Record sales at discount fashion chain Primark will bolster a firm full year of profits at patent Associated British Foods (ABF). The FTSE 100 company, controlled by the Weston family, maintains its full year earnings guidance in a trading update issued on Thursday.
The update shows quarterly revenue growth across all of its businesses apart from sugar. Sales at Primark rose 7% in the three months to 6 January despite ‘unseasonably warm weather’ in October.
Firm corporate figures from AB Foods fail to get investors excited, however, marking the stock about 1.5% lower at £28.17, with the results largely anticipated by financial markets.
London’s main FTSE 100 index makes modest progress higher in early trade on Thursday, which opens around 10 points up at 7,733.08.
CHINA GROWTH SURPRISE
The blue-chip index is also bolstered by surprisingly robust growth data from China, a major trading partner of the UK. The world’s most populous nation grew 6.9% in 2017, beating Chinese government targets of 6.5%. That means the second biggest economy globally expanded faster than the 6.8% chalked-up in 2016.
Back to today’s corporate news, the owner of the Costa Coffee chain Whitbread (WTB) says business across its high street cafes has declined and is likely to remain ‘subdued.’
Like-for-like sales at Costa's stores fell 1.5% in the 13 weeks to 30 November, hamstringing Whitbread’s overall growth to just 0.3% in the UK amid tough consumer market conditions. Whitbread is also one of the UK’s largest hotel chains, behind the Premier Inn brand.
There is also emerging speculation that activist investor Sachem Head has asked Whitbread to consider a break up of its Costa Coffee chain from its hotels and restaurant businesses. That’s according to reports from news agency Reuters.
Shares in the group stay roughly flat in early trade on Thursday, at £38.83.
HOSTILE ENGINEERS BATTLE HEATS UP
Hostilities are intensifying in the hostile battle emerging at planes and cars parts group GKN (GKN), covered in today’s issue of Shares online magazine.
GKN has today issued a statement designed to ‘correct some of the misleading statements’ made by suitor Melrose Industries (MRO). GKN has rejected two buyout offers from Melrose.
Britain’s Royal Mail (RMG) on Thursday reports a rise in nine-month revenue, helped by higher parcel volumes and strength in its international business.
But investors retain deep concerns about the group’s balance sheet, pension scheme funding and its long-term ability to maintain dividends in a deliveries industry being hugely disrupted, not least by online giant Amazon.
UNDERLYING GROWTH CONFIDENCE
Experian (EXPN), the world’s biggest credit data company, reports a 5% rise in third quarter organic revenue from ongoing activities. That’s at constant exchange rates.
Encouragingly, the company also confidently predicts mid-single digit organic growth for the full year. Analysts are currently anticipating a headline decline in revenues for the 12 months to 31 March 2018 of £4.63bn, versus £4.64bn in the previous year. Pre-tax profit of £1.19bn is expected.
Shares in the company surprising fail to respond to the apparent positive news, barely budging at £16.52.
Countrywide (CWD), the property services company, ends the 2017 year on a weak note after struggling on its sales and lettings side in the fourth quarter.
That means it will miss forecasts on both revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) lines, with expected EBITDA of £65m a good 10% off the market’s £72m expectations.
That sends shares in the company spinning lower on Thursday, down nearly 18% at 111p.
Also under the cosh is NHS IT systems provider EMIS (EMIS). The company sees its share price tank 17.5% to 794p after delivery and service level failures on its GP surgeries EMIS Web suite.
EMIS admits that the financial impact is impossible to say at this point but investors are anticipating bad news.
Leading UK bank Barclays (BARC) unveils plans to axe 100 senior roles from its investment banking division. That’s according to unconfirmed stock market gossip. Shares in the bank are currently changing hands at 199.08p.
INFLUENTIAL STOCKS GO EX-DIVIDEND
Dividends are typically in focus on Thursday with several FTSE 100 constituents today trading without entitlement to the next payout. The list includes big six energy supplier SSE (SSE), which heads the Footsie loser board down nearly 3% at £13.05.
Other notable stocks to trade ex-dividend are temporary power company Ashtead (AHT), the UK’s largest listed software company Micro Focus (MCRO) and catering giant Compass (CPG), which lost its CEO just before Christmas in a freak air crash disaster.
