London’s FTSE 100 lost some of its momentum on Thursday morning, trading 0.7% lower to 6,337.72 as investors moved on from the vaccine news to focus on the UK’s latest economic data.
For the third quarter of 2020, the UK economy seemingly rebounded strongly with GDP rising 15.5%, but this was lower than the 17% that had been predicted.
Analysts have also predicted the economy, which is still 8.2% smaller than before the pandemic began, will shrink again in the fourth quarter thanks to renewed national lockdowns.
GVC SETS OUT FUTURE STRATEGY
In company news, betting company GVC (GVC) fell 1.4% to £10.04 after it said it would focus entirely on nationally regulated markets for all of its revenue by 2023, as new boss Shay Segev laid out his plans to transform the group and grow its presence.
The Ladbrokes owner, which will be renamed Entain, said its new corporate actions would cut operating profit by around £40 million in 2021.
But the company emphasised the ‘significant’ opportunities for growth in four key areas: the US market, its core UK business, new markets, and expanding to new audiences.
Retailer WH Smith (SMWH) gained 1.38% to £14.70 despite making a headline loss of £69 million in the 12 months to the end of August, according to its preliminary results statement.
On an IAS 17 accounting basis, the £69 million loss compared to a £155 million profit before tax in the 2018-19 financial year, while revenue from its travel outlets was down 32%, with high street store revenue down 19%.
Despite having to close many of its stores throughout the first lockdowns, particularly in airports, seemingly investors were more focused on the fact that WH Smith reported its US business was showing signs of recovery through an increase in domestic travel.
L&G RULES OUT DIVIDEND GROWTH
UK insurer Legal & General (LGEN) dropped 3.6% to 227.6p after it said it will keep its final dividend payment for 2020 flat due to the impact of the coronavirus pandemic.
The FTSE 100 company set out five-year targets ahead of its investor day, with aims to generate £8 billion-to-£9 billion in combined cash and capital, paying dividends in the range of £5.6 billion-to-£5.9 billion over the 2020 to 2024 period.
Broadcaster ITV (ITV) dipped 0.85% to 88.96p despite reporting much improved advertising trends in the third quarter, as revenue remained lower and costs higher due to the pandemic.
Advertising spend was down 7% in the three months to 30 September quarter, compared to the 43% in the prior three , with advertising spend in its final quarter expected to be up 6% year-on-year.
But total external revenue was down 16% to £1.86 billion, with broadcast revenue down 13% at £1.3 billion and the production arm ITV Studios down 19% at £0.9 billion.
B&M PROFITS ALMOST DOUBLE
Discount retailer B&M European Value Retail (BME) edged 0.6% lower to 498.44p despite reporting a 95% rise in first half core earnings.
B&M, which entered the FTSE 100 index in September, said it made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £295.6 million in the six months to 26 September, versus the £151.4 million reported in the same period last year.
Revenue increased 25.3% to £2.24 billion, the company said. Like-for-like sales at B&M’s UK stores were allowed to stay open through lockdowns because they sell some food, fuelling a 23% hike during the half.
Luxury brand Burberry (BRBY) gained 3.85% to £16.89 as it saw sales return to growth in October.
Burberry reported revenue of £878 million for the six months to 26 September, down 31% on a year earlier but better than analysts had predicted, with comparable store sales falling by less than expected in the previous quarter. Adjusted operating profit fell 75% to £51 million.
Analysts had expected comparable sales to fall by around 12% in the second quarter, but Burberry said on Thursday that the drop was only 6% and that it had seen strong double-digit growth in key markets, including mainland China, Korea and the US during the half.
OTHER COMPANY NEWS
Defence technology company Qinetiq (QQ.) jumped 7.42% to 312.6p after it boosted its profit after tax by 19% in the first half of its financial year compared to the previous year, to £74.2 million.
The company increased its full-year guidance, saying it now expected to deliver ‘low double-digit revenue growth’.
Power network operator National Grid (NG.) fell 1.48% to 946.6p despite reporting a 78% increase in statutory profit before tax in the six months to the end of September compared to last year, bringing in £720 million.
However, its underlying profit before tax - excluding 'exceptional items, remeasurements and timing' - fell by 9%.
The company said it still expected the pandemic’s impact on demand and revenues to result in £1 billion of cash flow impact for the full year.
Telecommunications company Spirent Communications (SPT) dropped 5.11% to 269.5p despite reporting that demand for 5G services continued to show strong growth in the third quarter of 2020.
The company said it ‘remains confident that the group will show progress in 2020’, despite some impact from laboratory and office closures due to Covid-19.
CEO Eric Updyke said: ‘Overall, we are on track to show full year progress in 2020 with, as in previous years, trading performance weighted to the second half of the year and to the final quarter. Our expectations for the full year remain unchanged.’
