BP Sinks FTSE 100 With Deepwater Horizon Charge

Tuesday, January 16: the FTSE 100(-0.17%) was dragged lower by mining stocks and BP, led by Fresnillo(-3.34%) as BP(-2.50%) announced a $1.7bn charge in Q4 earnings pertaining to the Deepwater Horizon rig blow-out.

JD Sports was lifted 6.31% by an “encouraging” trading update, where pretax profit is expected to overshoot previous guidance after a strong second half.  Pretax profit is now expected to be around £300m, compared to prior expectations of £270-295m and last year’s figure of £238.4m(+81.0%). The sports retailer saw LFL store sales 3% higher, unchanged from the first half whilst the online segment continued to grow, along with overseas space expansion.

Dunelm(-4.46%) found itself at the mercy of investors, despite posting numbers which compared well both historically and with the wider market in its second quarter trading update. Total revenue for the 13 weeks to December 30, rose by 14% to £297.5m, whilst on a LFL basis revenue chimed in 3.4% higher to £255.0m. Online revenues were also strong at +31% over the prior period. However gross margin did come in 180bps lower than the previous year, an effect attributed to: a continued mix of lower margin Worldstores sales(-80bps), and a focus on newness in ranges(-100bps). Excluding these factors, core margins were in line with the prior year with improvement expected going into the second half noted the retailer.

Annual inflation was noted to ease in the UK for December, but exceeded the Bank of England’s target for the 11th consecutive month with customers vulnerable due to a steep fall in sterling in 2016. Consumer prices were noted as rising 3% on the year in December, relative to a 3.1% read for November. Meanwhile at the factory gate, prices rose 3.3% on the year to December, a faster rate than the prior month. However, companies’ raw materials costs were only 4.9% higher on the year, marking the slowest pace of growth since July 2016. The ONS noted inflation was fuelled by increases in prices of food, alcohol, tobacco and furniture over the festive period.

Across Europe, indices were mixed at the close with the FTSE 100 -0.17%, the DAX 30 +0.35% and the CAC 40 +0.08%.


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