Thursday, July 26: The FTSE 100 looked set to end the day flat(+0.06%) as positive earnings results from British American Tabacco, Smith & Nephew and RELX were balanced by disappointments from Schroders, Royal Dutch Shell and Compass; indices on the continent surged higher as a result of a breakthrough with respect to U.S. – E.U trade talks, lifting shares in automakers and bringing much needed relief to the DAX 30(+1.83%) and the CAC 40(+1.00%).
Vesuvius(+9.11%) led the FTSE 250 higher at the open as the flow metal engineer announced improving results with respect to virtually all business metrics. Revenue came in 12.1% higher to £897.0m, trading profit was 20.3% higher to £99.6m, as operating profit and PBT were 32.9% and 44.4% higher to £90.0m and £87.8m respectively. The business outperformed underlying markets due to growth in demand for value-creating solutions, supported by increasing investment in R&D. Markets. As a result, management estimate that full year trading profit will be marginally above the current consensus market expectation of c.£189m and remain confident of delivering further organic improvement in profit margins as restructuring programmes deliver results.
Cobham(-9.88%) dwelt lower as it informed the market of a dispute with U.S. aircraft maker Boeing over the latter’s KC-46 aircraft refuelling tanker programme. Boeing is making damage assertions against Cobham and is withholding payment for KC-46 parts, and as a result forcing the aerospace engineer to book a £40m charge in H1 results due August 3 as the programme has taken longer than expected, impacting cost assumptions. Limited impact on H1 cash generation is expected, though the cash flow consequences are expected to be truly felt in second half results until the situation is remedied.
In other Europe-related news, the ECB reaffirmed that it will end its €2.6tn euro stimulus package this year as it held interest rates, despite unpredictable trade conflicts weighing on growth prospects.
Across Europe, indices were mixed at the close with the FTSE 100 +0.06%, the DAX 30 +1.83% and the CAC 40 +1.00%.