UK share prices watch: BAT dips after update
British American Tobacco (LON:BATS) is expectedly among today’s UK share prices to watch, as its trading update disappointed investors. Broader market sentiment has also deteriorated amid the latest trade tensions between the US and China.
BAT heads south on Wednesday
British American Tobacco has slumped to the bottom of the blue-chip leaderboard after the company issued a trading update ahead of closed period starting on July 2, cautioning that full-year global industry volume expected to be down around 3.5 percent. The company, however, noted that it was on track for constant currency revenue growth in the mid-upper half of its long-term guidance range of between three percent and five percent.
Reuters quoted Liberum analysts as commenting that the company’s commentary on revenue from its ‘New Category’ products, which includes vaping and e-cigarette offerings, seemed to “suggest some softness”. BAT said that its first-half New Category constant currency revenue growth was approaching its FY guidance range, “reflecting the unwinding of high year end 2018 trade inventories following the restocking of Vibe and low first quarter trade demand due to regulatory uncertainty in the US”. Shares in the tobacco group are trading nearly five percent lower in early afternoon trade, pressuring the blue-chip FTSE 100 index which currently stands about 0.7 percent in the red.
Reckitt Benckiser’s (LON:RB) shareholders meanwhile are digesting a change at the top as the maker of Nurofen and Durex announced that it had appointed PepsiCo’s Global Chief Commercial Officer Laxman Narasimhan to succeed Rakesh Kapoor as CEO. Reckitt’s shares are up by more than one percent, having traded in negative territory in the morning.
An upcoming CEO departure has pressured mid-cap group Saga (LON:SAGA), as the company announced that its chief executive Lance Batchelor would retire at the end of the current financial year in January 2020, after six years with the business. The cruises-to-insurance group for the over-50s said that it had kicked off the process to recruit a successor. Shares in Saga are about 5.60 percent worse off intraday, compared with about a 0.6-percent fall in the mid-cap FTSE 250 benchmark.
In smaller London-listed companies, Boohoo (LON:BOO) is down even as it reported a 39-percent rise in revenue for the three months to May 31. The company said that it had seen growth across all geographies with UK up 27 percent and international up 56 percent. Boohoo, however, also unveiled a small fall in its gross margin for the quarter.
Broader market sentiment meanwhile has been subdued with the trade tensions between Washington and Beijing returning to haunt investors.
“After a pleasant absence of a few days, the US-China trade war is back on the agenda,” said Chris Beauchamp, chief market analyst at IG, as quoted by Proactive Investors, adding that the spat was playing out in similar fashion to many other negotiations in US President Donald Trump’s life, with rejection of an initial deal followed up by tough language, “but in the end a deal (probably similar to what was on the table in the first place) is finally signed”.
“But the time between initial deal and final agreement can be a long one, and markets have already learnt the folly of expecting a resolution too soon,” he pointed out.
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UK share prices to watch tomorrow
Tesco will be in the list of tomorrow’s UK share prices to watch, with investors awaiting the company’s first-quarter trading statement. Proactive Investors reports that analysts at UBS expect the supermarket to report a 0.7-percent increase in UK like-for-like sales, with 4.5-percent growth for wholesaler Booker. The analysts, however, expect the company’s like-for-like sales in central Europe to have fallen 1.5 percent and like-for-like sales in Asia to have dropped by 0.5 percent.
Packaging maker DS Smith (LON:SMDS) is scheduled to post its full-year results tomorrow, after recently saying in a pre-closing trading update that its margins are expected to have progressed further in the second half of the financial year ending April 30, and that operating cashflow generation is expected to be stronger than in the comparable period last year.
In smaller London-listed companies, Majestic Wine (LON:WINE) is also set to update investors on its full-year performance and the Financial Times reports that the retailer is expected to report lower annual profit as it faces competition from online rivals and discount chains.
UK shares set to come under pressure tomorrow include 3i Group (LON:III), NMC Health (LON:NMC), Persimmon (LON:PSN), Severn Trent (LON:SVT) and WPP (LON:WPP), which are going ex-dividend.