LONDON (Alliance News) - Another trading update, another profit warning from Rolls-Royce sent its shares down 16% at the London open Thursday, amid an overall soft market.
In the FTSE 250, Halfords was down 8.8% after the bike and car parts retailr reported a fall in profit in the first half of its financial year and said that profit in its next financial year will be broadly unchanged on the current year.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.6% at 6,260.00
FTSE 250: down 0.6% at 17,002.94
AIM ALL-SHARE: down 0.2% at 741.49
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Hang Seng: closed up 2.4% at 22,888.92
Nikkei 225: closed flat at 19,697.77
DJIA: closed down 0.3% at 17,702.22
S&P 500: closed down 0.3% at 2,075.00
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GBP: soft at USD1.5195 (USD1.5210)
EUR: soft at USD1.0736 (USD1.0741)
GOLD: firm at USD1,087.49 per ounce (USD1,086.80)
OIL (Brent): down at USD45.70 a barrel (USD46.13)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in GMT)
10:00 Ireland Consumer Price Index
10:00 EU Industrial Production
13:30 US Initial and Continuing Jobless Claims
13:30 Canada New Housing Price Index
14:15 US Fed's Bullard speech
14:30 US Fed Chair Yellen Speech
14:45 US Fed's Lacker speech
15:00 US JOLTS Job Openings
15:00 US Fed's Stanley Fischer speech
15:15 US Fed's Evans Speech
16:00 US EIA Crude Oil Stocks change
17:15 US Fed's William Dudley speech
19:00 US Monthly Budget Statement
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House prices in the UK remain on an upward curve, the latest house price balance from the Royal Institution of Chartered Surveyors showed with a score of 49%. That topped forecasts for 45%, and it was up sharply from 44% in September.
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Germany's inflation accelerated as initially estimated in October, final data from the Destatis showed. Consumer prices rose 0.3% year-on-year in October after staying flat in September. The latest gain was the fastest since June, when prices climbed at the same pace. Month-on-month, consumer prices remained flat following a 0.2% fall in the prior month.
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Producer prices in Japan were down 0.6% on month in October, the Bank of Japan said. That missed forecasts for a decline of 0.4% following the 0.6% contraction in September. On a yearly basis, producer prices skidded 3.8% versus expectations for a decline of 3.5% following the 4.0% drop in the previous month.
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Core machine orders in Japan jumped 7.5% on month in September, the Cabinet Office said - worth JPY816.4 billion. The headline figure topped forecasts for an increase of 3.3% following the 5.7% decline in August. On a yearly basis, core machine orders dipped 1.7% - also beating expectations for a decline of 4.6% following the 3.5% contraction in the previous month.
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Indian Prime Minister Narendra Modi was due to arrive in Britain on Thursday for a three-day visit with trade and business ties topping the agenda for his talks. Modi is to hold discussions with his counterpart David Cameron, meet with industry leaders and address Parliament. "Leaving for UK. I am hopeful this visit will strengthen economic ties between India and UK and bring more investment to India," Modi said in a message on Twitter. Before the visit, India announced the easing of foreign investment rules in 15 sectors including defence and civil aviation in major economic reforms to push growth. Indian media reported that India and Britain could announce deals worth billions of dollars during the visit, covering investment and defence. India is keen to buy 20 BAE Systems Hawk trainer aircraft for its armed forces, broadcaster NDTV reported.
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Migration problems are likely to continue around the world in the coming decades, the International Monetary Fund said, urging G20 leaders to cooperate on "cross-border solutions". "The surge of refugees in the last few years has reached levels not seen in decades. And these numbers could increase further in the near future," IMF chief Christine Lagarde said online. Refugees and economic migrants combined are now an estimated 3% of global population, the article said.
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BROKER RATING CHANGES
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Nomura Maintains Standard Life Rating At Reduce
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BERENBERG INITIATES SAFECHARGE WITH 'BUY' - TARGET 324 PENCE
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Liberum Cuts Genus To Hold From Buy, Keeps Target At 1,500p
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Investec Downgrades OneSavings Bank To Sell From Hold
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COMPANIES - FTSE 100
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Rolls-Royce Holdings affirmed its 2015 guidance but said profit will come in at the low end of expectations, while the FTSE 100 jet engine and power turbine maker also downgraded its expectations for 2016 thanks to revenue mix changes and weaker margins. The aerospace and defence engineering group also said it will review its dividend policy in light of the weak expectations for 2016, with any changes to be announced in due course, and said it will undertake a wide-ranging restructuring of the business, with plans to save around GBP150 million to GBP200 million per year.
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SABMiller reported a drop in profit in the first half of its financial year as it was hit by unfavourable currency movements against the dollar, which it said will continue for the remainder of the year. The drinks giant, which is being acquired by AB InBev, said pretax profit in the six months ended September 30 fell 18% to USD2.32 billion from USD2.82 billion in the same period the year before, as revenue decreased 12% to USD9.99 billion from USD11.36 billion. SABMiller will pay an interim dividend of 28.25 cents, a 9% rise on the 26.0 cents it paid the prior year.
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Brazilian miner Vale and Anglo-Australian peer BHP Billiton, as joint shareholders in Samarco, announced they pledge to support Samarco in creating an Emergency Fund for rebuilding works and to help the affected families and communities. In a joint statement, the companies said: "We have also had discussions with Samarco and authorities about the additional support we can provide. Investigations are continuing and Samarco will provide further updates relating to the response and operations."
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Burberry Group reported a rise in profit in the first half of its financial year but said revenue remained flat as declines in wholesale and licensing sales offset growth in retail sales, as luxury goods retailer warned that the external environment remains uncertain and challenging. The fashion brand said pretax profit in the six months ended September 30 grew 9% to GBP155 million from GBP142 million in the same period the prior year, although revenue remained flat year-on-year at GBP1.10 billion. Burberry will pay an interim dividend of 10.2 pence per share, a 5% increase on the year before.
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3i Group said it will remain "cautious and disciplined" in its investment approach, amid uncertainty about the outlook for growth in areas such as the Eurozone and China, a challenging macroeconomic and geopolitical landscape, and "fragile" investor confidence. The private equity group's update came as it reported that it generated a total return on shareholders' funds of 4.4% in the first half to September 30 against the 7.1% recorded in the corresponding period the prior year. Net asset value per share increased to 401 pence at the end of September from 396p at the end of March, after accounting for the payment of a 14p final dividend for the prior financial year.
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COMPANIES - FTSE 250
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Halfords Group reported a fall in profit in the first half of its financial year and said that profit in its next financial year will be broadly unchanged on the current year, although it expects to achieve growth thereafter. The car parts and bicycle retailer said pretax profit in the 26 weeks ended October 2 fell 5.9% to GBP46.4 million from GBP49.4 million in the same period the year before, even though revenue rose 1.8% to GBP533.5 million from GBP524.1 million. Halfords said that the motoring side of the business performed well in the period with in-store service sales growing strongly, but that a disappointing cycling performance in the second quarter contributed to a decline in overall profitability. Halfords will pay an interim dividend of 5.66 pence per share, a 2.9% increase on the 5.5p paid the prior year.
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FirstGroup said it swung to a pretax loss in the first half due to the impact of the loss of a rail franchise in the period, although its adjusted figures were weaker as well amid mixed trading across its operations. The transport operator said its pretax loss for the half to the end of September was GBP7.5 million, swung from a GBP9.9 million profit a year earlier, as revenue in the half fell to GBP2.44 billion from GBP2.94 billion due to the loss of the Capital Connect and ScotRail franchises. FirstGroup said its trading was in line with its expectations in the half, with the rest of the rail portfolio performing well and financial performance at the top end of its forecasts, underpinned by strong passenger volume growth.
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IMI said it expects its earnings will be at the low end of market estimates for 2015 as tough conditions continued in its markets in the third quarter. The engineer, which makes flow and fluid control products and heating and cooling systems, said organic revenue for the three months to the end of September was down 5.0%, with revenue falling 7.0% on a reported basis due to adverse currency movements, partially offset by acquisition contributions.
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Rexam said trading in the second half of 2015 has been in line with its expectations, with beverage can volumes higher in the third quarter. The can maker, currently in the process of being acquired by US metal packaging supplier Ball Corp, said overall global beverage can volumes were up 3.0% in the third quarter to the end of September. Volume growth in Europe slowed in line with expectations, while volumes were subdued in the Middle East. Overall, Rexam, said its expectations for the full year are unchanged, but it said the outlook for 2016 points to a more challenging market. The pricing reductions it is facing in Europe will be mostly offset by a restructuring programme the group launched earlier in 2015.
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Builders' merchant and DIY group Grafton Group said its trading in the second half of 2015 has been positive against a competitive market backdrop, but that the tough UK market and weakness in Belgium has resulted in a cut to its operating profit outlook. Grafton said it still delivered like-for-like growth in the UK in the four months to the end of October, but the market remains very competitive. This, plus ongoing weakness in its operations in Belgium, mean it has cut its operating profit expectations for 2015 by 3-4% against market consensus.
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Shawbrook Group said private equity fund manager Pollen Street Capital has agreed to sell a 10% stake in the business. Pollen Street, which invests in the financial services industry, will retain a 44.6% stake in the challenger bank, following the sale of 25.0 million shares at 335 pence each. Goldman Sachs acted as sole bookrunner in connection with the placing.
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Card Factory said its expectations for the full year remain unchanged after achieving growth in sales in the first nine months of its financial year. The card and gifts retailer said total sales in the nine months ended October 31 grew 7.9%, although this wasn't as strong as the 8.7% sales growth it made in the comparative period a year earlier.
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COMPANIES - INTERNATIONAL
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Alibaba Group announced that USD14.3 billion or RMB91.2 billion of gross merchandise volume was settled through Alipay on Alibaba's retail marketplaces on November 11, making the 2015 11.11 Global Shopping Festival the largest shopping day in history. It represented an increase of 60% compared to 2014. "This day demonstrates the power of domestic China consumption, and the Chinese consumer's strong demand for international products. It also showcases how Alibaba uses big data, cloud computing and mobile innovations to create the best shopping experience for buyers and sellers," said Daniel Zhang, chief executive officer of Alibaba Group.
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Chinese computer maker Lenovo Group said its second-quarter loss totalled USD717 million, compared to profit of USD272 million last year. Lenovo incurred USD599 million in restructuring costs and a USD324 million one-time charge to clear smartphone inventory in the just concluded quarter. Quarterly revenue was USD12.15 billion compared to USD10.48 billion last year, a 16% year-over-year increase or 23% growth in constant currency.
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Apple is in discussions with US banks to develop a payment service that would let users zap money to one another from their phones rather than relying on cash or checks, the Wall Street Journal reported citing people familiar with the matter. The report said the talks with banks are continuing and it is unclear if any of the firms have struck an agreement with Apple.
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Facebook introduced Notify, a new app from the social networking giant that delivers timely notifications about the things that matter to users, from the sources they like, all in one place. Notify from Facebook is available in the US for iPhone.
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German drug maker Merck reported that net income for the third-quarter 2015 increased by 46% from last year, while EBITDA pre-exceptionals climbed 10% driven by good operating performance in the third quarter. It raised its forecast for 2015.
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German utility RWE said its nine-months net income increased to EUR1.935 billion from EUR994 million last year. RWE also confirmed the forecast for its business trend this year.
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German conglomerate Siemens reported that its fourth-quarter net income declined 33% to EUR1 billion from last year's EUR1.50 billion. Revenue increased 4% to EUR21.33 billion from EUR20.44 billion last year. On a comparable basis, revenue dropped 4%. Fourth-quarter orders went up 15% year-over-year to EUR23.72 billion. Comparable orders grew 6%.
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Thursday's Scheduled AGMs/EGMs
Kier Group
Target Healthcare REIT
JD Wetherspoons
Picton Property Income
Asian Citrus Holdings
Swallowfield
Hansard Global
Digital Globe Services
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
