Next earnings fall, Smiths Group revenues flat
London open
The FTSE 100 is expected to open 38 points lower on Friday, having closed down 1.23% at 6,952.59 on Thursday.
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Next reported a 5.6% fall in earnings per share and kept its dividend flat after store sales fell in the year to 31 January. Retail full price sales fell 7% but group sales fell just 0.5% to £4.1bn thanks to 11.2% growth in online revenues. The central guidance for the year ahead is for EPS to "modestly move forward".
Indivior said it was likely to appeal a ruling from the US District Court of Delaware, which found that Alvogen does not infringe the asserted claims of three of its US patents protecting its key Suboxone Film treatment for opioid addiction. If Alvogen is successfully launched in the US, Indivior said it believes "it could potentially result in a rapid and material loss of market share for Suboxone Film in the US" within months.
Smiths Group said underlying revenue had been broadly flat in the first half of the year, reflecting an improving trend, though operating profit had been hit contract timing and higher R&D costs. The full year outlook was reaffirmed, but first-half headline earnings per share fell 11% at 40.4p per share, down 2% on an underlying basis. The interim dividend was upped 2% to 13.80p.
Newspaper round-up
China has retaliated against Donald Trump’s decision to impose tariffs on steel and aluminium by signalling that it will hit US goods such as pork, apples and steel pipe with higher duties. As Asian stock markets plunged at the prospect of a trade war between the world’s two biggest economies, China’s commerce ministry urged Washington to negotiate a settlement as soon as possible but set no deadline. - Guardian
A further escalation in protectionism by President Trump’s White House could dent global growth, drive up inflation and blow the Bank of England’s economic forecasts for the UK off course, its rate setters warned yesterday. The Bank’s monetary policy committee, the nine experts who set interest rates, used the minutes to its latest meeting to respond to punitive tariffs imposed by the US on steel and aluminium from the UK and the European Union this month. - The Times
Thousands of jobs in the City of London will begin migrating to continental Europe from next month despite Theresa May’s success in negotiating a standstill transition deal, senior business figures have told The Times. EU leaders are expected to sign off today on the legal wording of a Brexit implementation period that will effectively keep the UK aligned with Brussels until the end of 2020.
One of Unilever’s biggest shareholders has hit out at the Anglo-Dutch consumer goods giant’s decision to abandon its double-headed structure in favour of a single corporate entity in the Netherlands. Iain Richards of Columbia Threadneedle, a top 10 investor, said his company was “disappointed” by its “lack of engagement with shareholders” ahead of the decision, which could lead to its expulsion from the blue-chip FTSE 100 index. - Telegraph
A former colleague of Archie Norman, chairman of Marks & Spencer, has been appointed as the head of the struggling retailer’s food business. The appointment of Stuart Machin, a 30-year retail veteran and boss of Steinhoff UK, the company behind Poundland, Harveys and Bensons for Beds, will renew speculation about the growing influence of Mr Norman at M&S. - The Times
The Serious Fraud Office (SFO) is set to recover £4.4 million lost in a bribery scandal at an African oil company subsequently bought by Glencore. The High Court in London yesterday granted the SFO the right to recover the proceeds from the sale of shares in Chad Oil, a company used by Griffiths Energy International to bribe diplomats in order to win contracts in Chad. - The Times
US close
US stocks finished lower on Thursday, as investors continued to mull over the latest policy announcement from the Federal Reserve overnight, and amid worries about a trade war leading to what one analyst referred to as "a veritable bloodbath" on Wall Street.
The Dow Jones Industrial Average was down 2.93% at 23,957.89, the S&P 500 closed off 2.52% at 2,643.69, and the Nasdaq 100 was 2.5% lower at 6,682.26.
Stocks had ended in the red on Wednesday after the Fed lifted rates by 25 basis points as widely expected, to a target range of 1.5% to 1.75%.
The central bank also signalled that rates would rise twice more this year and three times in 2019.
“We're trying to take the middle ground,” said Fed chair Jerome Powell.
“On the one hand, the risk is we wait too long and then we have to raise rates quickly, and that foreshortens the expansion - we don't want to do that.
"On the other side if we raise rates too quickly inflation doesn’t get sustainably up to 2% and that will hurt us going forward.”