The Morning Call - British American Tobacco reports rise in profit, revenue and growth

Highlights of the Day

Asian Markets

Trading was mixed in Asia-Pacific stock markets, as slight declines in Australia, China, Hong Kong and Japan were being offset by bigger gains in the region’s emerging.

U.S. Markets

U.S. stocks rallied late in the session following the announcement of a pact to ease trade tensions between the U.S. and the European Union.

Today's News

The US has agreed to work towards lowering trade barriers with the European Union, Donald Trump said after a meeting with European Commission chief Jean-Claude Juncker. The two agreed to launch a “new phase” in relations and work towards zero tariffs, the US president said.

British American Tobacco said its interim profit, revenue and cigarette volumes all grew strongly after its acquisition of Reynolds American and despite underlying volumes falling and currency headwinds, as it expects another “good” year of growth.

AstraZeneca reported a fall in interim revenue and profit, but held its annual guidance. Total revenue for the first half of the year fell 1% at actual exchange rates, down 5% at constant currencies, to $10.33bn. Product sales rose 2% at actual exchange rates to $10.02bn but externalisation revenue – which includes royalties and milestone payments – was down 53% to $318m.

Anglo American boosted its dividend after interim revenue and volumes rose significantly despite profit being held back by costs as its reduced its debt. For the six months ended June, pretax profit widened 0.9% to $2.44bn from $2.42bn the year prior. This was after revenue rose 13% to $13.70bn from $12.12bn the year before.

Royal Dutch Shell reported a sharp rise in second quarter earnings, as it launched a share buyback programme worth at least $25bn. Current cost of supplies earnings attributable to shareholders for the three months to June 30 rose sharply to $5.23bn from just $1.92bn last year, up to $10.93bn for the first half of 2018 overall from $5.30 a year prior.

Facebook shares tumbled by more than 20% after the social media network’s revenue and user growth fell short of investor expectations. The firm, which is facing backlash for its handling of fake news and privacy, said it had 2.23 billion monthly active users at the end of June.

Virgin Money announced underlying profit before tax increased by 10% to £141.6m in the first half of 2018, up from £128.6m in over the same period last year.

National Express said statutory half year pre-tax profit jumped 24% to £80.1m in the first half of 2018. The transport operator reported growth in free cash of over 3% to £85.2m and raised full year guidance to £170m.

Smith & Nephew delivered reported revenue growth of 4% in the three months to 30 June, including 2% currency tailwind, with underlying growth of 2%.

Sky reported a 5% increase in like-for-like revenue to £13.6bn and a 11% rise in established business earnings before interest, tax, depreciation and amorisation to £2.5bn in the year to 30 June 2018.

Sophos reported cash earnings before interest, tax, depreciation and amortisation fell from $27.3m in the first quarter of FY18 to $20.3m in the first quarter of FY19.

Compass Group reported a jump in third-quarter revenue on Thursday as it said it continues to trade “well” and backed its full-year expectations.

Diageo raised its dividend on the back of strong financial results. The company said sales rose 0.9 per cent to £12.2bn while operating profit got a 3.7 per cent boost to £3.7bn.Organic profits increased 7.6 per cent, as Diageo said cash flow remained strong.

Airbus said second-quarter profit more than doubled even as it trimmed the full-year outlook for operating earnings after taking control of a new airliner program from Canada’s Bombardier Inc.

Nestle said it expects an improvement in sales and profitability in the second half of 2018 as it seeks to assuage activist shareholder Third Point, with its infant formula business helping second-quarter results.

Daimler warned lower earnings at Mercedes-Benz passenger cars will extend into the third quarter because of higher trade barriers hitting its range of sport utility vehicles sold in China and struggles with a new emissions regime in the European Union.

Intu Properties said that it swung to a pretax loss for the first half of the year and said separately that long-serving Chief Executive David Fischel will leave the company once a successor has been appointed.

Schroders reported a rise in first-half pre-tax profit as assets under administration and net inflows edged higher and the asset manager lifted its interim dividend by 3%.

Oil Prices were higher, extending gains into a third day after Saudi Arabia suspended crude shipments through a strategic Red Sea shipping lane and as data showed U.S. inventories fell to a 3-1/2 year low.

Gold Prices held steady on as the dollar eased after U.S. President Donald Trump and European Commission President Jean-Claude Juncker agreed to work towards eliminating trade barriers

Companies Reporting this week

Day	Companies
Monday:	Ryanair * Alphabet
Tuesday:	PZ Cussons * Hammerson * Drax *
Wednesday:	ITV * Tullow Oil * Indivior * Croda International * Deutsche Bank * Coca-Cola * Facebook * General Motors * Boeing * Qualcomm * Vodafone * Brewin Dolphin
Thursday:	Sky * Diageo * Anglo American * Astrazeneca * British American Tobacco * Intu * Virgin Money * Shell * Airbus * Nestle * Daimler * Amazon *
Friday:	Reckitt Benckiser * BT Group * Pearson * Aon * ExxonMobil * Twitter *

Early Market Movements

Market	Index	Change	% Change
UK 100	7,657.3	-0.9	-0.0%
UK 250	20,763.1	+9.5	+0.1%
GER 30	12,766.3	+186.9	+1.5%
FRA 40	5,465.9	+39.5	+0.7%
US 30	25,414.10	+172.16	+0.7%
U.S. 500	2,846.07	+25.67	+0.9%
OIL (Crude)	74.29	+0.36	+0.5%
GOLD	1,229.88	-1.75	-0.1%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
British American Tobacco	4129.5	+156.5	+3.9%
Smith & Nephew	1371.5	+50.5	+3.8%
Vesuvius	644	+62	+10.7%
SSE	1258.5	-80	-6.0%
Hammerson	512.2	-16.8	-3.2%
Cobham	121.2	-10.4	-7.9%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Vodafone	Barclays	Overweight	175.1	240
Croda International	Bernstein	Outperform	4919	5400
Just Eat	Goldman Sachs	Conviction Buy List	870	1080
Anglo American	JPMorgan	Overweight	1700	2170

Forthcoming Economic Data

Time/Date	Previous	Forecast	Outcome
12.45pm: European Main Refinancing Rate	0.00%	0.00%	–
1.30pm: ECB Press Conference	–	–	–
1.30pm: U.S. Core Durable Goods Orders	0.0%	0.5%	–