Kingfisher Share News (KGF)

(Alliance News) - London futures ticked up on Wednesday despite unease over an outbreak of Covid-19 in Beijing leading to a mixed session in Asia overnight.

In early news, housebuilder Berkeley Group reported a fall in full-year profit, as did utility SSE, which took GBP738.7 million in exceptional charges. DIY retailer Kingfisher reported a slump in like-for-like sales for its first quarter but an improvement in recent weeks, and online clothing seller boohoo achieved very strong first quarter trading and made two acquisitions.

IG says futures indicate the FTSE 100 index of large-caps to open 36.70 points higher at 6,271.00 on Wednesday. The FTSE 100 index closed up 178.09 points, or 2.9%, at 6,242.79 on Tuesday.

In the US on Tuesday, Wall Street ended higher, with the Dow Jones Industrial Average ending up 2.0%, the S&P 500 up 1.9% and Nasdaq Composite 1.8% higher. But stocks in Asia were mixed on Wednesday.

"The prevailing winds from Wall Street have rapidly changed direction in Asia today. Regional markets are weighed down by the escalating Covid-19 outbreak in Beijing, Korean sabre-rattling, weak Japanese trade data, and escalating tensions on the India-China border," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda.

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.

Tens of thousands of people linked to the new Beijing virus cluster – believed to have started in the sprawling Xinfadi wholesale food market – are being tested, with almost 30 residential compounds in the city now under lockdown.

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 Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite is up 0.1%, while the Hang Seng index in Hong Kong is 0.3% higher.  

The value of outbound shipments from Japan 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.

Shipments to China, Japan's largest trading partner, fell 1.9% to JPY1.1 trillion, while imports declined 2% to JPY1.5 trillion, the ministry said.

The yen was stronger early Wednesday. Against the yen, the dollar was quoted at JPY107.24 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 mens' clothing recording a fall of 6.8%. Fuel prices also continued to slump, with petrol and diesel prices both down 17%.

Sterling was quoted at USD1.2558 on Wednesday after the data, slightly lower than USD1.2588 at the London equities close on Tuesday.

The euro traded at USD1.1274, firm versus USD1.1261 late Tuesday.

Gold was quoted at USD1,727.54 an ounce early Wednesday in London, flat on USD1,727.20 on Tuesday. Brent oil was trading at USD40.23 a barrel, unchanged on USD40.22 late Tuesday.

In early UK company news, housebuilder Berkeley Group said a sharp slump in annual profit was as expected.

Revenue for the financial year to April 30 was down 35% to GBP1.92 billion, with pretax profit also down 35%, at GPB503.7 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.

Electricity utility SSE 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.

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.

Retailer Kingfisher reported a slump in profit for its recently ended financial year, and a fall in sales in the first quarter of its new year due to Covid-19, though trends have improved in more recent weeks.

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 reported "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 Powell will continue to testify before Congress at 1700 BST.

By Lucy Heming; lucyheming@alliancenews.com

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