The FTSE benchmark was under pressure in early trading, with bank stocks in retreat after some firms in the sector agreed to pay a total of more than $3bn related to allegations of attempted rigging of the foreign-exchange market.
IC TIP UPDATES:
A total of six banks, including HSBC (HSBA) and RBS (RBS) have been fined £1.1bn by the Financial Conduct Authority for failing to control practices in their foreign exchange operations. Barclays (BARC) has not yet agreed a settlement. Fines from US and Swiss regulators swelled the total fine to $3.2bn. We retain our buy recommendations on all three banks.
Sell recommendation SSE (SSE) has announced the appointment of senior independent director Richard Gillingwater to replace Robert Smith as chairman alongside its half year results. The six months to September saw adjusted profits rise by 4.6 per cent but reported profits dip 6.2 per cent to £316.6m. The company has also been forced to warn that persistent low production and consumption and a ‘challenging business environment’ mean that full year earnings will be at the bottom end of expectations, similar to last year’s.
Building products business Tyman (TYMN) says that trading in its UK and US operations has remained strong, although its European business has seen weaker conditions. Currency movements have also been a concern but has eased more recently and full year figures should meet expectations. We keep our buy rating.
Oil services and engineering specialist Cape (CIU) says it is trading in line with expectations with ‘steady performance in Europe, the UK and former Soviet Union, ‘robust’ trading in the Middle East and mixed performance in Asia Pacific. The order book stands at £636m, only marginally down on this time last year. Buy.
Moneysupermarket(MONY) has grown revenues by 18 per cent over the past three months, giving nine months group revenues growth of 10 per cent. We keep our buy.
Construction specialist Kier (KIE) says that trading remains in line with expectations and that within its £6.3bn order book, 95 per cent of next year’s forecast revenues are already secured. We maintain our buy recommendation.
KEY STORIES:
Supermarket Sainsbury (SBRY) sae underlying sales dip by 0.3 per cent in the six months to 27 September with like for like sales down 2.1 per cent and underlying profits 6.3 per cent lower at £375m. Meanwhile, newly appointed chief executive Mike Coupe has used the announcement as a platform to launch his strategy for the business.
Barratt Developments (BDEV) reports continued good trading with the company on course to meet its target of 15,000 completions in the full year to 2015. Private forward sales are up 11.9 per cent to £1.26bn with joint venture forward sales up almost 50 per cent at £293.1m.
Retailer WH Smith (SMWH) says sales were flat in the first 10 weeks of its financial year with like for like sales down 1 per cent. The high street was again the drag, with like for like sales down 4 per cent while like for like sales in the Travel business rose 2 per cent.
Support services specialist G4S (GFS) is benefiting from a return to growth in the US and continued strong growth in emerging markets, resulting in organic revenue growth 4.2 per cent for the nine months to September.
Luxury retailer Burberry (BRBY) posted a 14 per cent rise in revenues to £1.1bn and a 6 per cent improvement in adjusted profits for the six months to September, although foreign exchange movements affected the reported profit figure, leaving it 12 per cent lower at £142m.
Punch Taverns (PUB) posted like for like net income growth of 1.3 per cent for the year to 23 August, marking five consecutive quarters of growth in this metric.
Interserve (IRV) says it has won £1.5bn worth of work since July including the recent contract to run probation services in five regions, which should bring in £600m over seven years.
OTHER COMPANY NEWS:
Mears Group (MER) says that lower levels of social housing contracts mean that it has 96 per cent revenue visibility for 2014 and 86 per cent visibility of the £934m forecast revenues for 2015.
Conviviality Retail (CVR) says trading is line with expectations with revenues for the 26 weeks to 26 October of £183m and like for like revenues down 1.7 per cent.
Rail scheduling and monitoring technology specialist Tracsis (TRCS) more than doubled revenues to £22.4m in the year to July with profits up 62 per cent to £4.2m with trading reported to be ‘buoyant’.
Workspace Group (WKP) launched a placing of 9.99 per cent of its share capital alongside results today which showed the benefit of its changing focus in London property. Profits rose by 61 per cent to £65.9m with its net asset value per share up by 20 per cent to 101p.
