UK stocks closed in the red on Tuesday afternoon following a lacklustre start in US stock markets in response to weaker than expected October retail sales which grew only 0.3% compared with 0.5% expected.

In addition the prior month was revised down to 1.6% growth from the initial 1.9% reported. At 16:30 the FTSE 100 was 0.9% lower at 6,363.

COMPANY NEWS

Cigarette-maker Imperial Brands (IMB) eked out a small gain in full year sales thanks to higher prices as stick volumes continued to shrink. Group revenues for the 12 months to September were up 0.8% despite a 2% fall in volumes, although a ‘sub-optimal’ product mix meant lower gross profits.

Revenues from ‘new growth products’ were down 27% although the second half saw sales recover to a 9% drop compared with a first half drop of 43%.

Strong cash conversion enabled the firm to pay a rebased dividend of 137.7p per share, a third lower than last year. The shares puffed up 7.3% to £15.1.

Shares in home repair and improvement group Homeserve (HSV) gained 2.8% to £12.7 after it reported a 17% jump in full year sales driven by strong growth in North America and a positive contribution from the acquisition last year of a 79% stake in eLocal.

A lack of exceptional gains reduced reported pre-tax profit but underlying growth and a strong financial position led the firm to raise its interim dividend, pleasing investors.

Financial and information services group Experian (EXPN) posted resilient first half results with organic revenues up 2% in the six months to September and likely to grow between 3% and 5% in the third quarter.

Growth was largely centred on North America and Brazil, while the stand-out division was Consumer Services which surpassed 400,000 customers. The firm said it would pay an unchanged interim dividend but left its guidance unchanged, limiting gains. The shares dropped 3.5% to £28.90.

In an unscheduled trading update, temporary power provider Aggreko (AGK) raised its full year pre-tax profit guidance to the upper end of its previous £80 million to £100 million target range.

The firm performed ahead of expectations in the nine months to September thanks to a recovery in demand in the US and Europe. Looking forward, the Tokyo Olympics next year should add a further boost to the business. The shares jumped 3.5% to 588p, continuing their recent outperformance.

Low-cost airline EasyJet (EZJ) recorded its first ever annual loss for the year to September as pandemic-related travel restrictions hammered its business.

Pre-tax losses for the period to September were £1.27 billion compared with a profit of £430 million the previous year, and given the continued uncertainty over when travel will return to ‘normal’ the firm declined to offer any profit guidance for the coming year. The shares dropped 1.9% to 763p.

SMALLER COMPANY NEWS

Shares in audio products firm Focusrite (TUNE:AIM) gained 1.6% to 929p after the company recorded a 57% rise in full year sales to £130 million in the period to August.

The firm put the ‘exceptional growth’ in revenues and earnings down to the boom in podcasting and the use of Zoom and other platforms during lockdown. It also said the current financial year had started well thanks to demand for film and TV dubbing and radio entertainment.

Online musical instrument seller Gear4Music (G4M:AIM) raised its full year earnings guidance yet again after post a 42% increase in first half sales and a 325% jump in earnings before interest, taxation, depreciation and amortisation (EBITDA).

Customer numbers have topped 400,000 and trading has been ‘very strong’ into November meaning ‘results for the full year will now be ahead of the recently upgraded consensus’. The shares rocked 5.7% higher to 718.5p.

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Issue Date: 17 Nov 2020