Daily market update: ITV, Primark, Reckitt, Rentokil, Taylor Wimpey

A decent showing on Wall Street last night and a solid performance from Asia on Thursday helped to spur part of Europe into a higher gear.

The FTSE 100 advanced 0.4% to 10,612 amid a higher oil price and a plethora of corporate news flow.

Brent Crude continued to move higher, nudging above $83 per barrel and stoking fears that energy bills will go through the roof. Oil is so important to the world’s economy and to see the price go up so quickly in just a week could leave investors feeling dazed and confused.

The Middle East situation is unfolding at a rapid pace, and investors are finding it hard to make a firm call on whether there will be a sustained energy crisis or just a short, sharp shock.

ITV

ITV remains locked in takeover talks with Sky to sell its broadcasting and streaming arm. This keeps hopes alive for what could be the most significant deal in the UK media space for a long time. Getting a deal over the line would be transformational for ITV, leaving it free to focus its entire energy on content creation.

Broadcasting is a tough industry and there is little visibility on advertising-related earnings. While linear TV viewing continues to be in decline, ITV has done a fantastic job of pivoting to the digital world with its streaming platform and that will be a key attraction to Sky.

Sky clearly sees an opportunity to boost its position among UK audiences and strike bigger deals with advertisers. It is playing the consolidation game to build scale. Sky would get more channels to build into its ecosystem and potentially achieve substantial cost-savings by embedding ITV’s operations into its own.

Quite who will want to buy ITV’s broadcasting business if Sky pulls out is unknown. Lots of people may want the studios arm, but the rest only has limited appeal and there are very few buyers for whom it would make logical sense to acquire.

Primark

Eoin Tonge has secured the top job at Primark on a permanent basis after being interim CEO for the past year.

He is an interesting choice given a background as both a numbers and strategy person for the likes of Marks & Spencer and Greencore. These skills will be useful given that Primark operates on thin margins and cannot afford to waste a single penny.

Watching the bottom line is vital but so is pushing harder on marketing and ensuring Primark remains a go-to destination in what’s currently a tough retail market.

Primark’s success lies on drawing people into shops and persuading them to leave with a basketful of goods. It’s a volume game, and Primark needs to see shopping bags bursting at the brim.

Putting Filip Ekvall into the newly created chief commercial officer role also gives Tonge valuable support in the quest to put Primark back on top after a patchy period. Ekvall has considerable experience with H&M, which is one of Primark’s biggest competitors on the high street.

With the new team now in place, parent group Associated British Foods will be hoping for a rapid improvement in sales and profit growth if it still wants a fighting chance of spinning off Primark. The better the financial and strategic position of Primark, the higher the valuation investors will be prepared to pay to own shares in the retail business as a standalone entity.

Reckitt

A weak cold and flu season may be good news for most, but it has left Reckitt’s share price in sluggish mode. A hit to demand for the company’s seasonal over-the-counter health products means Reckitt needs a dose of its own medicine.

This overshadowed slightly better-than-expected sales growth for the year as a whole and an uptick in the dividend – largely underpinned by strength in the company’s emerging markets business.

Like several of its consumer good counterparts, Reckitt faces a challenge in the West from people trading down to unbranded alternatives as household budgets remain under pressure. In the developing world, such safe and cheaper alternatives do not exist to anywhere near the same extent and that is supporting growth for Reckitt in these regions.

Momentum is improving in North America – but Europe is a different story. On the plus side, Reckitt’s transformation of the business continues to tick along with costs being steadily lowered. The Essential Home business has been offloaded, to allow the company to focus on its core brands.  

The open question for Reckitt remains the destiny of its Mead Johnson nutrition arm – an expensive purchase from 2017 which continues to haunt the company thanks to litigation issues. Disappointingly for shareholders there was no update on the planned exit from this business.

Rentokil

Like a pest you just cannot shift, Rentokil has long been dogged by problems in its North American business. It now seems to be finding the right solutions to fix this issue and investors have responded accordingly.

Rentokil’s expensive acquisition of Terminix in 2022 gave it a big footprint across the Atlantic but problems with integration, poor allocation of company resources and a tough competitive environment helped squash its lofty aspirations.

Full-year results suggest Rentokil is finally getting its act together. Organic growth of 2.6% in the fourth quarter is encouraging in the context of the negligible growth recorded for the first half of last year.

Margins in the North American arm have improved and are signalled to improve further while costs are being taken out of the business.

At a group level, cash flow is improving at pace, and this is helping to bring down debt which should tee things up nicely for the new-look leadership team. Mike Duffy starts as CEO later this month and long-serving chair Richard Solomons is retiring once a successor can be found.

Taylor Wimpey

The dampening effect of last year’s Budget on the housing market and the uncertain outlook for interest rates have shaken the foundations of UK housebuilders in recent months. In this context Taylor Wimpey’s latest numbers felt reassuring.

Yes, profits for 2025 may have plunged on a statutory basis, but this reflected one-off items including cladding fire safety provisions. More important to the market was Taylor Wimpey’s ability to hit previous guidance on completions and earnings.

The outlook wasn’t anything to cheer the heart, but investors will hope there is a measure of conservatism baked into it. Like others in the sector, Taylor Wimpey is at the mercy of soggy property prices at a time when build costs are creeping higher.

Recent events in the Middle East have raised the prospect of stickier inflation and rates staying higher – potentially bad news for mortgage affordability and demand for new homes.  

Taylor Wimpey and its peers are unlikely to get any help from the market environment so they must roll their sleeves up and build some resilience into their business models to withstand what could be a testing period.