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LONDON (Alliance News) - Publisher Pearson is the biggest faller on the FTSE 100 Thursday after it issued a profit warning, saying trading had been weaker than it expected, particularly in North America, its main market.
The Financial Times owner and publisher of education books said it had continued to grow strongly in emerging markets, but state budget pressures, changes to US education policy, and investments it made, all weighed on its business in the US, where it makes about 60% of its revenues. Educational policy changes also hit its UK business.
It said it will accelerate its cost cutting and focus investments towards its biggest growth areas in 2014, after warning the tough trading had continued into this year. It booked GBP130 million in restructuring costs for 2013.
On a brighter note, Pearson said profits were growing strongly at at the FT, driven by rising digital subscriptions.
Still Pearson shares are down 7.9% Wednesday afternoon, a six-month low.
The share prices of London-listed platinum miners have so far shrugged off the start of the latest strike by workers in South Africa. Shares in the likes of Lonmin have risen, even though the company confirmed that members of the Association of Mineworkers and Construction Union members had downed tools.
Anglo American said it has recorded low attendance at its Rustenburg, Union and Amandelbult mines following the start of industrial action this morning and expects production to be impacted by the strike. Lonmin said it expects losses to be in the region of 3,100 platinum ounces per day during the strike.
The strikes are becoming an annual feature of the South African mining sector, even though 2012's fatal conflict between workers and the mining companies ended with the employers making big concessions. Workers continue to demand big pay increases that the companies say they can't afford given last year's decline in precious metals prices.
Earlier in the week, Lonmin said offers on the table from it, Impala Platinum and Anglo American Platinum range from a pay increase of 7.5% to 8.5% depending on pay grade. The firms have also pledged to increase accommodation and other allowances.
Lonmin shares are up 0.9%, while Anglo American is up 2.7%.
In UK economic news, the Bank of England's Executive Director for Markets, Paul Fisher, has said there is no immediate need to hike the bank's key interest rate even if the 7% unemployment rate threshold is reached in the near future.
"We are still some way off the point where it is appropriate to start raising Bank Rate and that when it is time, it would be appropriate to do so only gradually," Fisher said, citing the fall in infaltion back to target and levels of output that are still below the pre-crisis peak.
BOE policy maker Ian McCafferty, meanwhile, said that a recovery in business investment will require not only a pickup in final demand, but a sustained decline in uncertainty. He said that a recovery is in its very early stages.
All eyes are now on BOE Governor Mark Carney, who will give a speech in Edinburgh Friday.
Car production in the UK climbed to a six-year high in 2013 on the back of robust domestic demand and surging exports to countries outside Europe, a report from the Society of Motor Manufacturers and Traders showed. Production rose 3.1% in 2013 to over 1.5 million units, the highest volume since 2007. Industry analysts predict output to reach record levels of around two million units by 2017, the report noted.
In political news, Ukrainian opposition leader Vitaly Klitschko blamed the government for escalating violence in an article published Thursday, as another protest leader called for the president to stand down, and the death toll reached at least three.
Attempts by President Viktor Yanukovych to hold the opposition responsible for the "chaos" would fail, Klitschko wrote in the newspaper Bild, amid the clashes and burning barricades in Kiev. On Independence Square, protest leaders late Wednesday demanded that Yanukovych step down within 24 hours, as around 50,000 people took to the streets of the capital.
International mediators have opened a series of meetings with the Syrian government and opposition in an 11th-hour bid to secure their participation in peace talks scheduled for Friday.
Arab League and UN special envoy Lakhdar Brahimi and a team of diplomats met separately with Damascus and the opposition in Geneva in a bid to reach a consensus over the framework of what would be the first direct talks between the two sides since the outbreak of the conflict in March 2011. The mediation came a day after an acrimonious start to the talks in Montreux, during which the two sides swapped accusations and challenged each other's legitimacy, clashing over the intended focus of the US- and Russia-backed talks in an opening ceremony attended by more than 40 countries.
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FTSE 100: down 0.1% at 6,820.19
FTSE 250: down 0.3% at 16,105.56
AIM ALL-SHARE: down 1.1% at 872.21
GBP-USD: 1.6600
EUR-USD: 1.3645
GOLD: USD1,254.19 an ounce
OIL (Brent): USD107.90 a barrel
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KEY UK CORPORATE NEWS:
FTSE 100: EasyJet says it will report a slightly wider first-half loss because it won't get the benefits of last year's early Easter, a key trading period for airlines. The low-cost carrier said it carried 4.2% more passengers in the first quarter to end-December, while a 3.4% rise in revenue per seat offset a 3.0% rise in cost per seat. The London Stock Exchange's third-quarter revenues increased 52%, buoyed by recently acquired clearing house LCH.Clearnet and good growth in other areas. SSE expects to deliver an increase in adjusted pretax profit before in the current financial year that will meet consensus forecasts. SABMiller will increase its investment in its Nigerian subsidiary, Intafact Beverages Ltd, by a further USD110 million in order to triple capacity at its Onitsha brewery. Insurer Aviva is looking for a new finance chief after saying Chief Financial Officer Pat Regan will leave in June to join QBE Insurance Group Ltd in Australia. Biopharmaceutical company Shire, meanwhile, has named Susan Kilsby as its new non-executive chairman, replacing Matthew Emmens who is retiring after more than 10 years with the company.
FTSE 250: AMEC may be wishing it hadn't walked away from Kentz Corp after the former takeover target saw its shares hit an all-time high after it said it expects it 2013 earnings per share to meet its expectations, growing at a double digit rate on the 2012 figure, and reported a jump in its order intake, pipeline of prospects and work backlog. Kenmare Resources said it increased production at its Moma Mine during its fiscal fourth quarter, bringing the increase for the year to 22%. Grades were also higher. Petra Diamonds says its on track to meet full-year production targets after reporting a 31% rise in production in the first half. Its revenues were up 19% in the half, and it said it expects strong growth in the second half. IP Group is hoping to raise GBP75.0 million in a capital raising designed to fund its future growth. It is also going to buy up the rest of Fushion IP PLC that it doesn't already own. It currently has a 20.1% stake. Bus and rail operator FirstGroup has reiterated its growth plans for coming years, ahead of an investor meeting where bosses are likely to be quizzed about why they are rejecting a plan proposed by one shareholder that it should break itself up and sell off its Greyhound bus operations in the US. AG Barr says it's on track to meet full-year expectations after strong trading momentum continued in the final quarter. It expects revenues to rise 6.1% to about GBP252 million for the year, after a 5.5% rise in the fourth quarter. Margins will also be up for the year, although marketing and promotions capped growth in the final quarter. PayPoint reported an 8% rise in third-quarter net revenues to GBP31 million thanks to growth in bill and general payments, retail services and PayByPhone. St. James's Place said the value of the funds its manages rose in the fourth-quarter thanks to net inflows and the strong recovery of the financial markets. The wealth manager said it attracted GBP1.3 billion in net inflows in the three months to end-December, bringing the total for the year-to-date to GBP4.3 billion. It had GBP44.3 billion under management at the end of the quarter. AZ Electronic Materials says it will appeal a ruling by the Korean Supreme Court that went against it over an alleged patent infringement by UP Chemical Co Ltd in South Korea relating to perhydropolysilazane dielectric technology.
AIM: Sterling Energy is a big gainer after force majeure at the Ntem Concession offshore Cameroon, in force since 2005, was lifted. Thor Mining is up after further screen fire assay tests at its Spring Hill project in Australia achieved a 50% increase in gold grades. San Leon Energy is also doing well after it successfully completed flow testing on its Lewino-1G2 shale gas site in Poland's northern Baltic Basin. LPA Group is another gainer after it said pretax profit increased in its most-recent fiscal year, despite UK sales dragging revenue down 3.9%. The firm posted pretax profit of GBP1.8 million for the period ended September 30, 2013, up from GBP877,000 a year earlier, buoyed by a suplus on the sale of its Tudor Works site in Saffron Walden of GBP2.1 million. Leyshon Resources is a big faller after it restarted trading following the demerger of its energy assets. Cyprotex is another big faller after it warned that it expects to post a pretax loss of up to GBP1.2 million for 2013 due to finance charges related to its redeemable loan notes and convertible loan notes with Trident Private Equity Fund III LLP. Verdes Management is else down after it received a letter asking for the first GBP125,000 tranche of a recently received loan to be returned.
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AFTERNOON WATCHLIST: World Economic Forum Davos, US Jobless Claims, US Chicago Fed National Activity Index, US Markit Manufacturing PMI Preliminary, American Petroleum Institute Monthly Report, US Home Sales, EIA Crude Oil, Natural Gas Storage Change, Kansas Fed Manufacturing Activity
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Friday's Key UK Corporate Events
Close Brothers Group Trading statement
Henry Boot Trading statement
Workspace Group Interim Management Statement
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Friday's Key Economic Events
All Day World Economic Forum - Davos
09:00 Italy Retail Sales
09:30 UK BBA Mortgage Approvals
12:05 UK BOE's Governor Carney speech
13:30 Canada Consumer Price Index
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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1
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