Improving profitability of FTSE 100 giants is a theme running through the UK stock market in early trade on Tuesday. Blue-chip heavyweights HSBC (HSBA) and BHP Billiton (BLT), the huge mining company, both post substantially improved profits.
Full year results from banking group HSBC (read parts one and two) demonstrate further progress in its recovery drive, the group today reporting that it made a pre-tax profit of $17.2bn (£12.3bn approx) in 2017.
That's a 141% jump on the $7.1bn profit of the previous year, although investors should remember that 2016 figures were in the face of particularly stiff headwinds, including some hefty one-off costs.
It is arguably for this reason that the market shrugs off the apparent headline profits progress, marking the stock 2.7% lower in early trade to 740.3p, making it one of the larger Footsie fallers.
MINING GROUP PROFITS BOUNCE, SHARES DO NOT
Underlying half year profits at the world’s biggest miner BHP Billiton climbed 25% in the six months to 31 December 2017, boosted by robust commodity prices. Copper and oil were particularly firm drivers of the increase.
Underlying profit for the Anglo-Australian miner climbed to $4.05bn (about £2.09bn) from $3.24bn (£2.32bn) a year ago. However, that was less than expected by analysts, which explains the soggy response of the share price today, also among the bigger blue-chip decliners.
The stock sags 2.8% in early deals to £15.186.
Overall the FTSE 100 index is modestly off on Tuesday, down about 10 points at 7,237.36.
Just a day after posting decent full year results British trading systems firm Fidessa (FDSA) reveals a hefty takeover offer for the group has been tabled.
The deal, coming from Swiss banking and finance systems supplier Temenos, is a straight cash deal valued at £35.67 per share, although it would also include the right to the 79.7p per share combined second half and special dividend dividend already announced by Fidessa.
Negotiations are believed to be at an advanced stage, although Fidessa’s board have so far resisted recommending the deal to shareholders.
Fidessa shares understandably rally strongly on Tuesday despite having jumped about 30% before today’s news in February alone. The stock is currently trading up 23% at £35.90, implying that the market is very confident that the takeover deal will get done.
REGULATOR GETS TOUGH WITH BOOKIE
Bookmaker William Hill (WMH) has been ordered to pay £6.2m in penalties for failing to protect customers and prevent money laundering. The hefty fine, handed out by the UK Gambling Commission, is due to charges that the company did not adequately seek information about the source of funds of a handful of customers making large deposits to accounts.
The funds have since been linked to criminal offences which resulted in gains for the betting business of around £1.2m. The gambling Commission is also concerned about how William Hill handles potentially problem gamblers.
Yet the share price remains largely flat at 323.7p on Tuesday, valuing the business at just shy of £2.8bn. Presumably investors are relieved that fines were not larger.
British sportswear retailer Sports Direct (SPD) plans to buy back up to £100m worth of its shares as it looks to further reduce the share capital of the company and, presumably, bolster the share price.
The stock advances 1.5% on Tuesday to 362.8p, although that is less than half the 800p highs of early 2015.
HOTELS FIRM MISSES FORECASTS
Holiday Inn-owner InterContinental Hotels (IHG) posts a 7% rise in operating profits to $759m (£544m) for 2017. The group - which has 5,300 hotels - says revenue for the year grew 4% to $1.78bn (£1.28bn).
But that is a fairly hefty miss on forecasts, which had been anticipating $811m of operating profit, sending the share price into a steep nosedive, down more than 4% at £44.94.
British homewares retailer Dunelm (DNLM) sees its half year sales rise but its share price slump on Tuesday. Revenue for the half year increased 18% to £545.4m, aided by its Worldstores acquisition.
But on a like-for-like basis the 6% increase does not impress investors, and nor does the underlying 8% drop in pre-tax profits. That sparks a hefty sell -off in the shares, down more than 10% at 5479p, valuing the business at 1.17bn.
Finance chief Keith Downs also announces plans to leave.
TRACSIS GROWTH BACK ON THE RAILS
Data and analytics technology supplier to the transport industry Tracsis (TRCS) posts a positive half year trading update showing good progress on the revenue, profits and cash flow fronts.
That gets investors excited, who chase the shares more than 7% higher in early trading on Tuesday to 515p.
News of a new chief executive appointment goes down very well with Hikma Pharmaceuticals fans. News that the company will be led by Sigurdur Olafsson with immediate effect triggers a 7%-plus share price rally to £10.135.
Oil markets were split on Tuesday, with U.S. crude was pushed up by reduced flows from Canada while international Brent prices eased.
Gold prices fell for a third straight session on Tuesday as the dollar rebounded from over three-year lows hit last week, while investors waited for the minutes of the latest Federal Reserve meeting for clues on the outlook for U.S. interest rates.
