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(Alliance News) - Stocks in London are called higher on Tuesday, with sentiment lifted by a positive session on Wall Street on Monday, despite a less-than-stellar handover from Asia.
IG futures indicate the FTSE 100 index is to open 18.30 points higher, or 0.2%, at 7,527.45. The blue chip index closed up 8.26 points, or 0.1%, at 7,509.15 on Monday.
In early UK corporate news, Watches of Switzerland backed annual guidance ahead of a "potentially more challenging" second half of its financial year, plastic pipes manufacturer Genuit posted interim revenue growth, and retailer Ted Baker has agreed to be taken over in a GBP211 million deal.
Rolex watch seller Watches of Switzerland said revenue in the first quarter ended July 31 climbed 31% year-on-year to GBP391 million from GBP297 million.
The FTSE 250 constituent noted a "strong performance against a particularly strong comparative in the UK with Q1 FY21 benefitting from de-stocking and pent-up demand as showrooms re-opened following the Covid-19 lockdown".
US quarterly revenue doubled year-on-year, while in the UK, it rose 8%.
"While we continue to monitor the wider macro-economic environment, we believe that the strength of the luxury watch category, with its unique supply/demand dynamics, together with the success and agility of our model will continue to support long-term sustainable strong sales growth," it said.
Watches of Switzerland affirmed guidance. It expects annual revenue between GBP1.45 billion and GBP1.50 billion, up from GBP1.24 billion in financial 2024.
Guidance assumes a "potentially more challenging trading environment in the second half".
Genuit said interim revenue increased, though profit inched lower as costs rose.
Revenue in the half-year to June 30 increased 7.6% to GBP318.0 million from GBP295.6 million a year prior. Pretax profit slipped 2.7% year-on-year, however, to GBP32.9 million from GBP33.8 million.
Selling and distribution costs were 6.8% higher at GBP42.7 million, while administration expenses rose 0.8% to GBP37.7 million.
Genuit lifted its payout by 2.5% to 4.1 pence per share from 4.0p.
"Genuit has performed well in the first half. Agile pricing leadership offset inflationary pressures, and the effect of selective business decisions helped to increase our margins. These, with more focus on operational efficiency, overcame some limited headwinds while delivering revenue growth over the prior year and improving profitability throughout the second quarter," Chief Executive Officer Joe Vorih said.
"While mindful of the macroeconomic pressures, we have good momentum as we enter the second half, and the group anticipates meeting full year expectations."
Ted Baker has agreed to GBP211 million takeover from Reebok owner Authentic Brands Group, ending a several months long formal sales process. Ted Baker currently has a market capitalisation of GBP167.4 million.
ABG will fork out 110p per Ted Baker share, an 18% premium to the retailer's 93.1p closing price on Monday.
"Today, we are announcing an all-cash offer from ABG. The Ted Baker board believes the offer, which is supported by Ted Baker shareholders with a majority of shares, represents a fair value for shareholders and balances the company's growth prospects with the risks of the uncertain economic environment in which the business is operating," Ted Baker Interim Chair Helena Feltham said.
"The Ted Baker board believes that ABG will be a strong and supportive owner of the business. We are confident that with ABG's experience, reach and investment, the Ted Baker brand will be capable of achieving its long-term global potential."
Ted Baker has been in a formal sales process since April, and initially had said that Sycamore Partners Management, a New York-based private equity firm whose approaches had triggered the move, was participating. However, Ted Baker later confirmed that Sycamore was no longer participating in the sales process.
In May, Ted Baker said it had progressed talks with a "preferred counterparty" into the due diligence phase, however the unnamed party had bowed out of a potential deal in June.
Ted Baker has suffered setbacks in recent years that have sent its shares tumbling and resulted in management changes. It was hit by complaints of inappropriate hugging made against then-chief executive Ray Kelvin in 2019. It then went through three CEOs within a year, as well as several profit warnings.
ABG in March completed the buy of Reebok from Adidas in a deal worth up to EUR2.1 billion.
Elsewhere on the M&A front on Tuesday, Sage said it has acquired Lockstep, which provides cloud native technology for accounting workflows between companies.
"The acquisition of Lockstep accelerates Sage's strategy for growth by broadening its value proposition for SMBs and by expanding Sage's digital network," the FTSE 100 constituent said.
It did not reveal a consideration for the deal.
abrdn said it has sold 12.8 million shares in HDFC Asset Management, receiving GBP225 million. The sales were made on the National Stock Exchange of India and Bombay Stock Exchange.
The sold shares amounted to a 6.0% stake. abrdn's remaining holding is just over 10%.
Shares in Darktrace will be in focus. The cybersecurity company late Monday confirmed that it is in early stages of discussions with private equity company Thoma Bravo on a possible cash offer for the Cambridge-based firm.
Thoma Bravo has until September 12 to either make a firm offer for Darktrace, or state that it will not be making an offer.
Darktrace shares had ended 1.2% lower on Monday, giving it a market capitalisation of GBP2.80 billion.
Miner BHP reported annual earnings growth earlier on Tuesday.
In the year to June 30, revenue rose 14% to USD65.10 billion from USD56.92 billion. Pretax profit was 36% higher at USD33.14 billion from USD24.29 billion. It raised its dividend by 8.0% to USD3.25 per share from USD3.01.
It noted an exceptional gain of USD7.1 billion after tax on the merger of its petroleum business with Woodside, an Australian petroleum exploration and production company.
The firm noted, however, that this gain was partly offset by a USD1.1 billion cost coming from a dam failure for its Brazilian mining joint venture Samarco Mineracao.
Covid-19 also resulted in a USD1.5 billion negative financial impact after tax.
"BHP delivered strong operational performance and disciplined cost control to realise record underlying earnings of USD40.6 billion and record free cash flow of USD24.3 billion. We have reduced debt and announced a final dividend of USD1.75 per share," said Chief Executive Mike Henry.
BHP shares closed up 4.1% in Sydney.
The pound was quoted at USD1.2049 early Tuesday, down from USD1.2075 late Monday. The euro stood at USD1.0166, down from USD1.0184. Against the yen, the dollar was trading at JPY133.34, up from JPY133.07.
The UK unemployment rate was steady in June, while wage growth figures came in slightly ahead of expectations, but continued to lag the red-hot inflation rate.
The UK unemployment rate was 3.8% in the three months to June, unchanged from the three months to May, according to the Office for National Statistics.
A year earlier, the unemployment rate had sat at 4.7%.
Wage growth figures, meanwhile, came in above expectations. Regular pay, so excluding bonuses, was 4.7% higher in the three months to June. The figure topped FXStreet cited consensus of 4.5% growth.
Including bonuses, wage growth was 5.1% year-on-year, beating a forecast of 4.5% growth.
That means UK earnings by both measures continue to lag consumer price inflation, which ran at 9.4% in June.
"In real terms (adjusted for inflation), over the year, total pay fell by 2.5% and regular pay fell by a record 3.0%," the ONS added.
Asian equities were mixed on Tuesday. The Nikkei 225 in Tokyo was closed marginally lower, while the S&P/ASX 200 ended up 0.6%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng Index in Hong Kong was down 1.4%.
Gold stood at USD1,780.47 an ounce early Tuesday, up from USD1,778.71 at the London equities close on Monday. Brent oil was quoted at USD93.83 a barrel, down from USD94.22.
The economic events calendar on Tuesday has the latest Germany ZEW indicator of economic sentiment at 1000 BST.
By Eric Cunha; ericcunha@alliancenews.com
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