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(Alliance News) - Stock prices in London opened higher on Wednesday with the FTSE 100 boosted by gains for housebuilders after Berkeley Group raised its annual profit guidance on robust interim results.
The UK flagship stock index was up 21.05 points, or 0.3%, at 7,360.95 early Wednesday. The mid-cap FTSE 250 index was up 40.53 points, or 0.2%, at 23,278.70. The AIM All-Share index was up 2.94 points, or 0.2%, at 1,202.99.
The Cboe UK 100 index was up 0.2% at 729.16. The Cboe 250 was up 0.1% at 20,711.84, and the Cboe Small Companies was up 0.1% at 15,032.48.
In mainland Europe, the CAC 40 stock index in Paris was up 0.3%, while the DAX 40 in Frankfurt was down 0.1%.
In the FTSE 100, Berkeley Group was the best performer, up 5.5%. The housebuilder credited its willingness to take on "large-scale, complex" sites in London and the south east of England for a strong rise in interim earnings.
For the six months to October 31, revenue rose 36% to GBP1.22 billion from GBP895.9 million last year, and pretax profit increased 26% to GBP290.7 million from GBP230.8 million.
Looking ahead, Berkeley raised its earnings expectation for the current financial year by 5% from the current guidance, which was for pretax profit to be at a similar level to last financial year of GBP518.1 million.
Further, as a result of a resilient sales market, its delivery pipeline and the recovery of sales to pre-pandemic levels, Berkeley said pretax profit growth is expected to be around 5% per annum for the next three financial years. This sees Berkeley on a path to delivering GBP625 million of pretax profit for the year ending April 30, 2025, it said.
Steve Clayton, manager of the HL Select UK Growth Shares fund, which holds a position in Berkeley, said: "Historic investment into land acquisition, at times when others have been wary or unable to commit, has left the group with a clear growth runway ahead. Capital continues to be strictly managed, with the group choosing to invest in land currently, given the future returns it expects are high. The ongoing dividend to shareholders provides a useful yield, but really Berkeley Group is a growth vehicle, built around the predictable delivery of future developments at attractive margins.
"Supply of housing in the capital and South East remains tight and bond markets are signalling that no nasty surprises on interest rates are expected any time soon. That backdrop should give Berkeley plenty of potential in the years ahead."
Large-cap peers, Barratt Developments, Taylor Wimpey and Persimmon were up 1.2%, 0.4% and 1.6% respectively in a positive read-across.
Taylor Wimpey said Chief Executive Officer Pete Redfern will step down from the role after 14 years and will leave the housebuilder once a suitable candidate has been identified and a full handover has taken place. Taylor Wimpey said it has a succession plan in place and the recruitment process is advanced, with a selection process considering both internal and external candidates.
Croda International was up 3.0% after UBS upgraded the speciality chemicals company to Buy from Neutral.
Sage Group was up 2.5%. Morgan Stanley raised the accounting software provider to Overweight from Equal Weight.
In the FTSE 250, SSP Group was up 0.5%, giving back a higher opening gain. The travel concessions operator expressed optimism in its prospects in light of easing restrictions.
For the financial year ended September 30, SSP posted revenue of GBP834.2 million, down 42% from GBP1.43 billion last year, as its pretax loss narrowed to GBP411.2 million from GBP425.8 million.
Turning to current trading, SSP said revenue in first nine weeks of the new financial year was averaging 66% of 2019 levels. The London-based firm highlighted that sales trends have continued to improve, with air passenger numbers in the UK and continental Europe boosted by an extended European summer holiday season.
In addition, rail passenger numbers were continuing to benefit from commuters returning to offices in greater numbers, the Upper Crust and Ritazza owner said.
At the other end of the midcaps, Games Workshop was the worst performer, down 6.6%. The fantasy wargames maker and retailer said it expects sales for the six months to November 28, of no less than GBP190 million, up from GBP186.8 million last year, and pretax profit of no less than GBP86 million, down from GBP91.6 million.
Games Workshop said operating profit-pre royalties receivable is estimated to be down GBP15 million. However - excluding foreign exchange movements, increased carriage costs and costs of paying more to staff - its core business operating profit is broadly in line with last year's performance, it said.
"While the profit headwinds in the core business are unwelcome and look likely to result in further consensus cuts, they are understandable and we are encouraged that underlying profitability remains solid," said Jefferies analyst Andrew Wade.
In Asia on Wednesday, Tokyo's Nikkei 225 index closed up 1.4%. In China, the Shanghai Composite ended up 1.2%, though the Hang Seng index in Hong Kong closed flat. The S&P/ASX 200 in Sydney finished 1.3% higher.
The pound was quoted at USD1.3252 early Wednesday, up from USD1.3224 at the London equities close Tuesday.
The euro was priced at USD1.1290, higher against USD1.1241. Against the Japanese yen, the dollar was trading at JPY113.40, down from JPY113.58.
Brent oil was quoted at USD75.11 a barrel Wednesday morning, up from USD74.74 late on Tuesday. Gold stood at USD1,788.20 an ounce, firm against USD1,785.50.
In a quiet international economic calendar on Wednesday, there are US MBA mortgage applications in the afternoon, along with a rate decision from the Bank of Canada.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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