LONDON MARKET PRE-OPEN: Phoenix in record half-year cash generation

Mon, 15th Aug 2022 07:47

(Alliance News) - Stock prices in London are seen opening higher on Monday, though equities in China were showing signs of late weakness after poorer than expected retail sales data from the world's second-largest economy.

IG futures indicate the FTSE 100 index is to open 32.7 points higher, 0.4%, at 7,533.59. The blue chip index closed up 34.98 points, or 0.5%, at 7,500.89 on Friday. It added 0.8% last week.

In early UK corporate news, Phoenix Group offered a bullish cash generation outlook for 2022, after a "strong" first half, coal miner Thungela posted a substantial revenue hike, while ingredients supplier Treatt issued a profit warning.

Phoenix Group reported a "record" first half for cash generation, lending it confidence for the rest of the year.

"Phoenix delivered against all of its key objectives in H1, with a record set of financial results and clear strategic progress made. We have delivered further organic growth and also announced the cash funded acquisition of Sun Life of Canada UK. This will support us in delivering a dividend that is 'sustainable and grows over time'," the London-based insurance services provider said.

Phoenix's total revenue climbed 28% to GBP2.69 billion from GBP2.10 billion a year earlier.

However, its pretax loss widened to GBP1.65 billion from GBP454 million. Its bottom line was hit by a GBP31.61 billion net investment loss, swinging from income of GBP8.11 billion a year earlier.

Phoenix hailed its "record" first half cash generation of GBP950 million, up from GBP872 million a year earlier.

It is now "confident of delivering at the top-end of our GBP1.3 billion to GBP1.4 billion target range for the year".

The FTSE 100 listing lifted its interim payout to 24.8 pence per share from 24.1p.

AstraZeneca said its Enhertu drug met its primary endpoint in a breast cancer trial.

Enhertu showed a "meaningful improvement" in progression-free survival, the amount of time a patient lives without the disease getting worse.

The trial involved sufferers of human epidermal growth factor receptor 2-positive unresectable and/or metastatic breast cancer. Participants had been previously treated with trastuzumab emtansine, an existing cancer therapy.

Unresectable is when the disease cannot be removed through surgery, and metastatic is when it spreads to distant parts of the body.

Coal miner Thungela hailed a record first half performance.

Revenue in the six months to June 30 more than doubled to ZAR26.18 billion, about GBP1.33 billion, from ZAR10.05 billion.

It declared a ZAR60 interim dividend per share, having not declared one a year earlier.

"Demand for affordable energy sources such as thermal coal escalated amid the energy security crisis which was exacerbated by the escalation of the Russia-Ukraine conflict. Coupled with supply constraints in major coal producing regions, this resulted in the price of thermal coal increasing to unprecedented levels," Thungela said.

"Notwithstanding the impact of the rail performance on export equity sales volumes, we achieved record adjusted operating free cash flow of ZAR8.9 billion."

Thungela was hived off from parent Anglo American last year in June.

Elsewhere in London, Digital 9 Infrastructure set out plans to move to the Premium Segment of the Main Market, qualifying it for FTSE index inclusion.

The digital infrastructure investor said: "As the company grows, the board believes that DGI9 will benefit over time from the migration with an increase of its profile as an investment company, diversification of the company's share register with access to blue chip UK and international investors as well as from potential FTSE index inclusion. The migration is subject to the company meeting the relevant eligibility criteria under the listing rules and approval by the FCA. The company will provide an update in due course."

Digital 9 currently has a market capitalisation of GBP972.5 million, ahead of roughly 65 FTSE 250 constituents, including the likes of Currys, Moonpig, JD Wetherspoon, Aston Martin and Greencore.

Next Fifteen Communications said its acquisition of advertising agency M&C Saatchi has received two key regulatory approvals.

It has received approvals under the UK National Security & Investment Act 2021 and the Australian foreign investment regulatory framework.

Backing from the Committee on Foreign Investment in the US remains. Next Fifteen expects this to be received early in the fourth quarter.

Natural extracts and ingredients supplier Treatt warned on annual profit, amid accelerating inflation, weaker margins due to foreign exchange volatility and Covid-19-hit subsidiary in China.

Treatt now expects pretax profit before exceptional items to land between GBP15.0 million and GBP15.3 million for the full-year.

In its results for the half-year ended March 31, it said it was on track to deliver profit in line with consensus of GBP21.7 million.

In Tokyo on Monday, the Nikkei 225 ended 1.1% higher, while the S&P/ASX 200 in Sydney rose 0.5%. In China, the Shanghai Composite was down 0.1% in late trade, though the Hang Seng in Hong Kong was down 0.5%.

Factory output and retail sales in China edged up in July but were weaker than analysts' expectations, official data showed Monday, as a Covid-19 resurgence and property market jitters cast a pall over hopes for a stronger economic recovery.

The world's second-biggest economy saw a bounce in business activity as some coronavirus restrictions eased in June, but the boost is fading and Beijing remains welded to a zero-Covid policy of snap lockdowns and long quarantines, which has battered sentiment.

But for July, China's industrial production rose 3.8% on-year, down from a 3.9% jump in June, the National Bureau of Statistics said Monday.

Retail sales grew at a slower-than-expected 2.7% from a year ago, down from 3.1% in June, while the urban unemployment rate fell to 5.4%, the NBS said.

In Japan, the economy expanded in the three months to June, official data showed Monday, after the government lifted Covid-19 curbs on businesses.

The world's third-largest economy grew 0.5% quarter-on-quarter due to stronger consumption and capital investment.

While the country never imposed strict stay-at-home orders during the pandemic, the government in March lifted virus restrictions primarily targeting business opening hours.

The pound was quoted at USD1.2104 early Monday in London, down from USD1.2121 late Friday. The euro stood at USD1.0239, down from USD1.0248. Against the yen, the dollar was trading at JPY133.29, down from JPY133.63.

Brent oil was quoted at USD97.19 a barrel early Monday, down from USD97.91 at the London equities close on Friday. Gold was quoted at USD1,791.62 an ounce, down from USD1,797.13.

By Eric Cunha; ericcunha@alliancenews.com