Shares in London have clawed back some of the dramatic losses of the past couple of days. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Management at Imperial Brands (IMB) expect full year net revenue and earnings to be on track with expectations, but this will be weighted towards the second half. The first half will include a £160m write-off after the collapse of wholesaler Palmer & Harvey last November. The company is continuing to focus on its next generation products by launching its blu vaporiser into new markets. Shares fell nearly 1 per cent in early trading. Buy.
After an early rally, Rio Tinto (RIO) stock is flat this morning, despite announcing a record full year dividend and another $1bn share buyback. All told, the diversified miner says it has declared $9.7bn of shareholder returns in 2017, ahead of net earnings for the full-year, while net debt has more than halved to just $3.8bn – less than 8 per cent of the equity. Our buy call is under review.
Rio’s earnings – in particular, those generated at its Kestrel mine – have been good news for another UK-listed stock. Today, Anglo Pacific Group (APF) released most of the important financial metrics on which it is judged: a cash balance of £8.1m, a 90 per cent increase in royalty income year-on-year and a re-iteration that around 90 per cent of Kestrel’s saleable tonnes will fall into Anglo’s royalty tenements. The income case looks good, too. Quarterly distributions will increase by at least 8 per cent this year, while a final 2.5p dividend for 2017 is both 66 per cent up on the norm and covered twice over with free cash flow. We remain buyers.
KEY STORIES:
Severn Trent’s (SVT) trading statement this morning was welcomed by investors, who sent the shares up more than one per cent - ahead of the wider FTSE. The group has confirmed it expects to deliver at least £50m in customer ODI outperformance payments for the year. It is following this up with its largest ever customer engagement programme, which will include a panel of 10,000 customers, to help it with planning for the next regulatory period. The update is broadly positive, but as ever wider political fears continue to hang over the water sector.
Energy regulator Ofgem has announced it has extended its prepayment meter safeguard tariff to an additional 1m households. The regulator has expanded the tariff to cover those who qualify for the Warm Home Discount and are on the standard variable tariff - almost 1m people - and is working to put temporary protection in place for everyone on default deals later this year. The initial annualised saving is expected to be around £115 on average, though the regulator warned it would likely fall to around £66 from April when higher energy costs push up the tariff price. Both Centrica (CNA) and SSE’s (SSE) shares were up in early trading, though the latter rose less than the wider market.
OTHER COMPANY NEWS:
Shares in supermarket chain Tesco (TSCO) fell this morning following news that the company could be facing a possible £4bn payout in respect of owed wages to female staff members. It’s thought thousands of women who work for the supermarket’s stores on hourly rates have been underpaid compared to male colleagues.
EVR Holdings’ (EVRH) chief executive Anthony Matchett will now take on the role of executive chairman, too. Sean Nicolson, who had been chairman since the company was recapitalised in 2015, has stepped down with immediate effect. Meanwhile, Simon Cole - who joined EVR as a director in March 2016 - will take on the new role of senior non-executive director. EVR, which creates virtual reality music content, expects to launch its first consumer product this year - the ‘MelodyVR’ music platform.
Shares in Warpaint (W7L) are up more than 4 per cent after the cosmetics company announced that Retra, the brand it acquired in November last year, is progressing well. Full year results are set to be in line with the board’s expectations.
