UK stocks are drifting into mid-week with the FTSE 100 index down 0.3% to 7,157 on weakness in banks, healthcare and utilities, while construction stocks, miners and telecoms help underpin recent gains.

Housebuilder Barratt Developments (BDEV) releases a strong set of half year results with profits growing faster than revenues which is always a good sign.

For the six months to the end of December sales were up 7% to £2.1bn driving a 15% increase in operating profits and a 19% increase in pre-tax profits to £408m.

Even better news for shareholders, the capital return plan has been extended with another £175m pay-out now scheduled for November 2020.

The shares continue their positive run of form adding 2% to 556p.

Flintshire-based rival Redrow (RDW) also reports strong first half sales although earnings growth is more muted.

Turnover was up 12% to £3bn while operating profits were up 7% and pre-tax earnings were up just 5% to £185m.

Chairman Steve Morgan leaves on a high however with a £111m or 30p per share cash return to shareholders in the form of B shares.

Investors take the update in their stride with the shares unchanged at 593p.

Industrial and electronics group Electrocomponents (ECM) reveals a good start to 2019 with like-for-like sales beating the market.

Group turnover is up 6% in the four months to the end of January with northern Europe, central Europe and the key US market showing better growth.

Asia Pacific is notably weak with just 2% growth due to lower sales of Raspberry Pi but shareholders are in a forgiving mood and the shares add 2% to 567p.

Shares in high-street lender CYBG (CYBG) leap 10% to 197p after the bank points to full year net interest margins towards the top of its estimate range and better cost savings.

The net interest margin – the money it makes on loans minus the cost of customer deposits – is seen at 1.65-1.70% for the full year.

This is below the levels enjoyed by rivals Barclays (BARC), Lloyds (LLOY) and RBS (RBS) but investors will be pleased to see there are no bombshells of the kind that Metro Bank (MTRO) delivered last month.

Meanwhile cost synergies from the Virgin Money acquisition are seen at £150m against a previous estimate of £120m.

Specialty chemical-maker Victrex (VCT) sheds 4% to £22.60 after the firm reports weaker trading in the first quarter due to ‘end-market headwinds’ and de-stocking by customers.

Turnover slipped by 18% to £64m due to a 22% drop in volumes following the end of a contract with a large consumer electronics firm.

However what it calls ‘core volumes' were still down 13% due to tougher automotive and consumer electronic markets in general.

Further down the market intrigue continues to swirl around outsourcer Interserve (IRV).

On the one hand the Board has agreed its de-leveraging plan with its lenders, bond-holders and pension trustees without having to sell off its prized RMDK business.

On the other the firm has received a letter from Coltrane Master Fund, owner of 17.5% of Interserve’s capital, calling for a general meeting to dismiss almost the entire Board but backing chief executive Debbie White.

The shares jump 22% to 16p as traders and short-sellers race to pick up stock.


Disclaimer: The author owns shares in Barratt Developments

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Issue Date: 06 Feb 2019