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Admiral and Schroders try to lift FTSE with profits surge
Bosses of car insurer Admiral and fund manager Schroders are sweeping out at a high point for their businesses but the FTSE 100 closed lower.
Admiral, whose chief executive and co-founder Henry Engelhardt (below) is leaving the company in May, was the biggest FTSE 100 riser, up 9% to 19.19p, after full-year profits smashed forecasts. The shares have gained 29% in the past 12 months.
Last year the Cardiff-based firm saw pre-tax profits rise 6% to £377 million, ahead of analysts’ expectations of £350.4 million, helped by rising car insurance rates.
Its combined operating ratio improved to 85.6% from 86.5%. Any reading below 100% shows an insurer is making an underwriting profit and is taking in more in premiums than it is paying out in claims.
Dividends also came in higher than expected with a special 29.8p per share dividend lifting the final payment to 63.4p and taking the total shareholders received for the year 16% higher to 114.4p.
There was a changing of the guard at Schroders too as the UK’s biggest stock market listed investment group said Michael Dobson, its long-serving chief executive, would be replaced by head of investment Peter Harrison on 4 April.
Dobson (pictured) is sticking around, however, moving sideways to be chairman, replacing Andrew Beeson, who is retiring.
The announcement came as Schroders’ full-year results impressed investors and sent its shares flying to £28.30 in early trading although they settled back and closed 20p (0.7%) higher at £27.38.
Profits before tax and exceptional items last year advanced 7.9% to £609.7 million, higher than the £601.1 million consensus analyst forecast gathered by the company.
Net inflows of new money into its funds and wealth management businesses hit £13 billion, beating analyst predictions of £12 billion.
The good news from the financial sector helped lift the FTSE 100 to trade nearly 12 points or 0.2% higher at 6,159 in the morning. This reversed in the afternoon and the index closed nearly 17 points or 0.3% down at 6,130.
A cut by credit ratings agency Moody's in its outlook for the global pharmaceuticals industry knocked Shire (SHP) 3% lower at £37.55..
Investors are cautious ahead of this afternoon’s release of the first of two sets of US jobs data. Today’s ADP figures are a curtain raiser for the more significant non-farm payroll data tomorrow.
Inmarsat (ISA) fell 4.2% to 925p, after the satellite communications group posted a 3.6% rise in annual core profits but said trading conditions would continue to be difficult because of weak government spending.
Whitbread (WTB) was the biggest FTSE 100 faller, dropping over 6% to £38 as a trading statement for the start of the year disappointed investors with like for sales growth of 2.2% at Premier Inn and 0.5% at Costa Coffee.
Steve Clayton, head of equity research at Hargreaves Lansdown, the investment broker, said the company was a better proposition than the share price suggested.
‘The stock has retreated by over 15% in the last year, and now trades on circa 15.4 times consensus earnings to January 2017, which is a little cheaper than its longer run average of 16 times. There are not that many stocks out there offering double-digit organic sales growth,’ he said.
BHP Billiton (BLT) gained 2.7% (20p) to 799p on firmer metals prices and on news of a $5.1 billion settlement with the Brazilian government over the burst dam disaster in November involving mining company Samarco, which it jointly owns with Brazil’s Vale (VALE5.SA).
In the mid-cap FTSE 250 index Cobham (COB) tumbled nearly 8% (20p) to 239p after the defence contractor missed scaled-back expectations after a profits warning in November. Full-year earnings per share of 19.5p came in below the 20.1 to 21.7p range it had indicated.
Lonmin (LMI) was the fastest rising smaller company, racing 17% (18p) higher to 122p after the platinum miner announced the loss of 5,108 jobs in South Africa, less than expected, although unions said they were disappointed.
In Europe the FTSEurofirst 300 index dipped six points to 1,336.
Volkswagen (VOWG_p.DE) shares firmed 0.4% to 116.2 euros after the car maker issued its most detailed statement on the emissions cheating scandal that forced its chief executive to resign and wiped billions of euros off its market value.
It said Martin Winterkorn had been alerted to problems with US diesel emissions tests in 2014, a year before they became public. It has rejected accusations that it did not inform shareholders early enough but has set aside £4.9 billion in provisions for legal costs.
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by Gavin Lumsden on Jul 22, 2016 at 16:24