11.42am: Computacenter hit by cost inflation and supply chain issues
Computacenter PLC (LSE:CCC) has forecast modest growth in adjusted pre-tax profit for 2022 after challenges caused by post-pandemic factors, cost inflation and supply chain issues.
The FTSE 250-listed company said it has seen a “substantial headwind” this year following the unwinding of the COVID-19 cost and utilisation benefits it received in 2020 and 2021.
Benefits from currency movements and contributions from acquisitions are “much smaller than the Covid headwinds”, the IT services group added in a trading update.
It noted that inventories remain higher than last year due to supply chain issues. Although these constraints and inventory levels are expected to unwind as the year progresses, they are not expected to be resolved until well into next year, the company added.
Shares were trading 5.87% late morning following the update.
11.02am: Likewise plunges 17% on profits warning
Likewise Group PLC (AIM:LIKE) saw its shares plunge 17.24% to 15p after it warned that annual profit will be held back by a high level of investment, as well as poor market conditions that are driving up inflationary pressures.
The floor coverings distributor said adjusted profit before tax in 2022 is likely to remain "broadly in line" with that of 2021 when the company reported adjusted pre-tax profits of £1.6mln.
Likewise attributed the shortfall to “unfavourable market conditions caused by the terrible war in Ukraine, political instability in the UK and a particularly hot summer."
Inflationary cost pressures and investments have continued into its "key trading period", which is likely to result in lower fourth-quarter profit than expected.
10.53am: GSK shares rise as EMA approves RSV and HIV applications
Shares in GSK PLC (LSE:GSK, NYSE:GSK) bucked the weaker market trend and rose 1.74% after the European Medicines Agency (EMA) accepted marketing authorisation applications for RSV and HIV.
The pharmaceuticals giant said the EMA had validated the application for its respiratory syncytial virus (RSV) older adult vaccine candidate under accelerated assessment.
It also validated an application for cabotegravir long-acting injectable for the prevention of HIV, submitted by ViiV Healthcare.
For the RSV vaccine, the company said a European regulatory decision was expected in the third quarter of 2023.
9.25am: NatWest shares tumble as profits miss forecasts and provisions rise
Shares in NatWest Group PLC (LSE:NWG) topped the FTSE 100 fallers today, dropping 9%, as the high street lender reported third quarter profits that missed City expectations, increased impairment provisions and took a one-off hit for its discontinued Ulster Bank operation.
Total income for the third quarter was £3.23bn, up from £2.68bn in the same period last year, while operating profit before tax was £1.08bn, up from £976mln but below analysts' expectations of around £1.2bn.
The bank set aside an additional £247mln in the quarter to reflect the deteriorating picture, denting its profits, while the planned withdrawal from the Republic of Ireland through its Ulster Bank subsidiary led to a further charge on the mortgage book of €419mln.
NatWest said it still expects to reach its return on equity target - a key measure of profitability - of 14-16% in 2023, but said the route to achieving that would be different as both income and costs increase amid rising interest rates and inflation.
The bank forecast 2022 income to be around £12.8bn with a net interest margin greater than 2.80% for full year 2022 in the Go-forward group.
NatWest Group chief executive Alison Rose, commented: "Although we are not yet seeing signs of heightened financial distress, we are very conscious of the growing concerns of our customers and we are closely monitoring any changes to their finances or behaviours."
Michael Hewson chief market analyst at CMC Markets UK said: “Today’s quarter three numbers are a reminder if any were needed of how vulnerable banks are to the economic winds blowing through the economy.”
He pointed out that in the first half impairments were a modest £26m, however today’s numbers have seen that provision increased by £247m, while operating expenses also saw a sharp increase compared to quarter two, to just shy of £1.9bn.
Richard Hunter, head of markets at interactive investor, commented: “NatWest has rounded off the banks’ reporting season in mixed fashion, with some enforced financial writedowns blotting the overall copybook.”
He also highlighted the increase in provisions and the €419mln charge relating to the planned withdrawal from the Republic of Ireland through its Ulster Bank subsidiary.
But he was upbeat on prospects for share price noting that “Elsewhere, the key metrics are in good shape.“
“Wider market weakness at the open and an unforgiving attitude to banks missing expectations has weighed heavily on the shares in early exchanges, but for the longer term the shares remain the preferred play in the sector, with the market consensus still coming in at a strong buy.”