LONDON (Alliance News) - London stock indices continued where they left off on Tuesday, with miners driving early losses Wednesday, on a busy morning of UK corporate news which included grocer J Sainsbury cutting its dividend.
Sainsbury said it swung to a pretax profit in its recently-ended financial year, as business picked up from the prior year when it booked a loss, but revenue still slipped in a tough UK market for grocery retailers.
The supermarket chain said it made a pretax profit of GBP548 million in the year ended March 12, having suffered a GBP72 million pretax loss the prior year, when it booked property writedowns and impairments.
Revenue slipped to GBP23.51 billion from GBP23.78 billion, while like-for-like sales fell by 0.9%, which Sainsbury's said was due to ongoing pricing pressures and food price deflation.
Sainsbury's cut its dividend for the year by 8.3% to 12.1 pence from 13.2p the year before. The stock traded down 1.4%, making it one of the worst performers in the FTSE 100.
Meanwhile, sales fell for all four of the big supermarkets in the UK, the latest set of grocery data released by Kantar Worldpanel showed, the first time all four have seen sales fall for a year.
In the 12 weeks ended April 24, UK supermarket sales increased by only 0.1% year-on-year, slowing down from the 1.1% growth reported in April, which had been boosted by an earlier Easter.
Sainsbury's posted the lowest sales fall out of the big four grocers, according to Kantar, although this is the first time the retailer has dipped into decline since July last year. In the 12 weeks, Sainsbury's sales fell by 0.4%, but its market share remained flat at 16.5%.
Tesco saw sales fall 1.3%, as its market share also slipped to 28.0% from 28.4%. Wm Morrison Supermarkets sales fell 2.6%, as its market share slipped to 10.6% from 10.9%. Early Wednesday, Tesco shares traded down 1.5% and Morrisons was down 3.4%.
The FTSE 100 was down 0.4%, or 24.77 points, at 6,160.82. The blue-chip index was once again dragged down by its heavily weighted mining sector. After closing down 6.8% on Tuesday due to weak Chinese manufacturing data, the FTSE 350 Mining sector index was down 2.9% Wednesday, making it the worst performing sector index in London.
The FTSE 250 was down 0.3% to 16,686.59 and the AIM All-Share was down 0.1% to 725.23. In Europe, the French CAC 40 and the German DAX 30 were both up 0.2%.
In Asia, the Shanghai Composite closed down 0.1% and the Hang Seng in Hong Kong continues down 0.8%. The Tokyo Stock Exchange remains closed for Greenery Day and will be closed Thursday as well for Children's Day. Tokyo shares last traded on Monday, when the Nikkei 225 closed down 3.1%.
Next shares reversed early losses to trade up 2.5% even as the clothing and hardwares retailer said sales fell in the first quarter of its financial year as unseasonably cold weather led to a reduced demand for spring clothing, leading it to lower its full-price sales guidance for the full year.
Next said total sales in the first quarter ended May 2 fell by 0.2% on the same period the year before, as full-price sales declined by 0.9%. The latter was at the lower end of its sales guidance of a 1% decline to 4% growth.
By division, full-price sales at Next Retail fell by 4.7%, while full-price sales at Next Directory grew by 4.2%.
Next said its results were hit by much colder weather in March and April, which reduced the demand for clothing, particularly over the Easter holiday period which was unusually warm last year.
Royal Dutch Shell said earnings plummeted in the first quarter of 2016 as the oil giant said its expenditure this year is likely to be considerably lower than previously guided.
Shell said its current cost of supply earnings dropped to USD814.0 million in the first quarter of 2016 from the USD4.80 billion reported a year earlier. Before exceptional items, CCS earnings halved to USD1.60 billion from USD3.70 billion.
Compared to the fourth quarter of 2015, CCS earnings fell from USD1.84 billion but rose slightly from USD1.57 billion once exceptional items are excluded.
Shell said its earnings were hit by continuing declines in oil, gas and liquefied natural gas prices, alongside weaker conditions within the refinery industry. On the other hand, earnings benefited from lower operating expenses, as steps taken by Shell to reduce costs more than offset the increase in operating expenses associated with the acquisition of BG Group, Shell said.
The first-quarter results were the first set of financial results to have incorporated BG Group following the acquisition completed in February. Shell A shares were down 0.5% and Shell B shares were down 0.6%.
Defence contractor BAE Systems said trading so far in 2016 has been in line with its expectations, sending its shares up 0.4%.
Ahead of its annual general meeting, taking place in Hampshire on Wednesday, the group said its outlook for 2016 remains unchanged, with underlying earnings per share anticipated to rise by between 5% and 10% against the adjusted 36.6 pence posted for 2015.
"Whilst economic and geo-political conditions remain volatile, we have started the year with good momentum and the business is performing well. In 2016 and beyond, we are well placed to continue to generate attractive returns for shareholders," said BAE Chief Executive Ian King.
In the FTSE 250, International Personal Finance was the worst performer, down 8.0%. The home credit lender said it added more customers and issued more credit in the first quarter of 2016, even though the lender's Mexican business detracted from the performance of its home credit operations in Southern Europe and digital.
IPF said it has opened three of the 10 new branches it intends to start in Mexico in 2016. The growth of credit issued in Mexico of 4% during the quarter was slower than expected, IPF said, citing "largely operational" factors. The company said it has "a clear plan" to address those issues and return to higher rates of growth.
Still ahead in the economic calendar, there are Markit services and composite PMI readings from a number of countries. France is at 0850 BST, Germany at 0855 BST, the eurozone as a whole at 0900 BST and the US at 1445 BST. UK construction PMI is at 0930 BST, and the ISM non-manufacturing PMI for the US is at 1500 BST.
There are also eurozone retail sales at 1000 BST, US mortgage applications at 1200 BST, and US ADP unemployment change at 1315 BST. US factory orders are at 1500 BST and the Energy Information Administration's crude oil stocks are at 1530 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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