its dividend for the first time in a year after beating profit estimates for the second quarter, as higher oil prices helped to offset weak refining margins.

The energy giant reported underlying replacement cost profit, or net profit, of $2.76billion (£2.15billion) for the second quarter, beating analyst expectations of $2.6billion.

The result, which compared with a $2.7billion profit in the previous three months and $2.6 billion a year earlier, will ease pressure on boss Murray Auchincloss after BP fell short of expectations in the previous two quarters.

Mark Crouch, market analyst at eToro:

‘BP’s shares have fallen nearly 15% since April so investors will be feeling positive that certain challenges – such as the company scaling back refining operations in Germany – are behind them and that the company can kick on and finish the year strongly.

‘With the ongoing balancing act between investing in renewable energy methods and maintaining profits and shareholder returns that are predominantly from fossil fuel operations, BP will be driven by what is in the best interests of their shareholders first and foremost.

‘And with wind and solar struggling to meet growing global energy demand, while oil and gas demand continues to increase, that looks to be exactly what BP is doing.’

London-listed stocks are trading lower at the open, as investors assess a mixed bag of corporate earnings and exercised caution around interest rate decisions in the US and UK.

The beverages sector is the worst hit, down 6.8 per cent to its lowest since November 2020, as Diageo sank 8.1 per cent to the bottom of the FTSE 100 after the spirits maker reported a steeper than expected 4.8 per cent decline in annual organic operating profit.

Energy shares are buoyed by a 1.9 per cent gain in BP, which reported a second-quarter profit above expectations, raised dividend and extended its share repurchase programme.

Standard Chartered has now gained 5.1 per cent and moved to top the FTSE 100 after the bank announced its largest-ever share buyback worth $1.5 billion and lifted its earnings outlook for this year.

St James’s Place has gained 18 per cent to the top of the FTSE 250 after the wealth manager said it plans to cut tens of millions of pounds of costs, as it tries to rebuild investor confidence following regulatory scrutiny of its charges.

The Federal Reserve is expected to keep rates unchanged this week, while bets of a cut from the Bank of England stand at just over 58 per cent, despite data showing sticky services inflation.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘BP has beaten forecasts, despite previous warnings about lower refining margins and a weakening oil price over the last quarter.

‘The energy major is maintaining capital discipline and cutting debt, with a strong level of cash generation helping to boost shareholder returns.

‘A persistent global energy undersupply should continue to set a supportive backdrop for BP, but longer term the question remains how the company will transition to net zero, with the pace and scale of change and capital investment that will require.’

Business leaders have railed against Rachel Reeves after she ditched a number of key infrastructure projects in a bid to balance the books.

The Chancellor told MPs yesterday that the Government will axe several transport schemes, including the A303 tunnel at Stonehenge as well as improvements to the A27 Arundel bypass in the south-east.

Boris Johnson-era plans to reopen former railway lines were also in the firing line.

‘If we cannot afford it, we cannot do it,’ Reeves said.

Standard Chartered has lined-up its largest-ever share buyback worth $1.5billion and lifted its earnings outlook for this year, with the Asia-focused bank betting on strong economic growth in its core markets and planning to rein in costs.

The bank’s Hong Kong-listed shares were up 4 per cent after the results, while its FTSE 100-listed shares are up 4.7 per cent in early trading.

StanChart posted a statutory pre-tax profit for the first half climbed of $3.49billion, up 5 per cent year-on-year and just ahead of a consensus estimate compiled by the bank.

The London-headquartered lender, which earns most of its revenue in Asia, now expects operating income to grow more than 7 per cent on a constant currency basis compared with its previous projection of 5 to 7 per cent.

Asia-focused global banks including StanChart and rival HSBC have benefited in recent years from higher interest rates and relatively stronger economic growth and wealth generation in the region.

‘We are uniquely positioned to take advantage of significant growth opportunities that will continue to come from the markets in our footprint, generating value for our clients,’ StanChart CEO Bill Winters said in a statement.

‘Global trade and investment will continue to grow.’

BP beat forecasts with a second-quarter profit of $2.76billion on Tuesday, the energy giant told investors this morning as it increased its dividend and extended its share repurchasing programme.

The group lifted its dividend to 8 cents per share from 7.27 cents, in line with analysts’ expectations, and maintained the rate of its share buyback programme at $1.75 billion over the next three months.

BP said it remains committed to buying a total of $7 billion of shares this year.

Underlying replacement cost profit, the company’s definition of net income, reached $2.76billion in the three months to June, exceeding a forecast of $2.54billion in a company-provided survey of analysts.

That compared with a $2.7 billion profit in the previous quarter and $2.6 billion a year earlier.

St James’s Place plans to cut up to £500million in costs by 2030, with almost half of the money earmarked for reinvestment, as the wealth manager moves to rebuild investor confidence in the wake of regulatory pressure.

Boss Mark FitzPatrick, who took up the role in December, announced the plans alongside half-year results.

The plans, which include a target to cut costs by £80million by 2026, will see SJP aim to trim its overall costs by £100million a year by 2027 and to hit net savings of close to £500million by 2030.

Around half the savings will be invested back into the business, the company added, in areas including digital services and better serving ultra-wealthy clients.

SJP’s stock is down around 40% over the past year, since Britain’s top financial regulator announced a wider clampdown on firms to ensure they provide a fairer deal to customers.

The company is currently revamping its fee structure and working through customer complaints

In February, it set aside 426 million pounds to cover potential redress costs.

FitzPatrick said: ‘As we look to the future, we are ambitious and have a clear direction of travel towards achieving sustained success. I am confident that the approach set out following our business review will enable us to achieve annual FUM growth in the mid-to-high single digits over time.

‘While near-term profit growth will reflect the structural impact of transitioning to our new simpler and more comparable charging structure as announced last October, we expect to see the Underlying cash result accelerate in 2027 and beyond, doubling between 2023 and 2030.

‘Importantly, much of this rapid growth is highly predictable because of those changes that we are making to our charges.

‘We are positioning for further success, and I am confident that our refreshed strategic focus leaves us well placed for a very bright future ahead.’