LONDON MARKET PRE-OPEN: Strong Reckitt guidance; NatWest backs outlook

Fri, 29th Apr 2022 07:50

(Alliance News) - Stock prices in London are seen opening higher on Friday, making a confident end to a tricky month for markets, which have faced Covid-19 worries in China, alongside rampant inflation and central bank monetary tightening in response.

IG futures indicate the FTSE 100 index is to open 76.0 points, 1.0%, higher at 7,585.19. The index closed up 83.58 points, or 1.1%, at 7,509.19 on Thursday.

So far this week, the FTSE 100 has lost 0.2%, despite posting three successive days in the green. So far in April, the blue-chip index has lost 0.1%, so it may yet end the month with a gain.

Household goods producer Reckitt Benckiser reported a slight revenue fall in the first quarter of 2022, while pharmaceutical firm AstraZeneca's got a boost from its acquisition of Alexion. NatWest rounded off the UK blue-chip banking earnings season with a slight flourish.

Total income in the three months to March 31 climbed 17% annually to GBP3.03 billion from GBP2.59 billion. Operating pretax profit jumped 96% to GBP1.25 billion from GBP635 million.

The lender expects to meet annual guidance, though there is an improved outlook for its 'Go-Forward' businesses, which exclude Ulster Bank Republic of Ireland.

NatWest now expects total income, excluding notable items, at the "Go-Forward" units to be "comfortably above" GBP11.0 billion. Back in February, it only expected total income "above GBP11.0 billion", not "comfortably above".

In addition, on Friday, AIB said it has entered into exclusive talks with NatWest to acquire EUR6 billion in Ulster Bank performing tracker mortgages.

"Any potential transaction remains subject to negotiations and agreement," AIB added.

AstraZeneca said its total revenue in the first three months of 2022 surged 56% to USD11.39 billion. The drugmaker's reported earnings per share fell 79% yearly, however, to USD0.25.

Core EPS, which excludes acquisition-related items, amortisation of intangibles, impairments, and restructuring charges, was 16% higher at USD1.89.

Astra said the revenue surge reflected "growth across the company, the contribution of the Alexion medicines and several Vaxzevria contracts that are expected to complete delivery by half year 2022".

AstraZeneca completed its USD39 billion takeover of Boston-based rare diseases firm Alexion Pharmaceuticals in July last year.

Astra backed annual guidance. It tips revenue to rise "by a high teens percentage" and core EPS to climb by a "mid-to-high twenties percentage". Both growth rates are at constant currency. Astra has not given any guidance on a reported basis.

It also said it plans to launch a new R&D site in Cambridge, Massachusetts.

Reckitt Benckiser said it expects 2022 like-for-like net revenue growth at the upper end of its 1% to 4% guidance.

"Despite significant cost inflation, we expect adjusted operating margins in-line with prior year and current market expectations," the Dettol and Air Wick owner said.

Net revenue in the first quarter fell 2.3% year-on-year to GBP3.42 billion. On a like-for-like basis, it was up 5.6%.

Hygiene arm revenue fell 9.0% like-for-like, though Nutrition surged 20% and Health jumped 21%.

Elsewhere in London, electrical goods seller AO World said it is "cautious" about its revenue and profit outlook, amid supply chain pressures and the impact of inflation.

In the year ended March 31, group revenue fell 6% year-on-year, though was up 52% from two years prior.

A strategic review launched in January is continuing, AO World added.

Building materials company Kingspan said first-quarter revenue surged, though inflationary pressures, which had ebbed slightly at the turn of the year, have returned in recent weeks.

Kingspan's revenue in the first quarter of 2022 jumped 47% year-on-year to EUR1.89 billion.

"Raw material inflation which had eased considerably at the turn of the year has returned sharply over the past six weeks and the associated recovery effort is ongoing," it cautioned.

"The group's trading outlook for the second quarter is positive with a strong order backlog on hand and decent activity in most end-markets. Raw material inflation remains an issue to be firmly managed, coming on the back of a highly inflationary year in 2021."

In the Asia Pacific region, stocks were largely higher on Friday. The S&P/ASX 200 closed up 1.1% in Sydney. The Shanghai Composite was up 2.3% in late trade. The Hang Seng in Hong Kong surged 3.2%. Financial markets in Japan were closed on Friday for the Showa Day holiday.

The dollar was lower early Friday in London. The pound was quoted at USD1.2522, up from USD1.2458 late Thursday. The euro stood at USD1.0544, up from USD1.0524. Against the yen, the dollar was trading at JPY130.26, down from JPY131.00.

Gold stood at USD1,912.28 an ounce, up from USD1,887.75. Brent oil was quoted at USD108.18 a barrel, rising from USD106.55.

The economic events calendar on Friday has eurozone economic growth figures at 1000 BST and US personal income data at 1330 BST.

Already out, figures from Nationwide showed annual UK house price inflation ebbed slightly in April.

UK house prices rose 12% year-on-year in April, slowing from March's 14% climb.

On a monthly basis, the average UK house price climbed 0.3% to GBP267,620, from GBP265,312. In March, prices had risen 1.1% monthly.

By Eric Cunha; ericcunha@alliancenews.com