Banknote maker De La Rue in Covid-19 profit warning; markets on edge – business live

• 9.18am GMT09:18 Omicron knocks eurozone growth to 11-month low
• 8.35am GMT08:35 Unilever shares jump as activist Peltz builds stake
• 8.15am GMT08:15 De La Rue shares plunge 30%
• 8.03am GMT08:03 Banknote printer De La Rue in profit warning over Covid impact
• 8.02am GMT08:02 Introduction: markets brace for Fed meeting and Ukraine developments

08:03

Updated at 8.10am GMT

Here’s AJ Bell investment director Russ Mould on De La Rue’s profits warning:

Banknote printer De La Rue left its shareholders feeling poorer as it warned on profit thanks to supply chain issues and staff shortages associated with the Omicron variant of Covid-10.

“While it insists a turnaround plan has been delayed rather than derailed, many investors are not sticking around to find out.”

Just in: Growth across the eurozone has slowed to its lowest in nearly a year, despite signs of recovery in Germany.

The eurozone’s recovery weakened again this month, as restrictions imposed to combat the Omicron variant caused a sharp slowdown at companies in the services sector.

Tourism, travel and recreation firms were especially hard hit by a drop in spending.

Firms were also hit by rising costs, leading them to hike their own prices. But encouragingly, manufacturers reported that supply chain delays were improving.

This pulled data firm IHS Markit’s Flash Eurozone PMI Composite Output Index down to 52.4, from 53.3 in December. That’s an 11-month low, closer to the 50-point mark showing stagnation.

Chris Williamson, chief business economist at IHS Markit, says the overall impact of Omicron on the wider economy appears relatively muted:

Not only has the alleviating supply crunch helped factories boost production, but cost pressures in manufacturing have also moderated.

“Importantly, while the Omicron wave has dented prospects in the service sector, the impact so far looks less severe than prior waves. Meanwhile, perceived prospects have improved among manufacturers, linked to fewer supply shortages adding to the brightening outlook.

“In the meantime, however, prices for goods and services are rising at a joint-record rate as increasing wages and energy costs offset the easing in producers’ raw material prices, dashing hopes of any imminent cooling of inflationary pressures.”

Here’s the details:

• Flash Eurozone Services PMI Activity Index fell to 51.2 (53.1 in December). 9-month low.
• Flash Eurozone Manufacturing PMI Output Index rose to 55.8 (53.8 in December). 5-month high.
• Flash Eurozone Manufacturing PMI rose to 59.0 (58.0 in December). 5-month high.

De La Rue isn’t alone in being buffeted by supply chain problems.

There was a 19% jump in profit warnings issued by UK listed companies in the last quarter of 2021. A record proportion cited supply chain disruption and rising costs, according to EY-Parthenon’s latest Profit Warnings report.

It found that:

• UK listed companies issued 203 profit warnings in 2021 - down from the record-breaking 583 warnings in 2020
• One-in-five companies in consumer-facing sectors issued a warning over the year
• A record 44% of profit warnings issued in Q4 2021 were blamed on supply chain disruption
• Retail, Software & Computer services and Aerospace & Defense were amongst the hardest hit FTSE sectors in 2021

Alan Hudson, EY-Parthenon partner and UK&I turnaround and restructuring strategy Leader, says :

“Sporadic growth made it a difficult year for many companies to navigate, despite healthy headline growth. By the second half of the year, an increasing number of companies were issuing profit warnings as forecasting and earnings challenges evolved and multiplied.”

The biggest driver of warnings in 2022 is likely to be the rise in inflationary pressures and its impact on disposable incomes and margins, Hudson adds:

We have already recorded profit warnings relating to rising energy prices. Labour shortages and wage increases are also beginning to feature more in company concerns, especially in logistics, hospitality and healthcare – including care homes.”

Germany’s economy is showing resilience, with private sector growth speeding up in January after a difficult December.

Service sector companies in Germany have returned to growth, while manufacturing is growing at the fastest pace in five months, the latest ‘flash’ survey of purchasingg managers shows.

IHS Markit says:

The goods-producing sector drove a renewed increase in new orders at the start of the year. Overall inflows of new business showed the strongest rise since last September as manufacturing order books expanded markedly and to the greatest extent for five months. There was a slightly better month of new business across the services sector as well, with demand improving somewhat after falling in each of the previous two months.

New export business received by services firms continued to fall, however, hinting that the upturn here was driven by the domestic market.