The FTSE 100 slipped lower on Thursday, as miners declined and investors digested news Royal Dutch Shell (RDSB) could be hit with an exit tax in the Netherlands ahead of its move to relocating its headquarters to the UK.
Early on, the blue chip benchmark traded 0.22% lower at 7,275.32 points, not helped by rising inflation as this raised the likelihood of a pre-Christmas rate rise, thereby boosting the pound.
When some 70% of its constituents’ earnings are derived from overseas, strength in sterling isn’t too helpful for the FTSE, though downside was capped by positive earnings from a number of corporates.
CORPORATE NEWS
Royal Mail (RMG) topped the FTSE 100 leader board early on, the shares bid up 5% to 459.9p after the postal services group said it will return £400 million to shareholders after reporting a jump in profit in first half profits.
For the 26 weeks ended 26 September, pre-tax profit jumped from £17 million to £315 million year-on-year as revenue increased 7.1% to £6.07 billion.
In a show of confidence, Royal Mail plans to return £400 million of capital to shareholders, of which £200 million will be via a share buyback and the balance by way of a special dividend to be paid alongside interim dividend.
‘Looking ahead, GLS continues to deliver good volume and revenue growth, both year on year and against H1 2019-20’, said Royal Mail.
‘Whilst we are seeing upward pressure on costs in all of our markets, we maintain our outlook for the full year of low single digit % revenue growth and [about] 8% operating profit margin.’
Bunzl (BNZL) improved 0.25% to £27.94 after the distribution and services firm reported the completion of a further two UK acquisitions; Workwear Express is a specialist in personalised workwear and promotional clothing with a strong e-commerce focus with a broad range of customers, while Hydropac is a distributor of insulated packaging solutions.
METRO MARKED LOWER
Elsewhere, Metro Bank (MTRO) was marked down 17% to 110p on the revelation the challenger bank has agreed to terminate takeover talks with private equity giant Carlyle, though the board stressed it ‘continues to strongly believe in the standalone strategy and future prospects of Metro Bank’.
Gaming software provider Playtech (PTEC) rose 3.6% to 768p after confirming media reports that it has received a preliminary approach from JKO Play relating to a possible rival offer the business, thus intensifying the bidding war for the company amid interest from Gopher and Aristrocrat.
JKO Play, which is controlled by Formula One team owner Eddie Jordan, is seeking access to certain due diligence information in order to explore terms on which an offer might be made. Playtech accepted a 680p-a-share bid from Aristocrat last month and has also received a preliminary approach from Gopher Investments.
AROUND THE MARKET
Waste management company Biffa (BIFF) traded 4.3% lower at 378p despite resuming its dividend after narrowing first half statutory operating losses as revenue was boosted by ‘strong’ performance in its collections and recycling business.
Information services provider Euromoney Institutional Investor (ERM) edged 0.2% higher to £10.50 after reporting a rise in annual profit as cost cuts bolstered performance.
Flow control and instrumentation group Rotork (ROR) fell 8.2% to 341.4p after it said order intake in the four months to October was up a high single digit percentage year-on-year, while also flagging that the negative impact of supply chain disruption is expected to continue.
And Naked Wines (WINE:AIM) soured 23% to 519p as first half sales growth slowed versus a tough prior year comparative, boosted by Covid lockdowns.
The direct-to-consumer wine business also downgraded its full year total sales growth guidance to a £340 million to £355 million range, below the previous £355 million to £375 million estimate, with the growth slowdown reflecting lower than anticipated investment in new customers.
