Supermarket chain Sainsbury (SBRY) reported a hefty slump in half year profits as it continues to grapple with stiff competitive pressures. Pre-tax profits fell from £220m a year ago to £132m in the six months to 22 September with like-for-like sales barely making any progress, up just 0.6%.

The supermarket group blamed the drop in profits on a number of charges, including the integration of Argos and the proposed merger with Asda.

Sales growth picked up in the second quarter from the dismal first three months of the year but the main problems remains the core grocery business, where sales growth of 1% was a big improvement on an extremely poor 0.2% in the first quarter, but it’s hardly enough to get investors excited.

Still, investors see some promise in the figures, sending the share price 1.5% higher in early trade on Thursday to 323.9p.

Today announcement follows similar updates from Tesco (TSCO) and Morrisons (MRW) in recent days, which you can read here, and here.

Overall markets are on the front foot on Thursday with the leading FTSE 100 index making 30-odd point progress to 7,148.22 following a firm showing on US markets overnight.

CHANGE PAYING OFF AT BURBERRY

Fashion business Burberry (BRBY) saw like-for-like retail sales rise 3% in the six months to 29 September, but it is a knock-out performance on the profits line that grabs attention.

The luxury fashion house reports a pre-tax profits jump to £174.1m from £128.3m this time last year, lifting the stock 0.8% to £18.30. Burberry is going through a major transformation as it searches for the right model to secure its future in an increasingly internet sales driven world.

‘Mindful that we are only in the first phase of our multi-year plan, we continue to manage dynamically through the transition,’ says chief executive Marco Gobbetti. The group has also reconfirmed its outlook for the full year.

Global pharma firm AstraZeneca's (AZN) third quarter results show that sales are booming in China and the US, rising 32% and 25% respectively. The drugs developer says new medicines are performing strongly and product sales are up 8% across the board.

But it is not all good news with total third quarter sales declining 13% to $5.3bn, putting the squeeze on profits. Pre-tax profit for the period dropped by more than a third to $477m.

Shares in AstraZeneca nudge 1.5% up in early trade to £59.45, just a fraction off 2018 highs of £61.07.

Defence group BAE Systems (BA.) has stuck to its full year guidance as it focuses on navy ship and fighter jet programmes.

That implies flat underlying earnings per share compared to last year. The shares inch 0.5% higher to 535.6p.

INVESTORS RECYCLE RENEWI

Falling profits and earnings spark a major sell-off at recycling services firm Renewi (RWI) where underlying pre-tax profits slump 12% to €33.9m. But the really bad news comes in the shape of delays to volumes in parts of the business, which will likely act as a major drag on profits in the second half.

‘Resumption of full soil production at ATM not expected this financial year resulting in reduced management expectations of up to €3m operating profit per month,’ says the announcement.

That prompts a 17.5% collapse in the share price to 45.45p.

Interim pre-tax profit at car sales advertiser Autotrader (AUTO) rose 9% to £114.5m driven by strong adoption of new products and advertising packages by both retailers and manufacturers.

The company added that the strong first half meant revenue growth for the full year was likely to exceed previous guidance, news that captures the imagination of investors who send the stock more than 5% higher to 458p.

In focus after the London close on Thursday is the latest monetary policy decision from the Federal Reserve.


Issue Date: 08 Nov 2018