AGK.L Share News (AGK)

LONDON (Alliance News) - UK shares were higher Thursday midday, recovering ground lost from a negative open, with mining stocks supporting the gains, as well as motor insurer Admiral Group and building materials company CRH, following strong full-year results from both.

The FTSE 100 was up 0.3%, or 17.2 points at 6,164.26, looking to on its way to take back all the loses seen in 2016 to date following a positive week so far. If the UK's leading index were to reach 6,242.32 points, it would be flat for the year.

The FTSE 250 was up 0.4% at 16,796.13, and the AIM All-Share was up 0.1% at 697.11. In Europe, the CAC 40 in Paris and the DAX 30 in Frankurt were down 0.3% and down 0.2%, respectively.

Admiral was up 6.9%, after the group reported consensus-beating results. It declared 2015 as "the year of the uncut diamond", as it lifted its dividend and reported higher profit.

Pretax profit rose to GBP368.7 million in 2015, from GBP350.7 million the prior year, as net revenue increased to GBP904.8 million from GBP884.6 million and total expenses fell to GBP525.0 million from GBP529.3 million. Admiral lifted its total dividend for 2015 to 114.4 pence from 98.4p, which Numis said was also better than consensus estimates of 97.3p.

Numis said Admiral's adjusted pretax profit of GBP377 million was "materially" ahead of consensus of GBP350 million and the broker's own estimates of GBP359 million, while it was also better than Shore Capital's forecasts of GBP357 million.

"I would describe 2015 as: the year of the uncut diamond. When the year started many people thought it would turn out to be a lump of coal. But no, 2015 was no lumpy coal year," Admiral Chief Executive Officer Henry Engelhardt said.

Numis kept an Add stance on Admiral. However, Shore retained a Sell recommendation on the company as the broker said one of the key takeaways from the 2015 results was the continuing loss from the International car insurance division, which reported a loss of GBP22.2 million, against a loss of GBP19.9 million a year earlier.

Shares in Ireland's CRH also were coloured bright green, up 4.0%, as it posted higher pretax profit and revenue for 2015, driven by acquisitions it made and a robust US market. CRH said its pretax profit for the year to the end of December was EUR1.03 billion, up from EUR761.0 million a year earlier, while revenue rose 25% to EUR23.64 billion from EUR18.91 billion thanks to the significant volume of acquisitions made in the year.

The group benefited in part from the positive translation effect of the strong dollar on its results, as US sales increased thanks to more normal weather patterns at the start of 2015 than a year earlier and from the continued positive momentum in the US construction industry. CRH said it will pay a flat 44.0 cents final dividend, leaving its total dividend flat at 62.5 cents.

Miners were continuing their rally started in mid-January, with the FTSE 350 Mining sector index adding 4.7%, on its way up from levels near all-time lows touched at the start of the year. The index is up 24% so far in 2016. Glencore was up 8.5% on the day Thursday, Anglo American up 5.7%, Rio Tinto up 3.9% and Antofagasta up 3.8%.

Rio Tinto said it managed to replenish its iron ore reserves at a quicker rate than it extracted them in 2015, leading to an increase in its overall reserves, and said coal reserves and resources have also risen. The reserves cover the company's iron ore operations in Australia, which were 309.0 million tonnes higher at the end of 2015 from the previous reserve estimate.

Rio also said its coal reserves have increased following the reserve update, covering its operations in New South Wales and Queensland in Australia. The total coal ore reserve at the end of 2015 stood at 2.50 billion tonnes from 2.10 billion tonnes under the last estimate.

Travis Perkins was up 3.6% after the builders' merchant expressed confidence on its outlook, even as a tough repair, maintenance and improvement market in the UK dragged on its 2015 profit. The group said pretax profit for the year to the end of December was GBP224.0 million, sinking 30% from the GBP321.0 million posted in 2014.

At the other end of the index, Inmarsat was down 6.1%. The satellite communications company reported pretax profit of USD338.0 million for 2015, down slightly from USD342.3 million in 2014, as revenue slipped a little to USD1.27 billion from USD1.29 billion. On an adjusted basis, stripping out USD10.8 million in revenue in 2014 from energy-related assets that were sold, revenue was mostly flat.

Fourth quarter revenue, excluding deferred revenues from troubled customer LightSquared, came in at USD299.1 million, down from USD314.5 million in the corresponding period in 2014. It was 4.1% below Nomura's forecast, and below consensus at USD315.00 million.

Inmarsat also said it expects capital expenditure to be within the range of USD500 million to USD600 million in each of the next three years. Nomura said this is higher than consensus which expected capex to be USD463.0 million, USD441.0 million and USD393.0 million for the next three years respectively.

Meanwhile, Whitbread was down 3.6%. Analysts were disappointed by the group's slowing, below-expectations like-for-like sales growth in the 11 weeks to February 11. The hotel and coffee shop owner said total sales in the 11-week period grew 7.7%, while like-for-like sales increased by 1.7%. This slowed from 3.5% increase in like-for-like sales and a 10.4% rise in total sales reported for the 13 weeks to November 26.

The growth was below Shore Capital's estimate for like-for-like sales growth of between 2.0% and 2.5%. Shore said while the update is likely to be taken negatively by the market, particularly around the Costa coffee performance, the broker believes the hotels division is undervalued. Shore maintained its Buy rating.

Imperial Brands was down 2.9% after the tobacco giant was downgraded to Neutral from Buy by Goldman Sachs.

In the FTSE 250, Aggreko was up 9.5%, even though the temporary power company said its profit and revenue dipped in 2015 as it took a hit from the low oil price, a price reduction on a contract extension in Bangladesh, and slower payments in Venezuela and Yemen.

Aggreko said its pretax profit fell to GBP226.0 million in 2015 from GBP289.0 million in 2014, in line with its expectations as it took a hit from lower demand from the oil and gas industry and pricing pressures which drove its trading margin down to 16% from 19%.

Cobham was the worst mid-cap performer, down 7.1%. The aerospace group increased its dividend in 2015 after reporting robust underlying results, but ultimately posted a pretax loss for the year after booking impairments and restructuring charges. Pretax loss of GBP39.8 million in 2014, swinging from a GBP24.3 million profit in 2014 despite experiencing a 12% lift in revenue to GBP2.07 billion from GBP1.85 billion and improving its trading margin.

Stocks in New York were called for a slightly higher open, with the DJIA and the S&P 500 seen up 0.1% and the Nasdaq Composite pointed up 0.2%.

In the US corporate calendar, Hewlett Packard Enterprise releases its first-quarter results after the US equities market close.

In the US economic calendar, initial and continuing jobless claims are at 1330 GMT, at the same time as nonfarm productivity and unit labor costs data. Markit services and composite Purchasing Manager's Index readings are due at 1445 GMT and ISM non-manufacturing PMI at 1500 GMT. US factory orders are at 1500 GMT and the energy information administration's natural gas storage is at 1530 GMT.

Investors were shrugging off data from Markit showing that the UK service sector expanded at the weakest pace in nearly three years in February. The Chartered Institute of Procurement & Supply/Markit services PMI dropped to 52.7 in February from 55.6 in the previous month. Economists had expected the index to fall slightly to 55.1. However, any reading above 50 still indicates expansion in the sector.

Meanwhile, eurozone private sector growth eased to a 13-month low in February but the slowdown was less severe than initially estimated, final data from Markit showed. The composite output PMI slid to 53 in February from 53.6 in January. This was the lowest score since January 2015 but slightly above the flash score of 52.7. Similarly, the services PMI dropped to 53.3 from 53.6 in January.

By Daniel Ruiz; danielruiz@alliancenews.com

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