Associated British Foods (LON:ABF) has been one of today’s notable UK share prices, with investors digesting the Primark owner’s trading update. The broader London market meanwhile has been barely moved, with little excitement likely given the Independence Day holiday on the other side of the Atlantic.
AB Foods rises, Persimmon dips
AB Foods is marginally outperforming the market after reporting a rise in revenue for the 40 weeks ended June 22. The Primark owner further said that it continues to expect that the full year profit decline in Sugar has been reflected in the first half, and that the full-year outlook for the group remained unchanged, with adjusted earnings per share expected to be in line with last year.
“Primark continues to deliver a very impressive performance in a tough retail environment without the aid of the online businesses that’s keeping most retailers’ necks above water. Offering shoppers value for money when rivals are struggling has seen Primark seize market share in the UK, and the proposition is proving attractive overseas too, with a reasonable performance in Europe and promising noises emerging from the fledgling US business,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown, as quoted by Proactive Investors, adding that the group’s retail performance was “unfortunately being soured by the struggling Sugar operations, where the end of quotas has seen sugar prices plummet”.
Hyett, however, also pointed out that conditions seemed to be staiblising. AB Foods’ shares have gained about 0.7 percent in early afternoon trading in London, as compared with about a 0.07-percent gain in the benchmark FTSE 100 index.
In other notable blue-chip UK share prices, Persimmon has clawed back some losses posted earlier in the session, with investors digesting the company’s trading update which revealed a drop in total revenues to £1.75 billion in the half-year to June 30, from £1.84 billion a year ago.
“The pressures of the step up in customer service continue to weigh on revenues […] the question remains of how long until customer service initiatives impact profitability,” Jefferies analysts said, as quoted by Reuters. Proactive Investors meanwhile quoted Peel Hunt as commenting that Persimmon’s first-half update pointed “to a slightly softer volume picture as the group has worked to improve quality and customer service by delaying site releases”.
“The shares have struggled year to date, especially against their bigger peers, while it’s also worth flagging that the dividend yield is now 12 percent,” the broker pointed out. Shares in Persimmon are underperforming the market with about a 0.3-percent fall, while FTSE 100 peer Taylor Wimpey (LON:TW) has given up about 0.7 percent. Barratt Developments (LON:BDEV), however, is trading in positive territory, having gained about 0.3 percent in early afternoon trade.
Vodafone (LON:VOD) meanwhile is outperforming the market, reacting positively to analyst comments. Proactive Investors quoted Barclays as saying that it still saw “a clear value opportunity, and potentially near-term catalysts to help unlock the discount to our 200p price target, with hopefully no operational deterioration in 1Q”. The analysts elaborated that those near-term catalysts include the blue-chip telco’s deal with Liberty Global which Barclays expects to complete this month. The analysts further updated their forecasts for the deal, now expecting it to add €1.7 billion to this year’s underlying earnings (EBITDA) and €200 million to free cash flow. Vodafone’s shares are changing hands about 1.6 percent higher.
UK share prices to watch tomorrow
UK share prices to watch tomorrow will be in short supply, with only specialist building materials supplier SIG (LON:SIG) scheduled to update investors on its performance. The company, which is set to post a half-year trading update, said in a statement in May that it had seen continuing like-for-like sales declines in the first part of the year, with group like-for-like revenues 2.6 percent lower. Group revenues from continuing operations were 3.4 percent lower in the period, including an adverse 1.3-percent currency movement offset by a 0.5-percent improvement from more working days.
SIG said at the time that trading conditions remained challenging and the outlook in many of its end markets remained uncertain, notably in the UK. The group, however, reassured investors that it remained confident that the underlying profitability for the full year will be delivered in line with management expectations, providing there is no further deterioration in market conditions.
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