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LONDON (Alliance News) - UK equities opened higher Thursday, after the minutes from the Federal Reserve's October meeting pointed towards a December US interest rate hike, in-line with market expectations.
Meanwhile, on the London Stock Exchange, Johnson Matthey was the best performer in the FTSE 100, trading up 6.8%. The platinum and chemicals company said it will pay a special dividend to shareholders following the disposal of assets in the first half, as its pretax profit and revenue both rose despite mixed conditions in most of its markets, offset by a strong performance in its emission control unit.
The group said it will pay an interim dividend of 19.5 pence per share, flat year-on-year, but said it also will pay a special dividend for the half of 150.0p, following the disposal of businesses during the half. The total distribution to shareholders from the special payout will be GBP305.0 million.
Royal Mail was trading up 4.4%. The postal operator said its pretax profit fell in the first half of its financial year due to an acceleration of its cost-cutting plans in the UK, though revenue also declined and the group reiterated its full-year performance, as in the past, would be heavily dependent on the Christmas period.
The company said its pretax profit for the half year to September 27 fell to GBP116.0 million from GBP167.0 million in the half to September 28, 2014, mainly due to more costs being booked from its restructuring plan in the UK and reflecting a higher number of voluntary redundancies. Nearly 3,000 net employees left the company in the first half. Due to that, Royal Mail's operating margin for the half declined by nearly 110 basis points.
Royal Mail said it will pay an interim dividend of 7.0 pence per share, up from 6.7p a year before.
CRH was another top blue-chip performer, trading up 3.3%. The Irish building company said it continues to expect its 2015 earnings to be well ahead of the previous year as it continued to deliver good sales growth in the first nine months.
The group said total sales grew 16% year-on-year in the nine months to the end of September, though growth did slow to 14% in the third quarter. Europe sales growth for the third quarter was only 1.0%, amid mixed trading in the region, albeit with conditions stable overall.
Sales growth continues to be driven by its Americas operation, CRH said, where third-quarter sales rose 23%, a slowdown from the 32% growth in the first half and leaving nine-month growth at 28%.
The FTSE 100 index traded up 0.9% at 6,335.71 points just after the open. The FTSE 250 index was up 0.4% at 17,150.39, and the AIM All-Share was up 0.2% at 750.34.
In Europe, the CAC 40 in Paris was up 0.8% and the DAX 30 in Frankfurt was up 1.1%.
Asian stocks closed higher Thursday, the Nikkei 225 in Tokyo closed up 1.1%, the Hang Seng in Hong Kong ended up 1.4% as did the Shanghai Composite.
In the FTSE 250, Poundland Group was the biggest faller in the index, down 16%. The discount retailer said its pretax profit fell in the first half due to higher costs and said like-for-like also declined due in part to tough comparatives, though it said the acquisition of 99p Stores has progressed in line with its expectations.
The company said its pretax profit for the 26 weeks to September 27 was GBP5.3 million, down from GBP9.3 million a year earlier, mostly due to exceptional distribution and administrative expenses it incurred in the half.
Total revenue rose to GBP561.1 million, up from GBP528.2 million, with underlying sales rising 5.6% in constant currencies but like-for-like sales down 2.8%, compared to a 4.7% rise a year earlier.
Bovis Homes Group shares were down 10% after the housebuilder warned its operating profit margin for the full year is likely to be only marginally ahead as its overall mix of homes was more weighted to existing sites than previously anticipated.
The group said that following planning delays on a number of higher margin sites, its revenue mix will be weighted further towards existing sites than it had originally planned. Bovis said delivering an increasing in production in the short-term remains constrained by a shortage of sub-contract labour, which has pushed up its costs, though this is showing signs of moderating.
Qinetiq Group was the best midcap performer, up 5.6%. The defence services company said it managed to deliver a solid set of interim results against a difficult market backdrop, as both profit and revenue increased but its order intake slumped.
The company said its pretax profit for the half to the end of September was GBP48.3 million, up from GBP44.4 million a year before, as revenue rose to GBP370.9 million from GBP365.6 million. Amid an environment of tighter defence and security budgets, however, order intake in the half was down to GBP228.4 million from GBP320.5 million, though QinetiQ said this came against a tough prior-year comparison.
Electrocomponents was another big gainer up 4.1%. The company said it has initiated a "major performance improvement plan" following what it called a "disappointing" performance in its first half, as it reported a drop in pretax profit.
For the half year to end-June Electrocomponents reported a pretax profit of GBP19.9 million, down from GBP57.1 million a year before, as a rise in revenue to GBP626.5 million from GBP616.4 million a year before was offset by a GBP31.3 million write-down of new website costs. The company's previous year results were restated due to a change in the accounting recognition of vendor rebates.
On Wednesday, the minutes of the Federal Open Market Committee's October meeting revealed most members expect economic conditions to justify an interest rate hike next month.
Some members of the Federal Open Market Committee believed that the economy was strong enough already last month to end the near-zero benchmark interest rate in place since December 2008, notes from the central bank's October 27-28 meeting showed.
In the economic calendar, current account data for the eurozone for September are due at 0900 GMT, before UK retail sales data for October at 0930 GMT and the accounts from the European Central Bank's October policy meeting at 1230 GMT. In the US, weekly jobless claims data are scheduled to be released at 1330 GMT, with the US Conference Board's leading indicator reading for October and the Philadelphia Federal Reserve's manufacturing survey for October at 1500 GMT. Investors will also be keeping an eye on a speech by Federal Reserve Bank of Atlanta President Dennis Lockhart at 1730 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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