Coca Cola HBC Rises Amid Risk Aversion, Ex-Divs

LONDON (Alliance News) - Stocks in London were lower on Thursday at midday, as risk aversion was still the reigning attitude among investors amid tensions between the US and North Korea, while the FTSE 100 was being further dragged by blue-chips going ex-dividend.

Royal Dutch Shell - the largest stock in the large-cap index by market capitalisation - BP, the fourth biggest, and Diageo, the sixth, were all firmly in the red after all went ex-div.

However, Coca Cola HBC was the stand out performer, up 7.9%, after the Hellenic bottler posted "excellent" interim results, having reported an increase in its profit and revenue in the first half of 2017, driven by volume growth and margin improvements.

The soft drinks bottling firm reported an operating profit of EUR266.4 million for the six months to June 30, up 21% from EUR220.6 million for the same period in 2016. Net profit for the half rose to EUR191.6 million from EUR140.0 million the year before.

Net sales revenue for the period rose 5.6% year-on-year to EUR3.21 billion from EUR3.04 billion, or 5.7% in constant currencies. Volume rose 1.4% to 1.02 billion unit cases from 1.01 billion unit cases.

Coca-Cola HBC said its comparable operating margin increased by 1.5 percentage point to 9.1%, benefiting from operating leverage despite "adverse input costs and foreign exchange movements".

The FTSE 100 index of large caps was down 1.2%, or 92.20 points, at 7,405.86. The mid-cap FTSE 250 index was down 0.4% at 19,801.60. The AIM All-Share index was down 0.1% at 1,002.95.

The BATS UK 100 index was down 1.2% at 12,583.91, the BATS 250 was down 0.5% at 17,797.77. The BATS Small Companies was marginally lower at 12,239.27.

In mainland Europe, the CAC 40 index in Paris and DAX 30 in Frankfurt at midday were down 0.3% and 0.7%, respectively.

Relations between Washington and Pyongyang have been stretched in recent days over North Korea's nuclear weapons programme and missile tests, after the US intelligence community determined that North Korea had successfully produced a miniaturised warhead that can fit inside its missiles, and on new UN sanctions against North Korea.

North Korea warned on Wednesday that it is considering a pre-emptive strike against the US Pacific territory of Guam, following comments from US President Donald Trump that further threats from North Korea would be met with "fire and fury". North Korea followed that up on Thursday by saying that it planned to fire rockets near Guam soon as a "crucial warning", adding that "only absolute force can work" on Trump.

US Secretary of State Rex Tillerson defended Trump's remarks, which he argued send a clear message to North Korea that the US will defend itself and its allies. However, the secretary of state said that "Americans should sleep well at night, have no concerns about this particular rhetoric of the last few days".

"What the President is doing is sending a strong message to North Korea in language that Kim Jong-un can understand, because he doesn't seem to understand diplomatic language," Tillerson said.

IG market analyst Joshua Mahony commented: "The potential for a conflict between North Korea and the US seems to be an ongoing threat to risk appetite which will likely flare up every once in a while".

However, the analyst said that "as long as the likes of Trump and Kim Jong-un continue their recent commentary, we are likely to see the likes of gold, Japanese yen and treasuries in favour".

Gold - often seen as a safe haven - kept rising overnight, quoted at USD1,279.38 an ounce at midday - near its highest level in two months - above the USD1,273.94 an ounce at the close on Wednesday.

Stocks in New York were pointed lower on Thursday, with the Dow Jones Industrial Average seen 0.2% lower. The DJIA broke on Tuesday a nine-day rally that took it above the 22,000 mark for the first time in its history.

The S&P 500 was pointed down 0.4%, while the Nasdaq Composite was seen down 0.5%.

In Asia, the Japanese Nikkei 225 index closed down 0.1% on Thursday. In China, the Shanghai Composite ended down 0.4%, while the Hang Seng index in Hong Kong fell 1.1%.

Hong-Kong-listed HSBC Holdings shares took a hit, ending down 1.5%, as the Hang Seng was also victim of risk aversion among investor, with HSBC's London-listed shares - the second biggest stock in the FTSE 100 - down 1.7%.

Elsewhere in London, Glencore was down 1.7%. The miner said better commodity prices helped push up revenue in the first half of 2017 to USD100.28 billion from USD69.42 billion the year before, with the reduction in costs across the group also helping to significantly improve margins.

That resulted in Glencore turning to a pretax profit of USD2.86 billion in the first half from a USD698.0 million loss the year before. Net profit attributable to shareholders was USD2.45 billion, turning from a USD369.0 million loss.

The Marketing division is now expected to report annual adjusted Ebit of between USD2.40 billion to USD2.70 billion, after the range was lifted by USD100.0 million on Thursday. Meanwhile, net debt was reduced by USD1.6 billion to USD13.9 billion at the end of June over a six month period.

In the FTSE 250, Greggs was the biggest mid-cap gainer, up 4.4%, after Berenberg upgraded the bakery and food-to-go retailer to Buy from Hold.

Cineworld was up 2.8%, after the cinema operator said its first half profit jumped 58%, boosted by blockbusters as its film slate began the year "particularly well".

Amec Foster Wheeler was another gainer, up 2.7%. The oilfield services company managed to return to profit in the first half of 2017 despite experiencing a drastic drop in revenue, as it announced its first contract in the Australian petrochemicals space.

Specialist bank Aldermore Group was up 2.6% after saying its interim profit surged by almost a third, adding that it will consider beginning paying dividends at the end of 2017.

In the economic calendar on Thursday, the UK NIESR GDP estimate is at 1300 BST. In the US, the producer price index is at 1330 BST, together with initial jobless claims.

Already out, UK industrial production grew more than expected in June largely due to higher oil and gas output, data from the Office for National Statistics revealed.

Industrial output expanded 0.5% on a monthly basis, after staying flat in May. Output was forecast to grow 0.1%. The monthly growth was mainly driven by a 4.1% rise in mining and quarrying as a result of higher oil and gas production.

Manufacturing remained flat in June, in line with expectations, after falling 0.1% a month ago. On a yearly basis, industrial production grew 0.3%, reversing a 0.2% fall in May. At the same time, growth in manufacturing doubled to 0.6% from 0.3%.

The pound recovered some ground lost earlier in the day, quoted at USD1.2999 at midday, barely changed from USD1.3002 at the London equities close Wednesday.