Insurers took centre stage in London early Wednesday, with both Prudential and Aviva reporting results, while markets awaited a key consumer price index reading in the afternoon.
Meanwhile, shares in holiday operator Tui dropped to the bottom of the FTSE 250 index, despite reporting a nearly breakeven quarterly result, its first since the Covid-19 pandemic decimated travel. Tui said its underlying loss before interest and tax was €27.0 million, narrowed from €669.8 million a year before. It said summer travel this year is almost at the same level as in 2019.
Tui shares were down 2.9% early Wednesday in London.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,475.72
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Hang Seng: down 2.3% at 19,550.70
Nikkei 225: closed down 0.7% at 27,819.33
S&P/ASX 200: closed down 0.5% at 6,992.70
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DJIA: closed down 58.13 points, or 0.2%, at 32,774.41
S&P 500: closed down 0.4% at 4,122.47
Nasdaq Composite: closed down 1.2% at 12,493.93
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EUR: down at $1.0209 ($1.0223)
GBP: down at $1.2075 ($1.2086)
USD: firm at JP¥135.04 (JP¥134.96)
GOLD: down at $1,788.80 per ounce ($1,793.82)
OIL (Brent): down at $95.57 a barrel ($97.62)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday’s key economic events still to come
0700 EDT US MBA weekly mortgage applications survey
0830 EDT US consumer price index
1000 EDT US monthly wholesale trade
1000 CDT US Fed Chicago President Charles Evans speaks at Drake University
1030 EDT US EIA weekly petroleum status report
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Consumer prices in Germany rose at a slower pace in July, the Federal Statistical Office said, continuing a trend seen since May, but inflation remained elevated. Annually, consumer price inflation was 7.5% in July, confirming flash estimates, falling back slightly from 7.6% in June and 7.9% in May. On a monthly basis, prices rose by 0.9% in July from June, having risen by 0.1% in June from May. On a harmonised basis, designed for EU-wide comparison, Germany’s annual inflation rate warmed up to 8.5% from 8.2% in June. On a monthly basis, prices rose by 0.9%, having declined by 0.1% in June.
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BROKER RATING CHANGES
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Peel Hunt cuts IWG to ’add’ (’buy’) - target 240 (353) pence
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Barclays cuts IWG price target to 230 (300) pence - ’overweight’
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HSBC cuts XP Power to ’hold’ (buy) - price target 2,430 (4,000) pence
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Jefferies starts Pets At Home with ’buy’ - price target 425 pence
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COMPANIES - FTSE 100
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Prudential was pleased with its ‘resilient’ performance in the first half, but new business profit was held back by rising interest rates in Hong Kong. Prudential has a large business in Asia. In the six months to June 30, attributable pretax profit slumped to $300 million from $1.26 billion. However, adjusted operating pretax profit rose 5.7% to $1.66 billion from $1.57 billion. Pru noted it booked a negative $1.38 billion ‘short-term fluctuation’ in investment returns, which is much worse than the negative $212 million seen a year prior. Annual premium equivalent sales rose to $2.21 billion from $2.08 billion. New business profit slipped to $1.10 billion from $1.18 billion, which Pru put down to higher interest rates and differences in geographical and channel mix. Interim Chief Executive Mark FitzPatrick said: ‘Our resilient operational performance demonstrates the strength of our well positioned and well diversified franchise across the Asia region, driven by our multi-channel, digitally enhanced distribution platform.’ Anil Wadhwani will take over as CEO of Prudential in February next year. Pru declared an interim dividend of 5.74 US cents, up 7% year-on-year and equal to one-third of its previous full-year dividend of 17.23 cents per share.
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Aviva reported an ‘excellent’ first half and is confident of meeting its annual targets. In the six months to June 30, its IFRS loss widened to £633 million from a £198 million loss a year prior. Adjusted operating profit rose to £829 million from £725 million. Annuities & equity sales increased 12% to £2.76 billion from £2.47 billion. Aviva’s General Insurance gross written premiums rose 6% to £4.69 billion from £4.37 billion. Its combined operating ratio worsened to 94.0% from 91.6%, however. New business sales in Life unit were up 3% to £17.4 billion from £16.9 billion. Its Solvency II cover ratio fell to 234% from 244%. Aviva declared an interim dividend of 10.3p, rising 40% from 7.35p a year earlier. ‘Overall, Aviva is in excellent health and our strategy is delivering results. We enter the second half of 2022 with confidence and while we remain mindful of market and macro-economic challenges, we are on track to meet all of our financial targets,’ Chief Executive Amanda Blanc said.
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Industrial and electronic products distributor RS Group has acquired Mexican Risoul y Cia for $275 million cash. RS Group, formerly known as Electrocomponents, said the deal for the distributor of industrial and automation products ‘significantly strengthens’ its position in Mexico. ‘We are excited about deepening our presence in Mexico and having a strong platform to expand into Latin America, a region we can see benefiting from nearshoring owing to de-globalisation and a greater focus on improving sustainability through reducing distances products travel,’ RS added.
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COMPANIES - FTSE 250
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TP ICAP saw revenue grow across its asset classes in the first half, leading to a nice bump in dividend. In the first half of 2022, pretax profit more than doubled to £72 million from £28 million. Revenue rose to £1.08 billion from £936 million, led by a strong performance in Rates. Global broking revenue was up 8%, with TP ICAP saying all asset classes generated revenue uplift. Global broking revenue per broker increased 14%. TP ICAP upped its dividend by 13% to 4.5p from 4.0p. ‘Despite the uncertain backdrop, we are cautiously optimistic for the remainder of the year and we are well positioned,’ the interdealer broker added.
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Quilter reported a single-digit rise in profit in the first half characterised by heightened global market volatility and ‘extremely challenging’ conditions. The London-based wealth manager posted a 9% increase in adjusted pretax profit to £61 million for six months to June 30 from £56 million in the prior year on the back of broadly flat revenue and cost discipline. Total net fee revenue was virtually unchanged at of £303 million from £304 million. Interim dividend remained unchanged at 1.2 pence even though adjusted diluted earnings per share dropped by 5.1% to 3.7p from 3.9p. For the interim period, assets under management and administration were 12% lower at £98.7 billion as at June 30 from £111.8 million as at December 31 principally due to adverse market movements of £14.5 billion, which offset net inflows. Net inflows slowed by 30% to £1.4 billion from £2.0 billion.
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COMPANIES - SMALL CAP
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Simon Wolfson, CEO of FTSE 100 retailer Next, left the board of Deliveroo on Tuesday, the food delivery company said. ‘After much consideration, and with regret, I believe that the time required to continue in my role at Deliveroo is no longer compatible with my executive and other commitments,’ Wolfson said. ‘I have enjoyed my time working with [Founder & CEO Will Shu], the executive team and my board colleagues over the past 18 months and wish the company all the best for the future.’ The announcement came as Deliveroo reported a wider half-year loss. The pretax loss widened to £147.3 million in the first half of 2022 from £95.4 million a year before, even as revenue rose by 12% to £1.01 billion from £907.0 million. Gross transaction value rose by 7% to £3.56 billion, and Deliveroo expects GTV to rise by between 4% and 12% at constant current in the full year. It expects to reach breakeven on adjusted earnings sometime between the second half of next year and the first half of 2024.
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Wednesday’s shareholder meetings
AssetCo PLC - GM re share split
Ariana Resources PLC - AGM
Cadence Minerals PLC - AGM
CML Microsystems PLC - AGM
Foresight Group Holdings Ltd - AGM
Mountview Estates PLC - AGM
Unbound Group PLC - GM re open offer
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