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FTSE 100 movers: Tui bounces back but Evraz slumps on Russia sanctions

Fri, 10th Aug 2018 13:58

(Sharecast News) - London's FTSE 100 was down 1% to 7,662.61 in afternoon trade on Friday, tracking broader losses amid worries about Turkey.

Tui was the standout gainer following heavy losses the day earlier on the back of its third-quarter results.

The travel operator said on Thursday that it was sticking to its guidance for full-year underlying earnings growth but posted a drop in third-quarter underlying earnings.

Bernstein said that although the results undoubtedly showed the tour operation business to be at the mercy of external effects, these - this year it was hot weather - may be industry impacts and non-recurring but the impact on profitability when they hit shows the potential operational leverage to them.

"However, the results also show the resilience and diversity of TUI. The non-tour operator parts of the business will generate 62% of EBITA this year and are growing strongly, offsetting the weakness in the tour operator and, despite the perfect (lack of) storms, enabled TUI to retain guidance at more than 10% (albeit closer to 10% than the market expected)," it said.

Diageo ticked up as it told its broker to kick off the first swathe of its 2bn share buyback. Citigroup will begin purchasing the drinks giant's shares up to a value of up to 1.4bn, with further tranche to be announced by the FTSE 100 company later in the financial year to June 2019.

On the downside, Russia-based steelmaker Evraz slumped a day after its first-half results.

CMC Markets analyst David Madden pointed to the fact that relations between the US and Russia took a hit on Thuesday after Washington DC revealed plans to impose fresh sanctions on the country for its alleged role in the poisoning of a former Russian spy in the UK.

Meanwhile, Accendo Markets analyst Artjom Hatsaturjants said: "While direct US sanctions have so far been limited to state-owned Russian companies and President Putin's close associates (Oleg Deripaska's Rusal comes to mind), how long before another US policymaker starts talking about Evraz's billionaire owner Roman Abramovich's 'friendship' with Putin and Evraz suffers the fate similar to that of deeply-damaged aluminium giant Rusal?

"While Evraz can certainly take steps to address its exposure to Russian market or its ownership structure, FX headwinds are entirely out of company's hands. More wild share price swings to come?"

The stock was also knocked lower by a downgrade to 'sell' at VTB Capital, while Rolls-Royce was weaker after a downgrade from JPMorgan Cazenove.

Bookie Paddy Power was under the cosh as Credit Suisse upgraded it to 'neutral' from 'outperform' but cut the price target to 7,600p from 8,000p and reduced its estimates.

"Previously, we were valuing the cash flows generated separately and adding the result to our valuation. As a result of this (and tweaks to our numbers for the remainder of the business), we lower our 2018E EBITDA estimate by 3% to 455m (was 468m). This is below guidance of 460-480m, but if we exclude US sports-betting losses to be consistent with guidance, our estimate is in-line at 464m."

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 1,570.50p 1.82%

Carnival (CCL) 4,611.00p 1.77%

Royal Mail (RMG) 466.30p 1.48%

WPP (WPP) 1,227.50p 0.82%

National Grid (NG.) 816.80p 0.79%

SEGRO (SGRO) 673.80p 0.36%

Diageo (DGE) 2,806.50p 0.32%

Ocado Group (OCDO) 1,060.00p 0.28%

Tesco (TSCO) 265.60p 0.23%

Pearson (PSON) 919.00p 0.22%

FTSE 100 - Fallers

Evraz (EVR) 507.00p -9.53%

Fresnillo (FRES) 972.00p -4.89%

Randgold Resources Ltd. (RRS) 5,412.96p -3.31%

Rolls-Royce Holdings (RR.) 1,052.00p -2.95%

Paddy Power Betfair (PPB) 7,350.00p -2.65%

Coca-Cola HBC AG (CDI) (CCH) 2,693.00p -2.36%

Associated British Foods (ABF) 2,412.00p -2.07%

Anglo American (AAL) 1,676.60p -2.04%

Rio Tinto (RIO) 3,807.50p -1.91%

Glencore (GLEN) 324.00p -1.88%

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