Kingfisher reports disappointing third quarter, Sage Group sees full-year profits fall
London open
The FTSE 100 is expected to open six points lower on Wednesday, having closed up 0.22% at 7,323.80 on Tuesday.
Stocks to watch
DIY group Kingfisher reported a “disappointing” 3.2% fall in third quarter sales in softer markets as the company's chief executive said it was suffering from “organisational complexity” that ignored customers. Total sales fell to down 3.2% to £2.95bn on a constant currency basis. On a like-for-like basis the decrease was 3.7% reflecting continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France. “My early assessment is that we have not found the right balance between getting the benefits of group scale and staying close to local markets. We are suffering from organisational complexity, and we are trying to do too much at once with multiple large-scale initiatives running in parallel,” said chief executive Thierry Garnier, who was brought in to turn the company's fortunes around.
Sage Group reported a 5.6% improvement in its organic total revenue for the year on Wednesday, to £1.82bn, which it said reflected growth in recurring revenue of 10.8% underpinned by software subscription revenue growth, offset by a decline in SSRS revenue and a decline in processing revenue to. The FTSE 100 company said its organic operating profit was down 13% at £432m for the year ended 30 September, while its margin widened slightly to 23.7% from 23.4%. An increase in its full-year dividend of 2.5% was declared, to 16.91p, in line with Sage’s policy of maintaining the dividend in real terms.
Micro Focus said on Wednesday that it expects to report full year revenue and adjusted EBITDA consistent with the revised revenue guidance given in August, and in line with its consensus on Wednesday. The FTSE 250 company said it expected to report net debt of $4.3bn at a leverage multiple of 3.2x adjusted EBITDA for the year ended 31 October, following the completion of the share buyback programme and a one-off tax payment in respect of the SUSE disposal.
Newspaper round-up
Targeted increases in public sector pay are needed to enable the NHS, schools, the armed forces, the police, the civil service and prisons to hold on to and hire workers in the face of competition from the private sector, a think tank has said. The Institute for Fiscal Studies said that after a decade of wage restraint, the government now needed to respond to growing evidence of recruitment difficulties. - Guardian
Lidl is giving its UK staff a pay rise worth £10m with a higher hourly rate likely to propel it to the top of the supermarket pay league table. The retailer said 19,000 employees would get a pay rise in March when its hourly rate would move from £9 to £9.30 outside London and from £10.55 to £10.75 in the capital. The rises match the higher rate announced by the Living Wage Foundation – the charity which sets the voluntary measure – last week. The official minimum wage set by the government for Britons aged over 25 is £8.21. - Guardian
Spotting Eddie Stobart lorries: it’s a quintessentially British pastime. For outsiders, the public’s love of the green and white livery is something of a head scratcher - not unlike the pickle the Aim-quoted company has found itself in. Eddie Stobart Logistics is in a race against time to secure a rescue. A multimillion-pound accounting black hole has opened up. Half-year losses are at least £12m - they could be worse - and it is in dire need of investment. - Telegraph
The management of TSB has been severely criticised in a report into a disastrous attempt last year to switch 5.2 million customers on to a new banking system. The board of the British bank failed to sufficiently challenge the plans of Sabadell, its Spanish owner, to move the customers to a new platform over a single weekend in April and did not understand the scale of the project. - The Times
New York’s top prosecutor is investigating the owner of Wework, the beleaguered office space provider, amid concerns about the business dealings of its former boss. The We Company confirmed that it had been contacted by the office of Letitia James, the attorney-general of New York, but declined to comment about the nature of the investigation. - The Times
US close
Wall Street trading finished as it started on Tuesday - in a mixed state - as some confused signals on the US-China trade front and some disappointing figures from the likes of Home Depot and Kohl's halted a record-breaking rally.
The Dow Jones Industrial Average closed down 0.36% at 27,934.02 and the S&P 500 lost 0.06% to 3,120.18, while the Nasdaq Composite rose 0.24% to 8,570.66.
At the open, the Dow Jones was 58.58 points weaker after closing higher in the first session of the week, shrugging off some heightened caution surrounding Beijing and Washington's protracted trade war.
Former White House chief economic advisor Gary Cohn told CNBC on Monday that he believes Donald Trump will forge ahead with another round of tariffs against China on 15 December if the pair are unable to agree to a trade deal by then.
“The Dow Jones, which at one point spiked to 28,150, pulled back under 28,000 as the session went on,” said SpreadEx analyst Connor Campbell.
“That 50 point loss seems, in part at least, to stem from the confusion surrounding the trade deal.
“From a 'constructive' phone call on Saturday morning to reports of Chinese pessimism on Monday, with a Huawei ban delay and hopes of Chinese stimulus thrown in to muddy the waters, it is hard to work out exactly where the superpowers stand."