The Morning Call - Debenhams cuts dividend after 52% profit drop

Highlights of the Day

Asian Markets

Markets in Asia tracked modestly higher on Thursday amid improved investor sentiment after U.S. stocks notched gains in the last session.

U.S. Markets

After moving notably higher over the two previous sessions, stocks turned in a lackluster performance during trading. The major averages fluctuated as the day progressed before ending the session mixed.

Today's News

AstraZeneca announced the US Food & Drug Administration has approved its Tagrisso drug, or osimertinib, for the 1st-line treatment of patients with metastatic non-small cell lung cancer whose tumours have epidermal growth factor receptor mutations. The UK pharmaceutical company said the approval is based on results from its Phase III FLAURA trial.

BHP Billiton reduced its full-year production forecasts for iron ore and narrowed copper production guidance, as the miner continues to progress on its exit from its US onshore petroleum business. For the nine months ended March, iron ore production rose 2% to 175 million tonnes. Copper production increased 37% to 1.29 million tonnes. Petroleum production fell 8% to 143 million barrel of oil equivalent. In coal, mettalurgical coal production fell 2% to 31 million tonnes and energy coal production to 20 million tonnes.

GlaxoSmithKline and Innoviva said that the landmark IMPACT study published in the New England Journal of Medicine or NEJM showed significant benefits of Trelegy Ellipta for patients with chronic obstructive pulmonary disease or COPD. The study showed that Trelegy Ellipta was superior to Relvar/Breo Ellipta and Anoro Ellipta across multiple including lung function and health-related quality of life, the firm said.

Sky grew its like-for-like revenue grew by 5%, or £441 million, to £10,144m in the nine months to 31 March, with good growth in all territories and all categories. Direct-to-consumer revenue grew by £297m to £8,851m as the result of customer and product growth, a higher number of pay-as-you-go buys, a home communications price rise in the UK in March 2017 and a TV price rise in Italy.

Unilever has reported underlying sales growth, excluding spreads, of 3.7% in the first quarter. This comprised volume growth of 3.6% and price growth of 0.1%. There was an improvement in volumes particularly in emerging markets, where underlying sales growth was 5.1% with volume up 4.3% and price up 0.8%. Turnover decreased 5.2% to €12.6 billion, which included an adverse currency impact of 9.8% and 1.5% growth from acquisitions net of disposals.

Acacia Mining posted a fall in first quarter earnings after reducing operations at its flagship gold mine but stuck to its full-year production and costs targets. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the three months to March 31 fell to $44m from $82m a year earlier.

Nestle confirmed its full-year guidance after organic sales growth accelerated to 2.8 percent in the first quarter of 2018, helped by improving volumes. Nestle is among packaged food companies taking action after seeing sales slow as many consumers prefer fresh foods, reacting by cutting costs, divesting underperforming businesses and increasing efforts to innovate with new products.

Debenhams warned on the full-year outlook for the second time in four months and cut its dividend as it reported a 52% slump in first-half profit. The retailer, which issued a profit warning in January, said it made an underlying pretax profit of £42.2m in the 26 weeks to March 3 – below analysts’ average forecast of £44m and the £87.8m made in the first half of its 2016-17 year.

Gold Prices rose to their highest in a week, as wobbly stocks preserved the precious metal’s safe have appeal.

Oil Prices continued to rise, surging to their highest since December 2014 after US oil inventories dwindled.

Companies Reporting this week

Day	Companies
Monday:	None of Note
Tuesday:	AA * JD Sports
Wednesday:	Tesco
Thursday:	Saga
Friday:	None of Note

Early Market Movements

Market	Index	Change	% Change
UK 100	7,331.7	+14.3	+0.2%
UK 250	20,020.3	+8.3	+0.0%
GER 30	12,587.9	-3.0	-0.0%
FRA 40	5,391.2	+11.0	+0.2%
U.S. 30	24,748.07	-38.56	-0.2%
U.S. 500	2,708.6	+2.3	+0.1%
OIL (BRENT)	73.89	+0.41	+0.6%
GOLD	1,353.78	+4.37	+0.3%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
WPP	1145.5	+29.5	+2.6%
Rentokil	278.5	+5.6	+2.1%
Weir Group	2201	+83	+3.9%
Standard Life Aberdeen	367.2	-13.6	-3.6%
Lloyds	65.65	-1.97	-2.9%
Ultra Electronics	1302	-86	-6.2%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Rio Tinto	JP Morgan	Neutral	3977	4300
Intu Properties	Barclays	Underweight	199.9	180
National Grid	RBC Capital	Sector Perform	826	900
Croda International	JP Morgan	Neutral	4635	4800

Forthcoming Economic Data

Time/Date	Previous	Forecast	Outcome
8:30am: UK Retail Sales m/m	0.8%	-0.5%	–
12:00pm- US FOMC Member Brainard Speaks	–	–	–
12:30pm- US Unemployment Claims	233k	230k	–