10th Sep 2019 07:44
(Alliance News) - Stock prices in London are seen opening lower on Tuesday, amid mixed trading in Asian equity markets following soft inflation data from China.
In UK company news, Bovis Homes and Galliford Try have entered talks over a potential combination of housebuilding businesses, high-street retailer JD Sports Fashion's stellar growth continued, and equipment rental firm Ashtead reported strong first-quarter earnings.
IG futures indicate the FTSE 100 index is to open 11.11 points lower at 7,224.70. The blue-chip index closed down 46.53 points, or 0.6%, at 7,235.81 on Monday.
Ashtead Group said it delivered a strong first quarter with revenue and profit rising.
For the quarter ended July 31, revenue rose 17% to GBP1.28 billion from GBP1.04 billion in the first quarter last year, and pretax profit rose 8% to GBP304.7 million from GBP274.4 million.
The company's US Sunbelt unit generated revenue of USD1.38 billion, up from USD1.17 billion a year ago.
"We remain focused on responsible growth. Our increasing scale and strong margins are delivering good earnings growth and significant free cash flow generation. This provides significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders. We spent GBP125 million under our share buyback programme in the quarter, and expect to spend a minimum of GBP500 million on share buybacks in 2019/20," said Ashtead Chief Executive Brendan Horgan.
"We expect business performance in line with our expectations and the board continues to look to the medium term with confidence."
JD Sports Fashion said it saw a period of significant progress amid well-documented challenges for the UK retail sector.
For the 26 weeks to August 3, revenue rose 47% to GBP2.72 billion from GBP1.84 billion last year, and pretax profit increased 6.6% to GBP129.9 million from GBP121.9 million.
The retailer said it saw strong total like-for-like sales growth in global Sports Fashion stores of 12% including "highly encouraging" growth of over 10% in its core UK and Ireland region.
JD Sports raised its interim dividend 3.7% to 28.00 pence from 27.00p.
"Notwithstanding the ongoing uncertainty with regards to Brexit, the board is confident that, without the impact from the transition to [accounting rule] IFRS 16, the group would have been on track to deliver headline profit before tax for the full year at the top end of market expectations which currently range from GBP402 million to GBP424 million. However, after adjusting for the impact of the transition to IFRS 16, we would expect to deliver results at the mid-point of expectations. We remain encouraged by our prospects for further growth," Chair Peter Cowgill said.
Housebuilder Bovis Homes said it is to restart talks on combining with peer Galliford Try's Linden Homes housebuilding unit.
Bovis Homes said the talks are solely related to merge with Galliford Try's housebuilding arm and not with Galliford Try itself. Bovis said Galliford Try would be a "well-capitalised, standalone construction-focused group".
Back in May, Galliford rejected a GBP1.05 billion bid by Bovis for Galliford's Linden Homes and Partnerships & Regeneration businesses.
Bovis said on Tuesday the potential deal would value the housing businesses at GBP1.08 billion. Under potential terms, the issue to Galliford Try shareholders would be 0.57406 Bovis Homes shares per Galliford Try share.
This would equate to 63.7 million Bovis Homes shares, valued at GBP675 million, based on Bovis Homes' closing share price on Monday of 1,059.00p.
"The transaction is an exciting opportunity to create two strategically focused businesses. The significant cash element within the consideration provides a firm foundation for our newly reorganised Construction business to flourish as an independent company. The strong balance sheet and excellent fit between the combining businesses will be a superb platform for both private housebuilding and partnerships, creating a unique and well-positioned housing provider," Galliford CEO Graham Prothero said.
The pound was quoted at USD1.2339 early Tuesday, lower than USD1.2369 at the London equities close Monday,
UK Prime Minister Boris Johnson suffered another humiliating Commons defeat after his second bid for a snap general election was rejected by MPs.
Johnson said he wanted to head to the polls next month to break the political deadlock, as he accused opposition parties of making "outrageous excuses" to delay. But Labour and other opposition MPs refused to back the bid - which needed a two-thirds majority in the Commons - while the risk of a no-deal remained.
MPs voted 293 to 46, short of the 434 needed - marking the new PM's sixth Commons defeat.
The prorogation of Parliament for five weeks, passed in the early hours of Tuesday, makes a general election extremely unlikely until at least mid-November.
The Japanese Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite is down 0.2%, while the Hang Seng index in Hong Kong is flat.
The prices Chinese firms pay factories for their goods fell last month at the fastest pace in three years, official data showed Tuesday, as slackening demand and the bruising US trade war drag on the economy.
Consumer prices also were broadly subdued and only supported by a surge of almost 50% in the price of pork caused by African swine fever that has ravaged the country's pig industry.
The producer price index - an important barometer of the industrial sector that measures the cost of goods at the factory gate - dropped 0.8% in August on a year before, following a 0.3% drop in July.
However, consumer price index, a gauge of retail inflation, rose 2.8% on year last month, stabilising from July and beating forecasts.
In the US on Monday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.1%, S&P 500 flat and Nasdaq Composite down 0.2%.
The economic events calendar on Tuesday has UK unemployment data at 0930 BST.
Related Shares:
Bovis HomesGalliford TryAshtead GroupJD Sports