The FTSE 100 had a spring in its step on Thursday, as the blue chip index rose 0.5% to 7,485.1 in early afternoon trading.
The market seemed to defy recession fears after the Bank of England announced an interest rates hike of 0.5% to 1.75%, representing the most aggressive rates growth in 25 years.
The FTSE 100 was buoyed by a selection of positive results, as miner Glencore and fashion company Next gave the index a shot in the arm despite several weaker results from Rolls-Royce, Hikma and Informa.
Glencore
Glencore shares gained 3.8% to 463.1p after announcing a revenue surge to $134.4 billion as market volatility led to record prices across its coal, gas and physical premia segments.
The mining giant reported an adjusted EBITDA climb of 119% to $18.9 billion against $8.6 billion the last year.
Glencore also cut its net debt by 62% to $2.3 billion from $6 billion, and confirmed a basic EPS rise of 820% to 92c compared to 10c.
The group mentioned $4.5 billion in shareholder returns over the interim period, including 11c per share in special distributions and a $3 billion share buyback.
Glencore confirmed a total of $8.5 billion in total shareholders returns in FY 2022.
“Glencore became the latest natural resources player to deliver bumper returns to shareholders,” said AJ Bell investment director Russ Mould.
“However, with the risks of recession bubbling, investors may not see such high levels of generosity going forward.”
Next
Next shares increased 0.6% to 6,787p following an unexpectedly high growth in full price sales of 5% in HY1.
The fashion company attributed the strong sales to warm weather and social events sparking a renewed interest in its formal wear business.
Next also commented its stronger sales might be linked to the closure of several competitors over the past three years, funnelling a higher level of customer revenue into the high street brand.
“Next is widely considered a best-in-class retailer and today’s results offer ample evidence of why that is the case,” said Mould.
“Bosses at Next are well-versed in how to operate successfully as a public company, demonstrating fluency in the art of expectation management.”
“This helps explain how, right in the middle of the worst cost-of-living crisis in a generation, the company has been able to deliver better-than-expected numbers.”
“Next has also benefited from market share gains as competitors like Topshop and Debenhams have disappeared from the high street.”
Rolls-Royce
Rolls-Royce shares plummeted 9.3% after the engineering firm swung to a statutory loss of £1.6 billion in HY1 2022 compared to a profit of £394 million year-on-year.
Rolls-Royce confirmed a revenue growth to £5.6 billion from £814 million, however, on the back of its record Power Systems order intake, continued recovery in its Civil Aerospace flying hours and a strong Defence order book.
However, the company said it expected supply chain problems and inflationary issues to persist into 2023, and with news of a recession on the horizon, the prospects looked slightly bleak for the group.
The firm also mentioned struggles in attracting experienced and qualified engineering staff.
“We are actively managing the impacts of a number of challenges, including rising inflation and ongoing supply chain disruption, with a sharper focus on pricing, productivity and costs,” said Rolls-Royce CEO Warren East.
“This is setting us up to deliver on our commitments this year and in the future. We are making choices to manage the current challenges, deliver better returns, reduce debt, and generate long-term sustainable value.”
Mould added: “For a one-time champion of British engineering, the company is at a pretty low ebb. Today’s results demonstrate the size of the task facing the newly appointed chief executive Tufan Erginbilgic.”
“If even a well-regarded figure like Warren East, who will hand over to Erginbilgic at the beginning of next year, can’t fix the business then what hope is there for anyone else?”
“Despite seeing some recovery in the all-important civil aerospace business, Rolls is still left trailing behind expectations.”
Hikma
Hikma shares dropped 4.5% to 1,682p following a 27% operating profit drop to $239 million in HY1 compared to $326 million the last year.
Profits reportedly slid on lower pricing in its Generics sector and a high HY1 2021 comparative due to an impairment reversal.
Revenue remained flat for Hikma year-on-year at $1.2 billion, with stronger performance in Injectables and Branded sectors offsetting the weakness in Generics.
Hikma hiked its dividend 6% to 19c per share compared to 18c the year before.
“Hikma’s resilient first half performance is a testament to the strength of our core underlying business, supported by the breadth and depth of our portfolio and capabilities,” said Hikma Pharmaceuticals CEO and executive chairman Said Darwazah.
“Double digit profit growth in our Injectables and Branded businesses has helped to offset a decline in Generics caused by industry-wide competitive pressures.”
Informa
Informa shares fell 2.5% to 585.5p despite a 59.1% HY1 revenue growth to £1 billion against £688.9 million the year before.
The firm reported a 226.6% operating profit rise to £234.5 million compared to £71.8 million on the back of high revenues and effective cost management.
Informa announced its GAP II strategy also helped revenues climb, with its investment programme moving on track according to schedule.
The exhibition company also confirmed its resumption of dividends, recommending a 3p per share payout for the interim period.
“As outlined in our recent Market Update, Informa’s first half results underline the benefits of our GAP II strategy, with strong growth in revenues, profits and cash,” said Informa CEO Stephen A. Carter.
“We remain on track to achieve the upper-end of 2022 guidance, with good forward visibility in Subscriptions, Exhibitors, Delegates and Digital Services, whilst continuing to deliver accelerated shareholder returns, additional growth investment and further targeted expansion.”
