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(Alliance News) - Stock prices in London are seen opening higher on Thursday following Wednesday's steep losses, as minutes from the US Federal Reserve's most recent monetary policy meeting revealed several members contemplating a wind-down of its monetary easing measures.
In early company news, Kingfisher raised its profit guidance as the pandemic-spurred demand for home-improvement supplies continues. National Grid raised its dividend after upbeat annual results. Plastic piping systems maker Genuit Group started the search for a new chief executive.
IG futures indicate the FTSE 100 index is to open up 54.40 points at 7,004.60. The blue-chip index closed down 84.04 points, or 1.2%, at 6,950.20 Wednesday.
Kingfisher said it delivered strong sales growth in the first quarter, with positive momentum continuing into the second quarter.
For the three months to April 30, Kingfisher reported total group sales of GBP3.44 billion, up 64% on a like-for-like basis, supported by strong demand in the UK and France as well as continued e-commerce sales progress.
In the UK & Ireland, where Kingfisher has B&Q and Screwfix stores, first-quarter sales were GBP1.83 billion, up 65% on a like-for-like basis. In France, where the company operates Castorama and Brico Depot, like-for-like sales were up 102% to GBP1.18 billion.
Kingfisher said the second quarter has started well with like-for-like sales to May 15 up 8.2%, which continues to reflect strong demand.
Following the upbeat performance, Kingfisher raised its first-half like-for-like sales growth view to mid-to-high teens from low double-digit. It also anticipates first-half adjusted pretax profit to be ahead of previous expectations, in the range of GBP580 to GBP600 million. Kingfisher posted adjusted pretax profit of GBP415 million in the first half of last year.
Kingfisher expects financial 2022 adjusted pretax profit growth ahead of sales, from previously 'in line with'.
"We continue to see high levels of demand from both new and existing customers, with clear progress made on our 'Powered by Kingfisher' strategic priorities, especially in four key areas. Firstly, e-commerce continues to be our fastest-growing channel with two-year growth of over 250%, now accounting for 21% of group sales. During the quarter, we established a new agile operating model for our technology and digital teams, and further strengthened these teams with multiple new hires," said Chief Executive Officer Thierry Garnier.
"Secondly, we are excited to have launched Screwfix as a pure-play online retailer in France in late April. Thirdly, our new own exclusive brand kitchen range is now available in all key markets, with very positive results despite lockdown restrictions," Garnier added.
National Grid said it delivered good operational progress during its recently ended financial year, with high levels of network reliability across all service territories, despite the "significant challenges" throughout the year from Covid-19.
For the year ended March 31, revenue was GBP14.78 billion, up 1.7% from GBP14.54 billion in financial 2020, and pretax profit was GBP2.08 billion, up 19% from GBP1.75 billion.
National Grid declared a final dividend of 32.16 pence per share, bringing the total dividend to 49.16p, up 1.2% from 48.57p last year.
Looking ahead, National Grid expects GBP30 billion to GBP35 billion in capital expenditure over the next five years and annual earnings per share growth 5% to 7% over next five years.
"In the past year we have successfully navigated the challenges of COVID-19, delivered over GBP5 billion of capital investment and achieved a solid underlying financial performance. This is testament to the strength and resilience of our business model and the unwavering commitment of our employees. We also announced the transformational acquisition of WPD which will ensure National Grid is at the heart of the energy transition in the UK and enhance the future growth profile of the group," said CEO John Pettigrew.
"National Grid has an exciting future, with numerous opportunities in the UK and US to provide energy security and support the delivery of net zero. Our critical role in the energy sector, alongside our position as a principal partner at COP26, provides us with a unique opportunity to call for more ambitious action towards a clean energy future and a strong platform from which to generate value for all our stakeholders," Pettigrew added.
Genuit Group said Martin Payne has informed the board of his intention to step down as CEO and from the board. Payne will leave the company during the first half of 2022, to support an orderly transition, after leading the business for five years.
Genuit said it is commencing a process to appoint a successor and will provide an update when appropriate.
The company, formerly known as Polypipe, also said revenue for the four months ended April 30, was GBP193 million, up 32% from GBP146.6 million a year ago.
Genuit said it has seen a robust start to the year and now expects underlying operating profit to be close to the top end of the current consensus because of the stronger-than-anticipated revenue growth in the period to April 30. Underlying operating profit consensus is GBP85 million, with a range of GBP80 million to GBP88 million.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite was up 0.2%, while the Hang Seng index in Hong Kong was down 0.5%. The market in Hong Kong reopened on Thursday after being closed for a holiday on Wednesday.
In the US on Wednesday, Wall Street ended in the red, with the Dow Jones Industrial Average down 0.5%, S&P 500 down 0.3%, and Nasdaq Composite marginally lower.
Some US Federal Reserve officials believe it may soon be time to consider tapering asset purchases meant to aid the US economy's recovery from the virus pandemic, according to meeting minutes released Wednesday.
In the minutes, policy makers noted the economy "remained far from the [FOMC's] maximum-employment and price-stability goals" and, as a result, "it would likely be some time until the economy had made [the] substantial further progress "needed to begin tapering those purchases".
The minutes continued: "A number of participants suggested that if the economy continued to make rapid progress toward the committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases."
The Fed also said "the expected surge in demand as the economy reopens further, along with some transitory supply chain bottlenecks, would contribute to [personal consumption expenditure] price inflation temporarily running somewhat above 2%."
Meanwhile, bitcoin stabilised after Wednesday's wild swings that saw the cryptocurrency collapse by almost a third in one day before recovering most of its losses.
The dollar was stronger across the board following the Fed meeting minutes.
The pound was quoted at USD1.4130 early Thursday, down from USD1.4155 at the London equities close Wednesday.
The euro was priced at USD1.2190, lower from USD1.2216. Against the yen, the dollar was trading at JPY109.06, up from JPY108.68.
Brent oil was quoted at USD66.98 a barrel Thursday morning, up from USD66.06 late Wednesday. Gold was trading at USD1,876.15 an ounce, lower against USD1,883.00.
In the international economics calendar on Thursday, eurozone construction output is at 1000 BST and US initial jobless claims at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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