5th May 2016 07:34
LONDON (Alliance News) - Stocks in London were higher soon after the open Thursday, amid a huge number of corporate updates for UK investors to digest, with phone company BT Group leading the FTSE 100 gainers after reporting higher pretax profit, as it set out investment and dividend payout plans for the years ahead.
The FTSE 100 was up 0.3%, or 15.15 points, at 6,127.17. The FTSE 250 was up 0.4% at 16,732.74 and the AIM All-Share up 0.1% at 724.64.
BT shares were up 3.4% after the telecommunications provider reported a rise in pretax profit for its most recently ended financial year, and set out its guidance for the next two years, as it outlined plans to invest around GBP6 billion in broadband and 4G coverage in the UK over the next three years.
BT reported a pretax profit of GBP3.03 billion for the year to end-March, up from GBP2.65 billion the year before, as revenue rose to GBP19.04 billion from GBP17.98 billion.
BT proposed a full-year dividend of 14.0 pence per share, up 13% from 12.4p the year before. It expects to grow its dividend by more than 10% in each of the next two financial years.
RSA Insurance Group was up 2.8%. It said it saw good underwriting results in the first quarter, driving up operating profit, as RSA benefited from benign weather conditions and as underlying results continued to indicate an improving picture.
The blue-chip insurer said insurance market conditions in the first quarter, to the end of March, were broadly unchanged against the same period in 2015. Slow growth in the market and strong competition has driven sharp price-volume trade-offs, the group said, in line with its expectations.
Group net written premiums in the quarter were flat year-on-year, reflecting the impact of the disposal of non-core operations RSA has undertaken. Operating profit in the quarter grew ahead of expectations, RSA said, with a strong underwriting performance in the UK & Ireland, Canada and Scandinavia, with all regions ahead year-on-year and outpacing RSA's expectations.
Wm Morrison Supermarkets was another gainer, up 2.2%. The supermarket chain reported a fall in total sales but growth in like-for-like sales in the first quarter of its financial year, as it warned it expects continued deflation in the UK grocery market.
Morrisons said total sales excluding fuel in the 13 weeks ended May fell by 1.8% year-on-year, while falling by 0.9% including fuel. On a like-for-like basis, sales excluding fuel grew by 0.7% and by 1.2% including fuel. Morrisons said total sales were hit by supermarket closures it made and by its disposal of the 'M local' convenience-store chain.
Like-for-like transactions were up by 3.1% in the quarter, driven by a "significant" increase in sales of its Food-to-Go range, and like-for-like volume growth was "strong", Morrisons said.
At the other end of the blue-chip index, Centrica was the worst performer, down 7.8%. The energy group said it intends to issue a considerable amount of shares to institutional investors to raise funds, so the company can reduce debt and accelerate its strategy by funding two acquisitions.
Centrica said it plans to issue around 350.0 million shares, which is equal to around 7.0% of its current issued share capital. It will be conducted through a bookbuild process which will determine the price, but Centrica has already hinted it wants to raise at least GBP750.0 million. At Centrica's closing price of 231.10 pence on Wednesday, 350.0 million shares would fetch GBP808.5 million, or GBP744.5 million at its early Thursday price of 213.10p.
Centrica said the placing will allow it to complete two acquisitions worth a total of GBP350.0 million and to lower net debt by a further GBP400.0 million, which in turn will reduce the pressure on Centrica's investment-grade credit ratings.
Satellite business Inmarsat was down 4.7%. Inmarsat revised down its 2016 guidance for revenue after it amended its cooperation agreement in the US with Ligado Networks and reported a fall in pretax profit for the first quarter of the year. Inmarsat reported a pretax profit of USD58.5 million in the three months to end-March, down from USD96.3 million a year before, on revenue of USD298.6 million, down from USD304.8 million.
The company said that the underlying trading environment in 2016 has continued to be tough, and demand weakened in the first quarter. Additionally, for operational reasons the ramp up in revenue from its Global Xpress satellites is "proceeding more slowly than previously expected."
Meanwhile, Rolls-Royce was dropping 3.1%. The engine maker said trading in the first few months of 2016 has been in line with its expectations and its outlook for the full year is unchanged. The FTSE 100-listed jet engine maker said profit, before any financing charges, will be significantly weighted to the second half, in line with previous guidance.
The outlook for the second half, Rolls-Royce said, reflects increased large-engine deliveries, good underlying growth in aftermarket revenue and incremental benefits from its restructuring programme.
Still in the UK corporate calendar, GW Pharmaceuticals publishes its half-year results at 1200 BST.
The CAC 40 in Paris was down 0.2%, whist the DAX 30 in Frankurt was up 0.2%.
In Asia, the Shanghai Composite ended down 0.2%, while the Hang Seng index in Hong Kong is down 0.2%. The Tokyo market remained closed for Children's Day.
Private sector activity in China expanded for the second straight month in April driven by services, while output broadly stagnated at manufacturers. The Caixin composite output index fell to 50.8 in April from 51.3 in March, according to data published by Markit. A score above 50 indicates expansion but the latest reading signals a slowdown in growth.
The services Purchasing Managers' Index came in at 51.8, down from 52.2 a month ago. This suggested that the pace of service sector expansion remained modest overall and slower than the historical series average.
Also in the economic calendar Thursday, the UK's Markit services PMI is due at 0930 BST.
"Given how important the services sector is to the UK economy we really need to see a decent number here or run the risk that we see a growth downgrade next week from the latest Bank of England inflation report," said CMC Markets chief market analyst Michael Hewson. The analyst expects a slight decline to 53.6 from 53.7 in March.
In the US, initial and continuing jobless claims are due at 1330 BST, while the Energy Information Administration natural gas storage data are at 1530 BST.
By Daniel Ruiz; [email protected]
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InmarsatCentricaRSA.LMRW.LBTRolls-Royce