After a positive start, UK shares drifted lower during the course of Thursday, although they managed to hold onto their strong gains of Monday and Tuesday, as investors looked ahead to Friday's US retail price data and consumer confidence survey.
Sterling continued to drift lower against the dollar, hitting a new 12-month low of $1.318 on concerns over growth next year in the face of the Omicron variant, while Brent crude oil futures gave up 0.8% to $75.30 per barrel.
At the close the FTSE index of leading shares was down 16 points or 0.22% at 7,321, pulled lower by aerospace and housing-related stocks.
CORPORATE NEWS
Engineering company Rolls Royce (RR.) was the biggest faller on the FTSE, sliding 3.3% to 124.5p despite saying its restructuring programme was delivering cost savings more quickly than expected, putting the business in a good position to achieve its £1.3 billion savings target by the end of 2022.
A recovery in international flights and power systems markets and resilience in Defence led to improved trading and a return to positive free cash flow in the third quarter.
Improved trading and a £300 million concession outflow which will now fall into 2022 means the company is expected to beat its prior guidance of £2 billion of free cash outflow in 2021.
STRONG TRADING
Shares in packaging company DS Smith (SMDS) rallied 1.9% to 389p after it said it was continuing to benefit from a very dynamic market with demand for packaging for different retail solutions.
First half revenues in constant currencies were 22% higher to £3.33 billion driving a 26% increase in adjusted operating profit to £276 million. Growth was driven by 9.4% growth in corrugated box volumes and higher selling prices across the group.
The interim dividend was increased 20% to 4.8p per share.
Online card retailer Moonpig (MOON) raised its guidance for full year revenues which it said are now expected to be at the upper end of the £270 million and £285 million range, sending its shares up 4.5% to 374p.
In the medium term, the group continues to target underlying annual revenue growth in the mid-teens and an Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin rate of approximately 24%-to-25%.
Shares in shoe brand Dr. Martens (DOCS) recovered from their intraday lows to finish down just 3.5% at 390p, even though it reported first half revenues up 16% to £369.9 million which drove pre-tax profits 46% higher to £61.3 million.
The company said it remained confident in meeting market expectations for 2022. From 2023 and over the medium term the revenues are anticipated to grow by a mid-teen’s percentage.
Shares in Frasers (FRAS) climbed 4.8% to 741p after the company said first half revenue grew 23.6% to £2.34 billion and pre-tax profit rose 75.3% to £186.0 million year-on-year.
Growth reflected a strong bounce in trading after stores reopened and looking ahead to the period ended 24 April 2022, the company said it expected to achieve an adjusted pre-tax profit of between £300 million to £350 million.
Bus and rail firm First Group (FGP) said first half losses widened to £64.5 million from £33.5 million year-on-year, while revenues climbed to £2.14 billion from £2.05 billion on higher passenger numbers.
The company said it was on track to deliver a 10% margin in the first full year after pandemic-related restrictions end, with about £20 million in annualised cost efficiencies delivered since 2019. The shares skidded 5.7% to 96p.
Shares in rival Go-Ahead Group (GOG) fared even worse, slumping 15% to 600p after it admitted it to 'serious errors' in its handling of the LSER contract.
At the same time, the firm said it was 'difficult to estimate' the size of the financial penalty it could receive from the Department for Transport for its mishandling of the contract.
A list of FTSE 100 index movers can be seen here.
