UK WINNERS & LOSERS SUMMARY: Royal Mail Rises As Parcels Boost Outlook

(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Thursday.

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FTSE 100 - WINNERS

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Wm Morrison Supermarkets, up 3.3%. Goldman Sachs boosted the supermarket to Buy from Sell.

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Halma, up 2.0%. The hazard detection and life protection technologies manufacturer said profit declined in the first half of its financial year, with the UK proving its weakest region during the Covid-19 pandemic, but the FTSE 100 constituent upgraded guidance. For the six months ended September 30, Halma reported a GBP96.3 million pretax profit, down 9.0% from GBP105.8 million. This came as revenue dropped 5.4% to GBP618.4 million from GBP653.7 million, including a 17% drop in UK revenue to GBP87.6 million from GBP105.2 million. Chief Executive Andrew Williams said: "We have had a good start to the second half, with order intake ahead of revenue and up on the same period last year. Our improving trading performance, together with our strong cash position, will enable us to accelerate strategic investments in the second half of the year. As a result of our progress so far this year, we now expect adjusted profit before tax for [financial 2021] to be around 5% below [financial 2020], compared to prior guidance of 5% to 10% below [financial 2020]."

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FTSE 100 - LOSERS

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Kingfisher, down 4.4%. The DIY retailer posted double-digit sales rises almost across the board in its third-quarter, helped by both its status as essential retailer and by an online order surge. And more recently, sales in the six weeks to November 14 have continued to grow, albeit at a slightly slower pace. In the three months to October 31, sales jumped 17% year-on-year to GBP3.46 billion. At constant currency, sales were 18% higher, while like-for-like constant currency sales climbed 17%. In its UK & Ireland arm, Kingfisher saw sales growth of 24% and 17% at its B&Q and Screwfix units. Total UK & Ireland sales were 22% higher. Online sales more than doubled, Kingfisher explained, and they now account for 17% of group sales, compared to 8% a year ago. In the six weeks to November 14, which has coincided with tighter restrictions in Europe, including part of England's one-month lockdown, group like-for-like sales are up 13%, slowed somewhat from the third-quarter.

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Johnson Matthey, down 3.6%. The speciality chemicals firm posted a fall in interim profit as it saw weaker demand in its Clean Air segment. Revenue for the six months to September 30 rose 2% to GBP6.80 billion, but pretax profit slumped 88% to GBP26 million. The fall in profit was driven by lower demand in the Clean Air segment, which mostly serves car makers, and major impairment and restructuring charges of GBP78 million. Underlying pretax profit still fell sharply, down 53% to GBP109 million. Johnson Matthey said that following "temporary disruption" in its Clean Air unit earlier in the year, it is seeing a strong recovery in demand across all regions, especially in China. Clear Air underlying operating profit was down 57% to GBP77 million in the half. Looking ahead, Johnson Matthey noted that activity in autos and other key markets has improved since the pandemic began and it expects a "materially" stronger second half versus the first.

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FTSE 250 - WINNERS

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Royal Mail, up 7.6%. The postal operator remained bullish on its future as a parcel delivery firm, despite reporting that interim profit was reduced to just one-tenth of the year-earlier level on a range of costs. Revenue for the half-year to September 27 amounted to GBP5.67 billion, up 9.8% on a year ago. However, pretax profit dived 90% to GBP17 million from GBP173 million, and the firm posted an operating loss of GBP20 million versus a profit of GBP61 million a year prior. For the Royal Mail arm, its UK business, revenue was up 4.9% to GBP3.83 billion from GBP3.65 billion a year before, with parcels revenue up 33% but letters revenue falling 21%. Parcel revenue exceeded letter revenue for the first time in the UK business. Parcel revenue climbed to GBP2.30 billion from GBP1.73 billion, while letter revenue fell to GBP1.53 billion from GBP1.92 billion. Keith Williams, interim executive chair, commented on the company's outlook: "We have updated our scenario for the full year. As parcel volumes at both Royal Mail and GLS have continued to be robust year to date, revenue performance in the scenario has improved."

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FTSE 250 - LOSERS

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Cineworld, down 11%. The cinema chain operator is considering a company voluntary arrangement as part of talks with lenders, the Financial Times reported. Cineworld, the FT said, is looking to reduce its rent payments and to permanently close UK cinemas amid lockdown restrictions and a lack of blockbuster films. Citing "three sources close to the negotiations" the FT said the insolvency process is aimed at cutting costs and is part of talks with lenders, as Cineworld seeks access to capital while waiting for the return of major movie releases in the spring. This followed decisions by Hollywood studios to delay film releases, which Cineworld needed to bring in winter customers, and which prompted the movie house chain to close all of its UK and US cinemas in October.

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Investec, down 4.9%. The Anglo-South African wealth management company said pretax profit dropped by more than a half in the first six months of its current financial year but it expects improvement going forward. Investec reported net interest income for the six months to the end of September of GBP359.4 million compared to GBP425.7 million a year earlier, resulting in a pretax profit decline to GBP112.9 million from GBP260.5 million year-on-year. As at September 30, net asset value per share increased by 4.6% to 433.5 pence from 414.3p as at March 31. The company declared an interim dividend of 5.5p a share, halved from 11.0p paid a year earlier. Going forward, Investec said it expects the overall performance in the second half of its current financial year to be ahead of the first half, underpinned by improving revenue trends as client activity levels improve and liability repricing aids net interest income.

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By Lucy Heming; lucyheming@alliancenews.com

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