UK investors are on the front foot in early trade on Wednesday as they eye the promise of progress on a softer Brexit deal and are buoyed by firm markets in New York and Asia overnight.

The benchmark FTSE 100 opens roughly 34 points higher at 7,362.92, closing on May highs of 7,385, and batting off a series of corporate announcement disappoints. They include Marks & Spencer (MKS), struggling to reinvent itself, and energy supplier SSE (SSE) after the later posted a hefty fall in underlying profits.

M&S heads the FTSE 100 loser board on Wednesday after reporting a fall in both sales and profits as it continues to push through major changes to its business. The one-time high street doyen unveils a near 10% fall in headline pre-tax profits (at £523.2m) for the year to 30 March as like-for-like sales, which strip out the impact of new stores, slid 2.9%.

But more shockingly for investors is news of a 26% cut to shareholder dividends for the year and a deeply discounted one-for-five rights issue as its looks to strengthen its balance sheet. That cash call has been priced at 185p per share, roughly 32% below the 271.2p at which the stock closed on Tuesday.

M&S shares sink more than 4% in early deals to 260.1p.

‘Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business,’ says chief executive Steve Rowe.

DIVIDEND RELIEF

After the hefty cut to dividends pushed through by Vodafone (VOD) recently investors will have mixed feelings about big payers SSE and Royal Mail (RMG).

Pre-tax profits at the Royal Mail rose in the year to 31 March, to £241m, from £212m the year before, with the story much the same – letters volumes down but growth coming from the company's European parcel arm, GLS.

The full year dividend is raised from 24p per share to 25p, although the payout will be reduced to 15p in future. Shares in the company jump 5% to 222p.

But annual results are far more gloomy from SSE, one of the UK’s so-called big six energy firms.

The results to 31 March show adjusted pre-tax profit slumping 38% at £725.7m, after stripping out one-off gains and the revaluation of various assets.

‘We clearly fell well short of what we hoped to achieve at the start of the year,’ says chairman Richard Gillingwater.

SSE, which is £50m into a £200m share buyback programme announced in February, confirms plans to pay an 80p per share dividend for the year, to the relief of shareholders, but the stock still comes under selling pressure today, falling around 2% to £10.25, a 15-year low.

PETS PROFITS PLUNGE

Veterinary services and pet products supplier Pets at Home (PETS) saw its share price jump more than 10% after the company reported strong trading.

The accompanying annual results are pretty ugly showing a 38% slump in headline pre-tax profits although once one-off costs are stripped out, underlying profits rose 6% to £89.7m.

Trading struggles saw Pets buy out a number of under-performing joint venture practices during the period and investors are hoping that a more central focus will improve operational efficiency down the line.

The company held its annual dividend steady at 7.5p per share, sending the shares up to 163.8p, valuing the business to more than £800m.

Going the other way are shares in engineering business Babcock (BAB), slumping more than 9% to 461.3p, lows not seen since the financial crisis a decade ago.

The decline comes after the company reported a slump in pre-tax profits as asset sales and lower activity in the short cycle parts of its business weighed on performance.

The company also offered up a dour outlook warning that current headwinds were unlikely to dissipate in the new fiscal year.

For the year ended 31 March, statutory pre-tax profit fell 39.9% to £235.2m and revenue slipped 4% to £4.66bn. The combined order book and pipeline was stable at £31bn.

The full year dividend was raised by 1.7% to 30p a share.

NO/LOW SUGAR BOOST

Soft drinks maker Britvic (BVIC) reported a rise in first half profits thanks to accelerated sales in its low and no sugar drinks brands.

For the 28 weeks ended 14 April, pre-tax profits rose to £45.2m from £41.8m as revenue grew 4.8% to £769.2m on a reported basis, and 1.9% on an organic basis.

Britvic shares are flat at 938p.

Housebuilder Bovis Homes (BVS) reported a ‘strong’ performance year-to-date with an uptick in the pace of sales helping out.

In 2019 so far average private sales rate per site per week rose to 0.61 from 0.52, a 17% increase on the prior year, the company said. Shares in Bovis nudge 8p lower to £10.37 with investors presumably still worried about the wider UK housing outlook as Brexit slams the brakes on sales.

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Issue Date: 22 May 2019