9th Mar 2016 08:38
LONDON (Alliance News) - It was a tentative start for UK stocks Wednesday, with equity indices fluctuating between gains and losses before the FTSE 100 headed higher.
Prudential led the blue-chip index, up 3.4%, after reporting a 22% increase in IFRS operating profit to more than GBP4.00 billion in 2015. The insurer declared a 38.78 pence ordinary dividend, up 5%, and a special dividend of 10p.
Heading in the opposite direction were shares in Restaurant Group, which plunged 19% in early trade, making it the worst performer in the FTSE 250 index of mid-cap stocks. The restaurant operator posted stronger profit and revenue and hiked its dividend for 2015, but gave a bearish outlook on 2016, with like-for-like sales having fallen so far this year.
The company, which runs the Frankie & Benny's, Chiquito and Garfunkel's chains, said its pretax profit rose to GBP86.8 million in the 12 months to the end of December from GBP84.9 million a year earlier, with revenue rising 7.9% to GBP685.4 million from GBP635.2 million.
The group will pay a final dividend of 10.6 pence per share, taking its total dividend up to 17.4p, a 13% rise year-on-year.
Restaurant Group said that while total sales increased 6.0% year-on-year in the first 10 weeks of 2016, like-for-like sales dipped 1.5%, as the more challenging trading conditions seen in the latter part of 2015 continued into this year, with softer consumer demand and weaker overall consumer confidence.
Though early in the year, Restaurant Group said it expects these trends to continue through the year and while total sales will rise due to new openings, like-for-like sales growth will likely be "difficult to generate".
Just after the open, the FTSE 100 index traded up 0.2%, or 14.82 points, to 6,140.26.
The FTSE 250 was down 0.1% at 16,631.87 and the AIM All-Share was down 0.2% at 698.86. In Europe, the French CAC 40 traded up 0.2% and the German DAX 30 was up 0.3%.
In Asia Wednesday, the Nikkei 225 index in Tokyo closed down 0.8%, the Shanghai Composite ended down 1.3% and the Hang Seng in Hong Kong fell 0.1%.
Burberry Group was one of the worst performers in the FTSE 100, down 2.4% after HSBC downgraded the stock to Hold from Buy. The luxury fashion retailer had been the best performer in the blue-chip index on Tuesday, when the company sought help from its financial advisers to defend itself against a possible takeover bid after a mystery investor built up a 5.0% stake in the company, according to a report by the Financial Times.
G4S shares dived 9.3% after the security services provider G4S said pretax profit slipped in 2015 due to a goodwill charge on businesses it has sold, as revenue dipped on currency movements and it booked more provisions on legacy contracts in the UK.
The FTSE 250-listed group, the world's largest security company by revenue, said its pretax profit fell to GBP78.0 million from GBP128.0 million in 2014, hit by a GBP66.0 million goodwill charge it booked on businesses it has sold and on one of its operations in Estonia.
G4S also increased provisions against onerous legacy contracts in the UK, in particular its contract running centres housing asylum seekers for the Home Office, which has been put under pressure by the significant rise in the number of asylum seekers from Syria and the surrounding region that G4S has to house under the contract and the losses it makes on all those it takes in.
SIG was another big faller in the mid-cap index, down 6.3%. The building products distributor said its pretax profit increased in 2015 due to lower one-off costs, but revenue was dragged lower by a challenging European market and a slowdown in the UK repair, maintenance and improvement segment.
The group said pretax profit for the year to the end of December rose to GBP51.3 million from GBP39.0 million in 2014, mainly due to lower amortisation and one-off costs booked by the group. Stripping out those one-offs, underlying pretax profit fell to GBP87.4 million from GBP99.1 million.
Revenue edged down to GBP2.57 billion from GBP2.60 billion, partly due to a hit from the weak euro but also tough trading conditions in Europe, particularly the French market, to which SIG is particularly exposed, though some encouraging trading signs emerged in the fourth quarter.
This combined with a slowdown in the UK repair, maintenance and improvement in the UK in the second half and meant revenue for the year fell, though it would have increased in constant currencies.
Cairn Energy said it has successfully completed its second appraisal well offshore Senegal, adding it is "delighted" with the test results.
The oil and gas company said the SNE-3 well underwent two drill stem tests within the upper reservoirs. The first test produced a maximum flow rate of 5,400 barrels of oil per day and a main flow rate of 4,000 barrels of oil per day, both over a 24 hour period from a 15.0 metre zone.
The second test delivered a maximum flow rate of 5,200 barrels of oil per day with a main flow rate of 4,500 barrels of oil per day, both over a six hour period from a 5.5 metre zone.
The positive news sent the company's shares to the top of the FTSE 250 gainers list, up 6.8%.
In the economic calendar, the main focus will be on UK industrial and manufacturing production data at 0930 GMT.
Also on Wednesday, US mortgage applications are at 1200 GMT and US wholesale inventories are at 1500 GMT, at the same time as the National Institute of Economic and Social Research's UK GDP estimate. Just after is the US Energy Information Administration's crude oil stocks at 1530 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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