The FTSE 100 was yesterday one of the few winners across major Western indices but it is unable to build on its early-March rebound in early trade on Wednesday, with several company results failing to impress investors.
Large cap companies including insurer Legal & General (LGEN) and bookmaker Paddy Power Betfair (PPB) offset gains elsewhere with the UK’s leading index trading roughly flat at 9am, nudging low single-digits higher at 7,184.83, or about 15 points shy of the 7,200 mark it tumbled from at the end of February.
In corporate news, betting firm Paddy Power Betfair is planning to change its corporate name to Flutter Entertainment in May, if shareholders agree. This news may come as a shock to many investors given the bookmakers extensive investment in branding over the years.
This development does little to lift the market mood regarding the stock, which drifts 1.6% to £61.30 as investors sensibly home in on full year 2018 results. These show an 11% slide in pre-tax profits to £219m despite overall revenues increasing 7% £1.87bn.
The stock had traded as high as £90 as recently as last June.
WEAK CASH WEIGHS ON INSURER
Shares insurance group Legal & General slump nearly 4% to 275.4p after releasing annual results that show that it has become the UK’s first £1trn investment manager after executing a flurry of infrastructure deals in 2018.
The group, the day’s biggest FTSE 100 faller, said investment in infrastructure, clean energy, commercial real estate and residential property in the UK, and an increase in international assets helped it hit an assets under management (AuM) figure of £1.02trn, up 3%.
Legal & General Investment Management saw assets under its management rise 3% to £1.02tn.
But analysts point to weaker than expected operational cash generation, down 2% at £1.27bn and below expectations of £1.3bn.
Questions remain over the longer-term growth strategy of food delivery business Just Eat (JE.), the firm’s share price off more than 3% in early trade at 756.2p. That values the disruptive company at about £5.15bn.
While full year results show improvement on both the top (revenues) and bottom (profits) lines, intensifying competition has some market watchers wondering if it needs even greater scale to protect its market position.
Revenue increased 43% to £779.5m with underlying EBITDA (earnings before interest, tax, depreciation and amortisation) up 6% to £173.9m. There was firm growth in both its core business and from the previously acquired HungryHouse operation, helping consolidate its position in the UK market.
ON THE UP
Heading the FTSE 100 leader board in early trade is British American Tobacco (BATS), rebounding from stiff declines in recent months as legal action overseas and competition in the vaping market have dragged on confidence.
Shares in the group rally more than 5% higher on Wednesday to £30.58 levels not seen since November.
Packaging firm DS Smith (SMDS) sees its stock jump around 3% to 359.4p after the company announced the sale of its plastics business. That deal will net the company $585m, or about £450m, and is the latest move away from non-sustainable packing solutions where the group firmly sees its future.
Solid full year figures from defence firm Ultra Electronics (ULE) are firmly supported by investors, bidding the stock more than 7% higher to £13.80.
Investors are clearly relieved to read that legacy issues have now been addressed if at the expense of short-term profits. Underlying pre-tax profit declined 7.8% to £101.4m.
