Despite Prime Minister Theresa May’s heavy Brexit vote defeat, the pound is holding firm and the UK-heavy FTSE 250 index trades 57.3 points higher at 18,487 on Wednesday. This perhaps reflects hopes we are going to get more time for negotiations, we’re less likely to have a hard Brexit or Brexit won’t happen at all. However, the EU has already said it isn’t going to negotiate further and there remains great uncertainty, meaning both the pound and the stock market could be volatile for weeks or months to come.

Consumer health, hygiene and home giant Reckitt Benckiser (RB.) cheapens 107p or 1.7% to £61.45 on the unexpected news long-serving CEO Rakesh Kapoor will retire from his role by the end of 2019 after more than eight years in the hot seat and 32 years at the Slough-headquartered company. Reckitt Benckiser’s board has begun the search for his successor, ‘considering both internal and external candidates’, but Kapoor’s imminent departure leaves investors in the consumer products powerhouse feeling skittish.

Housebuilder Bovis Homes (BVS) is bid up 2.2% to 947.6p on the news profits for the year to December 2018 reached record levels and will come in ‘slightly ahead of market consensus’ thanks to a ‘significant step-up in operating margin’ for 2018 driven by CEO Greg Fitzgerald’s turnaround strategy. While Brexit creates sector uncertainties, Bovis confidently boasts about its excellent forward visibility, with all the company’s land for 2019 having detailed planning consent and 91% of the group’s land for 2020 already in the bag.

Also in demand is Royal Mail (RMG), which rises 3.8% to 284.9p as concerns over a Jeremy Corbyn-led government determined to re-nationalise the parcel delivery service lessen in light of last night’s Brexit vote.

Heading south is European floor coverings distributor Headlam (HEAD), marked down 8.3% to 367p on a warning underlying pre-tax profit for 2019 will be lower than 2018 and in the range of £39m-to-£41m.

Expecting the UK market to show ‘further general weakness’ this year, Headlam’s profits will be impacted by ‘an anticipated movement in revenue mix and associated margin’, as well as higher costs and ‘a number of efficiency initiatives aimed at lowering the breakeven point and improving operating margin being at the early roll-out phase or trialling’. The good news is Headlam expects to maintain the 2019 dividend in-line with the forthcoming 2018 payout.

Also on the back foot is Pearson (PSON), the education outfit trading 6% lower at 918.4p on the news 2018’s underlying revenue was down 1% with a 5% decline in its US higher education courseware business. The learning giant now expects to deliver full year adjusted operating profit of £540m-to-£545m, implying a downgrade to the top end of the previously guided £520m-to-£560m range.

Over-50s insurer-to-travel provider Saga (SAGA) improves 0.7p to 103.9p after assuring the market it continued to trade in line with expectations during the second half. For the period between 1 August 2018 to 15 January 2019, Saga’s insurance division experienced pressure on broking profitability, yet this was offset by another strong result in underwriting.

Concrete-placing technology group Somero Enterprises (SOM:AIM) skips 12.6% higher to 330p after stating it expects to post annual revenue and operating earnings ‘moderately’ ahead of market expectations driven by volume increases and the effective management of operating costs.

Engineering contractor Van Elle (VANL:AIM) slumps 35% to 51.5p on a warning full year profits will fall short of expectations following a quiet first half and a third quarter that has been more challenging than expected, ‘with a disappointing performance in general piling and several project delays’.

Oil and gas company Upland Resources (UPL) crashes 34% lower to 2.2p on drilling results disappointment at its Wick exploration well, which Upland will now plug and abandon.


Issue Date: 16 Jan 2019