UK markets have started the day higher with the benchmark FTSE 100 up 0.5% to 7,350.4, bouncing back after yesterday’s blockbuster announcement from Google that it is barring Chinese smartphone marker Huawei from updates to its Android operating system.
On Tuesday UK investors seem more willing to put ongoing Brexit uncertainty to one side as they concentrate on corporate news, led by a surprise announcement from Tesco (TSCO).
The UK's number one supermarket chain plans to pull out of the increasingly competitive mortgage business. Tesco has been offering home loans since 2012 and has built up more than 23,000 mortgage customers over those seven years, with total lending balances of £3.7bn.
But Gerry Mallon, boss of Tesco's banking arm, said challenging conditions in the mortgage market in recent years has meant little in the way of profitable opportunities for the company.
Tesco will now look to sell its mortgage book, an announcement that leaves investors largely underwhelmed, the stock nudging less than 1% higher to 235.6p, valuing the chain at around £23bn.
JOBS TO GO AT GALLIFORD
Struggling housebuilder Galliford Try (GFRD) sees its shares jump 11% to 595p as it unveils plans to cut 350 jobs following a review of its construction business.
In a trading update, the firm said its construction division will focus on its core strengths of buildings, water projects and highways, and has cut its annual revenue target for the division to £1.3bn. Cost savings of £15m a year from 2021 will accelerate progress towards its target for 2% operating margin on its projects by 2021.
Galliford is still reeling from having its chief executive Peter Truscott poached by rival Crest Nicholson (CRST) in March.
Water company Severn Trent (SVT) saw both turnover and profit increased in the year to 31 March 2019, with the company able to shake off all the costs from last summer’s prolonged hot and dry weather without denting the bottom line.
But the water utility business again warns of the potential impact of re-nationalisation, saying it would harm its ability to carry out its objectives and impact shareholder value.
Investors aren't getting too carried away, the stock edging 0.7% higher to £19.34, although the shares have declined from £25 levels over the past two years.
Importantly, a final dividend worth 56.02p per share has been announced.
PROFITS PUNCTURED AT HALFORDS
Shares in cycling and motor equipment retailer Halfords (HFD) drop 1.3% to 236p as weak customer demand continues to squeeze profits.
Pre-tax profit for the year to 29 March 2019 crashed 24% to £51m despite flat sales and modest gross margin gains.
Home improvement retailer Topps Tiles (TPT) is down 3.2% to 75p after its profits for the six months through March slipped 19% to £5.2m following start-up costs as its new commercial business.
But it wasn’t all bad for the firm as underlying profits, stripping out trading losses at the commercial business and property costs, were up 11% to £8m.
Book and convenience retailer WH Smith (SMWH) is down 0.4% to £20.20 after announcing chief executive Stephen Clarke will step down from his role at the end of October after six years with the firm.
In a trading update, WH Smith also revealed a 15% jump in first quarter sales, following the rollout of new outlets at airports.
Sales in the 11 weeks to 18 May were also boosted by 4% growth from its recently-acquired US business InMotion. On a like-for-like basis, sales rose 1%.
