City sources predict the FTSE 100 will open up 12 points from yesterday’s close of 5,451 after Monday’s declines, which saw the index drop 63 points on the back of comments made by German Chancellor Angela Merkel, who underlined her opposition to the issuing of common euro area bonds.
International outsourcing firm Serco said it was on track for 2012 but expects revenues in the first half to take a hit from tough conditions in America. In a statement ahead of the firm’s half year end, Serco said it expected strong total revenue growth in 2012, including good organic growth. But it forecast that adjusted operating margins would be flat in the first half compared to the corresponding period in 2011.
Oil and gas services provider Petrofac has again reiterated its full-year profit guidance, saying that both its Engineering, Construction, Operations and Maintenance (ECOM) and Integrated Energy Services (IES) divisions are making good progress. The company expects net profits to grow by at least 15% in 2012, unchanged from its guidance in May. Based on the contracts signed in the year so far, Petrofac’s expects its backlog to be around $9.1bn by the end of the first half (June 30th), down slightly from $10.8bn at the start of the year.
FTSE 250 chemicals group Elementis has agreed to buy Brazilian coatings additives company Watercryl Quimica for a cash consideration of £24m. ‘This acquisition represents significant progress in extending our reach into the fast growing and increasingly sophisticated Latin America coatings market,’ said Chief Executive David Dutro.
City sources predict the FTSE 100 will open up 14 points from yesterday’s close of 5,491, as investors keep a close watch on the situation in Spain as the country auctions off its debt. The yield on Spanish 10-year bonds has climbed above the key marker of 7.0%, the level which indicates that a country’s expenditure is too great for it to afford in the long term.
Stocks to watch
The Whitbread bandwagon rolls on with the Premier Inn and Costa Coffee owner reporting forecast-busting like-for-like (LFL) sales growth in its first quarter. Total sales in the 13 weeks to May 31st were up 13.9% on the corresponding period of 2011, with LFL sales up 4.5%. Broker Jefferies had gone for LFL sales growth for the group of 3.0%. The Premier Inn division’s LFL sales were 4.3% higher than a year earlier, with LFL revenue per available room (revPAR) up 3.0%. LFL revPAR grew by 7.3% in London and 2.2% in the regions.
Property firm Hammerson is set to off-load most of its London office space as it pushes forward with plans to focus solely on retail space. The company has exchanged contracts on the majority of its office portfolio with Brookfield Office Properties for £518m. The six assets on the block represent 75% of Hammerson’s London offices and the sale price was 5.0% above proforma book value and represented a 5.2% initial yield, it said.
Chip designer Imagination Technologies saw notable increases in both royalty and licensing revenues last year, while profits came in ahead of expectations. Group revenue rose 30% to £127.5m in the year to April 30th from £98.0m the year before, with royalty revenue up 55% and licensing revenue 21% higher. Adjusted profit before tax jumped 53% to £36.8m from £24.0m, comfortably ahead of the £31.4m predicted by the market.
City sources predict the FTSE 100 will open up three points from yesterday’s close of 5,350, holding onto strong gains made in Thursday’s session, buoyed by good gains made in the US.
Support services and construction group Interserve has unveiled two new contract wins. The first is a £50m contract to provide facilities management services in the new Alder Hey Children’s Hospital to be created in Liverpool. The second is a £150m private finance initiative contract, where Interserve is part of a consortium chosen to design, build, finance and operate two new divisional headquarters, custody suites and a specialist operational training facility for the West Yorkshire police.
International Public Partnerships (IPP), the infrastructure investment company, is tapping the market for funds to pay down its debt and stock up its war-chest. The company is raising £180m through an open offer of shares to be issued at 116.25p each, with any unsold new shares being disposed of via a subscription offer and a placing.
Holiday Inn and Crowne Plaza owner InterContinental Hotels Group (IHG) has announced that its Chairman of over eight year is to retire at the end of 2012.
David Webster has been IHG’s Chairman since January 2004 and a member of the board since April 2003. When he leaves the group on December 31st, he will be replaced by Patrick Cescau, former Finance Director and Chief Executive Officer of IHG’s Foods Division.
City sources predict the FTSE 100 will open up 13 points from yesterday’s close of 5,719, following comments from Federal Reserve Chairman Ben Bernanke on Wednesday that US monetary policy was ‘more or less in the right place’, indicating further quantitative easing in the near-term is unlikely.
AstraZeneca said profits fell by more than a third in the first quarter after a number of patents ran and it was hit by tough market conditions. Revenues came in well below market expectations, falling 11% to $7.349bn, short of consensus forecasts for revenue of $7,874m. Loss of exclusivity on several key brands accounted for eight percentage points of the revenue decline, the firm said.
Integrated oil and gas titan Royal Dutch Shell’s upstream activities drove a bigger than expected increase in the Anglo-Dutch group’s first quarter earnings. Underlying earnings on a current cost of supplies (CCS) basis rose to $7,279m from $6,288m in the corresponding quarter of 2011. Charles Stanley analyst Tony Shepard had pencilled in a figure for earnings after tax of $6.5bn.
Adjusted profits at UK lender Barclays surged by over a fifth in the first quarter of 2012, well above expectations. Adjusted pre-tax jumped 22% from £2,004m registered in the first quarter of 2011 to £2,445m this year. Consensus estimates were for a reading of £2,006m. Adjusted results exclude the impact of £2,620m own credit reversal (2011: £351m), £300m in provisions for PPI redress (2011: nil) and any gains on acquisitions and disposals (2012: nil, 2011: £2m).
City sources predict the FTSE 100 will open up 11 points from Friday’s close of 5,768, buoyed by better-than-expected-data Chinese manufacturing data on Sunday.
House building and construction group Galliford Try has reached financial close on the Gateshead regeneration programme, for which it was named preferred bidder a year ago. Galliford Try’s consortium with Gateshead Council and housing association Home Group will now form a Local Asset Backed Vehicle to build 2,400 homes and associated community facilities, for both private sale and affordable housing.
Hull-based telecoms firm KCom is following in the footsteps of its bigger rival, BT, and bringing forward planned payments to its defined benefit pension schemes. The group, which said it is trading in line with trends reported back in November, is throwing off so much cash that it feels able to make an accelerated payment of £10m to its pension schemes. This comprises £6.9m of advance payment to fiscal 2013′s previously committed deficit contributions and an additional one-off contribution for fiscal 2012 of £3.1m.
Robert Noel has formally taken over as Group Chief Executive at Land Securities, the largest Real Estate Investment Trust in the UK. Noel was previously Managing Director of the company’s London Portfolio and is a recent recruit, having joined the firm from Great Portland Estates in 2010. He takes over from Francis Salway who was Chief Executive for seven years and left the business at the end of March.