UK investors continue to tread tentatively in early trade on Wednesday as threats perceived over global trade wars and geopolitical tensions in the Middle East give pause to optimism.
The UK’s FTSE 100 benchmark index eases back by single digit points to 7,413.57 having rallied more than 3.5% so far in June, and the cautious mood is reflected in another firm day for gold prices, traditionally seen as a safe haven in troubling times by investors.
The per ounce price of gold has soared from under £1,000 to five-year highs of £1,128 this month, up another 1.7% today.
There is limited corporate news to drive share trading on Wednesday although investors will no doubt be going over developments at Stagecoach (SGC) in the wake of its full year results and changes in its boardroom.
TRAVEL BUSINESS RE-SET
The UK's biggest bus and coach operator reported annual pre-tax profits of £132.9m, after multiple adjustments, up 3.5% on the previous year.
That’s despite a near £1bn decline in restated revenue just shy of £1.88bn after the disposal of its North American business. Last year Stagecoach lost the East Coast rail franchise after the government re-nationalised the service following ongoing poor performance and mounting losses, in which Stagecoach was 90% owner.
The deal was supposed to last until 2023 and Stagecoach plans to pull out entirely of running rail services in the UK this year
The shares, which collapsed by 25% in April and have nearly halved over the past year, ease back another 1.1% on Wednesday to 116.3p. That values the business at about £665m. Investors will presumably be relieved that the dividend remains unchanged at 7.7p per share.
But the biggest movers today are further down the market cap ladder, where environmental and energy consulting business RPS (RPS) crashes after issuing a damaging profit warning.
The problems come from its Australian business, an economy on the back foot recently and only recently coming through state and federal elections. That has seen a logjam develop in major infrastructure projects, while a ‘subdued’ property sector has not helped matters.
Ultimately this means profits will be ‘materially below management and market expectations’, the latter previously pitched at £49.9m, according to the company.
This unsurprisingly comes as a hammer blow for investors, particularly after an earlier profits alert last October, when the stock crashed 27%. The share price collapses 35% in early trade today to 108p, their lowest level in more than 10 years.
Back among larger companies, distribution and outsourcing FTSE 100 company Bunzl (BNZL) said it expected first half revenues to rise 4% and kept its outlook unchanged following slowing underlying growth reported in the first quarter.
Revenue for the half year is expected to have increased approximately 4% at actual exchange rates, or roughly 2% at constant exchange rates. This is due to underlying revenue growth of approximately 1% and a similar impact from acquisitions, net of disposals completed in 2018.
Bunzl shares nudge 1% lower to £21.22.
ELSEWHERE ACROSS THE MARKETS
Oil services company Wood Group (WG.) sees its share price rise more than 5% to 441.1p as it announced that it had grown its earnings in the first half, thanks to an improvement in margins.
Exploration and production oil firm Tullow Oil (TLW) nudges 1.8p higher to 209.5p after guiding for a gross profit of $500m in the first half on revenue of $900m, though it also flagged an $85m exploration write-off.
In the previous corresponding period, Tullow Oil posted a gross profit of $521m on revenue of $905m.
Car auctioneer BCA Marketplace (BCA) advanced 2.6% to 241p after it posted an 18% rise in annual profit.
TV and films dubbing technology firm Zoo Digital (ZOO:AIM) has swung to a full year loss owing to margin pressure. Pre-tax losses for the year to 31 March amounted to $1.3m, compared to a profit of $5m in the previous year.
Revenue edged up to $28.8m but the company's adjusted EBITDA fell to $0.4m, down from $2.4m. Zoo Digital's EBITDA margin has been squeezed to 1.4% from 8.4%. That sends the stock spinning 10% lower to 59p.
Robust electronics manufacturer Solid State (SOLI:AIM) has secured a franchise extension with Microchip Technology, which had acquired Microsemi last year. This will allow Microchip access to Solid State’s entire product portfolio for sales in the UK and Ireland.
Solid State shares rally 6.5p at 497.5p.
