19th Jun 2018 07:42
LONDON (Alliance News) - Stocks in London are set to open lower on Tuesday, after the tit-for-tat trade war between the US and China escalated, while Ashtead's annual earnings surged and McCarthy & Stone issued a profit warning. IG says futures indicate the FTSE 100 index to open 61.83 points lower at 7,569.50 on Tuesday. The FTSE 100 index closed flat at 7,631.33 on Monday.In early UK corporate news, equipment rentals firm Ashtead Group said 2018 was "another very successful year" buoyed by its Sunbelt business in the US. For the year ending April 30, revenue increased 20% to GBP3.70 billion from GBP3.19 billion last year. Pretax profit rose 16% to GBP862.1 million against GBP765.1 million and underlying pretax profit surged 21% to GBP927.3 million versus GBP793.4 million last year. In the US, Sunbelt's revenue came in at USD4.15 billion, compared to USD3.52 billion in 2017. Ashtead proposed a final dividend of 27.5p, making the total payout 33.0p for the full year, compared to 27.5p in 2017."All our divisions continue to perform well in supportive end markets. Thus, with a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence," said Chief Executive Geoff Drabble.Retirement housebuilder McCarthy & Stone said it has seen a "noticeable decline in reservation rates" since April. The company said its annual earnings were always heavily dependent on a strong spring selling season and as a result of less favourable conditions is now forecasting to achieve 2,100 to 2,300 legal completions in the financial year ending August compared to 2,302 in 2017. McCarthy & Stone is now guiding annual operating profit in the range of GBP65 million to GBP80 million, down from GBP96 million last year. The group's forward order book including legal completions currently stands at GBP706 million, up from GBP639 million a year ago. The company is now conducting a strategic review led by Chairman Paul Lester."This strategic review will seek to focus on improving margins and ROCE (targeting mid-teens ROCE over the short to medium term) together with a more balanced workflow. This will naturally lead to a more measured growth trajectory and a right-sizing of the group's cost base, with build cost savings as an additional key area of focus. The group will provide a further update on the actions resulting from this strategic review in September," the company said. McCarthy & Stone also said CEO Clive Fenton will retire in August, and the search to find his replacement is underway. Plumbing and heating products supplier Ferguson reported that third-quarter profit rose 17% to USD356 million from USD304 million last year. Revenue grew 10% to USD5.08 billion from the prior year's USD4.61 billion. Revenue was 8% ahead of last year at constant exchange rates and 7.1% ahead on an organic basis.Ferguson also said the sale of Nordics business Stark Group was completed in March for around USD1.20 billion.Looking ahead, the company, which was formerly known as Wolseley, said the fourth quarter has started well with organic revenue growth in line with the third quarter. Given the third-quarter performance, the group said it is well positioned for a successful outcome for the year, it said.In economic and political news overnight, Beijing immediately vowed retaliation after US President Donald Trump late Monday said he would impose a 10% tariff on another USD200 billion worth of Chinese goods, in a further escalation of the trade row between the economic rivals.The Chinese Commerce Ministry accused the US of practising "extreme pressure and blackmail", saying it was deviating from the "consensus reached by the two parties' many consultations" and had "disappointed the international community very much".If the US became "irrational", China would have to take strong and comprehensive countermeasures, it added.In the US on Monday, Wall Street ended broadly lower, with the Dow Jones Industrial Average ending down 0.4%, the S&P 500 down 0.2% and Nasdaq Composite closing down flat.In Asia on Tuesday, the Japanese Nikkei 225 index close down 1.8%. In China, the Shanghai Composite is down 3.6%, while the Hang Seng index in Hong Kong down 2.6%. Markets in China and Hong Kong resumed trading following the Dragon Boat holiday on Monday.In the international economic events calendar, there is eurozone current account and construction output figures at 0900 BST and 1000 BST, respectively. There also are US housing starts at 1330 BST. In addition, European Central Bank President Mario Draghi speaks at the ECB Forum on Central Banking in Sintra, Portugal at 0900 BST.Sterling was firm quoted at USD1.3257 early Tuesday, against USD1.3246 at the London equities close on Monday.In domestic political news, the UK government faces another battle to appease Brexit rebels in the Commons after Lords again backed giving MPs a "meaningful vote" on the final Brexit deal.The to-and-fro over Parliament's role as the UK leaves the EU will return to the Commons after peers inflicted another heavy defeat on the government on Monday.They backed an amendment to the EU (Withdrawal) Bill, tabled by Viscount Hailsham, which would require the government to allow MPs to vote on how it would proceed in the absence of a Brexit deal by January 21 next year.MPs will now vote on whether to adopt the motion, which was brought in after pro-EU rebels led by former attorney general Dominic Grieve accused the government of reneging on measures they believed had been agreed to stave off a rebellion last week."This will not only test May's ability to steer a minority government, but also the pounds buoyancy as pro-EU rebels promise they can collapse the government if their demands aren't met. Theresa May showing signs of weakness and an inability to control her party wouldn't bode well for the future as several other piece of legislation is still needed in order to prepare for Brexit," said London Capital's Jasper Lawler.Related Shares:
MCS.LAshtead Group