5th Feb 2020 08:01
(Alliance News) - Imperial Brands early Wednesday issued a profit warning following new vaping regulation in the US.
Tobacco trading remains in line with expectations, the FTSE 100 constituent told its annual general meeting, but group constant currency net revenue is now seen at a "similar level" to last year and adjusted earnings per share are expected to be slightly lower.
This is because of the US Food & Drug Administration's ban on certain flavours of cartridge-base vapour devices, as well as weaker-than-expected consumer demand for vapour.
First half adjusted earnings per share are expected to be down around 10% at constant currency, which the company said is due to the phasing of inventory write-downs, "primarily relating to the US flavour ban".
"Regulatory uncertainty and adverse news flow continues to affect demand in the US and Europe. We estimate this will result in significantly lower year-on-year [Next Generation Product] net revenue as well as increased provisions for slow-moving stock," Imperial said.
The stock was down 5.0% in early trade.
Still due Wednesday are full-year results from pharmaceutical firm GlaxoSmithKline at noon.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: down 0.3% at at 7,421.06
----------
Hang Seng: up 0.3% at 26,747.15
Nikkei 225: closed up 1.0% at 23,319.56
DJIA: closed up 407.82 points, 1.4%, at 28,807.63
S&P 500: closed up 1.5% at 3,297.59
----------
GBP: down at USD1.3012 (USD1.3026)
EUR: flat at USD1.1038 (USD1.1035)
Gold: up at USD1,560.60 per ounce (USD1,552.50)
Oil (Brent): down at USD54.22 a barrel (USD55.00)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Wednesday's Key Economic Events still to come
0900 GMT UK SMMT vehicle registration figures
0930 GMT UK CIPS-Markit Services purchasing managers' index
1100 GMT Ireland industrial production and turnover
0955 CET Germany services PMI
1000 CET EU eurozone services PMI
1100 CET EU retail trade
0700 EST US MBA weekly mortgage applications survey
0815 EST US ADP national employment report
0830 EST US international trade in goods & services
0945 EST US services PMI
1030 EST US EIA weekly petroleum status report
----------
The UK government is chartering a final flight to bring UK nationals back from coronavirus-hit Wuhan as Britons in mainland China are urged to get out after the outbreak continued to claim more lives. The plane is expected to leave in the early hours of Sunday morning local time and will land at RAF Brize Norton, the Foreign Office said – adding that they want to ensure that all British nationals in Hubei province contact their team to register if they want to leave on the flight. The PA news agency understands that 165 Britons and their dependants remain in Hubei province, the epicentre of the outbreak, while 108 people have requested assistance to leave as of the early hours of Wednesday. A total of 94 UK nationals and family members have already been evacuated to Britain from Wuhan on two flights which arrived on Friday and Sunday.
----------
Ireland's services sector grew for the third month in a row in January and registered the quickest pace of expansion since June. The AIB services purchasing managers' index rose to 56.9 in January from 55.9 in December, staying comfortably above the 50.0 mark which separates growth from decline. IHS Markit said: "The latest reading signalled the fastest rise in services output since last June, and was above the 20-year long-run survey average of 55.5. Total business activity growth quickened for the third straight month to a seven-month high, spurred by the fastest rise in new work since December 2018." Export sales also rose at the strongest pace since December 2018, IHS Markit added that business with the UK was stronger, amid less Brexit uncertainty.
----------
BROKER RATING CHANGES
----------
DEUTSCHE BANK RAISES ANTOFAGASTA TO 'HOLD' ('SELL') - TARGET 850 (840) PENCE
----------
SOCGEN RAISES EASYJET TO 'HOLD' (SELL) - PRICE TARGET 1440 (1280) PENCE
----------
PEEL HUNT RAISES SAFESTORE TO 'ADD' ('HOLD') - TARGET 860 PENCE
----------
COMPANIES - FTSE 100
----------
Vodafone reiterated its full-year guidance as trading came in line with expectations for the third quarter. For the three months to December 31, organic service revenue growth was 0.8%. Group revenue was up 6.8% to EUR11.75 billion. The telecommunications firm reiterated its guidance of adjusted earnings before interest, tax, depreciation and amortisation between EUR14.8 billion and EUR15 billion. Outside of the results, Vodafone said it remains on track to legally separate its European tower infrastructure into a new organisation which will be operational by May 2020, and it is preparing for a potential IPO in "early 2021".
----------
Housebuilder Barratt Developments said it achieved a "strong" first half performance as profit rose. Revenue in the six months to December rose 6.3% to GBP2.27 billion, with pretax profit up 3.7% to GBP423.0 million. The firm lifted its interim payout by 2.1% to 9.8 pence. Further, Barratt said it has extended its capital return plan and will pay a special return of GBP175 million in November 2021, in addition to the planned GBP175 million payment in November this year. On current trading, Barratt said the rate of net private reservations per active outlet per average week from the end of its first half to February 2 was 0.83, up from 0.74 a year before.
----------
COMPANIES - FTSE 250
----------
Babcock International said Archie Bethel intends to retire as chief executive, and the defence contractor has started a process to find his replacement. Bethel will remain in his role until his successor is in place. "Having served at Babcock for 16 years, I feel that this is the right time to retire. In the meantime, I am focused on positioning the company for further success in the future," said Bethel.
----------
Domino's Pizza reported sales growth in the fourth quarter, but its international operations continued to lag. Group system sales were up 3.7% to GBP352.0 million in the 13 weeks to December 29, up 4.1% organically. UK & Ireland system sales grew 4.4% to GBP326.7 million, up 4.5% organically, while International sales fell 5.0% to GBP25.3 million, down 1.4% on an organic basis. UK & Ireland operating profit is expected to be "within the range of current market expectations", said Domino's, noting that this range is around GBP102.1 million to GBP104.1 million. For its international operations, Domino's said it expects a GBP20 million operating loss. The disposal of its international operations is progressing, the company said, with the focus on Norway as a priority. For 2019, Domino's said it expects to take non-cash non-underlying charges in the region of GBP20 million relating to impairment charges for corporate stores, and around GBP20 million to GPB40 million as impairment charges for its international businesses.
----------
COMPANIES - INTERNATIONAL
----------
Intercontinental Exchange said it approached eBay to "explore a range of potential opportunities" that might generate value for shareholders. The online auction firm did not, however, engage in "a meaningful way". "We are not in negotiations regarding the sale of all or part of eBay," said ICE. The New York Stock Exchange owner continued: "Over ICE's 20-year history, the company's track record of creating shareholder value, both through organic growth and acquisitions, speaks for itself. ICE does look to explore potential opportunities that it expects will deliver enhanced shareholder value, and will continue to do so in the future."
----------
Wednesday's Shareholder Meetings
Imperial Brands
Daily Mail & General Trust
Ten Lifestyle Group
Future
Premier Miton Group
Grainger
Matomy Media
----------
By Tom Waite; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
SafestoreAntofagastaeasyJetImperial Brands