26th Nov 2019 08:42
(Alliance News) - Stock prices in London opened mixed on Tuesday, with Compass Group weighing on the FTSE 100 after reporting a fall in full-year profit and expressing concerns about the state of the European market.
The UK flagship index was 7.63 points lower, or 0.1%, at 7,388.66. The FTSE 250 was up 7.62 points, or 0.1%, at 20,695.55, and the AIM All-Share was down 1.21 points, or 0.1% at 908.21.
The Cboe UK 100 index was down 0.1% at 12,523.93. The Cboe UK 250 was up 0.1% at 18,581.45, and the Cboe UK Small Companies was flat at 11,303.77.
In European equities, the CAC 40 index in Paris was flat and the DAX 30 in Frankfurt down 0.1% in early trade.
In the FTSE 100, CRH was up 2.2% after the Irish building materials firm reported a "strong performance" in the first nine months of the year, while predicting "solid market fundamentals" in 2020.
CRH said it expects to report earnings before interest, tax, depreciation and amortisation for 2019 in excess of EUR4.15 billion, up 23% from EUR3.37 billion in 2018. The Irish company credited "positive momentum" in all divisions, contributions from acquisitions, the impact of a new accounting treatment of leases, and currency tailwinds.
As a result, CRH said it expects to report full-year pretax profit ahead of 2018's EUR1.9 billion.
Hiscox was up 1.7% after HSBC raised the insurer to Buy from Hold.
At the other end of the large cap index, Compass Group was the worst performer, down 6.6%.
Revenue growth in the year to September was 8.8% to GBP24.88 billion, with organic revenue growth "strong" at 6.4% and above Compass's target of 4% to 6% growth. The market had expected organic revenue growth of 6%, according to company-compiled consensus figures.
Compass's pretax profit slipped 3.5% on the year before to GBP1.47 billion. Compass said this was due to a cost action programme bringing a GBP190 million one-off charge, offsetting foreign exchange benefits.
Looking ahead, Chief Executive Officer Dominic Blakemore said expectations for Compass's new financial year are positive, though it does remain "cautious" on trading conditions in Europe, where it has experienced deteriorating business conditions.
Interactive Investor's Richard Hunter said: "The share price reaction to the numbers is likely to be due to an element of profit-taking, as well as a tinge of disappointment at the headline level with the numbers themselves and a marginally cautious tone on prospects in Europe.
"Even so, over the last year the shares have risen by a thumping 34%, which compares to a hike of 5% for the wider FTSE 100 and, although the company is clearly well-regarded, it seems that the shares are for the moment up with events. The general market view of Compass as a Hold is therefore likely to remain in place for the time being."
In the FTSE 250, Pennon Group was up 2.0%. The water company hiked its interim dividend Tuesday after profit jumped on cost-cutting measures.
For the six months ended September, pretax profit widened 22% to GBP163.1 million from GBP133.6 million the year prior. This was despite revenue falling 4.6% to GBP712.4 million from GBP746.7 million the year before.
Profit was helped by a reduction in costs during the period as well as gains related to its derivative holdings.
Pennon proposed a 13.66 pence per share interim dividend, up 6.4% from 12.84p the year before.
Tate & Lyle was up 1.5% after Goldman Sachs raised the food ingredients maker to Buy from Neutral.
At the other end of the midcap index, Greencore Group was the worst performer, down 7.5% after the convenience foods manufacturer reported a drop in revenue.
The Irish company said it "fundamentally" reset its business after exiting its unprofitable US operations last year, having returned GBP509 million of capital to shareholders in the process.
For the financial year ended September 30, revenue fell 3.5% to GBP1.44 billion from GBP1.50 billion, but pretax profit surged to GBP56.4 million from GBP17.8 million last year.
"As a result of this reset strategy, we anticipate another year of profitable growth in financial year 2020," said Chief Executive Officer Patrick Coveney.
The Japanese Nikkei 225 index closed up 0.4%. In China, the Shanghai Composite closed flat, but the Hang Seng index in Hong Kong ended down 0.2%.
The pound was quoted at USD1.2870 Tuesday morning, down from USD1.2906 at the London equities close Monday.
In the economic calendar on Tuesday are UK mortgage approvals at 0930 GMT. In the US are the housing price index at 1355 GMT and consumer confidence at 1500 GMT.
By Arvind Bhunjun; [email protected]
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Tate & LyleCRHPennonCompass GroupGreencoreHiscox