28th Feb 2019 17:23
LONDON (Alliance News) - Stocks in London ended mixed on Thursday on a busy day on the UK corporate earnings front, with Mondi, Rolls-Royce and RSA Insurance weighing on the FTSE 100. The FTSE 100 index closed down 32.47 points, or 0.5%, at 7,074.73. The FTSE 250 ended up 27.60 points, or 0.1%, at 19,181.35, and the AIM All-Share closed 2.92 points higher, or 0.7% at 909.34.The Cboe UK 100 ended down 0.2% at 12,039.19, the Cboe UK 250 closed up 0.1% at 17,139.96 and the Cboe Small Companies ended down 0.3% at 11,114.57."It is a mixed bag in Europe. The FTSE 100 is firmly in the red as a broad based sell-off in consumer, energy and mining stocks has weighed on the British index. China's manufacturing PMI report fell further into contraction territory to 49.2 - its lowest reading since early 2016. The second-largest economy in the world is a major importer of commodities and that is a large factor in the FTSE 100's underperformance," said CMC Markets analyst David Madden. In Paris the CAC 40 ended up 0.3%, while the DAX 30 in Frankfurt ended up 0.3%. On the London Stock Exchange, Rentokil Initial ended as the best blue chip performer, up 6.7% after the pest control company said a rise in summer call-outs for insect and rat catching helped boost annual results as last year's heatwave sent pest numbers soaring.The company's annual pretax loss totalled GBP114.1 million, reversing its GBP713.6 million profit the year before. However, this was due to a one-off divestment gain in 2017 and a one-off pension-related cost in 2018.On an adjusted basis, pretax profit rose 7.4% to GBP308.0 million from GBP286.9 million. This was ahead of Peel Hunt's estimate of GBP302.7 million and market consensus of GBP304.4 million.In 2018, Rentokil acquired 47 businesses, 42 of which were in Pest Control, which provided combined annualised revenue of GBP170.0 million. The company's total spend, including prior year acquisitions, was GBP298.4 million. Rentokil anticipates GBP200 million to GBP250 million mergers & acquisitions spend in 2019.At the other end of the large cap index, Mondi ended the worst performer, down 6.3% after the Anglo-South African paper & packaging firm said it has entered 2019 with "mixed" pricing."Pricing is mixed going into 2019, with recent price reductions in containerboard grades and market pulp and stronger pricing in our kraft paper markets," Chief Executive Peter Oswald said. "During 2019, we are planning longer maintenance and project related shuts, while looking forward to the incremental contribution from recently completed major capital projects and acquisitions."Still, Mondi hiked its 2018 dividend after profit and revenue rose in a "strong" performance, though said it has entered 2019 with "mixed" pricing. In 2018, pretax profit widened 26% to EUR1.11 billion from EUR884 million the year prior. Underlying earnings before interest, taxes, depreciation and amortisation expanded 19% to EUR1.76 billion from EUR1.48 billion the year before.Peer DS Smith closed down 3.6% the second worst blue-chip performer.RSA Insurance closed won 3.0% after the insurer reported a consensus beating annual pretax profit but saw a drop in net premiums, struggling with UK and Canada weather related costs and large losses in its London Market business. The general insurer's net written premiums for 2018 decreased by 3.1% to GBP6.47 billion from GBP6.68 billion in 2017, coming in just slightly below the analyst consensus forecast of GBPGBP6.50 billion. Pretax profit increased 7.1% to GBP480.0 million from GBP448.0 million in 2017. Analysts had predicted RSA's profit to decline to GBP417.0 million. The group's underwriting profit decreased 37% to GBP250 million from GBP394 million, behind consensus of GBP312 million. RSA suffered large losses of GBP758 million in 2018, totalling 11.6% of premiums compared to 10.8% in 2017.Rolls-Royce closed down 2.6% after the jet engine maker swung to a substantial annual loss after racking up huge costs from well-documented issues with its Trent 1000 turbines.For 2018, the company reported a pretax loss of GBP2.90 billion, swinging from a profit of GBP3.89 billion the previous year, despite revenue rising by 6.7% to GBP15.73 billion from GBP14.74 billion.During the year, the group reported an exceptional charge of GBP790 million from its Trent 1000 turbofan engine line. For the Trent 900 engine, there was an exceptional charge of GBP186 million for the year, following the decision by Airbus SE to close the production line of its A380 aircraft.In addition, the one-time scion of British engineering withdrew from the race to build engines for US giant Boeing's new mid-sized planes. The company said the bill for problems on its Trent 1000 turbines would rise to GBP1.50 billion over the five years to 2022 - GBP100 million higher than earlier estimates.In the FTSE 250, satellite communications firm Inmarsat ended as the best performer, up 6.0% amid a report that US rival EchoStar is planning a fresh approach for the London-listed firm, according to Reuters. At the other end of the mid caps, shares in Aston Martin Lagonda went into reverse after the luxury car maker swung to a loss in its maiden annual results as a listed company. The stock closed down 21% at 1,080p, down 43% from its October initial public offering price of 1,900p.Around GBP671 million was hacked off Aston Martin's total market value after the company posted a pretax loss of GBP73.1 million in 2018. The company's current market capitalisation stands at about GBP3.13 billion, down 28% from GBP4.33 billion when it listed.On an adjusted basis, Aston Martin's pretax profit was GBP68 million compared to GBP73 million in 2017. The company booked adjusting items of GBP136 million versus a GBP11.4 million gain a year prior.The costs include staff incentives and fees related to its initial public offering, and a negative past service pension benefit. Spending on development costs for new car models and the construction of a new facility in St Athan, Wales, also dented earnings. The pound was quoted at USD1.3286 at the London equities close, down from USD1.3343 at the close Wednesday.Sterling retreated from multi-month highs versus the greenback amid profit taking and stronger than expected US growth figures. "There has been a growing feeling that Brexit will be delayed, and that that lifted the pound earlier in the week, and today we are seeing some of the ground being handed back," said CMC's Madden. The euro as quoted at USD1.1395 at the European equities close, marginally higher than USD1.1363 late Wednesday, following positive inflation data from Germany.Germany's consumer price inflation accelerated for the first time in four months in February and at a faster than expected pace, preliminary data from the Federal Statistical Office showed.The consumer price index rose 1.6% year-on-year following a 1.4% increase in January. Economists had expected 1.5% inflation.Inflation based on the harmonized index of consumer prices was steady at 1.7% for a third month. That also matched economists' forecast. Compared to the previous month, the HICP rose 0.5% in February, in line with economists forecast."Together with the strong labor market and high consumer confidence, low inflation is a welcome shield against the current high wave of external uncertainties," ING economist Carsten Brzeski said.Stocks in New York were lower at the London equities close after the summit between US President Donald Trump and North Korean leader Kim Jong Un ended abruptly without an agreement on the denuclearisation of the Korean peninsula.The DJIA was down 0.1%, the S&P 500 index down 0.2% and the Nasdaq Composite down 0.3%.Trump told reporters the North Korean dictator wanted the US to lift all sanctions without having to give up all of his weapons of mass destruction."Basically, they wanted the sanctions lifted in their entirety and we couldn't do that," Trump said. "They were willing to de-nuke a large portion of the areas that we wanted, but we couldn't give up all of the sanctions for that.""So we continue to work and we'll see, but we had to walk away from that particular suggestion," he added. "We had to walk away from that".The president noted that the two sides will continue to work toward an agreement, although the lack of a deal at the summit has contributed to uncertainty on Wall Street."With Trump having walked away from talks with Kim Jong-Un, there is no doubt a message for the Chinese that he will walk away from trade negotiations too if they do not progress as planned," noted IG analyst Josh Mahony. On the economic front, a report from the Commerce Department showed US economic growth slowed by less than expected in the fourth quarter of 2018.The report said real gross domestic product climbed by 2.6% in the fourth quarter compared to the 3.4% jump in the third quarter. Economists had expected GDP to increase by 2.3%."At this early stage we suspect something in the 2% to 2.5% range for first quarter GDP growth looks possible. With a strong jobs market creating more significant wage pressures we continue to believe the next move in the Fed funds rate is more likely to be up rather than down as the market is currently pricing," analysts at ING said. Elsewhere, the Commerce Department said its reading on core consumer prices, which exclude food and energy prices, showed price growth accelerated to 1.7% in the fourth quarter from 1.6% in the third quarter.Brent oil was quoted at USD66.40 a barrel at the London equities close, marginally lower than USD66.66 at the close Wednesday. Gold was quoted at USD1,315.52 an ounce at the London equities close, down from USD1,321.40 late Wednesday.The economic events calendar on Thursday has manufacturing PMI data from China, Italy, France, Germany and the UK at 0145 GMT, 0845 GMT, 0855 GMT and 0930 GMT, respectively. There is also Germany unemployment figures at 0855 GMT and UK mortgage approval numbers at 0930 GMT. The UK corporate calendar on Friday has annual results from advertising and marketing firm WPP, stock exchange operator London Stock Exchange Group, property portal Rightmove, bookmaker William Hill and asset manager Jupiter Fund Management.
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InmarsatSmith (DS)RSA.LRentokil InitialRolls-RoyceMondiAston Martin Lagonda