Corporate news, plenty of it and not just in the bank sector
12/03/2008
29th February - Focus moves away from the financials for a change After a week dominated by action in the financials, that reporting season has more or less finished and we can now look at other sectors after a very busy week for reports. Again there has been both good and bad news, which would explain the oscillating nature of the FTSE 100 index, and today the reports from blue chips were generally pretty good. Capita followed up their previous good statements with another solid performance to complete a successful 2007, which showed a 19% rise in underlying pre-tax profit. Given that it remains confident amid strong demand for outsourcing and good trading conditions across the group, this morning's slight drop in the shares looks a little churlish.
United Utilities, often considered dull but worthy, said they remained confident of delivering the company's regulatory outputs and efficiency targets over the 2005-10 regulatory review period, but there was little to set the world alight and the shares have settled into a trading range for now
Turning to a much more cyclical stock, full year revenues at United Business Media were very impressive and above market forecasts. The group is on track for this year and after drifting down for some months, we might be at the start of a new upward trend in the share price here. Similar sentiments might apply to WPP, which saw revenues up 4.7% in 2007 and said 2008 should be a better year than last year, and the shares if anything, look a little stronger on a chart view.
3rd March - Attack of the jitters as financials drop again Not even a relatively reassuring set of figures from HSBC could stop the FTSE 100 index from a nasty early markdown, with the index flirting with a three figure drop after Friday's big falls on Wall Street. The big worry for HSBC was the scale of its latest sub-prime writeoffs which came in at $6.6bn or 63% up against last year, a pretty shocking figure. Against this however full year profits rose 10% and just like the other bank majors it raised its dividend for the year by 11%. It said that the outlook for the rest of 2008 was uncertain, and suggested the outlook in the US could get worse before it gets better, but if this is a case of a kitchen-sink job, it could be that the worst is over for this previously well respected group. That didn't stop RBS and Barclays adding to their 4% plus losses on Friday with another drop, but to be fair to them selling volume on the down days has not been that high, so again we could be near an excellent buying opportunity. Elsewhere, there were plenty of other corporate results to chew on, but no surprises either way, so it seems like a two-way market until Wall Street opens, when we should expect another bout of fireworks, which is more than Ben Bernanke might have really expected or indeed wanted last week. 4th March - Black Monday avoided and a relief rally It looks as though there is still life in the bulls after what could have been a very difficult session yesterday, and today the focus moved back to very busy reporting schedule as the FTSE 100 index set off at a pace on a relief rally. This did not last too long however with a bout of selling mid-morning leaving the index around 20 points ahead. Although there were no major movers in the blue chips, one or two shares stood out, with Schroders leading the way on the back of good year end results showing a 35% profit rise. As with many groups at the moment, it did add a note of caution, saying the difficult market conditions would have a less favourable impact on its business, but given that some investors had expected the worst, the outlook appears reasonable here. Down at the bottom end was Admiral, whose shares have been resilient this year. Although its 2007 pre-tax profits were better than expected, it added that improved premiums in the UK car insurance markets would not hit market results until 2008, and it would also be a much tougher year for its comparison website Confused.com. It's not a profits warning as such, but there is no room for disappointment here and the shares may drift until we see better market conditions.
Another stock that has been in fine form recently is Cable & Wireless, which set new growth targets today for the next five years and reiterated its EBITDA guidance for 2007/08, but as is often the way at the moment profit takers jumped in, so whilst it looks set fair for the future, we may have seen the best in the short term. 5th March - Footsie battling to establish a foothold It's been a rocky week so far, but last night's late surge in the US has fed through to London, with the FTSE 100 index stocks surging ahead despite around 30 points worth of ex-dividend payments. There was an interesting story overnight that Liberty International was in talks to team up with a major rival to become the world's largest shopping mall operator. Although no concrete names have been put forward, Australia's Westfield Group and GIC Real Estate, the property arm of Singapore's sovereign wealth fund, have been named as potential suitors, and this is a story that could run for some days with Liberty up 7% mid-morning. Another interesting stock is ITV, which is a touch ahead after it said it expected to see a 2% increase in net advertising revenues during the first quarter of 2008. Although it posted a 17% drop in 2007 ebitda earnings, the management do sound confident, and it could be an interesting turnaround situation. On the M&A scene, Melrose increased its offer for FKI to 85p per share, part cash, part shares, and has been given permission to study the rival engineer's books. With rumours of private equity sniffing, the current price of 77p would seem to present an excellent arbitrage opportunity. 6th March - Jitters ahead of today's interest rate decision It was a much better day in London yesterday with several stocks seeing impulsive looking moves within various cyclical sectors. It would seem that whilst there are profit warnings appearing, the general tone of results recently reported has been of satisfactory progress in profits and earnings, but there is an understandable caution on the immediate outlook. Today though we await the lunchtime interest rate decision by the MPC, and the feeling so far is that rates will be left unchanged although any accompanying comments will be examined closely. Traders are not hanging around though, and we have seen an early spate of selling with the FTSE 100 index down around 38 points mid-morning, around half of yesterday's gains In terms of results, there has been little of note so far, and shares in Taylor Wimpey were little changed after it reported a loss before tax for the year of £19.5m on the impact of exceptional items, particularly land and work in progress write downs in the US. As expected, it continues to anticipate a more difficult trading environment in the UK but the tone of the statement was not overly bearish.
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