Vodafone has completed the long-awaited sale of its Italian unit as part of a strategy to streamline the business and boost profitability.

Southern Europe has been a laggard for Vodafone, and the €8bn disposal will be a relief for investors looking forward to maximising returns from stronger regions, such as the UK and Africa. 

“The sale of Vodafone’s Italian business is intended to mark the final step of its European restructuring and to get the company back on a firm financial footing,” said Russ Mould, investment director at AJ Bell.

Vodafone will return €4bn to shareholders through share buybacks. Investors cheered the news and Vodafone shares jumped 4.6% on Friday.

“The telecoms are unlikely to ever shoot the lights out when it comes to growth, but the reliable nature of their revenue and high barriers to entry make shareholder returns one of the core attractions of these stocks,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“Vodafone’s Italian business has been struggling, so shedding this weight should help the group refocus and the division’s been up for sale for a while. Attention will now turn to how effectively Vodafone uses its resources to fix wider challenges, including high debts, costs and some increasing competition.”

Berkeley Group have steadied the ship and maintained guidance as cost inflation slows amid falling sales.

The group noted prices have been resilient, but sales rates are still around a third lower than they were in the same period last year. Higher mortgage rates are to blame for lower sales — a familiar story across the FTSE 350 housebuilders.

The focus for all housebuilding trading updates and results is now what the company thinks will happen in the future. Everyone knows they’ve had a terrible time, so poor historical sales are of little consequence. The emphasis is on what companies see happening with sales in the future. In this respect, Berkeley didn’t disappoint.

“Berkeley has delivered another solid performance in a difficult trading environment. Sales reservations are down around a third reflecting higher interest rates and weak economic sentiment,” said Charlie Huggins, Fund Manager at Wealth Club.

“But pricing and margins have remained firm, while build cost inflation has moderated. This means the group has reiterated its medium-term profit guidance.”

Investors will be encouraged the group has secured all sales for the year ended April 2024 and has secured 70% of sales for next year. Berkeley said enquiries levels have been ‘good’.

The company declared a 33p dividend in February and remains committed to returning an additional  £227m to shareholders by September 2024.

“The firm has sales secured to the end of this financial year as well as 70% of next year, which is a strong position to be in as we start to see some aggravating factors subside, particularly when we begin to see rate cuts which will make the market significantly more attractive,” said Adam Vettese, analyst at investment platform eToro.

“Berkeley Group shares are only 5% off their 52-week high, and given their smart management of a tough market, there’s no reason why they can’t push on in 2024.”

Trainline, a digital rail and coach platform, reported surging in revenue in the 12 months to the end of February. The Group’s net ticket sales skyrocketed to £5.3 billion, a 22% year-over-year (YoY) increase, hitting the top end of its guidance range of 17% to 22% growth.

The Group’s revenue soared to £397 million, a 21% YoY jump that surpassed its guidance range of 15% to 20% growth.

Trainline shares were 11% higher at the time of writing.

“Rail ticketing platform Trainline is enjoying multi-faceted growth with both its UK and international businesses showing real momentum,” said AJ Bell investment director Russ Mould.

“The company, which makes its money by earning commission and fees on ticket sales supported by ancillary services like insurance, is looking to boost an already dominant market share in the UK. 

“The track has been cleared here by the cancellation of a state-sponsored Great British Railways rival platform. The gradual easing of industrial action is also helping here and there is an opportunity to capture people who up until now have continued to buy paper tickets.”

The International Consumer segment also witnessed strong growth, with net ticket sales hitting £1.0 billion, a 14% YoY increase.

Spain and Italy, markets where carrier competition is most prevalent, led the charge with a combined 43% YoY surge in net ticket sales, solidifying Trainline’s position as the preferred aggregator.

Meanwhile, the combined net ticket sales across France and Germany grew 3% YoY, reflecting Trainline’s strategic decision to pause brand marketing in France until more widespread carrier competition emerges.

“The company is also increasingly targeting the European market where the greater reliability and affordability of rail travel makes for a compelling opportunity. It feels telling that the Madrid-Barcelona route is now the third most popular across all the countries it operates in, including the UK,” Russ Mould said.

The FTSE 100 slipped on Thursday in a bout of profit-taking exacerbated by several big dividend payers trading with the rights to the latest dividends.

Anglo American was one such stock, falling 6%, and Natwest dropped 5% as it traded ex-dividend. Strength in UK property-related stocks and oil majors counterbalanced weakness elsewhere in the market.

Inflation has been high on the agenda this week, and traders are assessing the implications for interest rates and when major central banks will cut rates for the first time.

Data points, including US CPI and UK jobs numbers released this week, did nothing to derail an equity rally spurred on by hopes of rate cuts in June this year. However, hotter-than-expected US PPI data released on Thursday served as a reminder that the timing of rate cuts is far from certain, sending US and UK stocks lower.

“US PPI came in stronger than expected, following on the back of the higher CPI reading earlier this week. This highlights the risk that the last mile on taming inflation in the US might not be as easy as progress made to date,” said Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management.

“It could give the Fed even more reason to push back the timing of any interest rate cuts in 2024.”

There is an undercurrent of mild optimism in equity markets, supporting global indices, including the FTSE 100. Although the FTSE declined on Thursday, the losses were contained to 0.3% as the index traded near the highest levels of 2024.

“The FTSE 100 has broadly held onto its gains as investors continue to cheer the news that recession looks like a thing of the past,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

“Hopes of interest rate cuts this summer have been raised, and while there is certainly no guaranteed course of action, the market’s forward-looking eyes seem to be focussed on a brighter near-term, even though there hasn’t been a fresh injection of enthusiasm.”

UK property

UK property-related stocks were front and centre on Thursday as Rightmove, Berkeley Homes, and Barratt Developments stole spots in the top 10 risers after RICS said the numbers of buyers in the UK housing market increased for a second consecutive month. An increase in buyers is being met with an increased supply of houses for sale— there haven’t been this many properties on the market since 2020.

“The housing market inspired more confidence in February, as buyers slowly resurfaced, and optimism rose among estate agents. However, given the broader picture, there’s still a risk that February may not have been flying after all. It could just have been falling with style,” said Sarah Coles, head of personal finance, Hargreaves Lansdown.

“The return of buyers is something to be celebrated. It comes after such a long period of decline that buyers were looking ready for the endangered list. They’re not flocking back in vast numbers: they’re approaching more tentatively to dip their toes in.”

Hedge Fund Tribeca has written to Glencore urging it to shift its listing to Sydney to achieve a higher share price.

The letter said: ‘London is no longer the home of mining’.

The letter penned by Glencore’s major shareholder Tribeca represents another blow for the London’s markets struggling to attract and keep companies listed on its exchanges.

Many will hope London could maintain its prowess in the mining industry, given that large technology companies tend to shun London in favour of New York. 

“Mining giant Glencore is facing pressure from an activist investor to change its primary listing from London to Sydney. Commentary included accusations that London is no longer the home of mining, which doesn’t quite reflect the significant other names in the sector still housed by the city,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

London’s FTSE 100 is home to major global mining giants, including Glencore and Rio Tinto. Anglo American and Antofagasta.

BHP shifted its main listing to Sydney in 2021. If Glencore were to follow, it would be a disaster for the London Stock Exchange.

The sector has faced the pressure of a slowing Chinese economy, leaving miners trading near multi-year lows which will be a factor behind the grievances detailed in Tribeca’s letter.

“Glencore’s performance has been dented by lower commodity prices, particularly in its coal portfolio in recent months. Disappointing share price performances are often a trigger for activist attention, and there are also some Glencore specific reasons for the weakness in valuation. A change of listing won’t magically fix these, but arguably could help the group refocus,” Lund-Yates said.

“The bigger question marks centre around calls for Glencore’s coal business to remain in the portfolio. It’s been broadly expected that Glencore would look to de-merge these assets at some point, so pressure not to do this means a strategic rethink could be on the cards, if the activists can drum up enough shareholder support.”

Vistry shares gained on Thursday after the homebuilder released full-year earnings revealing resilience in its partnerships approach to new homes.

Vistry’s strategy of focusing on affordable housing through partnerships with local authorities and associations delivered 16,118 new homes in 2023, down only 5.4% proforma compared to the prior year.

The company, which operates client-facing Bovis Homes, Linden Homes and Countryside Homes, now delivers the majority of its completed units through partnerships and has enjoyed greater stability than housebuilders focusing on the private market.

The successful integration of Countryside Partnerships has yielded cost synergies as well as greater coverage of the market.

Revenues for the year were 29.6% higher on an adjusted basis to £4.04bn and operating profit rose 8.2%. An enhanced focus on the affordable end of the market will ultimately pressure margins, but the group is now a high-volume operator, and sacrificing margins will be acceptable to shareholders if profits grow.

Vistry shares added 1% on Thursday and are now up 47% over the past year. This compares to a 5.7% gain for Persimmon and 22% rise for Taylor Wimpey. The market clearly sees value in Vistry’s partnership model.

“Vistry’s transition to a partnerships giant has meant its full-year numbers have held up better than many of its peers. Partnerships involve teaming up with local authorities and housing associations to provide affordable housing. These partners foot most of the bill which reduces Vistry’s risk and frees up cash to deploy elsewhere in the business,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“But it comes at a cost – the profits in this kind of work aren’t as juicy. That’s exactly what we’ve seen play out in 2023. Despite underlying revenue climbing around 30%, underlying operating profit only edged around 8% higher as margins came under pressure.

“Vistry will need to ramp up volumes if it wants to offset the impact of lower volumes on overall profits. The mammoth £4.6bn order book gives investors some comfort in this regard, providing near-term revenue visibility as the group looks to increase completions this year, targeting growth of around 8.5% to 17,500 new homes.”