(Alliance News) - Melrose Industries said Tuesday it is trading in line with expectations in 2019, though two of its units have been hurt by the recent General Motors strike in the US.
Sales in the industrial turnaround firm's Automotive unit were down 5% year-on-year in the period to from July 1 to October 31, and its Powder Metallurgy saw a 13% sales decline, both feeling the bite from the GM strike action. Melrose said Powder Metallurgy sales would have been in line with board expectations had it not been for the strike.
Nearly 50,000 GM workers downed tools in mid-September, launching the biggest labour dispute to hit the automaker in more than a decade. The strike ended in October after a 40-day walkout.
Melrose said sales in the Aerospace division, part of most recent big acquisition GKN, were up more than 5% in the recent four months on a year before, together with "good margin improvement".
"Melrose continues to do what it has always done well: improve businesses. Some macro conditions could be more helpful, but this has not stopped us continuing to transform the GKN businesses, delivering another trading period in line with expectations, and achieving better trends than seen in the first half of the year," commented Chair Justin Dowley.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 25.00 points 0.3% at 7,332.70
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Hang Seng: up 1.5% at 27,077.01
Nikkei 225: closed down 0.5% at 23,292.65
DJIA: closed up 3133 points, 0.1%, at 28,036.22
S&P 500: closed up 0.1% at 3,122.03
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GBP: soft at USD1.2958 (USD1.2969)
EUR: flat at USD1.1075 (USD1.1068)
Gold: flat at USD1,470.17 per ounce (USD1,469.08)
Oil (Brent): flat at USD62.30 a barrel (USD62.20)
(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
0930 GMT UK Finance monthly mortgage lending trends statistics
1100 GMT UK CBI industrial trends survey
1000 CET EU euro area balance of payments
1100 CET EU construction output
0830 EST US housing starts and building permits
0855 EST US Johnson Redbook retail sales index
1630 EST US API weekly statistical bulletin
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US Federal Reserve Chairman Jerome Powell reasserted the independence of the US central bank during White House talks with President Donald Trump on Monday, the Fed said. Powell attended the meeting, which comes amid an unprecedented campaign of public attacks on the central bank, at the invitation of the president, and was joined by Treasury Secretary Steven Mnuchin, the Fed said in a statement. Trump, who has lambasted Powell in harsh, personal terms over monetary policy, tweeted that the meeting was "good & cordial", adding that "everything was discussed" including interest rates, inflation, foreign exchange and the Fed's balance sheet policies. The Fed said Powell's comments were consistent with last week's congressional testimony and did not concern "expectations for monetary policy", except to say it will depend entirely on new economic information.
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An agreement has been reached in the dispute over the EU budget for 2020, diplomats and members of the European Parliament said on Monday evening. Government officials from the 28 member states and lawmakers have agreed to provide around EUR153.6 billion in disbursements next year. Additional money should be provided, among other things, for climate change, the fight against youth unemployment and digitization. The two sides had failed to reach a compromise on the spending package late on Friday. EU member states had agreed on a budget of EUR153.1 billion for next year, while lawmakers from the European Parliament were pushing for a more ambitious EUR159.1 billion.
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Sales of new cars in the EU decreased by 0.7% year-on-year in the first 10 months of 2019, industry data showed. From January to October, 12.9 million new vehicles were registered, the European Automobile Manufacturers Association said in its monthly bulletin. October saw over 1.17 million new vehicles registered in the bloc, the highest total for the month since 2009. Four of the five major EU markets saw increases of 6% or more in demand, while Britain registered a sales slump of 6.7%. However, the ACEA acknowledged that the new WLTP emissions standards that had gone into effect last year had seen a drop of 7.3% for October 2018, setting a low base of comparison for this year.
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About 100 anti-government protesters remain holed up at a Hong Kong university as a police siege of the campus entered its third day. City leader Carrie Lam said 600 people had left the Hong Kong Polytechnic campus, including 200 who are under 18 years old. Police have surrounded the university and are arresting anyone who leaves. Groups of protesters made several attempts to escape on Monday, including sliding down hoses to waiting motorcycles, but it was not clear if they evaded arrest. Lam said those under 18 would not be immediately arrested but could face charges later. She said the other 400 who have left have been arrested. Meanwhile, China hinted it might overrule the Hong Kong's high court ruling on Monday to strike down a ban on face masks that was aimed at preventing protesters from hiding their identity to evade arrest.
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BROKER RATING CHANGES
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JEFFERIES RAISES INTERTEK TO 'BUY' ('HOLD') - TARGET 6100 (6300) PENCE
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CITIGROUP CUTS B&M EUROPEAN VALUE RETAIL TO 'NEUTRAL' ('BUY') - TARGET 405 (410) PENCE
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JPMORGAN CUTS DIPLOMA TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 1730 (1760) PENCE
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COMPANIES - FTSE 100
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Halma edged its dividend higher after delivering first half earnings growth. The hazard detection and life protection technology manufacturer posted a 12% revenue rise to GBP653.7 million, with pretax profit rising 12% to GBP105.8 million. Halma proposed a 6.54 pence per share interim payout, 7.0% up from 6.11p last year.
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COMPANIES - FTSE 250
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Budget airline easyJet said its full-year results were in line with expectations but reported "some weakness in consumer confidence". Revenue increased by 8.3% to GBP6.39 billion, pretax profit fell by 3.4% to GBP445 million from GBP430 million however. Passenger revenue was 6.9% higher with the firm saying it benefited from strike action at IAG-owned flag carrier British Airways. easyJet said headline costs, excluding fuel were 10% higher at GBP4.54 billion. Headline pretax pretax profit was down 26% to GBP427 million but towards the top end of its GBP420 million to GBP430 million guidance range. Looking ahead, easyJet said forward bookings for the first half of the 2020 financial year are "reassuring", slightly ahead of last year's levels.
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Homeserve reported an interim earnings rise, and added that it has agreed to acquire a 79% stake in US-based directory website operator eLocal. The home improvements firm will pay USD140 million on a "debt free, cash free" basis. In the first half, Homeserve's revenue rose 13% to GBP457.7 million, with pretax profit up 2.1% from last year to GBP28.8 million from GBP24.6 million.
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COMPANIES - INTERNATIONAL
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Julius Baer reported double-digit growth in assets in the year-to-date and reconfirmed its annual targets. The Swiss private bank said assets under management in the ten months to the end of October grew to CHF422 billion, about USD426.42 billion, representing a year-to-date increase of 10%. This was driven by strong positive market performance and continued net new money inflows, it said. Julius Baer has approved the launch of a programme to buy back up to CHF400 million in its shares. The programme will be launched on Wednesday and is expected to run until the end of February 2021.
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Tokio Marine Holdings reduced its dividend, as income fell slightly in the first half of its financial year, hurt by a decline in net premiums written. For the six months ended September 30, the Japanese insurance firm posted ordinary income of JPY2.743 trillion, around USD25.3 billion. This represents a 0.9% drop year-on-year from JPY2.768 trillion. Ordinary income includes income from underwriting, investment, and amortisation of negative goodwill. It was hurt by a 1.7% reduction in net premiums written to JPY1.807 trillion from JPY1.839 trillion. Despite this, ordinary profit almost doubled to JPY147.49 billion from JPY75.10 billion as ordinary expenses fell 3.6% to JPY2.596 trillion from JPY2.692 trillion. The company declared an interim dividend of JPY130.00 per share for the second quarter, down 19% from JPY160.00 per share a year before. It expects to pay a year-end dividend of JPY95.00 per share, up from JPY90.00, which would take the annual total down by 10% to JPY225.00 per share from JPY250.00 per share.
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Tuesday's Shareholder Meetings
Dunelm Group
Petro Matad
BMO Real Estate Investments
Xeros Technology Group (re share placing)
Jupiter UK Growth Investment Trust
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By Tom Waite; thomaslwaite@alliancenews.com
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