London equities started the day on the front foot but had given up much of their early gains by lunchtime. Click here for the Trader Nicole Elliott's latest thoughts on the markets.
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Primark owner Associated British Foods (ABF) has warned as part of a trading update today that the benefits of weaker sterling will recede later in the year. Although management’s full year outlook is unchanged, like-for-like sales fell flat across the group during the first half. The UK, which generates half of Primark’s sales, achieved a 2 per cent rise in like-for-like sales during the same period. But margins will be hindered in the second half as currency hedges were carried out at less advantageous exchange rates in the period. Sell.
Senior’s (SNR) pre-tax profit has fallen in what it describes as a “challenging year” that has forced the streamlining of parts of the business and a cost-reduction programme. Pre-tax profit was £55.5m, down from £63.8m, while underlying revenues at constant currencies fell 2 per cent. End markets remain challenging, though the Flexonics business is expected to hit an inflexion point in its markets later this year. Buy.
Acquisitions and favourable currency movements sent reported revenues at Dechra (DPH) up a whopping 56 per cent in interim results. The three acquisitions made in 2015 are all performing ahead of expectations and have helped the group report particularly strong US growth. But even on an underlying basis, revenue growth was an impressive 6 per cent, with all four of the group’s divisions performing well. Buy.
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Insurance companies have found their share prices under pressure today after the government announced a change to the way personal injury compensation is calculated which is likely to result in the amount insurers will have to pay out. Shares in the likes of Admiral (ADM), Hastings (HSTG) and Direct Line (DLG) were marked down on the news although few have yet quantified the exact financial hit.
Investors seemed nervous about full year results from Quartix (QTX) after January’s trading update. This morning’s full-year results announcement however proves there was no need for concern. Revenue, profit and cash flows are all as impressive as ever and shareholders will benefit from a special dividend. Shares are up 6 per cent in early trading.
Dialight (DIA) posted underlying operating profits of £13.1m for the year to the end of December - up from £6.1m in 2015. Revenues were up by 2 per cent at constant currency, while order intake for the lighting division was up 8 per cent on that basis. A solid set of results as the specialist lighting group continues its restructuring programme, although the full benefits of operational leverage won’t become apparent till 2018.
Shares in Bunzl (BNZL) were up 1.8 per cent following its full year results announcement. Revenues were up 4 per cent in constant currency thanks to a combination of acquisitions and organic growth. However, the UK and Ireland division continued to hold the company back, with 2 per cent constant currency decline in both revenue and adjusted operating profit.
Ground engineering group Keller (KLR) continued to struggle against its Asia Pacific division, which made an £18m loss in the full year to the end of December, primarily due to market conditions in Australia and Singapore. The North America and EMEA divisions, however, posted impressive growth, with EMEA in particular posting double digit constant currency growth in both revenue and underlying operating profit.
London Stock Exchange Group (LSE) has announced its merger with Deutsche Borse may be in doubt as the European Commission is unlikely to approve the deal. The European regulator wants LSE to sell its majority stake in MTS, an electronic trading platform for European wholesale government bonds based in Italy. However, following discussions with the Italian regulatory authorities - who would be required to approve the divestment - LSE said it does not reckon this could be satisfactorily achieved.
Hiscox (HSX) reported a sharp uplift in pre-tax profits for 2016 at £355m. This was driven by gross written premiums rising by a quarter to £2.4bn. While there was no repeat of last year’s special dividend, management recommended a 15 per cent increase in ordinary dividends for 2016.
