Kingfisher Share News (KGF)

(Alliance News) - London stocks nudged higher at the open on Wednesday following a mixed session in Asian overnight, where caution crept in as Beijing tries to tackle a fresh Covid-19 outbreak.

SSE was leading London's blue-chip gainers following its full-year results, while Kingfisher rallied in the FTSE 250 as it saw a recent improvement in trading and boohoo shares gained on AIM amid a strong first quarter.

The FTSE 100 index was up 23.32 points, or 0.4%, at 6,266.11 early Wednesday. The mid-cap FTSE 250 index was up 46.64 points, or 0.3%, at 17,511.34. The AIM All-Share index was up 0.9% at 885.11.

The Cboe UK 100 index was up 0.4% at 10,605.89. The Cboe 250 was up 0.3% at 15,084.89, and the Cboe Small Companies up 0.2% at 9,773.96.

In mainland Europe, the CAC 40 in Paris was up 0.3% while the DAX 30 in Frankfurt was up 0.2% early Wednesday.

European stocks edged higher at the open on Wednesday despite caution in Asia overnight.

"Equity markets were mixed during the Asian trading session after chalking significant gains yesterday...A number of reasons may have injected a degree of caution in markets including concerns about rises in Covid-19 cases in Beijing and parts of the US, border skirmishes between China and India, and growing tensions on the Korean peninsula," said Lloyds Bank.

In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite ended up 0.1%, while the Hang Seng index in Hong Kong is 0.2% higher.

Beijing's airports cancelled more than 1,200 flights and schools in the Chinese capital were closed again on Wednesday as authorities rushed to contain a new coronavirus outbreak linked to a wholesale food market.

The city reported 31 new cases on Wednesday while officials urged residents not to leave Beijing, with fears growing about a second wave of infections in China, which had largely brought its outbreak under control.

Meanwhile, Beijing's state media played down a deadly border confrontation between Chinese and Indian troops and did not reveal casualties on its side even as social media users urged retaliation.

The Indian army said Tuesday that 20 of its soldiers were killed in a "violent face-off" along the Himalayan frontier on Monday, which resulted in "casualties on both sides".

In Japan, the value of outbound shipments dropped 28% year-on-year to JPY4.18 trillion in May due to coronavirus pandemic-induced lockdowns in most countries, a government report showed. The reading represented the 18th straight month of decline, with the epidemic delivering a crushing blow to Japan's export-oriented economy.

The yen was flat Wednesday morning. Against the Japanese currency, the dollar was quoted at JPY107.32 versus JPY107.33.

In UK data, figures showed the annual inflation rate eased to just 0.5% in May from 0.8% in April.

Prices for clothing & footwear slumped 3.1%, with men's clothing recording a fall of 6.8%. Fuel prices also continued to slump, with petrol and diesel prices both down 17%.

"Inflationary pressures are likely to remain fairly muted for the time being. This, in turn, will keep the pressure on the Bank of England to maintain its current degree of stimulus, and we expect a further GBP150 billion of QE to be unveiled this week," said ING.

Sterling was quoted at USD1.2572 on Wednesday after the data, soft against USD1.2588 at the London equities close on Tuesday.

The euro traded at USD1.1286, higher versus USD1.1261 late Tuesday.

Gold was quoted at USD1,728.03 an ounce early Wednesday in London, firm on USD1,727.20 on Tuesday. Brent oil was trading at USD40.71 a barrel, slightly higher against USD40.22 late Tuesday.

At the top of the FTSE 100 was SSE, up 8.6% as the electricity utility reported a fall in full-year profit on exceptional charges, though it continues to target delivery of its five-year dividend plan.

Revenue for the year to March 31 slipped 6.8% to GBP6.80 billion from GBP7.30 billion, with pretax profit halving to GBP587.6 million from GBP1.30 billion.

"Reported results for the year to 31 March 2020 were significantly lower than the previous year, reflecting pre-tax exceptional charges of GBP738.7 million recognised during the year; both in relation to the reshaping of SSE (with the sale of SSE Energy Services and the closure of Fiddler's Ferry coal fired power station) and a deterioration in market conditions," SSE explained.

SSE recommended a full-year dividend of 80 pence, down 18% from 97.5p the year before. The 80p payout was in line with SSE's previous announcements, including an update in March when it confirmed its dividend plans as other large companies were suspending payouts.

Looking forward, SSE continues to target delivery of its five-year dividend plan.

"It is still too soon to predict with accuracy the full human, social, economic and business impact of coronavirus; but we have put in place a comprehensive plan to achieve the related objectives of sustaining the dividend payments which provides vital income for people's pensions and savings - income which is now more important than ever; and promoting the long-term success of SSE for the benefit of all its stakeholders," said Chair Richard Gillingwater.

Berkeley shares rose 2.0% as it reported an anticipated decline in annual profit.

Revenue for the financial year to April 30 was down 35% to GBP1.92 billion, with pretax profit also down 35%, at GBP503.7 million.

This came from the sale of 2,723 homes - down from 3,698 the year before - at an average selling price of GBP677,000, again down from GBP748,000 the prior year.

"The reduction in profit before tax of 35.0% on the prior year was anticipated and reflects the progressive completion of a number of Central London developments acquired in the period from 2009 to 2013," Berkeley said.

The company said it is maintaining a pretax return on equity target of at least 15% for the period stretching May 1 to April 30, 2025, which equates to annual pretax profit of GBP500 million for the six-year period.

In the FTSE 250, Kingfisher gained 6.4% as it saw improved trends in the second quarter of its new financial year to date.

Sales in the year ended January 31 were down 1.5% at GBP11.5 billion, falling 1.5% on a like-for-like basis as well. Pretax profit slumped 66% to GBP103 million after GBP441 million of exceptional items, largely reflecting store and Russia impairments.

Turning to recent trading, the B&Q owner said first quarter like-for-like sales were down 25% even though trading up to March 14 continued the "positive trends" seen in the fourth quarter of the recently ended year. However, second quarter like-for-like sales to date were up 22% amid strong e-commerce growth and the phased reopening of stores.

"We ended FY19-20 in better shape, after a disappointing first nine months, by returning the group to positive like-for-like sales growth in Q4 as well as for the start of FY 20/21," said Chief Executive Thierry Garnier, who joined the business in late September.

"While the coronavirus crisis has obviously shifted our immediate priorities, we have continued to plan for the longer term and implement our new strategic plan. It would be a mistake not to. Kingfisher is well positioned within a home improvement market that is resilient and has attractive long term growth prospects," he added.

boohoo rallied 9.6% on AIM on "very strong" first quarter trading despite the Covid-19 pandemic, as it also unveiled two acquisitions.

Revenue was up 45% in the three months to May 31 at GBP367.8 million, with UK revenue up 30% at GBP183.0 million and sales in the rest of Europe surging 66% to GBP63.4 million. US sales rose 79% to GBP92.0 million, and Rest of World sales grew 22% to GBP29.4 million.

"The group entered the year with sustained momentum from a strong finish to its previous financial year. Trading in the middle of March through to early April was mixed, as a result of the impact of the Covid-19 pandemic, initially with a marked decrease in year-on-year growth. Performance across all of our brands and geographies improved throughout April, with a robust performance delivered in May," the online clothing retailer said.

Looking out, boohoo expects to deliver another year of "strong profitable growth", and ahead of market expectations. Revenue growth is expected at 25% for the current financial year, with an adjusted Ebitda margin of 9.5% to 10%.

Alongside the trading update, boohoo announced the acquisition of the online businesses and all associated intellectual property of Oasis and Warehouse for GBP5.3 million in cash from Hilco Capital. Administrators were called in for the two brands back in April. Deloitte at the time said that all stores would close indefinitely and online sales would be stopped.

In Wednesday's economic calendar, eurozone inflation and construction output are due at 1000 BST. US Fed Chair Jerome Powell will continue to testify before Congress at 1700 BST.

By Lucy Heming; lucyheming@alliancenews.com

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