UK shares traded in positive territory on Thursday despite new restrictions being introduced by the government to combat the increasing spread of Omicron.

Markets took comfort from news that three shots of the Pfizer/BioNTech vaccine neutralized the virus in laboratory tests.

Overnight trading in Asia was mixed with China’s SE Composite index gaining 1% while Japan’s Nikkei 225 dropped by 0.5%. After a volatile few weeks Brent Crude was relatively quite gaining 0.1% to $75.88 per barrel.

At 8.45 am the FTSE index of leading shares was up 0.2% at 7,352. The index was also helped by weakness in the pound amid renewed UK restrictions as this flatters the overseas earnings which dominate the index.

CORPORATE NEWS

Engineering company Rolls Royce (RR.) said its restructuring programme was delivering cost savings more quickly than expected putting the business in a good position to achieve its £1.3 billion target by the end of 2022.

A recovery in international flights and power systems markets and resilience in Defence led to improved trading and a return to positive free cash flow in the third quarter.

Improved trading and a £300 million concession outflow which will now fall into 2022 means the company is expected to beat its prior guidance of £2 billion of free cash outflow in 2021. Nevertheless, the shares dropped 3% to 124.5p.

STRONG TRADING

Shares in packaging company DS Smith (SMDS) gained 2.6% to 391p after it said it was continuing to benefit from a very dynamic market with demand for packaging for different retail solutions.

First half revenues in constant currencies were 22% higher to £3.33 billion driving a 26% increase in adjusted operating profit to £276 million. Growth was driven by 9.4% growth in corrugated box volumes and higher selling prices across the group.

The interim dividend was increased 20% to 4.8p per share.

Online card retailer Moonpig (MOON) raised guidance for full year revenues which it said are now expected to be at the upper end of the £270 million and £285 million range, pushing the shares up 5.3% to 376.8p.

In the medium term, the group continues to target underlying annual revenue growth in the mid-teens and an Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin rate of approximately 24%-to-25%.

Shares in iconic shoe brand Dr. Martens (DOCS) kicked 2% higher to 409.6p after saying first half revenues grew 16% to £369.9 million which drove pre-tax profits 46% higher to £61.3 million.

The company said it remained confident in meeting market expectations for 2022. From 2023 and over the medium term the revenues are anticipated to grow by a mid-teen’s percentage.

Shares in Frasers (FRAS) jumped 6% to 749p after the company said first half revenue grew 23.6% to £2.34 billion and pre-tax profit rose 75.3% to £186.0 million year-on-year.

Growth reflected a strong bounce in trading after stores reopened and looking ahead to the period ended 24 April 2022, the company said it expected to achieve an adjusted pre-tax profit of between £300 million to £350 million.

Transport company First Group (FGS) said first half losses widened to £64.5 million from £33.5 million year-on-year, while revenues climbed to £2.14 billion from £2.05 billion on higher passenger numbers.

The company said it was on track to deliver a 10% margin in the first full year after pandemic-related restrictions end, with about £20 million in annualised cost efficiencies delivered since 2019. The shares reversed 2.2% to 99.4p.

A list of FTSE 100 index movers can be seen here.

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Issue Date: 09 Dec 2021