UK stocks continued to slide on Tuesday following some mixed company updates and modest profit-taking after the big gains of last week, with weakness also reflecting the pound’s continued rise on UK recovery hopes and share price declines for London’s two tobacco firms.
By midday, the FTSE 100 was down 1.1% at 6,923.5 points while the FTSE 250 was off 0.7% at 22,339.
TOBACCO STOCKS TUMBLE
Shares in British American Tobacco (BATS) and Imperial Brands (IMB) tumbled 6.8% to £27.16 and 7.1% to £14.67 respectively on reports Joe Biden’s administration is looking to cap nicotine levels in cigarettes, with officials across the pond also looking at whether they will pursue a ban on menthol cigarettes.
Primark owner Associated British Foods (ABF) fell 2.7% to £23.94 after resuming its dividend payment at a lower rate as first-half profit halved following a slump in Primark sales as the national lockdowns forced stores to close.
For the 24 weeks ended 27 February 2021, adjusted pre-tax profit fell 50% to £319 million year-on-year as revenue slipped 17% to £6.3 billion. Primark’s adjusted operating profit slumped 90% to about £43 million.
The company declared an interim dividend of 6.2p per share, down from 12.05p per share last year. Looking ahead, the company said it continues to expect Primark profit to be lower than last year.
Chemicals group Elementis (ELM) jumped 14.8% to 155.8p after Sky News reported the firm has been the subject of a takeover bid from Nasdaq-listed Innospec in a cash and shares deal that values the FTSE 250 company at over 200p per share.
Mining giant Rio Tinto (RIO) softened 0.6% to £60.53 as it reported a drop in first-quarter production of iron ore, the commodity from which it makes the majority of its earnings, but maintained annual guidance ranges for all its products.
Output of the key steel-making ingredient from the group’s Pilbara operations in Australia in the three months through March fell to 76.4 million tons. That was down 2% year-on-year and 11% compared to the fourth quarter of 2020.
Rio Tinto said the fall was driven by above average wet weather at its mines through February and fixed plant reliability. Labour resource availability and weather challenges disrupted maintenance, while tropical cyclone Seroja impacted mine and port operations in April. Full-year iron ore guidance, however, remained unchanged.
AVAST LIFTS REVENUE GUIDANCE
Cybersecurity company Avast (AVST) jumped 3.8% to 489.5p after lifting its guidance on annual revenue growth following the sale of its family mobile business and continued demand seen in the first quarter of the year.
For full year 2021, the group now expects to deliver at the upper end of the 6-to-8% organic revenue growth guidance, with the consumer indirect segment revised to low single-digit percent growth.
Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, margin percent was expected to remain broadly flat versus 2020. The sale of the family safety mobile business on 16 April, would be modestly earnings dilutive, benefiting reported growth rates over the balance of the year, the company said.
The updated guidance comes as revenue in the first quarter of the year, was boosted by strong demand for its cybersecurity products. For the first quarter ending 31 March 2021, revenue grew 10.5% to $237.1 million. The company recommended the payment of a final 2020 dividend of $0.112 cents per share.
Fresh prepared food provider Bakkavor (BAKK) gained 2% to 127.4p after resuming its dividend following improved performance in the first quarter of the year as lockdown restrictions begin to ease.
The company said that ‘while uncertainty remains, improved visibility on sales for the coming months has made the board more confident about the group's liquidity position’ and so it will be recommending the payment of the previously suspended final dividend for 2019 of 4p per share.
For the 13 weeks to 27 March 2021, revenue was 4.4% lower than the prior year and 2.6% lower on a like-for-like basis.
OTHER NEWS
Price comparison website Moneysupermarket.com (MONY) fell 2.4% to 264p after it said its first-quarter revenue had dropped 20%. Moneysupermarket, however, said it expected its full-year results to be in line with market expectations.
FTSE 250 gold miner Petropavlovsk (POG) gained 1.1% to 27.1p as it reported a 49% drop in first-quarter production but stuck to its annual output guidance.
Fund manager Jupiter Fund Management (JUP) shed 1.3% to 274.4p having reported an uptick in first-quarter assets under management, though with net outflows in the period of £800 million.
Investment manager and advisory support group Tatton Asset Management (TAM:AIM) jumped 8.5% to 410p on guiding for annual results to be ahead of analysts’ forecasts.
Tatton’s inflows for the year through March were £755 million, or 11.3% of opening assets under management, which jumped 35% to £9 billion, up from £6.7 billion year-on-year.
Cosmetics company Warpaint London (W7L:AIM) soared 12% to 121p as it said it had continued to experience improved trading conditions in the first quarter of 2021, with sales and margins both on the rise.
