Kingfisher Keeps Cautious Outlook For UK, France

LONDON (Alliance News) - Kingfisher reiterated its cautious outlook for its second half on Thursday, as it reported a fall in like-for-like constant currency sales for its second quarter, with its B&Q business in particular seeing a fall.

The FTSE 100-listed DIY retailer said group sales rose to GBP3.1 billion in the three months to July 31, up 4% from a year earlier. The company, however, said total group sales fell 1.7% at constant currencies compared to a year before.

Kingfisher, which owns B&Q and Screwfix in the UK and Brico Depot and Castorama elsewhere in Europe, said like-for-like sales fell 1.9% at constant currencies.

"The second quarter has broadly followed a similar course to the first although B&Q's performance was impacted by seasonal swings across the periods. We have also continued to experience some disruption across the businesses, although on an improving trend," said Kingfisher.

"Availability of this year's unified and unique product is now approaching normal levels. We continue to adapt new processes as our transformation progresses, which will support the significant amount of change planned for the second half," noted the company.

Kingfisher said it remains "cautious" on its outlook for the second half of its financial year for the UK and France "as previously guided".

The US Federal Reserve remains on track to unwind its USD4.5 trillion balance sheet at an "upcoming" meeting, according to the minutes of the central bank's July monetary policy decision released late Wednesday.

Policy makers also expect to raise their benchmark lending rate by a quarter percentage point one more time this year despite ongoing concerns about stubbornly tame inflation. But some members want to be "patient" on raising interest rates as they lowered their forecast for underlying inflation. Many senior officials saw a greater likelihood that "inflation might remain below 2% for longer than they currently expected."

"It is clear that the weak inflation numbers are giving some FOMC members serious pause for thought, particularly since the Feds preferred measure of PCE is lower now at 1.5% than it was at the beginning of the year, and as such it is highly unlikely that we will see interest rates move again until December at the earliest," says CMC Markets chief market analyst Michael Hewson.

Here is what you need to know at the London market open:

 

MARKETS

• FTSE 100: to open 10.63 points lower at 7,422.40

• Hang Seng: down 0.2% at 27,356.47

• Nikkei 225: closed down 0.1% at 19,702.63

• DJIA: closed up 0.1% at 22,024.87

• S&P 500: closed up 0.1% at 2,468.11

• GBP: firm at USD1.2891 (USD1.2857)

• EUR: up at USD1.1773 (USD1.1696)

• GOLD: firm at USD1,287.93 per ounce (USD1,273.33)

• OIL (Brent): flat at USD50.37 a barrel (USD50.74)

(changes since previous London equities close)

 

ECONOMICS AND GENERAL

Thursday's Key Economic Events still to come (all times in BST):

• 0700 Germany wholesale price index

• 0930 UK retail sales

• 1000 EU consumer price index

• 1100 EU trade balance

• 1230 EU ECB monetary policy meeting accounts

• 1330 US initial jobless claims

• 1330 US continuing jobless claims

• 1415 US industrial production

• 1730 FOMC member Kaplan speech

UK Government officials remain "confident" they will make sufficient progress by October to ensure Brexit trade talks begin, amid reports Cabinet ministers believe they could be delayed. The Department for Exiting the European Union added Brexit Secretary David Davis also expects both the UK and EU to have a "dynamic and flexible approach" to each round of the negotiations. But Cabinet ministers involved in the Brexit talks are said to have privately indicated they think progress to the second phase - focused on a post-Brexit EU trade deal - may not happen until Christmas. Sky News cited sources as suggesting that next month's federal elections in Germany, including agreeing who forms the new government, could have an impact on the process. Philip Hammond earlier this month delivered a less-than-certain verdict that EU trade talks would begin this autumn. Speaking in Brazil, the Chancellor said there was "hope" from the UK that negotiations over future relations with the EU would begin in the autumn.

US President Donald Trump's failure to distance himself from neo-Nazis is a "huge mistake," German Foreign Minister Sigmar Gabriel has said. "Drawing an equivalence between the two sides instead of clearly distancing [himself] from the Nazi potential which was exhibited there was, of course, a huge mistake," he told dpa on Wednesday. Trump has repeatedly blamed violence last weekend at a white nationalist rally in Virginia - in which a woman died when a man ploughed a car into a group of counter-protesters - on "many sides." "It's also wrong. And it also shows how entangled some of Trump's supporters are with the radical right-wing scene in the US," Gabriel continued. "His chief ideologist [Steve] Bannon is closely linked to them. It should be a lesson to us in Europe about what can happen if you give them free rein," he said. Trump's equivocal condemnation of the violence at the Virginia rally has drawn fire from across the US political spectrum, including his own Republican party. Even the two living former Republican presidents felt compelled to issue a rare joint statement on Wednesday, with George HW Bush and George W Bush condemning "racial bigotry, anti-Semitism, and hatred in all forms."

Never again will there be war on the Korean Peninsula, South Korea's President Moon Jae In said Thursday, confirming that Washington had agreed not to take any military action against Pyongyang without discussing it with Seoul first. "I can say confidently there will be no war on the Korean Peninsula ever again," Moon said at a press conference to mark his first 100 days in office. The US and Trump had agreed to discuss all potential actions with South Korea "regardless of what kind of options it takes," Moon said. He also said he was considering sending a special envoy to North Korea - which last week threatened to fire missiles at the US territory of Guam - if Pyongyang stopped its provocative actions. "Inter-Korean dialogue should restart," Moon said. "However we should not be impatient about it. The objective is not dialogue itself. We need a productive one."

US Vice President Mike Pence called on Latin American allies to sever diplomatic and economic ties with North Korea on a visit to Chile on Wednesday. "The US places great importance on the ongoing diplomatic isolation of the Kim regime, and we strongly urge Chile today and we urge Brazil and Mexico and Peru to break all diplomatic and commercial ties to North Korea," Pence said at a press conference with Chilean President Michelle Bachelet in Santiago. Chile could take steps to reclassify its wine as a luxury good to prevent Pyongyang from purchasing it and selling it to acquire hard currency, he said. He said he hoped further isolation would advance "the hope for a peaceable solution and a nuclear-free Korean peninsula we believe becomes more attainable." Bachelet did not directly address Trump's calls to further isolate North Korea, but expressed Chile's concern over its nuclear programme.

Japan posted a merchandise trade surplus of 418.8 billion yen in July, the Ministry of Finance said on Thursday - down 17.0% on year.
The headline figure topped forecasts for a surplus of 327.1 billion yen but was down from 439.8 billion yen in June. Exports climbed 13.4% on year to 6.494 trillion yen, beating forecasts for 13.2% and up from 9.7% in the previous month. Exports to Asia climbed 14.8% on year to 3.495 trillion yen, while exports to China alone advanced an annual 17.6% to 1.211 trillion yen. Exports to the US gained 11.5% on year to 1.318 trillion yen and exports to the EU added an annual 8.3% to 721.068 billion yen. Imports picked up an annual 16.3% to 6.076 trillion yen versus expectations for 17.1% and up from 15.5 a month earlier. Imports from Asia jumped 18.1% on year to 3.026 trillion yen, while imports from China alone gained an annual 13.1% to 1.467 trillion yen.

Canada, Mexico and the US on Wednesday launched the first round of renegotiation on the North American Free Trade Agreement - or NAFTA - in Washing, DC. The countries' delegations are headed by Crystia Freeland, Canada's Foreign Minister, Ildefonso Guajardo Mexico's Economy and Robert Lighthizer, the US Trade Representative. In addition to the launch of the renegotiation round, which is estimated to last until August 20, also will start the meetings on another ten topics of the dialogue agenda involving the three countries. The Mexican government announced that it outlined a set of priorities for the NAFTA agenda, grouped into four thematic axes that are indispensable to strengthen Mexico's position in the global economy, to extend the free trade benefits and to reposition North America as one of the most competitive regions. Meanwhile, Freeland announced that during the first renegotiation round, Canada would seek to push for stronger labor standards, to maintain the dispute settlement mechanism, and to introduce new chapters on gender equality and indigenous rights. Finally, the White House had already announced in June a plan for renegotiation that included developing a mechanism to prevent countries from manipulating their currencies to gain trade benefits such as maintaining the rules that favor the purchase of American products. Also, the country plans to eliminate trade deficits with Mexico and Canada.

Nasdaq junior exchange for small companies based in the Nordic markets, Nasdaq First North, has been granted "growth market status" by HM Revenue & Customs, the Financial Times reported on Thursday. The legal approval means UK investors would be able to get tax exemptions for investing in the UK companies listed on Nasdaq First North. According to the Financial Times, the new status for Nasdaq First North is to entice British companies and investors away from London to the Nordic markets in challenge to The City after the Brexit vote.

 

BROKER RATING CHANGES

• HSBC RAISES TAYLOR WIMPEY PRICE TARGET TO 244 (211) PENCE - 'BUY'

• GOLDMAN CUTS SHIRE PRICE TARGET TO 6000 (6400) PENCE - 'CONVICTION BUY LIST'

• BERNSTEIN RAISES JOHNSON MATTHEY TO 'OUTPERFORM'(MARKET-P.);TARGET 3600(3400)P

• BARCLAYS CUTS HALMA TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 1160 (1150) PENCE

• HSBC CUTS INTU PROPERTIES PRICE TARGET TO 265 (293) PENCE - 'HOLD'

• HSBC RAISES DERWENT LONDON PRICE TARGET TO 3053 (2817) PENCE - 'HOLD'

• BARCLAYS RAISES QINETIQ TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 285 PENCE

 

COMPANIES - FTSE 250

Hikma Pharmaceuticals lowered its full-year guidance for the generics business and said it is in ongoing talks with the US regulator regarding its generic Advair Diskus product, as it reported "stable" revenue and profitability for the first half of 2017. Hikma said it now expects full-year revenue to be around USD2.00 billion in constant currency after lowering its guidance for the generics business. Revenue for the generics business is expected to be around USD620.0 million and core generics operating profit to be around USD30.0 million.

IP Group said Beijing Galaxy World has not received the approvals necessary from Chinese authorities to make an investment in the company, and will therefore not be going ahead with its conditional subscription for 16.5 million shares, equal to GBP23.1 million, that it had agreed in June. IP Group highlighted that, since that conditional agreement, a tightening by Chinese authorities for certain foreign exchange controls related to outbound investment has been "widely reported".

Kaz Minerals reported a more than doubling in pretax profit and revenue for the first half of 2017, helped by higher volumes and commodity prices as it delivered on its two growth projects in Kazakhstan. It delivered a more than doubled copper output to 118,000 tonnes for the half, and has narrowed its full year copper production target to 235,000 to 260,000 tonnes.

 

COMPANIES - INTERNATIONAL

Greg Abel, Berkshire Hathaway Energy chairman and chief executive officer, and Warren Buffett, chairman and CEO of Berkshire Hathaway, said that the company will stand firm on its USD9 billion offer to acquire 80% of Oncor Electric Delivery Co and will not be increasing its offer. Berkshire Hathaway Energy's bid for Oncor includes 47 regulatory commitments that have the support of 12 key stakeholder groups across Texas. "The strong coalition of stakeholders consistently express the appropriate concerns and necessary protections for Oncor and its customers," said Abel. "We stand ready to deliver on and exceed the regulatory commitments."

Cisco Systems revealed a profit for fourth quarter that fell compared to the same period last year. The company said its earnings came in at USD3.1 billion, or USD0.61 per share. This was lower than USD3.2 billion, or USD0.63 per share, in last year's fourth quarter. Analysts had expected the company to earn USD0.61 per share, according figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items. The company said revenue for the quarter fell 4.0% to USD12.1 billion. This was down from USD12.6 billion last year.

General Motors announced on Wednesday that it has been approved to voluntarily delist from the Toronto Stock Exchange. The auto giant reassured its shareholders that the TSX delisting will not impact its current listing on the New York Stock Exchange. The delisting will take place after the close of trading on November 30. In making the decision, the company explained that the NYSE and alternative platforms make up a "vast majority" of its daily trading volume. Meanwhile, trading volume for the stock on the TSX is relatively low. GM said it feels it will continue to have sufficient liquidity with its NYSE listing, and that the costs related to the TSX listing are "no longer justified."

 

Thursday's Shareholder Meetings

• Threadneedle UK Select Trust