International drinks maker Diageo (DGE) says the year has started well but goes on to warn that currency market volatility is hurting sales and profits.
The maker of Guinness and Smirnoff vodka tells investors that it expects sales to be reduced by £175m this year and operating profits to fall by £45m directly because of FX fluctuations. Last year to 30 June 2018 the company posted £12.2bn revenue and £3.8bn operating profit with forecasts for the current 12 months pitched at £12.7bn and £3.9bn respectively.
Investors are largely taking the news in their stride in early trade on Thursday with Diageo’s share price barely moving lower, off just 10p, or 0.4%, at £26.03.
It’s a quiet day for ex-dividend stocks with only gaming firm GVC (GVC) trading without entitlement to its latest dividend payout on Thursday. That trims 0.34 points off the FTSE 100, according to Reuters’ calculations.
That barely affects an otherwise positive start for UK markets with the FTSE 100 making modest single-digit gains in early deals to trade at 7,332.61. The midcap FTSE 250 and smaller company indices are also on the front foot on Thursday.
ASTON MARTIN CONFIRMS SHARE SALE RANGE
Iconic sports car maker Aston Martin has confirmed a price range for its planned share sale with stock expected to be pitched to investors at between £17.50 and £22.50 per share. This would hand the car firm, made famous by its James Bond association, a rough £5.07bn market value, at the top of the range speculated by City analysts.
Interestingly for new stakeholders, Aston Martin also says that Germany's Daimler will remain a shareholder, with a near 5% stake. The final price will be announced on 3 October, when trading will start.
British construction and services company Kier (KIE) said on Thursday that a hefty order book lifted its underlying full year pre-tax profit 9%, which was higher than expected. Orders worth £10.2bn sit on the firm’s books yet investors remain worried about the company and the wider sector in the wake of the collapse earlier this year of Carillion (CLLN).
Kier shares nudge close on 2% lower to £10.20, although it’s worth pointing out the run-up into today’s results from 900p levels.
UK online financial trading company IG Group (IGG) reported a 4.7% drop in revenue in the first quarter to 31 August, hurt by lower levels of market volatility, client activity and the regulatory squeeze from regulators on consumer derivative trading.
HIGH STREET STILL A CHALLENGE
Fashion chain French Connection (FCCN) has announced a 7% fall in like-for-like sales for the six months to 31 July. The company expects to close eight stores this year and is looking to renegotiate leases at other stores.
But the firm’s cost-cutting drive helped reduce underlying operating losses to £5.5m from £5.9m. Still, there is no doubt that about the intense competition facing the FCUK brand owner. French Connection shares slumped 6%-plus on Thursday to 47p, valuing the business at just over £45m.
British satellite company Inmarsat (ISAT) gets a modest lift on Thursday after saying it planned to collaborate with Japan’s Panasonic Avionics in providing in-flight broadband for commercial airlines.
Shares in Inmarsat have been under intense pressure for three years or more from bulging debt and stiff competition, losing more than half their value since 2015. But they manage to rise a little more than 2% today to 508.4p.
Oil rose for a third day straight on Thursday amid another drawdown in US inventories and strong gasoline demand, while signs OPEC may not raise output to address shrinking supplies from Iran also supported prices.
Gold prices nudged up as the dollar softened amid easing China/US trade tensions and ahead of next week’s US Federal Reserve meeting.
