With the latest machinations in the House of Commons over Brexit looming tonight and sterling still volatile against this uncertain backdrop, the FTSE 100 recovers some of the losses seen in recent days to trade more than 1% higher at 6,824 early on. The index is being powered by heavyweight tobacco stocks British American Tobacco (BATS) and Imperial Brands (IMB) which have relatively little exposure to the UK’s looming exit from the EU.
Domino’s Pizza (DOM) sours 24p or 8.7% to 250p as the pizza delivery play warns annual pre-tax profit will be at the lower end of the £93.9m-to-£98.2m consensus range following weak international sales in the fourth quarter to 30 December.
‘Our international businesses offer significant long term potential, but we have experienced growing pains this year, particularly in Norway, where we have faced business integration challenges,’ explains CEO David Wild, highlighting a strong performance in the UK and Ireland. ‘Many families decided to kick off the festive season with a Domino’s, with the Friday before Christmas breaking all records as we sold more than 535,000 pizzas - equivalent to 12 every second,’ he enthuses.
Royal Mail (RMG) reverses 9.3% to 272.8p as the unloved postal service provider downgrades its letter volume guidance, blaming the impact of new European privacy regulations and ‘business uncertainty’.
For the nine months to December, Royal Mail’s overall trading performance was broadly in line with expectations, but in the letters business, volumes were down 8% and revenue fell 6%. Addressed letter volume declines, excluding elections, are expected to fall 7-8% in the year to March and are likely to be ‘outside our forecast medium-term range next year’ too.
Consumer products giant PZ Cussons (PZC) plunges 11.7% lower to 185p after coughing up another profit warning and mellow first half results showing lower adjusted pre-tax profits of £32.8m (2017: £33.3m) amid ‘extremely challenging conditions’ in Nigeria, which are masking good performances in Europe and Asia.
The Imperial Leather owner now expects full year pre-tax profits will be ‘towards £70m’, down significantly from last year’s £80.1m haul and driven by conditions in Nigeria, including an estimated £5.5m impact from significant port disruption.
Healthcare services provider UDG Healthcare (UDG) surges 9.5% higher to 611.5p as the company forecasts annual earnings per share will rise by as much as 6% following a ‘good’ start to the financial year to September, with first quarter profit before tax coming in ‘well ahead’ of the same period last year.
Housebuilder Crest Nicholson (CRST) rallies 6.3% to 363.2p on relief that a 15% drop in pre-tax profit to £176.4m for the year to October falls within the previously guided £170m-to-£190m range.
Despite Brexit-related market uncertainties, CEO Patrick Bergin sounds rather chipper, insisting ‘our forward sales are strong, boosted by our strategic partnerships and our new channels to market.’ Furthermore, he explains ‘pricing is stable, build cost inflation has moderated and we have implemented plans to mitigate margin pressure, which will take effect progressively over the next few years.'
Convenience foods maker Greencore (GNC) fattens up 1p to 195p on news of an encouraging first quarter in which growth was driven by its ‘food to go’ categories. Greencore also reaffirms its full year outlook and having received the proceeds from the sale of its US business, insists ‘a strengthened balance sheet and strong underlying free cash generation leaves the group well positioned to consider organic and inorganic investment consistent with its strategic and returns objectives’.
Veterinary services group CVS (CVSG:AIM) slumps 25% lower to 493p on a warning full year earnings before interest, taxation, depreciation and amortisation (EBITDA) is expected to be ‘materially below’ market expectations. Investors are scurrying for the exits following this profit warning, one reflecting higher employment costs for vets and nurses and disappointing early performances from the group’s acquisitions in The Netherlands and of farm and equine practices.
