“While the FTSE 100 nudges ahead 0.1% to 7,141 on Thursday, overall the UK stock market remains stuck in a rut since February’s stock market sell-off,” says AJ Bell Investment Director Russ Mould.
“The real estate sector is weak this morning as major player Savills points to market uncertainty and a ‘tempering’ in strong transaction volumes in 2018 alongside a robust set of 2017 results.
“Shares in the highly diversified global property group were flat but several of its peers such as Land Securities and Hammerson were dragged lower by the cautious outlook. Both of these names were also hit by broker downgrades.”
“Cineworld has reported better than expected results, helped by a lower tax charge and strong performance outside of the UK.
“These results represent the end of a chapter in Cineworld’s life as they only relate to operations in UK, Central Europe and Israel.
“The future now also includes the US as its controversial acquisition of Regal Entertainment completed last month.
“The Regal deal has resulted in elevated debt levels, much to the annoyance of some critics who liked the company’s previous strong financial position. However, Cineworld is confident it can reduce the debt to more manageable levels in a couple of years.
“You’ll see from today’s results that ticket sales account for a little less than two thirds of earnings. The rest comes from food and drink, film distribution and advertising. That means Cineworld has several levers to pull with regards to accelerating earnings growth.
“The latest results should reassure the market that the business is trading well, yet ultimately all eyes will be on the US performance and to see whether Cineworld has the skills to thrive in a new geography.”
“Consumer goods giant PZ Cussons crashed this morning, losing a quarter of its market value on a major profit warning. The company behind brands like Imperial Leather and St Tropez guided for pre-tax profit of £80m to £85m in the year to 31 May 2018 which compares unfavourably with the consensus forecast of £93m.
“The business is facing the double whammy of a weakening outlook in the UK and ongoing cost inflation in its Nigerian business.
“A company like PZ Cussons lives or dies by the strength of its brands. To get the market back on side management will need to demonstrate the recent troubles are temporary rather than a reflection of the fading appeal of its products.”
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