(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Thursday.
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FTSE 100 - WINNERS
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Melrose Industries, up 3.0%. The industrial turnaround specialist said annual profit performance comfortably beat internal expectations. The company added it is considering a sale of the Air Management operations of Nortek. Melrose delivered a pretax profit of GBP106 million for 2019, swinging from a pretax loss of GBP542 million the year before. On an adjusted basis, pretax profit was 32% higher at GBP889 million. Melrose delivered revenue of GBP10.97 billion in the year, up 35%. The company is paying a final dividend of 3.4 pence per share, giving a total for the year of 5.1p, up 11% on 2018's payout. If a sale were to occur, Melrose would use the process to reduce debt and make an "exceptional repayment" to shareholders as well as increase pension contributions at GKN.
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Aviva, up 2.2%. The insurer said it made good progress in 2019, though underwriting profitability has declined as expected. Aviva posted a statutory pretax profit of GBP3.93 billion for 2019, more than double the GBP1.65 billion reported a year prior. This was helped by a GBP40.58 billion investment income, after a GBP10.91 billion loss in 2018. Taking into account a change to accounting standards, Aviva's pretax profit rose 58% to GBP3.37 billion. Operating profit for the year was 6% higher at a record GBP3.18 billion, Aviva reported, beating market consensus of a figure of GBP3.10 billion. Aviva's return on equity improved to 14.3% from 12.%, while the Solvency II cover ratio was 206% from 204%. Aviva is paying a final dividend of 21.40p. This takes the 2019 total to 30.90p, 3% higher than the year before.
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FTSE 100 - LOSERS
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Evraz, down 11%, Rio Tinto, down 6.3%, BHP, down 5.5%. The three commodities stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.
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ITV, down 9.5%. The broadcaster warned of lower advertising revenue. For 2019, pretax profit fell 6.5% to GBP530 million from GBP567 million in 2018 as operating costs increased 6.1% to GBP2.77 billion from GBP2.61 billion. ITV reported a 3.2% rise in total group revenue to GBP3.89 billion from GBP3.77 billion in 2018. Broadcast total revenue was down 1.9% year on year to GBP2.06 billion as total advertising revenue slipped by 1.7% to GBP1.77 billion but was guided to fall 2%. Looking ahead, ITV expects advertising revenue to be up 2% in the first quarter of 2020, though early indications suggest it will be down 10% in April. ITV noted it has seen travel advertising deferments relating to the coronavirus outbreak. "Even though being at home could lead to people watching more TV, many brands will suffer from lower footfall on the high street or in retail parks, and the brand owners will be the ones reassessing their advertising expenditure. What’s the point in advertising to a TV audience if there is a lower propensity to spend?," said AJ Bell's Russ Mould.
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FTSE 250 - WINNERS
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Coats Group, up 6.1%. The industrial thread maker recorded a rise in profit for 2019, despite lower than normal growth and temporary softness in the market. For 2019, pretax profit came in at USD166.8 million, up 36% from USD122.8 million in 2018. Revenue however, was down at USD1.39 billion from USD1.41 billion. The profit jump was attributed to a sharp drop in exceptional and acquisition related items in the year when compared to 2018, which included the initial costs relating to a business transformation programme. Exceptional charges declined to USD4.4 million from USD47.8 million. Coats proposed a final dividend of USD1.30 per share bringing the total annual dividend to USD1.85, up 11% from 2018's full year dividend of USD1.66.
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Spirent Communications, up 4.5%. The communications equipment firm reported a double-digit increase in annual profit and revenue, driven by higher product demand and a better win rate with US defence contractors, leading to a payout raise. For 2019, Spirent - which offers testing and analytics for networks and devices - posted a pretax profit of USD89.6 million, up 46% from USD61.2 million the year before. This was on revenue that grew by 13% to USD503.6 million from USD476.9 million. Spirent said its growth resulted from continued momentum in the group's high-speed ethernet sales particularly in China, and a higher win rate for Global Navigation Satellite System defence projects in the US. Spirent declared a final dividend of 3.45 cents per share, bringing the total payout to 5.39 cents, up 20% from 4.49 cents the year before. Looking ahead, Spirent said it is confident of achieving steady growth in 2020. Considering the coronavirus situation, it already has processes in place to protect staff, including working from home and restricted travel arrangements.
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PageGroup, up 2.5%. The recruiter said 2019 was a "record year" for the company but coronavirus outbreak and a number of economic challenges has dented profit for the first two months of 2020. For 2019, the company recorded pretax profit of GBP144.2 million, up 1.4% from GBP142.3 million a year ago, on a 6.7% rise in revenue to GBP1.65 billion from GBP1.55 billion. Operating profit increased 3% to GBP146.7 million. The company's conversion rate for 2019 was 17.1%, down from 17.5% in 2018, primarily due to tough trading conditions in a number of the company's markets. PageGroup has proposed a final dividend of 9.40p per share, up from 9.00p paid a year ago. Total payout for 2019 has been increased by 4.6% to 4.30p from 4.10p paid in 2018. Page added that the coronavirus outbreak in China has resulted in profit declining by 3% in the first two months of 2020.
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FTSE 250 - LOSERS
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Capita, down 21%. The outsourcer said it is making "significant" progress in its transformation, though it has warned more spending is required than originally thought. In 2019, Capita said the reduction in revenue is now slowing, with second half revenue rising in four out of its six divisions year-on-year. The order book at the end of 2019 was GBP6.72 billion, down 5.4% on the same date a year prior. Capita's 2019 revenue declined by 6.1% to GBP3.68 billion, compared to a 7.3% yearly decline in 2018. Adjusted revenue, taking into account accounting changes, fell 4% to GBP3.65 billion. Capita swung to a pretax loss of GBP62.6 million in 2019, following a GBP272.6 million pretax profit in 2018. Adjusted, pretax profit fell 2% to GBP275.0 million. The loss came after Capita booked a more than GBP300 million gain on a disposal in 2018. Capita sees "modest organic growth" and sustainable free cash flow of GBP160 million in 2020, a figure it said was disappointing. "We retain concerns over the challenge of sustaining a growth profile as AI and robotic process outsourcing takes hold, with new competition likely continuing to emerge, and potentially undermining Capita's existing outsourcing contract book as contract values fall," said Shore Capital.
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Cineworld Group, down 15%. Peel Hunt downgraded the cinema chain to Hold from Buy.
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Hyve Group, down 9.5%. The exhibitions and conferences firm said the coronavirus outbreak will hurt annual earnings and revenue due to the postponement of several events and a significant disruption across multiple geographies and sectors. Hyve expects a hit between GBP17 million to GBP19 million on revenue for its year ending September 30, translating to a GBP16 million to GBP18 million dent in profit. The company, however, noted it continues to be highly cash generative and has already booked around GBP200 million of revenue for financial 2020. In financial 2019, the company recorded pretax profit of GBP8.7 million on a revenue of GBP220.7 million. The company also said it has postponed Shoptalk and Groceryshop - Shoptalk 2020 as US companies are discouraging business travel, including conference attendance.
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OTHER MAIN MARKET AND AIM - LOSERS
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Stobart Group, down 1.6%. The aviation, energy, and civil engineering firm said it is to write-off GBP50 million due to the collapse of Flybe. The regional airline announced in the early hours of Thursday it has ceased trading with immediate effect and that administrators have been appointed. Crisis talks were held throughout Wednesday to try to secure a rescue package, but no deal was agreed. Flybe was bought in February last year by a consortium called Connect Airways, made up of Virgin Atlantic, Stobart Group and Cyrus Capital, after running into earlier financial problems. "Stobart Group's initial investment was made up through the sale of Stobart Air and its aircraft leasing business, Propius. As a result, the non-cash balance sheet impact on Stobart Group is GBP43.3 million and the additional GBP7 million investment made in 2020. The value of both these investments will now be written down to nil on its balance sheet," said Stobart.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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