FTSE 100 movers: Next, ITV and Morrisons gains offset BT decline
The FTSE 100 was led higher by well received updates from Next, ITV and Morrisons, overcoming a big falls for BT and Randgold, plus Thursday's ex-dividend stocks.
Clothing retailer Next led the blue chip index upgraded its profit guidance for the year as it posted a 6% rise in sales as an 18.1% jump in online sales helped to offset a 4.8% drop in retail. RBC Capital Markets said while some short-term volatility around its trading is likely, driven by upcoming tough comparisons with last year, "we see an improved sales outlook, particularly for the higher-rated online business, driven by a broader range of better-priced product and brands, and more competitive service options".
Royal Bank of Scotland climbed as it agreed to pay $4.9bn (£3.6bn) to settle a long-running investigation by the US Department of Justice into the bank’s dealing in mortgage-backed securities before the financial crisis. Investors' first thoughts were likely to be about how RBS will be able to reinstate its dividend at long last and begin the process of reprivatisation.
Investors switched over to ITV advanced after it posted a 5% rise in total first-quarter external revenue and said it is on track to deliver double-digit growth in online revenue. New chief executive Carolyn McCall said her "strategic refresh is progressing well" ahead of a first half where total advertising to be up 2% and profits will reflect the timing of the football World Cup. "Over the full year we are on track to deliver double digit growth in online revenue and good organic revenue growth in ITV Studios," McCall said.
Morrisons was on the front foot after it reported a strong start to the year, with group like-for-like sales in the 13 weeks to 6 May up 3.6% as the grocer made progress in the store estate as well as the newer wholesale business.
Coca-Cola HBC rose despite saying that first-quarter net sales fell 1.7%, mainly due to currency hits from the Russian rouble and Nigerian naira.
BT led the FTSE 100 fallers, as it reported a second year of lower profits, but chief executive Gavin Patterson unveiled a plan to cut £1.5bn of costs within three years by axing 13,000 back office jobs and restructuring its offices. He also plans to hire 6,000 more new staff as part of an operating strategy rejig that will see higher capital expenditure in coming years.
Forward guidance from BT was also disappointing to investors, with profits likely to fall again this year and the dividend held flat for the next two years to allow it to invest in things like expanding its fibre network and 4G and 5G mobile. Analyst George Salmon at Hargreaves Lansdown said the job cuts and move out of central London "are drastic actions", but "they still aren’t going to be enough to dig BT out the hole it’s in".
Miner Randgold Resources slumped as it revealed first quarter profits down 22% year on year to $66.5m as a result of lower production and increased costs. Production fell 16% quarter on quarter to 286,890 ounces from 340,958 ounces on lower output at the Loulo-Gounkoto complex, Tongon and Morila mines.
On issues in Congo, analysts at Shore Capital noted that recent reports have suggested a draft of the government's new mining regulations circulated to mining companies last week has apparently not acknowledged any of the changes sought by Randgold and other DRC miners. "We are expecting the Mines Ministry to submit a final version of the regulations to the country’s cabinet by mid-2018, so Randgold et al have only limited time within which to persuade the Mines Ministry to make at least some of the changes sought. "
House builder Barratt Developments said total forward sales were up 2.5% in the calendar year to £3.3bn, adding that current trading was in line with expectations. The company said it expected its net cash position at 30 June 2018 to be better than previous guidance at around £550m. Barratt is still riskier than its peers, said Shore Capital, keeping its 'sell' rating on the stock. "The Q3 trading update said nothing that would cause us to change forecasts, valuation or recommendation," ShoreCap says, with the macro environment for housing visibly worsening, especially on house prices.
Market Movers
FTSE 100 (UKX) 7,668.39 0.08%
FTSE 100 - Risers
Next (NXT) 5,626.00p 7.24%
ITV (ITV) 157.85p 4.40%
Kingfisher (KGF) 297.00p 3.02%
Morrison (Wm) Supermarkets (MRW) 252.65p 2.95%
Royal Bank of Scotland Group (RBS) 284.10p 2.90%
RSA Insurance Group (RSA) 653.60p 2.86%
Coca-Cola HBC AG (CDI) (CCH) 2,532.00p 2.68%
Anglo American (AAL) 1,790.80p 2.33%
Antofagasta (ANTO) 1,037.00p 2.32%
Old Mutual (OML) 260.60p 2.20%
FTSE 100 - Fallers
BT Group (BT.A) 219.20p -8.13%
Randgold Resources Ltd. (RRS) 5,610.00p -8.03%
Centrica (CNA) 146.50p -5.76%
Mediclinic International (MDC) 689.40p -2.41%
Barratt Developments (BDEV) 555.00p -2.32%
Admiral Group (ADM) 1,973.50p -1.91%
Standard Life Aberdeen (SLA) 363.97p -1.42%
BP (BP.) 565.28p -1.17%
Taylor Wimpey (TW.) 191.74p -1.09%
Evraz (EVR) 502.80p -0.98%