21st Nov 2016 08:23
LONDON (Alliance News) - Poor results from two UK mid-cap companies caused the FTSE 250 index to underperform early Monday.
Shares in plastic and fibre products company Essentra dropped 21% after it issued a profit warning for 2016, hit by market softness in its pipe protection arm and slower-than-expected improvements in its packaging unit.
Just behind was Mitie Group, down 14% after the outsourcer said it swung to a substantial pretax loss for the first half of its financial year after it decided to write off the value of its Healthcare business.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 6,795.07
FTSE 250: down 0.2% at 17,630.56
AIM ALL-SHARE: up 0.1% at 812.15
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Hang Seng: closed 0.1% at 22,357.78
Nikkei 225: closed up 0.8% at 18,106.02
DJIA: closed down 0.2% at 18,867.93
S&P 500: closed down 0.2% at 2,181.90
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GBP: up at USD1.2346 (USD1.2314)
EUR: up at USD1.0633 (USD1.0585)
GOLD: firm at USD1,214.46 per ounce (USD1,207.05)
OIL (Brent): firm at USD47.46 a barrel (USD46.34)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times in GMT)
11:00 Ireland retail sales
11:00 Germany Bundesbank monthly report
11:00 Ireland retail sales
13:30 US Chicago Fed national activity index
13:30 Canada wholesale sales
16:00 EU ECB President Draghi speech
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UK Prime Minister Theresa May will on Monday suggest she will match incoming US president Donald Trump's expected cuts to corporation tax as she attempts to hold out an olive branch to business leaders. In her first speech to the Confederation of British Industry annual conference, May will stress her "aim" for the UK to maintain its status as having the lowest corporation tax rate in the G20 group of countries. The British rate of tax on company profits currently stands at 20% and is due to fall to 17% by 2020. The US president-elect has pledged to cut the federal business tax rate from 35% to 15%.
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Heavy rain will see parts of Britain already battered by Storm Angus at risk of further flooding in the next 24 hours. Wet weather is expected to sweep across the South West and move north, causing damage and disruption as it falls on already saturated ground. The Environment Agency said it is preparing to put up temporary defences "where necessary" and said rivers have been cleared to make sure water can flow freely.
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German Chancellor Angela Merkel said she will stand for re-election next year, party sources told dpa, after months of uncertainty over whether she would run for a fourth term. The 62-year-old Christian Democrat leader - who has been in power since 2005 - has faced a number of difficulties in recent months, from criticism of her handling of the migration crisis to falling support amid a rise in right-wing populist sentiment. Despite the troubles, she remains unchallenged as the centre-right party's most prominent and popular figure.
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Former French prime minister Francois Fillon has won the race to become the conservative candidate in next year's presidential election, beating former president Nicolas Sarkozy, according to preliminary results from primaries on Sunday. With 80% of ballots counted, Fillon got 44% of the vote according to election organizer Thierry Solere, after a campaign dominated by the issues of terrorism and migration. He beat ex-premier Alain Juppe on 28.1% and Sarkozy on 21% in what became a three-horse race. Fillon and Juppe face off in a second-round run-off on November 27.
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US president-elect Donald Trump is considering Mitt Romney, the 2012 Republican nominee for president, to be his secretary of state, vice president-elect Mike Pence confirmed. Romney is under "active consideration," Pence said on Fox News. Romney, one of Trump's sharpest critics during the campaign, met with the president-elect on Saturday for what Romney said was a "very thorough and in-depth discussion."
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US President Barack Obama has refused to rule out the possibility that he might comment on the performance of his successor Donald Trump after he leaves the White House in January. Obama made the comments to journalists at a press conference on the sidelines of the Asia Pacific Economic Cooperation summit in Lima. Obama said he may comment on issues that go to core questions about "values and ideals" but would be less interested in "specifics of some legislative proposal or battle."
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The APEC summit closed Sunday with a declaration that pledges to continue working toward a free trade agreement. The declaration reaffirmed the commitment of the 21 APEC countries to keep markets open and to fight against all forms of protectionism. The summit has been overshadowed by concerns over US president-elect Donald Trump's statements in favour of protectionism. Several APEC heads of state have warned against trade barriers. Obama used the opportunity of the meeting to encourage the APEC leaders to give Trump a chance. He said he couldn't guarantee that Trump won't pursue some of the positions he took during the campaign, but added: "Reality will force him to adjust how he approaches some of these issues." Earlier Sunday, Obama and Russian President Vladimir Putin agreed to continue efforts towards resolving the Syrian conflict until Obama leaves office in January.
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Japan's exports to the US fell sharply in October, contributing to a considerable drop in overall shipments, the government said. Japan's overall exports declined 10.3% year-on-year to JPY5.87 trillion in October for the 13th straight month of fall, the Finance Ministry in Tokyo said in a preliminary report. Exports to the US, Japan's second-largest trading partner, dropped 11.2% from a year earlier to nearly JPY1.2 trillion with vehicle shipments down 2.7% and steel exports dropping by 40.2%, the ministry said. Shipments to China, Japan's biggest trading partner, declined 9.2% to JPY1.07 trillion. Japan's imports also dipped, dropping 16.5% to JPY5.37 trillion, mainly due to weak domestic consumption and falling global energy prices. The drop in imports meant Japan ran a trade surplus in October of JPY496.2 billion.
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South Korean President Park Geun Hye is likely to have played a role in the corruption scandal involving her friend Choi Soon Sil, investigating prosecutors said. In their interim report, the investigators also indicted Choi on a string of charges, including abuse of authority and attempted fraud, South Korean news agency Yonhap said.
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The new peace agreement which the Colombian government and the leftist Revolutionary Armed Forces of Colombia announced last week is better than the initial one, Colombian President Juan Manuel Santos said at a business forum on the sidelines of the Asia Pacific Economic Cooperation summit in Lima. The new agreement is broader and deeper, Santos said, after it was altered to address concerns of the parties that opposed the first deal.
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Missile launches and shelling in parts of Yemen shattered a temporary ceasefire with the rival sides blaming each other for violations. The Saudi-led alliance, which is fighting against the rebels allied with Iran, said it intercepted three ballistic missiles fired by the Houthi rebels in the province of Mareb in eastern Yemen. Local residents and sources in Houthi militias meanwhile reported airstrikes by the alliance in five areas.
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BROKER RATING CHANGES
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TRADERS: BERNSTEIN RAISES HSBC TO 'MARKET-PERFORM' (UNDERPERFORM)
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TRADERS: LIBERUM CUTS WS ATKINS TO 'HOLD' ('BUY')
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HSBC RAISES HAYS TO 'BUY' ('HOLD') - TARGET 150 (110) PENCE
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HSBC RAISES PAGEGROUP TO 'BUY' ('HOLD') - TARGET 440 (385) PENCE
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HSBC RAISES STHREE TO 'BUY' ('HOLD') - TARGET 320 (270) PENCE
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COMPANIES - FTSE 100
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Lloyds Banking Group has become the frontrunner to buy Bank of America's MBNA credit card business in the UK, the Financial Times reported. The FT, citing two people briefed on the process, said Lloyds had moved ahead of US private equity group Cerberus in the bidding for the MBNA business. BofA is now understood to have agreed to indemnify the buyer of MBNA if PPI compensation costs rise above a certain point. If a deal is done, it would mark the first acquisition made by Lloyds since it was rescued by the UK government at the height of the 2008 financial crisis.
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UK media and communications regulator Ofcom tabled plans for its next auction of mobile spectrum, including a cap on the amount of spectrum for which BT Group can bid. Ofcom said that, in 2017, it will auction 190 megahertz of spectrum in the 2.3 gigahertz and 3.4 GHz bands, an increase of just under a third of the total mobile spectrum currently available. Ofcom said it will apply a cap of 255 MHz on "immediately useable" spectrum any one operator can buy. As a result of this, BT Group's EE mobile business will not be able to bid for any spectrum in the 2.3 GHz band. BT/EE currently holds 45% of immediately useable UK mobile spectrum, Ofcom noted, compared to 28% for Vodafone Group PLC, 15% for O2 UK and 12% for Three.
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Pharmaceuticals giant GlaxoSmithKline said it has filed a regulatory submission in the US for its triple combination therapy for chronic obstructive pulmonary disease. The medicine employs three medicines - fluticasone furoate, umeclidinium and vilanterol - delivered in a single daily dose via Glaxo's Ellipta dry powder inhaler. The US regulatory submission for the medicines includes a new drug application to treat patients with COPD and is based on data from a closed triple combination therapy programme and from data on the performance of each of the medicines individually.
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COMPANIES - FTSE 250
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Facilities management and outsourcing firm Mitie Group said it swung to a substantial pretax loss for the first half of its financial year after it decided to write off the value of its Healthcare business. Mitie said it has decided to withdraw from the domiciliary healthcare market and placed its business serving this sector under review. As a result, it has written down all goodwill and intangibles related to the business. This decision has meant the group booked a GBP128.1 million one-off charge, mostly on the Healthcare division, for the half-year to the end of September. This pushed it to a pretax loss of GBP100.4 million in the period, compared to a GBP45.1 million profit a year earlier. The group cut its dividend to 4.00 pence from 5.40p.
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Plastic and fibre products company Essentra issued a profit warning for 2016, hit by market softness in its pipe protection arm and slower-than-expected improvements in its packaging unit. Essentra now expects to make an adjusted operating profit of GBP137.0 million to GBP142.0 million in 2016, down from its previous guidance of GBP155.0 million to GBP165.0 million previously.
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Technical products supplier Diploma reported growth in profit and revenue in its financial year to the end of September, with solid trading across its divisions despite a margin squeeze. The maker of medical devices, hydraulic seals and specialised wiring said it made a pretax profit of GBP54.0 million in the year to September 30, up 4.0% from GBP51.8 million a year before. Revenue rose 15% to GBP382.6 million from GBP33.8 million, but this was diluted on the bottom line by a decline in adjusted operating margin to 17.2% from 18.1%, driven mainly by weaker margins in Diploma's Healthcare business. Diploma declared a final dividend of 13.80 pence per share, meaning its total payout rises 10% year-on-year to 20.00p from 18.20p a year prior.
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BGEO Group said it is making a number of managerial appointments and shifting the business structure of its subsidiary Bank of Georgia. BGEO said that it will split the bank's Retail Banking business into two separate units. The first will be made up of the Express Bank operations for the emerging retail segment and the Bank of Georgia brand operations for mass retail. The second unit will consist of the small and medium enterprise banking and premium retail banking businesses. Additionally, David Tsiklauri will join the bank from rival TBC Bank, as a deputy chief executive officer and lead the Corporate Investment Banking department. He will replace Archil Gachechiladze in the role, who will be appointed chief executive officer of Georgia Global Utilities, the utilities and energy business of the company.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Bonmarche Holdings said its pretax profit more than halved year-on-year for the six months ended September 24, as both online and store-only sales declined over the period. The women's clothing retailer reported revenue of GBP93.1 million for the first half, down from GBP97.0 million the prior year, as store-only like-for-like sales dipped 8.6% on the prior year, and online sales fell 1.1%.
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Georgia's TBC Bank Group said it is merging its Corporate and Investment Banking divisions. TBC said the newly-merged division unit will offer debt, capital markets products and advisory services through a fully integrated franchise. The CIB structure will be led by George Tkhelidze, currently a deputy chief executive officer and chief risk officer at TBC Bank. Current head of the corporate banking division, David Tskilauri, will leave the company to join rival Bank of Georgia, which is owned by BGEO Group.
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Georgia Healthcare Group said its pretax profit for the third quarter almost doubled compared to the prior year, as it announced a deal to buy pharmaceutical retailer and wholesaler ABC Pharmacia. Georgia Healthcare reported a pretax profit of GEL10.4 million for the three months ended September 30, up from GEL5.3 million a year earlier. The figure was also 65% ahead of the pretax profit posted for its second quarter.
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Engineering services company Costain Group said it has won a GBP113.0 million compressor stations upgrade contract with National Grid, the UK's electricity grid operator. Costain will handle the upgrade of the compressor stations at the Peterborough and Huntingdon power stations in the UK, part of National Grid's Emissions Reduction Project. The work will complete in 2021.
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COMPANIES - INTERNATIONAL
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Facebook will buyback of up to USD6.00 billion in shares of the social media giant. The repurchase programme will go into effect in the first quarter of 2017 and does not have a fixed expiration, the company said in the filing. Elsewhere, Facebook is reportedly planning to increase its workforce in the UK by 50% when it opens its new London headquarters in 2017. Facebook's new headquarters will be in Fitzrovia at a site that is currently undergoing redevelopment.The majority of the new staff will be based there.
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Novartis has acquired Selexys Pharmaceuticals, an Oklahoma City-based company specialising in development of therapeutics in certain hematologic and inflammatory disorders. The company exercised its right to acquire Selexys following receipt of results of the SUSTAIN study, a Phase II trial evaluating the use of SelG1, an anti-P-selectin antibody, in the reduction of vaso-occlusive pain crises in patients with sickle cell disease. Novartis obtained the exclusive right to acquire Selexys and SelG1 in 2012. Terms of the deal could total up to USD665 million in upfront, acquisition and milestone payments.
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Fiat Chrysler has announced two separate recalls of a total of 83,338 vehicles to fix faulty windshield wipers and potential fuel leaks. The company has recalled 30,183 units of certain model year 2016 Dodge Durango and Jeep Grand Cherokee vehicles.
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Monday's Shareholder Meetings
Imperial Innovations Group
Mineral & Financial Investment
TR European Growth Trust
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By Tom Waite; [email protected]; @thomaslwaite
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