London’s FTSE opened lower on Friday morning, as data showed the UK economy shrank by 2.9% in January, weighed down by a slump in trading activity with the EU, albeit the decline was somewhat lower than the 4.9% drop many were anticipating.
By 9 am, the blue chip benchmark was off 0.15% at 6,727.15 points, while the FTSE 250 was 0.35% lower at 21,459 points.
Strength among banking and energy stocks wasn’t enough to offset weakness in miners and housebuilders, the latter falling after a gloomy update from Berkeley Group (BKG).
BURBERRY STRUTS ITS STUFF
In corporate news, luxury goods group Burberry (BRBY) bounced 7.1% higher to £21.28 on the news it now expects sales and adjusted operating profit for the year to March 2021 to top market expectations, as the strong rebound in performance since December has continued.
Like-for-like retail sales for the fourth quarter are expected to be in the range of 28%-to-32% higher than the same period last year, said the FTSE 100 trenchcoats-to-cashmere scarves seller.
Tracksuits-to-trainers purveyor JD Sports Fashion (JD.) edged 0.6p higher to 827.2p after agreeing to acquire 60% of Poland-based Marketing Investment Group in an effort to expand into Central and Eastern Europe.
Krakow-based MIG operates 410 retail stores and associated trading websites across nine countries in Central and Eastern Europe, selling a wide range of sports fashion footwear, apparel and accessories.
Housebuilder Berkeley cheapened 5% to £43.43 despite news it remains on track to deliver annual profit similar to last year’s £504 million, in line with guidance.
Market fundamentals remain ‘strong’, said Berkeley, supported by low interest rates and the under-supply of homes, while the group’s forward sales at year-end are anticipated to be north of £1.7 billion.
However, news of delays in obtaining materials and Berkeley’s guidance for the value of reservations for the current financial year to be around 20% lower than last year gave investors the jitters and triggered a sell-off in other housebuilders.
BODYCOTE LURCHES INTO LOSS
Thermal processing services provider Bodycote (BOY) softened 1.8% to 788p after swinging to an annual loss as restructuring costs and a pandemic-led decline in revenue weighed on performance.
For the year ended 31 December 2020, Bodycote’s pre-tax loss was £1.5 million, compared with a profit of £123.9 million a year earlier, as sales slumped 16.9% to £598 million.
‘The fall in demand that occurred in the second quarter led to an unprecedented drop in revenues that was significantly greater than even the worst points of the global financial crisis in 2008 and 2009,’ said the company.
IN OTHER NEWS
Elsewhere, building products provider Eurocell (ECEL) edged up 1.4% to 222p despite reporting losses for 2020, as investors focused on a strong second half of 2020 and an upbeat outlook.
‘Whilst the current levels of uncertainty mean it is difficult to predict the outcome for the year, 2021 has started well with sales to the end of February up 8% on 2020 and it remains our intention to return to paying dividends this year,’ insisted the company.
Engineering group Avingtrans (AVG:AIM), which supplies critical components to the energy, medical and industrial sectors, advanced 8.2% to 325.6p after completing the sale of its Peter Brotherhood business to Howden for £35 million.
And information management software play IDOX (IDOX:AIM) inched 1.2% higher to 73p after agreeing to sell its compliance operation business to Sponge Group, a digital learning and technology company, for £9 million in cash.
The disposal proceeds will be used to pay down debt and for investment to boost organic growth and potential acquisitions.
