London shares are up marginally after an uncertain couple of days. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
A strong performance from its integrated gas division helped Royal Dutch Shell (RDSB) to declare first quarter earnings per share of 64¢, on a current cost of supply basis. That’s up 39 per cent year-on-year and an impressive 23 per cent rise on the last three months of 2017, though cash generation was not as strong. Other reasons why the shares are down 2 per cent today include a potential drop in reserves at the Gronigen field, and only a modest improvement in gearing. Still, the supermajor now sounds confident it can commence its $25bn share buyback programme later in 2018. Income buy.
Poor weather affected sales in the first quarter at Taylor Wimpey (TW.) and while output for the full-year is likely to meet expectations, production is expected to be more weighted towards the second half. Buy
Barclays (BARC) saw last year’s first quarter profit of £1.68bn turn into a loss of £236m as a result of litigation and other one-off items (that seem to occur quite regularly). However, underlying profits were up one per cent at £1.73bn, helped by a 45 per cent improvement in credit impairment charges. Buy
The Competition and Markets Authority has said the proposed merger between SSE’s (SSE) household energy business and Npower “warrants further in-depth scrutiny”. The authority recently carried out a phase 1 investigation into the merger, noting the proposed merger could reduce competition, leading to an increase in energy prices for household customers. SSE and Npower now have until the 3rd of May to offer proposals to reduce the risk, otherwise a phase 2 investigation will begin
In an AGM statement this morning, SDL’s (SDL) chairman David Clayton said trading was in line with management’s expectations. The language translation technology group has now signed “the vast majority” (by value) of those licence deals that had been delayed from the 2017 financial year, and which were thus expected to be signed this year. Shares in SDL were up 5 per cent at the time of writing. Buy.
FDM’s (FDM) trading for the first quarter to March 2018 was in line with management’s expectations, with a reduction in lower-margin contractor revenues and a rise in higher-margin ‘Mountie’ consultant revenues. Mountie revenues were up 13 per cent year-on-year, while total sales were down 1 per cent (or up 3 per cent at constant currencies). At the beginning of this week, total Mounties at client sites was 3,310 - up from 2,826 for the same week last year. At the period-end, the IT group had “significant” cash balances with no debt. The shares were up 1 per cent this morning. Buy.
The chairman of Meggitt (MGGT) Sir Nigel Rudd is facing potential shareholder disquiet at today’s AGM over claims that he has too many other boardroom roles in the City, thereby hindering his ability to carry out his duties for the FTSE 250 engineering group. In a separate trading update, the group announced that trading had strengthened during the first quarter of 2018, “with organic revenue growth of 6 per cent excluding the effects of foreign exchange and disposals”. Buy.
Shares in ULS Technology (ULS) rose by over two per cent after the online conveyancing platform specialist revealed that profits for the year to 31 March 2018 will be ahead of market expectations. Turnover is expected to have risen by more than a third and pre-tax profits by a quarter. Full-year results are due for release on 27 June. Buy
KEY STORIES:
BP (BP.) has appointed former BG Group and Statoil chief executive Helge Lund to succeed Carl-Henric Svanberg as chairman. Mr Lund will immediately step down as a director of oil services group Schlumberger, serve as BP’s chairman designate from September, and officially take up the role in January. BP chief executive Bob Dudley thanked Mr Svanberg for his service, adding that the Swede had “led our board through BP’s darkest days and into this period of growth and modernization”.
Shares in car insurance group Hastings (HSTG) fell over six per cent, as investors reacted to a tough pricing environment and increased weather related claims. However, trading in the first quarter of 2018 saw live customer numbers up by 10 per cent to 2.67m, while the group’s market share of the UK private car insurance market grew from 6.7 per cent a year earlier to 7.4 per cent. Buy
OTHER COMPANY NEWS:
A first quarter update from Domino’s Pizza (DOM) has moved the share price north in early trading as underlying sales in the UK improved by 7 per cent. Along with a 17.6 per cent improvement in international sales, this helped lift the group total by 10.4 per cent on an organic basis to £311m. Around 11 new stores opened in the period, taking the group-wide total to 1,203. Bosses said its new GPS tool is now live in 541 stores, “generating valuable labour efficiencies for franchisees and an improved customer experience”.
Shares in online retailer N Brown (BWNG) also rose in early trading after the group reported an in-line set of FY2018 results. Pre-tax profits of £81.6m came in slightly ahead of consensus expectations, on group revenues which grew by a steady 3.9 per cent. Management says March was a difficult month for fashion retail - likely referring to the potential disruption from unseasonal weather - although expectations for the current year have been left unchanged for now.
Redde (REDD) has reconfirmed the strong outlook detailed in March’s half-year results. The increased underlying trading volumes seen in the first half have been sustained during the third quarter, and it looks like this has been maintained throughout April. The shares were up 1 per cent this morning.
