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(Alliance News) - Vodafone early Tuesday headlined a string of large UK companies providing updates, ahead of jobs and wages later in the morning.
The telecommunications firm raised its outlook for the current financial year.
Revenue for the half-year to September 30 came in at EUR21.94 billion, up 0.4% from EUR21.85 billion a year ago. The firm's pretax loss narrowed to EUR511 million from EUR2.85 billion a year ago, largely due to an impairment of EUR3.50 billion booked in the comparative period.
Adjusted earnings before interest, tax, depreciation and amortisation was EUR7.11 billion, up 2.7% from EUR6.92 billion a year ago.
Organic service revenue was up 0.3% in the first half as the second quarter returned to growth, of 0.7%, following a 0.2% fall in the first three months of the financial year.
Vodafone now expects adjusted Ebitda of EUR14.8 billion to EUR15.0 billion for the current financial year, previously seen between EUR13.8 billion and EUR14.2 billion, implying organic growth of 2% to 3%.
This new guidance includes a EUR800 million benefit from the Liberty Global acquisitions in Germany and Central Europe and Vodafone's disposal in New Zealand - excluding this, the company is still on track to achieve the upper half of its original guidance range.
"I am pleased by the speed at which we are executing on the strategic priorities that we announced this time last year. This is reflected in our return to top-line growth in the second quarter, which we expect to build upon in the second half of the year in both Europe and Africa," said Chief Executive Nick Read.
Vodafone declared an interim dividend of 4.50 cents, down 7.0% from the 4.84 cents paid out a year before. It noted 4.50 cents is 50% of its total payout in the previous financial year.
Vodafone shares were up 1.4% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 24.32 points, 0.4%, at 7,355.69
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Hang Seng: up 0.4% at 27,030.08
Nikkei 225: closed up 0.8% at 23,520.01
DJIA: closed up 10.25 points at 27,691.49
S&P 500: closed down 0.2% at 3,087.01
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GBP: soft at USD1.2847 (USD1.2867)
EUR: flat at USD1.1028 (USD1.1031)
Gold: flat at USD1,451.97 per ounce (USD1,452.20)
Oil (Brent): flat at USD62.36 a barrel (USD62.58)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US President Trump speaks at Economic Club of New York lunch
0930 GMT UK monthly unemployment figures
1100 CET Germany ZEW indicator of economic sentiment
0600 EST US NFIB index of small business optimism
0745 EST US Retail Economist/Goldman Sachs weekly chain store sales index
0855 EST US Johnson Redbook retail sales index
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Hong Kong protesters struck the city's transport network for a second day running on Tuesday as western powers voiced concern over spiralling violence after police shot a young demonstrator and another man was set on fire. Small bands of masked protesters blocked roads, threw objects onto train tracks and held up subway trains, sparking cat and mouse clashes with riot police and renewed chaos on the morning commute. Universities were also a flashpoint with police firing tear gas at protesters who had blocked roads leading to the City University of Hong Kong.
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The 2015 deal to curb Iran's nuclear programme is faltering in several areas, according to an International Atomic Energy Agency report that confirmed various violations and skyrocketing uranium enrichment. The deal between Iran and a group of world powers - which aims to prevent Iran from developing a nuclear bomb in return for far-reaching sanctions relief - has been at risk ever since Washington pulled out last year and reimposed tough economic restrictions, prompting Tehran to scale back its compliance. Iran started enriching uranium at its Fordow site on Saturday, as announced by Tehran, the IAEA said in the report. The 2015 pact bans enrichment at this underground site. The report, seen by dpa, also shows that Iran has boosted its output of enriched uranium to about 100 kilograms per month, up from 4 kilograms earlier this year.
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BROKER RATING CHANGES
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BERENBERG CUTS SENIOR PLC TO 'HOLD' ('BUY') - TARGET 185 (240) PENCE
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PEEL HUNT RAISES MARSTONS TO 'ADD' ('HOLD') - TARGET 140 PENCE
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DEUTSCHE BANK INITIATES FUTURE PLC WITH 'BUY' - TARGET 1562 PENCE
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COMPANIES - FTSE 100
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Broadcaster ITV said its performance in the first nine months of the year was as expected, with the FTSE 100 constituent set to deliver its full-year guidance. Total advertising revenue was up 1% in the third quarter, at the top end of guidance. The fourth quarter is expected to deliver a result somewhere between flat to 1% higher, and total advertising revenue should be down 2% across the full-year. For the nine months, Broadcast & Online revenue was down 3% to GBP1.46 billion, with ITV total advertising down 3%, as guided, and online revenue up 23%. ITV Studios revenue was up 1% to GBP1.12 billion. "ITV's overall performance for the first nine months of 2019 was as we expected, and although the economic environment continues to be uncertain, we are making good progress in executing our strategy," said Chief Executive Carolyn McCall.
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Engineer Meggitt upgraded its revenue guidance for 2019 as it reported stronger than expected trading in the third quarter, though was more cautious on its margin. The firm posted organic revenue growth of 11% in the third quarter, driven by all end market segments and a particularly strong performance in Defence. As a result, Meggitt now expects organic revenue growth for the full-year between 6% to 7%, versus guidance of 4% to 6% previously. However, its operating margin is expected towards the lower end of its guided 17.7% to 18.2% range. "While we expect good top line growth for the full year, margin progression will be constrained by mix effects, the grounding of the 737 MAX and, as discussed at the half year, pressures across our internal and external supply chain driven by the unprecedented ramp up in new aircraft production," Meggitt explained.
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Commercial property investor and manager Land Securities reported a swing to loss for it first half as it reported "unsettled" market conditions. Revenue for the half to September 30 was GBP369 million, down from GBP378 million a year ago. The company swung to a pretax loss of GBP147 million from a profit of GBP42 million, largely due to a GBP304 million net deficit on the revaluation of investment properties. EPRA net asset value per share was 1,296 pence at the end of September, down 3.2% from 1,339p a year ago. Looking ahead, Landsec said it expects the retail market to remain challenging due to company voluntary arrangements and administrations. Real estate fundamentals in London are "sound", however.
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COMPANIES - FTSE 250
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B&M European Value Retail reported strong third-quarter sales, though profit was hit by an impairment. Revenue for the half to September 29 was up 22% to GBP1.90 billion, while B&M UK stores revenue was up 14%, including like-for-like sales growth of 3.7%. "Trading so far in Q3 has seen continued solid LFL sales growth in the B&M UK stores business and it is well placed for the 'golden quarter' trading," the company said. B&M's pretax profit, however, dropped 71% to GBP32.2 million due to a GBP59.5 million impairment charge related to Jawoll, its German unit. On its German operations, the company said it is undertaking a strategic review to determine the future of the business after a "continued disappointing financial performance". B&M held its interim dividend at 2.7p per share.
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Royal Mail bid to block potential strikes by postal workers in the run-up to Christmas because of alleged ballot "irregularities" is to be heard by the High Court. The company is taking legal action against the Communication Workers Union over planned walkouts. Strike action was overwhelmingly supported by CWU members amid a dispute between workers and management over job security and employment terms. The CWU said the result of the ballot – with 97% supporting action on a turnout of almost 75% – represents the largest vote for industrial action in several years. But Royal Mail claimed the ballot was unlawful, pointing to evidence it said "demonstrates that CWU officials, including co-ordination and direction at a senior level, have planned and orchestrated breaches of their legal obligations".
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COMPANIES - INTERNATIONAL
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Chinese shoppers set new records for spending during the annual "Singles' Day" buying spree despite an economic slowdown and worries over the US trade war, with state media calling it a sign of China's rising economic strength. E-commerce giant Alibaba Group Holding said consumers spent USD38.3 billion on its platforms on Monday during the world's biggest 24-hour shopping event, up 26% from the previous all-time high mark set last year. The growth rate slowed slightly, however, from the 27% increase last year and 39% in 2017. Alibaba's main domestic competitor JD.com Inc, which holds an 11-day promotion ending at midnight on November 11, said early Tuesday it had handled sales over that stretch totalling USD29.2 billion, which was up 30%.
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Private equity group KKR has approached pharmacist Walgreens Boots Alliance Inc in what would be the largest leveraged buyout in history, Bloomberg reported. Walgreens has a market capitalisation of around USD55.56 billion, and debt of USD16.8 billion, Bloomberg added, dwarfing the size of the previous largest leveraged buyout, KKR's USD45 billion deal for utility TXU in 2007.
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Deutsche Post backed its annual guidance despite weakening economic growth at home and abroad. Bonn-based Deutsche Post said growth was "weak at best" in the third quarter of 2019 and added looming political and economic risks are "mainly on the downside" going into the end of 2019. Germany is likely to continue to suffer from a "persistently slack economy", the package and supply chain firm said, with no recovery expected until at least the second half of 2020. Looking to its own guidance, Deutsche Post backed earnings before interest and taxes guidance given in August of a 2019 figure of EUR4.0 billion to EUR4.3 billion. Ebit in 2018 was EUR3.16 billion.
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Tuesday's Shareholder Meetings
Galliford Try
Craneware
Pacific Horizon Investment Trust
JPMorgan Global Growth & Income
Mid Wynd International Investment Trust
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By Tom Waite; thomaslwaite@alliancenews.com
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