20th Mar 2019 07:37
LONDON (Alliance News) - Stock prices in London are set to open lower on Wednesday amid fresh worries over US-China relations, while the pound was soft as UK Prime Minister Theresa May prepares to request a Brexit extension. In UK company news, Kingfisher reported a fall in annual profit, though it did manage to beat analyst forecasts, and it said it will begin the hunt for a new boss. Kier slashed its interim payout and swung to an interim loss, while TI Fluid Systems said it had a "great year".IG says futures indicate the FTSE 100 index of large-caps to open 24.30 points lower at 7,299.70 on Wednesday. The FTSE 100 index closed up 24.81 points, or 0.3%, at 7,324.00 on Tuesday.Sentiment turned more cautious overnight amid uncertainty over US-China relations, said Jasper Lawler at London Capital Group. "Newsflow on any progress in the trade dispute has been slow over the past week. Until recently investors have kept their nerve over the trade war as they were more focused on the more dovish outlook from the FOMC. However, reports that US-Sino trade talks are turning sour is hitting sentiment," said Lawler."Hopes that a trade deal would be signed by March had already been pushed back to April and now even June. Suddenly a trade deal, which had looked imminent is now months away if it can be agreed at all."In the US on Tuesday, Wall Street ended mixed, with the Dow Jones Industrial Average closing down 0.1%, the S&P 500 index flat, and the Nasdaq Composite up 0.1%.In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong is 0.3% lower.Sterling was quoted at USD1.3247 early Wednesday, lower than USD1.3281 at the London equities close on Tuesday.UK Prime Minister Theresa May will write to the EU on Wednesday to ask for a delay to Brexit beyond the scheduled date of March 29.In a letter to European Council president Donald Tusk, the prime minister is thought likely to suggest a three-month extension to June 30 in the hope of securing parliamentary approval for her Withdrawal Agreement by that time.But with Downing Street refusing to reveal details, there was also speculation that she could ask for a longer delay of nine months or a year, with the option of an early break if a deal is done before May's European elections.And, muddying the plan for an extension, the EU's chief negotiator Michel Barnier on Tuesday warned that Brussels will want a good reason to grant a long delay to Brexit.In an apparent reference to options like a second referendum, general election or cross-party consensus, he said that a lengthy extension "needs to be linked to something new...a new event or a new political process".Any request for extra time is subject to unanimous approval by leaders of the remaining 27 EU states at a meeting in Brussels on Thursday."This week's EU Council meeting is unlikely to offer much in the way of clarity, with France making the most noise about the prospect of not granting an extension, with a final decision possibly coming much closer to next week's deadline," commented Michael Hewson at CMC Markets.In early company news, DIY retailer Kingfisher's annual profit beat consensus forecasts though marked a decline on the year before. Separately, the FTSE 100 constituent said it will launch the search for a new chief executive.Sales for the year to January 31 edged up just 0.3% at both reported and constant currencies to GBP11.69 billion, marking a 1.6% reduction on a like-for-like basis. Kingfisher's pretax profit fell to GBP322 million for the year, down from GBP682 million the year before. Even on an adjusted basis, pretax profit still fell 16% to GBP573 million from GBP683 million. This adjusted measure, however, did manage to beat consensus of GBP550 million.The B&Q owner's full-year dividend was maintained at 10.8p. In the year ahead, Kingfisher said it will be addressing the underperformance of Castorama France while rolling out Screwfix outlets in the UK. "During the year, the UK, Poland and Brico Depot France performed well, leveraging the benefits of our transformation. However, Castorama France has been disappointing, and we are implementing a clear plan to sustainably improve its performance," said Kingfisher Chief Executive Veronique Laury. "Our 'engine' is now largely built, and we are confident in delivering significant financial benefits over time. We are targeting growth in sales, margin and returns over the medium term."In a separate announcement, Kingfisher said it has decided to start the succession process for Laury, and she will leave at a date yet to be decided. "Leading the transformation has been so exciting but also very challenging. As the transformation approaches its final year, I believe it is right for someone else to lead the next phase of the ONE Kingfisher journey," Laury said. Kingfisher said Laury "fully supports" the decision to hunt for a new CEO.Construction firm and outsourcer Kier reported a swing to an interim loss and slashed its dividend.Revenue for the six months to the end of December rose 3% to GBP2.06 billion, but the company swung to a loss of GBP35.5 million from a GBP34.3 million profit a year ago. The loss was in part driven by administrative expenses rising to GBP202.0 million from GBP150.1 million.Kier cut its interim dividend to 4.9p from 23.0p paid out a year ago, which partly reflects the big increase in the number of shares following the company's 2018 rights issue. In December, Kier raised GBP250 million via a 33-for-50 rights issue of 64.5 million new shares at 409p.However, just 24.3 million, or 38%, of the rights issue was taken up by investors, and the company's bookrunners were left with taking up the remaining shares. The bookrunners later on managed to sell on those shares."Whilst the board notes the current political and economic uncertainty in the UK, and the implications for third party investment, the group is maintaining its underlying FY19 expectations, with the full-year results being weighted towards the second-half of the financial year, as expected," said Kier Executive Chair Philip Cox.TI Fluid Systems said it had a "great year" despite a slight softening in global light vehicle production growth. The automotive fluid storage manufacturer said revenue for 2018 dipped to EUR3.47 billion from EUR3.49 billion the year before, but pretax profit rose to EUR217.1 million from EUR158.0 million. This was helped as the firm incurred fewer finance costs, with net finance expense after exceptional items coming to just EUR64.5 million in 2018 versus EUR115.3 million the year before. Revenue growth at constant curreny was 2.0%, or 3.1% ahead of global light vehicle production growth volumes.TI Fluid Systems proposed a final dividend of 5.94 euro cents per share, taking the total for the year to 8.96 cents. For 2019, the company expects revenue growth in excess of global light vehicle production volume levels, excluding the impact of currency movements. TI Fluid Systems also expects an adjusted earnings before interest and tax margin consistent with the prior year, and adjusted free cash flow "similar to or slightly lower than" the prior year.For 2018, TI Fluid Systems's adjusted Ebit margin was 10.8% and adjusted free cash flow amounted to EUR146 million.Late on Tuesday, satellite operator Inmarsat confirmed it received a non-binding takeover offer from a consortium of firms in late January, valuing the firm at USD7.21 per share. Shares in Inmarsat closed 1.6% higher at 437.80 pence each, equivalent to USD5.80 per share. With 462.1 million shares in issue, the offer would value the company at around USD2.68 billion.The consortium - Apax Partners LLP, Warburg Pincus International LLC and the Canada Pension Plan Investment Board - made the cash offer on January 31. Subsequently, the consortium added the Ontario Teachers' Pension Plan Board to the members of potentially interested buyers under the deal.Inmarsat - which was responding to media reports of an offer - also confirmed the proposal was still under discussion with a further announcement to be delivered in due course.In the economic calendar on Wednesday, UK producer prices are at 0930 GMT, with consumer price inflation due at the same time.Capital Economics thinks UK inflation likely ticked up to an annual rate of 1.9% in February, from 1.8% in January. Later, at 1100 GMT, is the Confederation of British Industry Industrial Trends survey.Headlining Wednesday's economic calendar, however, is the latest interest rate decision from the Federal Reserve.The US central bank is widely expected to keep rates on hold as it announces its decision at 1800 GMT, with analysts predicting rate setters will lower their forecasts for 2019 to now only see one hike.Following the decision is a press conference with Fed Chair Jerome Powell at 1830 GMT.
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