On a fairly busy Tuesday for corporate news the UK’s major high street banks pass financial stress tests, Royal Dutch Shell (RDSB) has axed its austerity payout as its balance sheet strengthens and Pets at Home (PETS) losses its chief executive.
But the biggest story of the day comes at supermarkets delivery company Ocado (OCDO), which has finally inked the long-awaited international tie-up that investors have been hanging on for.
Shares in the company surge 23% to 315.4p in early trading on Tuesday with the market clearly sharing the excitement of CEO Tim Steiner. The company’s boss says Ocado's Smart Platform will allow retailers, such as Groupe Casino, to ‘build their online grocery offer in a way that is profitable and sustainable.’
TOPPS CUTS DIVIDEND, TRADING STRENGTHENS
That makes the company’s stock by far the best performing on the FTSE All Share index, beating the 6.5% jump to 64.75p of Topps Tiles (TPT). It books a 15% fall in first half pre-tax profit as UK consumers hold fire over big ticket home renovations.
But the market takes that news, alongside an 8% cut in its second half dividend, in its stride largely thanks to upbeat comments on more recent trading, with CEO Matthew Williams saying that ‘trading in the first eight weeks of the new financial year has improved, with like-for-like sales increasing by 3.2%.
SHELL CALLS TIME ON AUSTERITY
Among the large caps, Royal Dutch Shell leads the FTSE 10 leader board on Tuesday thanks to the group calling time on its austerity dividend policy. The oil major has boosted its cash generation forecasts, drawing a line under three years of oil price turmoil.
That sparks an encouraging 2% rise in the group’s shares to £23.635.
Miners lead the blue-chip fallers with commodity demand and prices under pressure. Glencore (GLEN) heads the list of mining stocks lower, down 2.2% to 350.1p.
FOOTSIE MAKES POSITIVE GROUND
Britain’s blue-chip index FTSE 100 offsets the mining sector malaise to firm around 18 points in early trading on Tuesday to 7,402.57.
Midcaps, the FTSE All Shares and smaller company indexes also post incremental rises.
There’s encouraging news for Britain’s banks, which are robust enough to handle any slump in economic conditions that might stem from a chaotic Brexit.
That’s the view of the Bank of England following results of its latest financial stress tests of the UK’s major lenders. Barclays (BARC), Lloyds Banking (LLOY), HSBC (HSBA), Standard Chartered (STAN) and others were put through their balance sheet paces in the tests.
PETS AT HOME BOSS GOES WALKIES
In decline are shares in pet pampering retailer Pets at Home as it surprising losses its CEO Ian Kellett. His decision is said to be driven by a desire to ‘pursue his own personal business interests,’ although coming alongside a fall in half year profits will not be missed by investors.
Pre-tax profit for the six months to 12 October show an 11.3% slide to £40.8m as pricing competition with online retailers takes its toll on margins.
British food products supplier Cranswick (CWK) reports a 17% jump in half-year profit, helped by growth in sales volumes and its recent acquisition of a pork business in Northern Ireland. That helps the stock rally 10% to £33.27.
STOCKS HEADING SOUTH
Going the other way are shares in Hull-based communications supplier KCOM (KCOM) after its first half pre-tax profits fell to £13.6m, a 23% slump.
Healthcare services supplier UDG Healthcare (UDG) is also under pressure, the shares down nearly 5% to 821.5p. That’s because a rough 17% rise in full year earnings is nearly all down to acquisitions and positive currency movements. The group is also losing its chief financial officer Alan Ralph.
Cyber security business Sophos (SOPH) sees its share price sag by around 7% on Tuesday to 600.5p after private equity shareholders sell a large slug of stock.
The deal was announced after hours yesterday, but encouragingly for shareholders there seems to be plenty of buying appetite at the final 616p strike price.
