UK shares continued to slide following yesterday afternoon’s sudden market reversal, with the FTSE 100 index dropping 0.7% to 7,275 despite several upbeat corporate reports.
The selling appeared to be broad-based with just the beverages, healthcare, pharmaceutical and utility indices posting gains.
EARNINGS GO UNREWARDED
Aerospace and defence contractor Babcock (BAB) delivered first half results in line with forecasts and maintained its full year profit outlook.
In terms of highlights, the firm’s combined order book and pipeline grew 10% since March to £34bn, its highest ever level, thanks to major contract wins including the Royal Navy’s Type 31 frigate. Despite the positive update, shares dipped 1% to 539p.
Financial software provider Sage (SGE) reported healthy growth in like-for-like sales for the full year to 30 September with an impressive 10.8% increase in like-for-like recurring revenues, giving it good visibility for the coming year.
The figures excluded Sage Brazil and Sage Pay, which are being held for sale. Sage Pay, the firm’s payments processing unit, is being sold to US Bancorp for £232m with Sage expected to report a profit of £180m on the deal. Shares brushed off the news, slipping 3% lower to 720p.
Travel-based convenience-food retailer SSP Group (SSPG) also served up a strong set of full year results with sales, margins and profits expanding at a healthy clip thanks to higher numbers of rail and air passenger numbers in the US and continental Europe.
As well as rewarding shareholders with a 16% increase in the total dividend for the year, representing a 40% payout ratio, the firm announced a share buyback of up to £100m. Shares failed to respond however, falling 2.7% to 637p.
RETAIL BLUES
Worst performer in the FTSE 100 was DIY retailer Kingfisher (KGF) which posted a third quarter trading update showing no immediate improvement in its UK or French businesses.
Like-for-like sales were down 1% in the UK and Ireland in the quarter, slightly worse than the first half, while Screwfix delivered respectable like-for-like growth of 3.7%. However French sales continued to disappoint, down 6.1% on a like-for-like basis. Kingfisher shares dropped 7.5% to 193p, just above their recent five-year lows.
FOOD & DRINKS BRING RELIEF
Food-led pub group Mitchells & Butler (MAB) reported a 16.5% increase in full year operating profits and a 10.7% increase in pre-tax profits as it managed to outperform the wider dining-out sector.
While conditions remained ‘challenging’, and cold wet weather kept some punters away, like-for-like sales continued to outstrip the market in the first few weeks of the new financial year. Shares surged 6.5% to a new 12-month high of 475p.
Soft drinks purveyor Fevertree (FEVR:AIM) trimmed its full year sales guidance to between £266m-£268m, slightly below market expectations, due to a slowdown in the UK ‘off-trade’.
Sales in the ‘on-trade’, i.e. through bars and restaurants, continued to grow steadily and sales in the US experienced ‘strong growth’ with full year revenues expected to beat previous estimates.
Fevertree shares, which touched a 12-month low of £17 earlier this month, fizzed 7% higher to £19.95.
