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FTSE holds steady after record rises but Wolseley falls back FTSE holds steady after record rises but Wolseley falls back
(35 minutes later)
Leading shares are holding steady after their recent record breaking run, with disappointing Chinese data being offset by better than expected eurozone figures.Leading shares are holding steady after their recent record breaking run, with disappointing Chinese data being offset by better than expected eurozone figures.
But building materials group Wolseley is under pressure, down 124p or nearly 3% at £40.86 after recent strong rises. The company reported an 8.9% rise in half year revenue to £6.4bn with trading profits up 11.1% to £390m. But it took a £245m impairment charge on its Nordic business, and although there was a strong performance in the US, its European markets continued to be weak.But building materials group Wolseley is under pressure, down 124p or nearly 3% at £40.86 after recent strong rises. The company reported an 8.9% rise in half year revenue to £6.4bn with trading profits up 11.1% to £390m. But it took a £245m impairment charge on its Nordic business, and although there was a strong performance in the US, its European markets continued to be weak.
Overall its said it expected a slowdown in revenue growth in the second half, up about 6%, and forecast full year trading profits would be in line with expectations. Analysts at Liberum said:Overall its said it expected a slowdown in revenue growth in the second half, up about 6%, and forecast full year trading profits would be in line with expectations. Analysts at Liberum said:
The first half looks a bit light compared to consensus and our estimate. Consensus was looking for £400m clean operating profit, we have £403m, and it made £391m. But the statement says that it is still on track to hit full year consensus, meaning that the year is a bit more second half weighted than expected.The first half looks a bit light compared to consensus and our estimate. Consensus was looking for £400m clean operating profit, we have £403m, and it made £391m. But the statement says that it is still on track to hit full year consensus, meaning that the year is a bit more second half weighted than expected.
As anticipated US is strong (second quarter like for likes up 11%) but Europe much slower, although picking up (UK up 3%, Nordics up 5% and other Europe up 5% in the second quarter), with profits down in spite of like for like turning positive. Dividend per share up 10% to 30.25p as expected, with no special. Shares on 16 time July 2016 estimated consensus. Shares could be weak as I think market may have been looking for upgrade.As anticipated US is strong (second quarter like for likes up 11%) but Europe much slower, although picking up (UK up 3%, Nordics up 5% and other Europe up 5% in the second quarter), with profits down in spite of like for like turning positive. Dividend per share up 10% to 30.25p as expected, with no special. Shares on 16 time July 2016 estimated consensus. Shares could be weak as I think market may have been looking for upgrade.
Clyde Lewis at Peel Hunt suggested it might be time for a restructuring:Clyde Lewis at Peel Hunt suggested it might be time for a restructuring:
The shares have bounced nicely so far in 2015 with a 14% rally, and now stand on over 18 times to July 2015 estimates and around 16 times for 2016. The long-run average is around 13 times.The shares have bounced nicely so far in 2015 with a 14% rally, and now stand on over 18 times to July 2015 estimates and around 16 times for 2016. The long-run average is around 13 times.
While we continue to rate the US business highly, we struggle to get excited about the UK and European operations. Maybe the future for the group lies in two separate companies – one based in North America and one in Europe?While we continue to rate the US business highly, we struggle to get excited about the UK and European operations. Maybe the future for the group lies in two separate companies – one based in North America and one in Europe?
Elsewhere Centrica is down 4.5p at 254.3p as Deutsche Bank moved to sell from hold and cut its target price to 225p from 280p. The same bank also cut its target price on National Grid, down 0.4p at 891.4p, from 880p to 860p.Elsewhere Centrica is down 4.5p at 254.3p as Deutsche Bank moved to sell from hold and cut its target price to 225p from 280p. The same bank also cut its target price on National Grid, down 0.4p at 891.4p, from 880p to 860p.
Deutsche warned the uncertainty surrounding the UK general election could hit Centrica:
Do you want to be holding Centrica shares on May 8th? The UK’s energy utilities are facing the riskiest general election since 1992 and Centrica looks most exposed. We believe Centrica’s shares could be worth at least 20% less under a Labour-led government than a Conservative one. The valuation gap could be much bigger given that Labour leader Ed Miliband’s mooted 10% energy retail price cut would wipe out Centrica’s group earnings. The outcome looks too close to call yet the shares appear to be pricing in a Conservative win. We downgrade from hold to sell and cut out target price to 225p, based on a 50:50 weighting of Labour and Conservative victories.
BG has dipped 8.2p to 882.4p amid reports that a small fire overnight on a floating production and storage vessel had halted production at the Knarr oil field in the north sea.BG has dipped 8.2p to 882.4p amid reports that a small fire overnight on a floating production and storage vessel had halted production at the Knarr oil field in the north sea.
But International Airlines Group has added 10.5p to 602.5p after Morgan Stanley issued a positive update.But International Airlines Group has added 10.5p to 602.5p after Morgan Stanley issued a positive update.
The FTSE 100 is currently 1.57 points higher at 7039.24, with commodity companies mixed after China’s manufacturing purchasing managers index dipped below 50.The FTSE 100 is currently 1.57 points higher at 7039.24, with commodity companies mixed after China’s manufacturing purchasing managers index dipped below 50.
But a better than expected eurozone composite PMI provided some support, with a reading of 54.1 this month, up from 53.6 in February.But a better than expected eurozone composite PMI provided some support, with a reading of 54.1 this month, up from 53.6 in February.
And UK inflation came in at zero, compared to expectations of a 0.1% rise.And UK inflation came in at zero, compared to expectations of a 0.1% rise.