LONDON MARKET PRE-OPEN: LSEG unveils buyback; WPP ups guidance

Fri, 05th Aug 2022 07:52

(Alliance News) - Stock prices in London are seen opening flat on Friday, despite a stellar handover from Asia, as traders await the next US jobs report before making big commitments.

The FTSE 100 index has had a decent start to August, up 0.3% so far this week, despite pre-central bank trepidation and a rising US-China tensions.

IG futures indicate London's large-cap stock measure is to open 2.2 points higher at 7,450.26. The index had closed up by a similar increment on Thursday, adding 2.38 points to 7,448.06.

In early UK corporate news, investment fund supermarket Hargreaves Lansdown reported "subdued flows" and "lower activity" in wealth management, amid uncertain market conditions. London Stock Exchange Group, meanwhile, reported an interim earnings climb, boosted by the Refinitiv acquisition. It also launched a GBP750 million share buyback. Ad agency WPP lifted guidance, while retailer Pets At Home left its outlook unchanged.

Hargreaves Lansdown said it sees "continued, economic and geopolitical turbulence" ahead.

"This will continue to impact key drivers of our business including asset levels and investor confidence. We have supported clients through such events and period for many years and each time we have come through stronger. This time will be no different," the FTSE 100 listing said.

Pretax profit in the year that ended June 30 fell 26% to GBP269.2 million from GBP366.0 million. Revenue declined 7.6% to GBP583.0 million from GBP631.0 million.

Over the financial year, assets under administration declined by 8.6% to GBP123.8 billion from GBP135.5 billion, "driven by market falls".

HL raised its annual ordinary dividend by 3.1% to 39.7 pence from 38.5p. However, including a special payout of 12.0p for financial 2021, the total annual dividend is down 24% from 50.5p.

Chief Executive Chris Hill commented: "Against a macroeconomic and geopolitical climate not seen in a generation with subdued flows and lower activity across wealth management, we have delivered GBP5.5 billion of net new business through the year and the quality of our service attracted a further 92,000 net new clients."

LSEG said its outturn in the first half of 2022 improved, as this year's interim period had an extra month's worth of contribution from Refinitiv.

LSEG completed the USD27 billion acquisition of financial market data and trading infrastructure provider Refinitiv in January 2021, ending a long process after first making its interest clear back in July 2019.

LESG's total income excluding recoveries jumped by 24% year-on-year to GBP3.57 billion from GBP2.87 billion. Including recoveries, the measure was up at the same rate to GBP3.74 billion from GBP3.02 billion.

Pretax profit jumped 73% to GBP803 million from GBP463 million.

The stock exchange operator said its offering benefits from market price volatility. Revenue from the Capital Markets unit alone jumped 34% year-on-year. Its largest revenue contributor, Data & Analytics, saw a top-line improvement of 26%.

"Our cash generation is allowing us to actively deploy capital across organic and inorganic investments, grow our dividend and commence a share buy-back programme, driving further value for our shareholders. We are successfully executing on our strategy, have good momentum going into the second half and our targets remain unchanged," CEO David Schwimmer said.

LSEG lifted its interim dividend by 27% to 31.7p per share from 25.0p. It will also launch a GBP750 million buyback, "phased over multiple tranches over 12 months". This kicks off on Friday.

Advertising agency WPP upped its annual outlook. It now expects organic revenue to rise between 6.0% and 7.0% for 2022. It had initially guided for a 5.5% to 6.5% rise.

Pretax profit in the first half of 2022 surged 12% to GBP562 million from GBP502 million a year earlier. Revenue increased 10% to GBP6.76 billion from GBP6.13 billion.

WPP upped its payout by 20% to 15.0p from 12.5p.

"We have enjoyed a strong first half, with broad-based growth across our creative, media and public relations businesses. This reflects the improved competitive position of our creative businesses, with their growing capabilities in commerce, experience and technology, our continued strength in media and the resurgence in demand for strategic communications advice from our public relations agencies," CEO Mark Read said.

FTSE 250-listed Pets At Home backed guidance after a "strong" first quarter.

Revenue in the period to July 15 rose 6.0% on a like-for-like basis. Total revenue rose 7.1% year-on-year to GBP404.7 million.

CEO Lyssa McGowan commented: "Our performance has remained strong in the first quarter, underpinned by continued customer growth and high levels of retention. We operate a unique omni-channel model, in a market in structural growth, where the passion and expertise of our colleagues and partners is a key competitive advantage."

Pets At Home still expects annual pretax profit in line with analyst consensus of GBP131 million.

Pendragon said a "large international corporate" bidder for the car dealership chain has decided against pursuing takeover talks. The potential suitor, which wasn't named, had made a bid of 29p per share. This would value Pendragon's share capital at around GBP405.1 million.

Shares in the firm closed at 21.50p on Thursday, giving it a market capitalisation of GBP300.3 million.

Pendragon was unable to engage with one of its five largest shareholders, the London-listing explained.

"The proposal was contingent on receipt of irrevocable commitments from all of Pendragon's major shareholders. The board of Pendragon concluded that the proposal merited engagement with its five largest shareholders and received strong support for the proposal from four of these shareholders who were willing to sign irrevocable commitments. However, Pendragon was unable to engage with one of these shareholders and therefore, given this lack of certainty, the bidder has withdrawn its non-binding offer and both parties have terminated discussions," it said.

In March, Sky News reported that Pendragon had rejected a GBP400 million takeover approach from major shareholder Hedin Group.

According to Sky, Hedin Group, which operates more than 200 vehicle showrooms in Belgium, Norway, Sweden and Switzerland through its subsidiary Hedin Bil, had tabled a secret 28p offer.

The pound was quoted at USD1.2145 early Friday in London, up from USD1.2115 at the London equities close on Thursday. The euro stood at USD1.0224, up slightly from USD1.0220. Against the yen, the dollar was trading at JPY133.30, unchanged from the European equities close on Thursday.

The July US nonfarm payrolls report is at 1330 BST. It follows Thursday's jobless claims data, which showed initial claims for unemployment support were slightly higher than expected last week.

New jobless claims have now risen in four out of the last five weeks, suggesting the US economy's momentum is waning.

According to the Department of Labor, initial jobless claims increased to 260,000 in the week that ended July 30, from 254,000 the week earlier. The prior week's figure was downwardly revised from 256,000.

The US economy is expected to have added 250,000 jobs in July, according to consensus cited by FXStreet, slowing from 372,000 in June.

In Tokyo, the Nikkei 225 ended 0.9% higher. In China, the Shanghai Composite was up 1.1%. The Hang Seng in Hong Kong was 0.3% higher. The S&P/ASX 200 closed up 0.6% in Sydney.

Gold stood at USD1,788.93 an ounce, up from USD1,785.66 late Thursday. Brent oil was quoted at USD94.81 a barrel, up slightly from USD94.65.

By Eric Cunha; ericcunha@alliancenews.com