UK stocks start the week on a firm note despite weakness in Asia on fears of an escalation of trade tensions between the US and China. The FTSE 100 index of leading shares is up 0.1% to 7,213 thanks to strength in Beverages, Healthcare and Utilities.
Top performer in the FTSE is energy supplier Centrica (CNA), up 2.5% to 95p after it maintains its full year targets despite weak first half trading due to the UK default tariff cap, warmer than normal weather and falling natural gas prices.
Confirmation of its full year cash flow and net debt targets will reassure investors concerned over the dividend after the firm explicitly linked its pay-out to the two metrics in its trading update last November. Centrica faces investors at its annual general meeting (AGM) tomorrow.
Countering Centrica is mobile phone operator Vodafone (VOD) with shares down 3% to 135p after the Times newspaper suggested the company was ready to slash its dividend to pay for 5G mobile networks and reduce its £28bn debt pile.
We have cautioned several times, most recently last month, that Vodafone’s prospective 9% dividend yield could be at risk as it tries to save much-needed cash.
Technical products supplier Diploma (DPLM) delivers upbeat first half results with revenues ahead of estimates up 11% and pre-tax profits up 13%. However, signs of a slowdown in its US seals business see the shares drift off 1.5% to £15.08.
In contrast plastics- and polymer-maker Victrex (VCT) reports weak first half trading in its core automotive and consumer electronics markets leading to a 13% fall in revenues and a 21% fall in pre-tax profits.
The company expects an improvement in the second half but lowered its sights as weakness in key markets means achieving positive like-for-like growth will be ‘challenging’. Shares fall 4.5% to a new 12-month low of £21.18.
Also making new 12-month lows is Metro Bank (MTRO), down 8.5% to 488p despite issuing a statement to confirm that its planned £350m equity raise is still on.
Responding to press speculation, Metro says feedback from existing and prospective shareholders ‘continues to be positive’. Meanwhile in scenes reminiscent of Northern Rock in 2007 customers have been queuing up at branches to withdraw their deposits.
Shares in international engineering and consultancy firm Ricardo (RCDO) add 3% to 815p after it announces it is buying Australian rail business Transport Engineering for AUD$53.6m (£29.8m).
The deal gives Ricardo immediate scale in the Australian market and will be earnings enhancing once it has been consolidated at the end of the first half.
Also enjoying a small rally is specialist retailer Angling Direct (ANG:AIM), up 2% to 84p after it reports strong full year results with sales up 39% and an improvement in gross margins.
Having consolidated its position in the UK the firm is planning its international expansion in other English-speaking markets and in continental Europe where the market is highly fragmented and online competition is limited.
Meanwhile five-a-side football pitch operator Goals Soccer Centres (GOAL:AIM), which is ‘in discussions’ with HMRC after an accounting error meant it under-paid VAT, announces that chief executive Andy Anson will step down in six months’ time.
In March, Goals revealed a ‘substantial misdeclaration of VAT’ to the tune of £12m and requested that its shares were suspended from AIM.
