28th Feb 2019 08:30
LONDON (Alliance News) - London stocks opened Thursday's session on a gloomy note amid worries over global trade and politics and a slowdown in China. Gains for Rentokil Initial and International Consolidated Airlines in the FTSE 100 were being offset by losses for RSA Insurance, Rolls-Royce and Mondi amid a raft of annual results from some of London's biggest names.The FTSE 100 was 47.32 points lower, or 0.7%, at 7,059.88 early Thursday. The mid-cap FTSE 250 was down 104.21 points, or 0.5%, at 19,049.54, while the AIM All-Share index was down 0.2% at 904.96.The Cboe UK 100 index was down 0.6% at 11,996.39, while the Cboe UK 250 was down 0.4% at 17,040.52. The Cboe UK Small Companies was flat at 11,148.66.In mainland Europe, the CAC 40 in Paris was down 0.2% while the DAX 30 in Frankfurt shed 0.5%.In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite closed 0.4% lower, while the Hang Seng index in Hong Kong finished down 0.5%."In the absence of any significant new impetus, the global equity rally is losing steam. The Chinese manufacturing data released overnight painted a very disappointing picture for the markets," said ThinkMarkets analyst Naeem Aslam. He added: "Overall, the flow of news has dampened the sentiment for the equity markets and we think this is going to be the main theme today."China's manufacturing activity dropped to a three-year low in February, amid a prolonged trade war with the US, official data showed Thursday. The manufacturing purchasing managers index came in at 49.2 in February, sinking from 49.5 in January, the National Bureau of Statistics said.The indicator fell below the critical threshold of 50 in December, for the first time in two years. A figure below 50 indicates contraction.This came as US Trade Representative Robert Lighthizer told Congress on Wednesday a landmark trade deal between China and the US remains an "if"."If we can complete this effort, and again I say 'if', and can reach a satisfactory solution to the all-important outstanding issue of enforceability as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with China," Lighthizer told a committee.He said the Chinese currency remains a concern and that negotiations are trying to deal with all outstanding issues.Lighthizer also indicated that trade talks with Europe are currently stalled.Meanwhile, US President Donald Trump and North Korean leader Kim Jong Un on Thursday failed to reach an agreement over denuclearization at their Hanoi summit.The summit ended earlier than originally scheduled after talks between the two sides broke down. Trump told reporters that the "papers were ready to be signed but it wasn't appropriate"."Sometimes you have to walk, and this was one of those times," Trump added.The president said Kim was willing to give up some of his country's nuclear sites "but not the ones we wanted".In London, pest control and hygiene firm Rentokil Initial, up 5.2% and the best performer in the FTSE 100, posted a rise in adjusted profit for 2018 and said it expects a "slight increase" in market expectations for 2019.Revenue for 2018 rose 2.5% to GBP2.47 billion, while the firm swung to pretax loss of GBP114.1 million from a GBP713.6 million profit the year before.In 2017, Rentokil had benefited from a GBP449.0 million gain on the disposal of businesses, which did not repeat in 2018, the firm then also booked a GBP341.6 million charge in 2018 relating to a pension settlement.On an adjusted basis, pretax profit rose 7.4% to GBP308.0 million. The firm lifted its dividend by 15% to 4.471p."2018 was a very good year for Rentokil Initial, and I am delighted that we have again exceeded our medium-term financial targets for revenue, profit and cash. We are confident of delivering further progress in 2019 and anticipate a slight increase in market expectations for 2019," said Chief Executive Andy Ransom.Separately, the company said Richard Solomons will succeed John McAdam as chair. Solomons was Chief Executive of InterContinental Hotels Group until June 2017.British Airways parent International Consolidated Airlines Group gained 3.8% after it said it expects profit in 2019 to be broadly in line with that achieved for 2018, and it proposed a special dividend.Revenue for 2018 came in at EUR24.41 billion, up from EUR22.88 billion in 2017, while pretax profit was boosted to EUR3.49 billion from EUR2.48 billion.The airline operator proposed a final dividend of 16.5 cents per share, bringing its total dividend for the year to 31 cents, while also proposed a special dividend of 35 cents.At current fuel prices and exchange rates, IAG said it expects its 2019 operating profit before exceptional items and IFRS16 to be broadly in line with the EUR3.23 billion reported for 2018. Both passenger unit revenue and ex-fuel unit cost is expected to improve at constant currency."The British Airways parent has produced an outstanding performance, which is particularly impressive given the difficulties being faced elsewhere in the airline industry," said Richard Hunter, head of markets at Interactive Investor.Hunter commented: "One such example of its progress is the dividend. Where British Airways had been unable to pay a dividend for some considerable time, the combined group began payments in 2015 and today's announcement of a special dividend will turbocharge an already punchy yield of 4.1%."RSA Insurance dipped 3.2% after saying it thinks 2019 will see a "bounce back" after its first year of underlying declines since 2013.Underlying pretax profit fell to GBP492 million from GBP620 million in 2017, while underlying return on tangible equity was 12.6%, down from 15.5% in 2017 and just below its 13% to 17% target range.On a reported basis, total income dipped to GBP701 billion from GBP7.11 billion in 2017, though pretax profit rose to GBP480 million from GBP448 million."In 2018 RSA increased headline profits and dividends with a still attractive return on capital. At an underlying level however, the results represent RSA's first down year since 2013. We believe strongly that 2019 will show a bounce back and are taking decisive action to that end," said Chief Executive Stephen Hester"Much went well in 2018, with excellent results in many of RSA's Personal Lines businesses and good progress on expenses and other strategic initiatives. However, adverse weather costs and challenging Commercial Lines results exposed us to more volatility than expected," Hester explained.Paper and packaging maker Mondi fell 2.8% despite hiking its 2018 dividend after profit and revenue rose in a "strong" performance, but 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. "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 Officer 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."Engine maker Rolls-Royce Holdings was down 2.9% as it said 2018 was a "breakthrough" year despite challenges with its Trent 1000 fleet."Underlying financial results are ahead of expectations, with good growth in profit and cash flow. Following the restructuring we announced in June last year we are starting to see the crucial behavioural changes needed to sustain our momentum," said Chief Executive Warren East.Underlying revenue was up 8% to GBP15.07 billion, with reported revenue up 7% to GBP15.73 billion. Rolls-Royce swung to a loss of GBP2.95 billion from a GBP3.90 billion profit in 2017, though underlying operating profit jumped to GBP616 million from GBP306 million.On a reported basis, the firm swung to an operating loss of GBP1.16 billion from a GBP366 million profit in 2017.The FTSE 100 constituent said it is making good progress with technical fixes on its Trent 1000 engines. Trent 1000 exceptional charges increased from GBP554 million at the half year stage to GBP790 million for the year as a whole. The firm said it expects around 10% revenue growth in 2019 and operating profit to be "closer to break-even", while Trent 1000 costs are expected to be around GBP450 million.
Related Shares:
International AirlinesRSA.LRentokil InitialRolls-RoyceMondi