NAK.L Share News (NAK)

LONDON (Alliance News) - Stocks on the London market slipped lower by midday Friday in end-of-month trade, with International Consolidated Airlines Group the worst blue-chip performer after disappointing analysts with its guidance.

The British Airways and Iberia owner, which on Thursday approved its first dividend payment since it was created in 2011, said its operating profit in the third quarter to the end of September was EUR1.25 billion, up from EUR900.0 million a year earlier and still up to EUR1.21 billion when excluding the contribution from Aer Lingus Group, the Irish flag carrier IAG acquired this year.

The strong results in the quarter meant IAG upgraded its operating profit guidance for the full year to EUR2.25 billion to EUR2.30 billion, a firmer target than the previous guidance for profit to be in excess of EUR2.20 billion. The new guidance also excludes any contribution from Aer Lingus.

Cantor Fitzgerald said the company's upgrade to guidance was "only to in-line with full year consensus", which already was at EUR2.29 billion. Liberum analyst Gerald Khoo shared the sentiment, saying the minor improvement to guidance may disappoint the market, given upward pressure on estimates at other European airlines and considering the new guidance is consistent with current consensus.

IAG shares were down 3.9% at the midday stage.

The FTSE 100 index had given up early gains by midday to trade down 0.4% at 6,370.65 points. The FTSE 250 was more resilient, trading up 0.1% at 17,130.14. The AIM All-Share index was down 0.2% at 739.39.

Before the London open, the Bank of Japan kept its massive stimulus package unchanged. The post-meeting policy statement showed that the Monetary Policy Board of the Japanese central bank, governed by Haruhiko Kuroda decided by an 8-1 majority vote to maintain its target of raising the monetary base at an annual pace of about JPY80 trillion. The bank also maintained its asset purchase program unchanged.

Some economists had hoped that the Bank of Japan may announce additional stimulus, as the domestic economy is still struggling with deflation and a fits-and-starts recovery.

Nevertheless, the Nikkei 225 in Tokyo closed up 0.8% after the statement.

The Shanghai Composite closed down 0.1% but ended October up 11%, its first monthly gain since May and the start of the recent collapse in Chinese stocks. The Hang Seng in Hong Kong ended down 0.8%, but similarly posted its first month of gains since April.

In Europe, eurozone consumer prices came in flat in October, while the single currency zone's jobless rate unexpectedly fell to its lowest level in about two-and-a-half years in September, preliminary figures from Eurostat revealed.

The consumer price index remained unchanged from the same month a year ago, after declining 0.1% in September. The outcome was in line with economists' expectations. Core inflation, which excludes energy, food, alcohol and tobacco, rose to 1.0% from 0.9%. Economists had expected the figure to match the September print.

Separately, Eurostat said the unemployment rate for the euro area fell to 10.8% in September from a revised 10.9% in August. Economists had expected the rate to remain unchanged at August's original figure of 11%. It was the lowest rate recorded in the euro area since January 2012, the agency said.

European stocks were trading lower, with the French CAC 40 in Paris down 0.2% and the Dax 30 in Frankfurt down 0.4%.

In the US, futures indicated a higher start on Wall Street, with the Dow 30, S&P 500 and Nasdaq 100 all pointed up 0.1%.

Major oil suppliers Exxon and Chevron will be the main focus in the US earnings calendar on Friday.

The rest of the day's economic releases will be from the US. Personal consumption data are at 1230 GMT, the Chicago purchasing managers' index is at 1345 GMT, and the Reuters/Michigan consumer sentiment index at 1400 GMT.

In addition to IAG's update Friday, Royal Bank of Scotland Group reported improved third-quarter net profit, as it booked a big gain on the loss of control of Citizens, the US retail bank it is selling, and warned that the costs of restructuring and addressing past conduct and litigation are not about to go away.

The bank said it made a GBP952 million net profit in the three months to September 30, compared with GBP896 million in the corresponding quarter the prior year. That included a GBP1.15 billion gain on the loss of control of Citizens, and the bank also confirmed it is set to sell its remaining 20.9% stake. RBS traded down 1.6%.

In the FTSE 250, Vectura Group was the best performer, trading up 8.1%. The drug development company said it has secured two milestone payments following an approval of an inhaler in the US and after hitting a development milestone in Europe.

Vectura said the US Food and Drug Administration has approved the dual combination Utibron Neohaler and Seebri Neohaler products for the long-term treatment of patients with chronic obstructive pulmonary disease. The approval has triggered a USD22.5 million milestone payment to Vectura from Swiss pharmaceuticals giant Novartis, Vectura's partner on the product.

The company also has been paid a USD750,000 cash milestone after a further development milestone was hit for its VR632 therapy in the European Union. VR632 is an asthma and COPD inhaled treatment therapy which users Vectura's dry powder inhaler and formulation technology. That milestone payment hwas made by Sandoz, a unit of Novartis.

Chemicals company Elementis traded up 5.2% after it said its earnings for the full year should be in line with expectations as the trends experienced in the first half of the year have continued, despite sales being down compared to last year.

David Dutro, chief executive of Elementis, said cashflow has continued to perform well which will allow it to "reward our shareholders with attractive returns via our progressive dividend policy," including its special dividend programme.

Pets At Home Group was the worst midcap performer down 6.9%. The pet products and services retailer said it is trading broadly in line with market expectations, but Chief Executive Nick Wood said sales in some parts of the business had been weaker-than-expected in the half.

Like-for-like sales in the 28 weeks to October 8 grew 1.8%, the company said, a slight improvement on the 1.7% like-for-like growth it posted for the first quarter but still well short of the 4.2% rise seen in the first half of its 2015 financial year. Merchandise like-for-like revenue increased 1.0%, while services like-for-like revenue was up 11%.

In the AIM All-Share index, Nakama Group was down 29%. The recruitment company posted a lower pretax profit for the first half to the end of September as total revenue declined, hit by depreciating currencies in Asia Pacific. Nakama's pretax profit fell to GBP169,000 in the half, down from GBP222,000 a year earlier, as total revenue for the group fell to GBP10.6 million from GBP11.1 million.

The fall in revenue was down to a currency hit the group took in its Asia Pacific operation, as well as weaker revenue from its UK business. Asia Pacific revenue was up 18%, but would have increased 27% in constant currencies.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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