Daily Market Summary Report - Tuesday 9th March 2010

A strong early performance from US shares helped Footsie recover from earlier weakness to close only slightly lower on a U-shaped day for the leading share index.

Sentiment had earlier been dented by weak economic news. Data from the Office for National Statistics showed the UK’s deficit on trade in goods widened to £7.99bn from £7.01bn the previous month, about £1bn more than economists had predicted.

Stocks also fell back on company updates. Shopping centre owner Liberty International fell after saying it is to split into two separate listed businesses, Capital Shopping Centres and Capital & Counties through a demerger. Liberty overall posted a loss of £329m in 2009 compared with a loss of £2.66bn. NAV fell to 464p from 765p. The dividend is unchanged at 16.5p.

Antofagasta slipped back but later moved into the blue. Lower copper prices hit Chile-based miner and railway owner 's earnings last year. Net earnings fell to $668m compared with $843m in 2008 excluding one-offs on sales of $2.96bn, down from $3.37bn. Copper production was 442,500 tonnes, ahead of the original forecast for the year of 433,000 tonnes.

Satellite communications service provider Inmarsat lost altitude, despite revenue and profits heading skywards in the fourth quarter. Total revenue in the final quarter of 2009 rose 13% to $181.5m from $160.6m in the fourth quarter of 2008. EBITDA jumped 18% to $119.7m from $101.4m the year before.

Energy supplier International Power reported a slight increase in its full-year dividend but said its near-term performance will be impacted by weak market conditions in the US and the UK.

Banks were out of favour after ratings agency Moody’s said it may downgrade the ratings of some UK lenders after the government removes support for the banking sector. Although Moody’s did not name which banks it had in mind for a downgrade, the two part-nationalised lenders, Royal Bank of Scotland and Lloyds Banking are regarded as the most likely suspects.

Shanks was the worst performer in the FTSE 250 after it ended talks with private equity group Carlyle about a possible offer for the waste group. A final price indication of 120p cash per share was proposed by Carlyle, but Shanks said it was unwilling to recommend an offer at such a level.

Difficult market conditions hit revenue and profitability at equipment rental group Ashtead Group but the company’s boss took comfort from his belief that the company is ‘clearly gaining market share’.

The weakness of sterling helped engineering group Weir grow revenues in 2009 and post a record operating profit. Revenue in 2009 grew 3% to £1,390m from £1,354m in 2008, but was down in 7% in constant currency terms.

Aviation and newspaper distribution group John Menzies said pre-tax profit more than doubled after it cut costs won new contracts.

Car dealer Lookers said full year profit increased by £26.4m after a strong performance from its parts division. Adjusted profit before tax for the year ended 31 December 2009 increased by 102% to £28.3m. Revenue on a like for like basis increased by 4.2% to £1.75bn.

Fund manager Gartmore, which floated in December, saw a net inflow of funds in 2009 as equity markets picked up, but net revenue still fell due to lower funds under management on average over the year and lower management fees.

Aer Lingus said operating losses quadrupled in 2009, though the Irish airline made a profit in the second half of the year. Operating losses, before exceptional items, widened to €81m from €20m last year, while revenues declined 11% to €1,205.7m.

Printer St Ives posted an increase in half year profit as it reduced costs but warned that it does not expect any immediate improvement in its underlying markets.

Shares in laundry and textile rental group Johnson Services firmed in early dealings after it said 2009 profit doubled and it reinstated a final dividend. Adjusted pre-tax profit rose to £12.2m for the financial year ending 31 December 2009 from £6m the year before. Revenue for the year fell to £236.4m from £252.3m a year earlier.

Shares in Ark Therapeutics fell back sharply after the drug developer said it would consider approaches it has received following a recommendation that a further clinical trial would be needed before its brain cancer treatment Cerepro could be approved.

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Daily Market Summary Report - Monday 8th March 2010

London’s top stocks ended the day with small gains after trading in a very tight range all day as shares paused for breath following last week’s good gains.

Oil fabrications giant Petrofac was one of the day’s major bright spot after it made a bit more than expected last year, with after tax profit up 37%, and hiked the dividend by an impressive 41%. Profit after tax jumped to $363m from $265m in 2008, slightly better than expected, while the pre-tax figure rose 25% to $447.5m. Revenue increased by 10% to $3.65bn.

It has not been a good day for pharmaceutical companies, however, with both Astra and Glaxo on the slide.

Drug giant AstraZeneca said its cancer treatment Recentin failed to meet the primary endpoint in a clinical study to compare it with rival treatment Avastin. ‘While we recognised that challenging Avastin would be a high hurdle, it is still disappointing, despite evidence of clinical activity with RECENTIN, not to have met the primary endpoint in this study,’ Alan Barge of Astra’s oncology division said.

Holders of Glaxo, meanwhile, have been rattled by talk of anywhere between a $1bn and $6bn liability relating to the company’s diabetes drug Avandia, after it emerged recently that the US Food and Drug Administration is investigating the cardiovascular risk profile of the drug.

Advertising giant WPP was seeing a bit of profit taking after the share price advanced on Friday in the wake of marginally better than expected results and the release of the well-received US jobless figures for February.

Prudential has accelerated its plans for a listing on the Hong Kong Stock Exchange and now wants it effective before its $20bn rights issue to help fund the purchase of AIG Asia. The listing will be effected by an introduction, with a dual-primary listing alongside its primary listing of ordinary shares in London.

Spanish bank Santander is leading the race to snap up Royal Bank of Scotland’s (RBS) 320 English branches for as much as £4bn. The Williams & Glyn's branch network is being sold for £1bn, but a potential buyer would also have to find an extra £3bn, according to a report in today’s Times.

Royal Dutch Shell has confirmed it is in talks to buy Australian coal-seam gas producer Arrow Energy, which said this morning it had received an indicative offer worth A$3.3bn. “These discussions may or may not lead to an agreed transaction,” said Shell in a brief regulatory announcement, but it has already offered A$4.45 a share in cash in a joint deal with PetroChina.

Last year was a good one for product quality and safety tester Intertek, considering the challenging economic conditions, as both profit and revenue increased by more than a fifth. Profit before tax was up 22% to £169.2m and rose 23% to £191.5m after adjusting for one-off items. Revenue improved by 23% to £1.24bn and was up 19% excluding acquisitions and 7% at constant currency.

In the FTSE 250, Forth Ports soared into the lead after it emerged on Friday that the port operator had been approached by a consortium including Peel Ports, the second largest port operator in the UK. The proposal was rejected by Forth.

Business continued to improve at industrial conveyor belt maker Fenner, another FTSE 250 riser, during the final weeks of its first half, leaving it confident of reporting results at the top end of expectations.

Housebuilder Bovis wrote back £11.6m of provisions made against its land bank in the second half of 2009 and has started to buy land again as the UK housing market stabilises. “The group has recommenced investment in land and is pleased with the progress made to date, with four consented sites acquired in the last quarter of 2009 and terms agreed in principle at the year end on a further 15 sites, all of which have been progressed during the early part of 2010.

Revenues at derivatives broker Tullett Prebon have dipped this year so far after a flat performance in 2009, though they are expected to pick up later in the year. “The underlying revenue run rate in the first two months of the year is 5% lower than a year ago at constant exchange rates. We expect this run rate against prior year to improve, particularly in the second half,” chief executive Terry Smith said.

Stagecoach, the bus and train group said trading has remained in line with company expectations despite being adversely affected by unusually severe weather conditions in January and February.

Recruiter SThree’s first quarter gross profit declined by 27% year on year to about £36m, though the current deal pipeline indicates improvements across most markets.

Metals group Delta reported a 20% hike in 2009 profit after a better than expected performance at its engineered steel products division.

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Daily Market Summary Report - Friday 5th March 2010

Strong economic data from the US sent Footsie to its highest levels since late 2008. The leading share index closed a whisker shy of the 5,600 point mark.

A much better than feared read on US non-payrolls sparked the surge. The US jobs figures showed 36,000 jobs were lost in February, compared with forecasts of more than 60,000 or possibly even higher.

Financial stocks and miners drove the advance. Schroders, Royal Bank of Scotland, London Stock Exchange, Aviva and Standard Chartered were among the risers.

Miners were also strong, including Xstrata. Ownership of the Prodeco thermal coal operations in Colombia is passing back and forth between the diversified miner and its major shareholder Glencore like an unwanted Christmas present. Having sold the business to Xstrata for $2bn in January 2009 Glencore is exercising its option to buy it back for $2.25bn, plus any profits accrued but not distributed by Xstrata since 1 January 2009.

WPP shares climbed. The advertising group has been hit hard by the recession and slump in advertising spend, but headline profit before tax fell less than expected during a “brutal” 2009 and there was an encouraging return to stability in January. Headline profit before tax for the 12 months to 31 December fell 16%, or 24% at constant currency, to £812.2m, although analysts had expected something nearer £780m.

Defence company BAE Systems has halved its stake in Swedish aerospace group contractor Saab. BAE will convert 1.05m Saab ‘A’ shares in to Saab ‘B’ shares and will then sell 11.2m Saab ‘B’ shares to Swedish investment company Investor AB for SEK 1,066m, equivalent to 95.50 Swedish krona (SEK) per share.

Full-year figures from business publisher United Business Media (UBM) were ahead of expectations in a “tough” year and the outlook for underlying performance in 2010 is “stable”. The shares shot to the top of the FTSE 250 risers on the back of the comments. An adjusted profit before tax of £165.1m was down 4% from £171.5m in 2008, but topped forecasts of a bigger drop to £150m. Revenue also fell a smaller then expected 4% to £847.6m.

Profits slumped by 85% last year as recruiter Michael Page felt the full force of the recession, though some of its markets are starting to recover and its expects an improvement this year. Revenue for 2009 was down 26.3% at £716.7m (2008: £972.8m) and by 31.5% allowing for weak sterling. Pre-tax profits crashed to £21.1m from £140.1m.

Investment trust giant Foreign & Colonial saw its net asset value per share jump 18.8% to 304.7p in 2009, despite a 13.1% fall in the value of its private equity portfolio.

Hochschild Mining's executive chairman Eduardo Hochschild has bought the miner's 36.9% stake in Zincore Metals for C$10.3m. The firm acquired the Zincore stake with acquisition of Southwestern Resources in May 2009, but now says it does not constitute a core asset for the company.

Premier Oil has abandoned exploration well 16/4-5 in the Norwegian North Sea as a non-commercial well, but results from the first of another two promising wells are due in the next few weeks.

In the investment trust sector Foreign & Colonial blamed a fall in the value of its private equity fall for its underperformance versus its benchmark index, though its net asset value per share still jumped 18.8% in 2009.

Global technology stocks investment trust Polar Capital Technology was ahead of the game, however, in the three months to end-January as tech stocks outpaced the market. Net asset value per share at 29 January was 265.6p, up 7.6% from the 246.8p at the end of October. Over the same period the Dow Jones World Technology Index climbed 6.5%.

Costain and joint venture partner Skanska has won a £15m contract to build the Royal Oak Portal, the first tunnel-related construction contract for London’s Crossrail project.

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Daily Market Summary Report - Thursday 4th March 2010

The blue chip index failed to stretch its winning streak to a fifth session, falling for the first time this week on negative results reaction and downbeat miners. It held above 5,500 all day despite coming close just after trade began and towards the end of play.

Engineering and project management firm Amec took the wooden spoon as investors react badly to a 3% slip in revenues, or 12% on an underlying basis, in 2009 amid tough economic conditions.

Admiral extended losses after Tuesday’s full-year results as Merrill Lynch cut the car insurance company to "neutral" from "buy" on valuation grounds.

Insurer Aviva must have expected a better response after 2009 profit beat forecasts. The share price was under pressure all day as analysts focused on a weaker than expected book value.

A drop in metal prices also hurt London’s performance Thursday. Fresnillo, ENRC, Randgold, Xstrata and Anglo American were among the biggest fallers. Kazakhmys fell through the afternoon despite increasing copper production last year to a bigger than expected 320,000 tonnes.

The day’s outcome could have been worse had it not been for fund manager Schroders, which said it had got off to a good start in 2010 following record net inflows and funds under management last year.

As expected, the Bank of England has held interest rates at 0.5% and taken no further action on quantitative easing (QE) amid conflicting signals over the state of the UK economy.

House prices fell by 1.5% in February breaking a run of seven consecutive monthly increases. The average house price in the UK is now £166,587, still more than 4.5% higher than a year ago, according to High Street lender the Halifax.

Elsewhere, a mixed statement from Cobham brought out the sellers. Underlying profit before tax increased 21% to £295m in 2009, towards the top end of the range of analysts' forecasts. But the Mission Systems and commercial markets businesses are finding it tough and earnings are expected to be more than usually weighted to the second half.

Scottish temporary power solutions provider Aggreko is another faller even after it reported record revenues, profits and margins in 2009, helped by foreign exchange tailwinds.

Leisure group Whitbread posted continuing double-digit sales growth at its coffee shop chain Costa and a move into like-for-like (LFL) sales growth at its hotel chain Premier Inn.

Petrofac wants to hive off its UK Continental Shelf assets into a new company to be formed with Swedish oil and company Lundin Petroleum. The new company, called EnQuest, will be 45% owned by Petrofac shareholders and will be listed on the London stock exchange as well as on the NASDAQ OMS bourse in Stockholm.

In the FTSE 250, newspaper publisher Trinity Mirror is higher. The publisher of the Daily Mirror saw a sharp fall in profits in 2009 as advertising sales slumped and circulation revenues were squeezed, but said it had seen an improvement in advertising towards the end of the year. Pre-tax profits in the 53 weeks to January 3 fell to £72.7m from £124.2m over the preceding 52 week period on revenues that were down to £763.3m from £871.7m.

Galiform is in the red. The joiner posted a fall in revenues in 2009, but the severity of the decline was softened by the company’s exposure to public and private sector tenanted housing, which has not experienced the same turmoil as the owner-occupied housing market.

Online gaming group PartyGaming fell into the red in the year to December 31 after paying costs for a non-prosecution agreement with the US authorities. The firm posted a net loss $26.5m in the year to December 31 having posted a profit of $66.1m the previous year.

Communications technology firm Spirent posted a rise in full year profit as conditions improved. For the year ended 31 December 2009 pre-tax profit rose to £54.1m from £51.4m the year before. Revenue grew by 6% to £272.1m.

Car rental firm Avis Europe reported a rise in annual pre-tax profit while revenue shrank 16% as customers continue to cut back on travelling. Pre-tax profit of €4.5m for the year ended 31 December against a profit of €3m the year before after 'rigorous cost cuts'. Revenue fell to €1.4bn from €1.7bn.

Mouchel Group is lower after rival support services group VT decided not to proceed with its offer for the company, leaving the field clear for Babcock International.

Shares in insurance company Lancashire Holdings took a step back as the company said it was too soon to gauge the effects on first quarter results of the Chilean earthquake.

Spirax-Sarco, the engineer that provides services and products for steam-using and specialist peristaltic pumping markets, posted record sales and profits in 2009, with a large helping hand from the weakness of sterling. Adjusted profit before tax, which excludes exceptional charges, edged higher to £90.2m in 2009 from £90.1m but was down 16% in constant currency terms.

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Daily Market Summary Report - Wednesday 3rd March 2010

A good start on Wall Street helped jolt Footsie out of its sluggish start, helping the leading share index close above 5,500 points for the first time since January.

Asia-focused bank Standard Chartered, the only FTSE 100 company to deliver results today, led the way after it defiantly said it will pay its executives bonuses after another record year in 2009, with income and profits slightly above market forecasts.

"We pay for good performance and we do not reward failure,” chairman John Peace said. Profit before tax rose 13% to $5.15bn and was up 18% on a constant currency basis. CEO Peter Sands added that 2010 has started well for both its retail and wholesale divisions.

RSA Insurance was weak after the company said yesterday that it expects to make around £30m in payouts as a result of the Chilean earthquake. Prudential, however, has pulled out of the tailspin it went into after it announced its plan at the beginning of the week to buy the Asian interests of cash strapped US insurer AIG.

There’s speculation that Prudential, which lost a fifth of its stock market value in the first two days of the week, could become a takeover target.

In the FTSE 250, ITV remains cautious despite returning to profit last year and keeping adjusted profit steady, as a marked bounce-back in advertising spend in early 2010 is flattered by weak comparatives. Pre-tax profit was £25m against a £2.7bn loss in 2008 on revenue down 7% to £1.87bn. Profit before tax and exceptionals dipped 4% to £108m.

TV ad revenue dropped 9% to £1.29bn, but that was ahead of the total market which fell 11% and the first quarter of 2010 is estimated to be up 7%. Early forecasts for April indicate an increase of 15-20%, but the group warns of tougher comparatives later in the year.

Rail and bus group Arriva saw profits fall by 19% in 2009 as it weathered the recession and dealt with the effects of a heavy increase in fuel costs. Profit before tax fell to £121.7m from £150m the year before on revenue that grew to £3,147.8m from £3,042.2m. Management said that it was disappointed in the revenue growth of its CrossCountry train operations. It needed around 10% passenger revenue growth to maintain the profitability of the UK Train division and only got 2.6%.

India-focused miner Vedanta has published the final terms of the $805m convertible bond offering it announced on Tuesday. The bonds, due for redemption in 2017, will carry a coupon of 4%. The company intends to use the funds raised by the bond issue to refinance debt redemptions and for general working capital purposes.

Support services company Carillion confidently expects to enhance earnings again in 2010 after beating market expectations in 2009 despite challenging market conditions.

Lender International Personal Finance has taken a battering after its full year figures. The dividend was held but profits were boosted by £10m from a pricing policy that will reverse in the current year due to increased early settlement rebates on the introduction of the EU Consumer Credit Directive in 2010.

Housebuilder Taylor Wimpey said full year pre-tax losses widened but said the first two months of the year had started strongly and it was well positioned to increase profitability as markets recover.

Frankie & Benny’s eateries owner The Restaurant Group said like-for-like (LFL) sales returned to growth in the latter stages of 2009. ‘The current year has started well - after nine weeks, revenues are 6% ahead of last year and like-for-like sales are up 1%,’ said chief executive Andrew Page, in a statement accompanying 2009 results.

Shares in Care UK surged after Bridgepoint Capital said it would buy the health and social care provider for £281m or 450p per share. Elsewhere in the healthcare sector Assura Group is off colour after it said it is selling its medical services assets to Virgin Group. The deal appears to put paid to hopes of a takeover for Assura; the group said in January that it had received preliminary bid approaches and these were still in progress at the time of its 10 February trading update.

Belgravium, which supplies technology used in handheld and vehicle mounted computers, posted a slight rise in pre-tax profits in the year to December 31 despite lower revenues. Profit before tax increased to £405,000 from £398,000 the previous year on revenue that slipped to £8,286,000 from £8,330,000.

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