7th Oct 2019 08:05
(Alliance News) - Building products supplier SIG said Monday it has seen a "deterioration in construction activity levels in key markets" since its interim results last month, reinforcing recent indicators of plunging activity in the UK construction industry.
The FTSE 250 company pointed to a number of key indicators showing further weakening of the macro-economic backdrop, notably in the UK and Germany.
Last week, the latest IHS Markit/CIPS purchasing mangers' index reading showed UK construction remained in contraction in September. The headline PMI posted 43.3 in September, down from 45.0 in August. The reading, further below the neutral mark of 50, signals the building sector suffered an even more severe downturn in September than was seen the previous month.
SIG said on Monday this deterioration of trading conditions has accelerated over recent weeks, and political and macro-economic uncertainty has continued to increase. However, the company added that management is taking steps to remedy the situation.
"Further benefits from transformational initiatives and the group's normal seasonality are still expected to deliver a stronger second half. However, the recent further weakening of the trading backdrop as the group has entered its traditionally strongest trading months of the year means that the board is now anticipating, in both the specialist distribution and roofing merchanting businesses, significantly lower underlying profitability for the full year than its previous expectations," SIG said.
Separately, SIG said it has agreed to sell its Building Solutions business to Irish building materials company Kingspan for GBP37.5 million. In addition, SIG agreed to sell its Air Handling division to France Air Management for an enterprise value of EUR222.7 million. The company said a majority of the proceeds would be returned to shareholders.
SIG shares were down 24% in early trading Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,145.78
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Hang Seng: Hong Kong market closed for holiday.
Nikkei 225: closed down 0.2% at 21,375.25
DJIA: closed up 372.68 points, 1.4%, at 26,573.72
S&P 500: closed up 1.4% at 2,952.01
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GBP: flat at USD1.2314 USD1.2302)
EUR: flat at USD1.0979 (USD1.0973)
Gold: firm at USD1,506,10 per ounce (USD1,504.05)
Oil (Brent): flat at USD58.32 a barrel (USD58.40)
(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
China National Day. Chung Yeung Festival. Golden Week concludes. Financial markets closed in Hong Kong and Shanghai.
0830 BST UK Halifax House Price Index
1100 BST Ireland industrial production and turnover
1000 EDT US employment trends index
1500 EDT US consumer credit
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Boris Johnson will attempt to save his Brexit plan this week after his French counterpart warned that the EU would decide within days whether an agreement would be possible. The UK prime minister told Emmanuel Macron that Brussels should not be lured into the "mistaken belief" that Britain could extend its membership of the bloc beyond October 31. But in a telephone call on Sunday, the French president reportedly informed Johnson that the EU will decide at the end of the week whether a deal is possible. An Elysee official told the BBC: "The president told [Johnson] that the negotiations should continue swiftly with Michel Barnier's team in coming days, in order to evaluate at the end of the week whether a deal is possible that respects EU principles."
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A second whistleblower has come forward in the impeachment case against US President Donald Trump, according to a lawyer representing the original whistleblower. Mark Zaid – who filed a formal complaint with the inspector general last month, triggering the impeachment inquiry – told The Associated Press that the second whistleblower, who also works in intelligence, had not filed a complaint with the inspector general but had "firsthand knowledge that supported" the original whistleblower. The original whistleblower complained that Trump was "using the power of his office to solicit interference from a foreign country" in the 2020 US election. Trump and his supporters have rejected the accusations that he did anything improper.
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North Korea and the US walked away on Saturday with opposing assessments of nuclear talks in Sweden, which Pyongyang said broke down but Washington called "good discussions". The US accepted host Sweden's invitation to resume talks in two weeks' time, State Department spokeswoman Morgan Ortagus said. The discussions followed months of stalemate after a February meeting between the North's leader Kim Jong Un and President Donald Trump, and came after Pyongyang's defiant test of a sea-launched ballistic missile on Wednesday. "The negotiations have not fulfilled our expectations and finally broke up...without any outcome. (It) is totally due to the fact that the US would not give up their old...attitude," the nuclear-armed North's leading negotiator Kim Myong Gil told reporters in Stockholm.
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Tens of thousands of anti-government protesters marched across more than half a dozen Hong Kong districts on Sunday despite heavy rain and shuttered subway stations. The marches on Hong Kong island and the Kowloon peninsula were largely peaceful as riot police on pedestrian walkways watched from above. Skirmishes appeared likely, however, as police flew a black tear gas warning flag at protesters gathering outside a police station in the popular shopping district of Tsim Sha Tsui. Police also sent a warning text message to residents appealing to them to stay inside as "unauthorized public events expected today will likely cause violence and disruption". Many protesters wore face masks in defiance of leader Carrie Lam, who enacted emergency legislation on Friday to ban their use at unsanctioned rallies and marches.
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BROKER RATING CHANGES
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HSBC CUTS CARNIVAL PLC TO 'HOLD' ('BUY') - TARGET 3500 (5300) PENCE
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HSBC INITIATES WH SMITH WITH 'BUY' - TARGET 2400 PENCE
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JEFFERIES CUTS DECHRA PHARMACEUTICA TO 'HOLD' ('BUY') - TP 3090 (2805) PENCE
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COMPANIES - FTSE 100
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Tesco confirmed a report that it has appointed John Kingman as non-executive director for its banking arm, Tesco Personal Finance, with effect on November 1. The supermarket chain did not confirm, however, if Kingman would be appointed as chair of Tesco Bank or as a non-executive director of the Tesco group. On Saturday, Sky News reported that Kingman had been lined up to become chair of Tesco Bank, replacing Graham Pimlott after seven years in the role. Kingman has been chair at insurance and pensions firm Legal & General for three years since 2016. Prior to that, he was part of the UK Treasury for four years from 2012 to 2016, leaving as acting permanent secretary.
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HSBC Holdings is planning to lay off up to 10,000 staff, a report said, just weeks after its chief executive stepped down and announced the axing 4,000 posts citing a weak global outlook. The latest cuts mostly in high-paid roles are part of a fresh cost-cutting drive by new boss Noel Quinn as the banking titan struggles to adjust to falling interest rates, Brexit and the long-running trade war, the Financial Times reported. The London-headquartered bank last month announced the shock exit of CEO John Flint after just 18 months in the hot seat but gave no reason for the decision.
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COMPANIES - FTSE 250
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Student accommodation developer Unite Group said it has sold two properties in Coventry to Mapletree Investments for GBP96 million. Mapletree Investments is a real estate investment firm headquartered in Singapore. The properties sold are the 736-bed Callice Court, and 391-bed Millennium View. The disposal falls in line with Unite's strategy to recycle capital through sales, which will be re-invested into its development pipeline, it said. Unite said it plans to dispose of GBP150 million to GBP200 million in assets per annum over the next three years.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Identification products firm De La Rue said it has appointed Clive Vacher as its new chief executive officer, effective immediately. Vacher replaced Martin Sutherland who has stood down as CEO after a handover.
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Podcast platform operator Audioboom Group said trading in the third quarter was in line with management's expectations. For the quarter ended September 30, revenue rose 86% to USD5.7 million from USD3.0 million last year. The company's cash position on September 30 was USD2.5 million, down from USD3.4 million on June 30. "We're pleased to confirm another strong quarter of growth for Audioboom, cementing our position as one of the largest independent podcast companies in the world. New shows launched into our Audioboom Originals Network made a significant impact as we increased our commitment to creative bravery and solidified our marketing strategy. We continue to execute our strategy efficiently, proving our business model both in the US and the UK, and delivering dynamic growth across all our key performance markers," said interim CEO Stuart Last.
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COMPANIES - INTERNATIONAL
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Negotiations to resolve a three-week-old strike at General Motors for better pay, benefits and job security have taken "a turn for the worse", a top negotiator with the United Autoworkers Union said Sunday. "After making some progress on important issues a couple days ago, the company has shown an unwillingness to fairly compensate the great workforce of the UAW," union vice president Terry Dittes said in a statement. On Saturday evening, the union submitted an "extensive proposal package" that "was an effort to move this set of negotiations to the next step," Dittes said in a letter to Scott Sandefur, vice president of labor relations at GM. Nearly 50,000 GM workers walked off the job in mid-September, launching the biggest labor dispute to hit the automaker in more than a decade.
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Japan's Honda Motor has bought the entirety of California-based Drivemode, Honda said on Monday. Drivemode is a start-up which develops and operates smartphone-based connected services and has been working with Honda since 2015. Honda, which did not give any financial details for the acquisition, said the deal will expand its operations in digital and connected mobility products.
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Pioneering digital payments firm PayPal Holdings on Friday said it is abandoning an alliance intended to oversee the Facebook-backed Libra cryptocurrency, which has come under attack by regulators. "PayPal has made the decision to forgo further participation in the Libra Association at this time," the California-based company told AFP. "We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future." International outcry is mounting over Libra – with central banks and governments railing against Facebook's upstart cryptocurrency and questions over how it would be regulated.
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Monday's Shareholder Meetings
no events scheduled
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By Tom Waite; [email protected]
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