UK stocks have responded positively to Prime Minister Theresa May’s success in fending off a leadership challenge with the FTSE 100 index climbing 0.3% to 6,902 points.

Supporting the index are banks, life insurers, miners and utilities while oil producers, oil services and industrial metals lag.

Topping the FTSE is travel operator TUI (TUI) whose shares jump 5% to £11.90 as the company reports full year earnings up by double digits for the fourth year running.

Despite the prolonged heatwave in northern Europe this summer and what it calls a ‘challenging market environment’ the group still managed to grow operating profits and earnings per share by just over 10%.

Looking to next year the firm is positive on demand for holidays in the Mediterranean and the Caribbean, and bookings for its new and existing cruise liners are ‘progressing well’.

Online grocery retailer Ocado (OCDO) sees a good finish to the year with sales for the quarter to the start of December up 12% to £390m and the volume of average orders up 13%.

As with the third quarter update there is no news on international contracts and the shares, which are among the most-shorted on the Main Market, tread water at 800p.

Distribution group Bunzl (BNZL), the third FTSE 100 firm to report this morning, confirms its full year guidance as set out in October. Sales are seen growing by 8% to 9% for the full year, half of which is organic and half from acquisitions.

It also slips in that it has bought a Danish foodservice distributor and that it has been given the thumbs-up from the Brazilian regulator for the purchase of Volk do Brasil, which will add c£40m of sales next year. The shares add 2% to £24.60.

Shares in Sports Direct (SPD) trade sideways at 275p despite a solid set of half year results. Sales for the six months to the end of October are up 4.5% and gross margins rise by nearly 300 basis points to 41.5%.

Despite the headwinds facing the UK retail sector, the core sports offering has remained remarkably resilient and chief executive Mike Ashley has high hopes that House of Fraser can be turned around and become what he calls the ‘Harrods of the High Street’.

Disappointing mid and small cap updates

At the other end of the scale companies which sound a note of caution or cut forecasts are given no credit whatsoever.

Shares in Ultra Electronics (ULE) move 9% lower at £12.57 after it warns that it is experiencing higher working capital requirements and a tight supply chain.

On the plus side the reason for the increase in working capital is the firm is pulling in more orders, meaning it is on track for its full year targets.

Ultra is well placed in what it calls ‘areas of priority spend’ with major exposure to the US defence budget which underpins its long-tern revenue projections.

Value retailer Bonmarche (BON) drops a bombshell with its lowered full year pre-tax profit guidance, sending the shares down 50% to 40.2p.

Instead of £5.5m of profits, management now see profits somewhere between break-even and a loss of £4m.

Sales over the Black Friday weekend were ‘extremely poor’ according to chief executive Helen Connolly and the current retail environment is ‘significantly worse even than during the recession’.


Issue Date: 13 Dec 2018