BARC, ULVR, SBRY warn about rising inflation. Should you stay invested?

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BARC, ULVR, SBRY warn about rising inflation. Should you stay invested?

 BARC, ULVR, SBRY warn about rising inflation. Should you stay invested?
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Highlights

  • The Bank of England (BOE) is expected to raise interest rates for the fourth meeting in a row on May 5, as UK inflation has risen to 7% in the 12 months to March.
  • The financial markets expect the BOE to raise rates to around 2.25% by the end of this year.
  • Barclays Plc, Unilever Plc, J Sainsbury Plc, and Whitbread Plc have recently warned about the impact of rising inflationary pressure on customers.

The Bank of England (BOE) is expected to raise interest rates for the fourth meeting in a row on May 5, as the inflation has risen to 7% in the 12 months to March, its highest since March 1992. The rising food, energy, and fuel prices continue to increase inflationary pressure on UK households, affecting their disposable income.

With the rising uncertainty and inflation, the financial markets expect the BOE to raise rates to around 2.25% by the end of this year. The central bank has also warned that inflation could hit double digits if the energy price cap is increased again in October.

The financial markets expect the BOE to raise rates to around 2.25% by the end of this year

2022 Kalkine Media®

Let us look at 4 FTSE-listed companies that have recently warned about the sharply rising inflation.

  1. Barclays Plc (LON: BARC)

The UK-based multinational universal bank has recently announced better than expected Q1 results, as strong investment banking performance helped drive income growth and it also further added that it has put its share buyback program on hold due to scrutiny in March by US regulators of its trading blunder. It all came after it became the latest UK bank to warn about the impact of the rising inflationary pressure on customers.

The high-street bank reported a decrease of 7% in profit before tax to £2.2 billion in Q1 2022, from £2.4 billion in Q12021. Its net profit to shareholders stood at £1.4 billion, above expectations of £644 million. It marked an 18% drop in net profit in Q1 2022 to £1.7 billion.

With a market cap of £23,788.64 million, the FTSE 100-listed company’s shares were trading at GBX 144.88, up by 2.02%, at 10:15 AM (GMT) on 28 April 2022. The company’s share value depreciated by -22.26% over the last one year as of 28 April 2022, while its year-to-date return stands at -22.47%.

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  1. Unilever Plc (LON: ULVR)

The consumer products giant has warned that it is facing higher costs of raw materials due to the rise in inflation and the Russia-Ukraine war and may further raise its products’ prices. The company said that the prices it charges for products have increased sharply in a few months, but its sale saw a 7.3% increase. The company expects its costs to rise by €2.7 billion in the second half, up by €1.5 billion from the forecast and on top of input cost inflation of around €2.1 billion in the first half.

With a market cap of £91,546.38 million, the FTSE 100-listed company’s shares were trading at GBX 3,568.50, down by 0.25%, at 10:15 AM (GMT) on 28 April 2022. The company’s share value depreciated by -11.88% over the last one year as of 28 April 2022, while its year-to-date return stands at -9.52%.

 BOE warned that inflation could hit double digits if the energy price cap is increased again in October

2022 Kalkine Media®

  1. J Sainsbury Plc (LON: SBRY)

The UK’s second-largest chain of supermarkets, J Sainsbury Plc, also announced a rise in costs with the geopolitical tension driving energy, fuel and food prices. The company has warned its shareholder that profit may get impacted this year by the soaring cost of living and fall in customer disposable incomes. It expects its underlying profit to fall from £730 million in the last 12 months to something around £630 million-£690 million. The supermarket also revealed that the pre-tax profits for the 12 months to March hit £854 million, compared with a £164 million pre-tax loss a year earlier.

With a market cap of £5,584.57 million, the FTSE 100-listed company’s shares were trading at GBX 234.00, down by 2.09%, at 10:15 AM (GMT) on 28 April 2022. The company’s share value depreciated by -3.60% over the last one year as of 28 April 2022, while its year-to-date return stands at -15.36%.

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  1. Whitbread Plc (LON: WTB)

The multinational hotel and restaurant company, Whitbread Plc, has cautioned the hospitality sector’s cost inflation to hit a higher level than anticipated to reach between 8% and 9%. The company reported a statutory profit before tax of £58.2 million, up from the loss of £1 billion in FY2021, post the pandemic. The company has also resumed dividend payments to shareholders as its leisure and business segments at its UK hotels have surpassed pre-pandemic levels.

With a market cap of £5,569.63 million, the FTSE 100 listed company’s shares were trading at GBX 2,866.00, up by 3.95%, at 10:15 AM (GMT) on 28 April 2022. The company’s share value depreciated by -13.09% over the last one year as of 28 April 2022, while its year-to-date return stands at -4.41%.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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