FTSE 100 movers: BAE takes off; Smurfit Kappa slips

by | Aug 2, 2023

(Sharecast News) – Convatec’s profits rose over the first six months of the year, leading the medical products and technologies company to raise its guidance.

For the half ending on 30 June, operating profits vaulted higher by 41.7% to reach $123.4m on a reported basis, even as sales edged up by just 1.1% to $1.06bn.

“This performance demonstrates the momentum Convatec is building – revenue growth is accelerating and we are expanding our operating margin, despite ongoing investments to drive future growth and the challenging inflationary back drop,” said Karim Bitar, the group’s chief executive officer.

“Given the strength of performance and the encouraging outlook, particularly in [Advanced Wound Care], we are increasing our guidance for the full year.”

Adjusted operating profits on the other hand were up by a more restrained 7.0% at constant currencies to $214.1m.

Leverage rose during the period to 2.5 times adjusted earnings before interest, taxes, depreciation and amortisation, versus 2.1 in the year earlier period.

Management raised its guidance for full-year organic revenue growth from 5.0-6.5% to 6.0-7.5%.

Its adjusted operating profit margin was now pegged to reach at least 20.5% in 2023 on a constant currency basis, versus the 19.7% previously guided to.

The company raised its interim dividend payout by 3.0% to 1.77p per share.

UK defence manufacturer BAE Systems on Wednesday lifted full-year guidance as the war in Ukraine led to increased demand for weapons, leaving the company with a record £66bn order book.

Sales guidance was increased by 200 basis points to 5 – 7%, reflecting the accelerated spend profile on the Dreadnought submarine programme and good demand and operational performance across all sectors, while underlying earnings before interest and tax (EBIT) was lifted by the same amount to 6 – 8%.

The group, which builds Typhoon jets, nuclear submarines and supplies ammunition for the British military, said earnings per share would now grow by 12%, compared with previous guidance of up to 7 per cent.

BAE posted half year underlying EBIT £1.3bn, up 10%, while the order intake was £21.1bn, leaving it with a record order backlog of £66.2bn. Sales increased 11% to £12.0bn and free cashflow jumped to £1bn from £123m.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “A strong set of first-half results have shown that BAE occupies a key space in the defence market. And with some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker.”

Endeavour Mining shares fell despite the company holding annual production targets for the current year as output recovered in the second quarter.

The company produced 268,000 ounces of gold in the three months to June 30, down from 292,000oz a year ago, but up by 2% on the prior quarter.

Taylor Wimpey posted a sharp drop in first half revenues and profit amid a backdrop of “substantially” higher mortgage rates.

The residential developer said that revenues shrank by 21.2% to reach £1.64bn, alongside a drop of nearly 29% in its profit before tax to £237.7m, for earnings per share of 5.0p.

Management highlighted what it termed as the company’s “resilience” and said its focus in the back half of the year remained on optimising all areas of its operations, calling attention to its “robust” balance sheet and “excellent” landbank.

Net cash at period en stood at £654.9m, up from £642.4m in the year earlier period.

Its interim dividend was bumped up from 4.62p per share to 4.79p.

Smurfit Kappa’s shares dipped on the back of weaker sales and interim profits.

Sales declined by 9% to €5.84bn as demand for cardboard boxes fell back from the highs of the pandemic.

Earnings before interest, tax, depreciation and amortisation fell 5% to €1.11bn, with the company managing to improve its earnings margin and market share.

Market Movers

FTSE 100 (UKX) 7,586.22 -1.04%

FTSE 100 – Risers

Convatec Group (CTEC) 218.60p 6.22%
BAE Systems (BA.) 985.80p 5.61%
Taylor Wimpey (TW.) 118.50p 3.86%
Vodafone Group (VOD) 75.41p 2.07%
Smurfit Kappa Group (CDI) (SKG) 3,092.00p 1.05%
Relx plc (REL) 2,610.00p 0.27%
Rolls-Royce Holdings (RR.) 185.35p 0.05%
BP (BP.) 481.55p -0.04%
Unilever (ULVR) 4,195.50p -0.14%
Berkeley Group Holdings (The) (BKG) 4,326.00p -0.18%

FTSE 100 – Fallers

Endeavour Mining (EDV) 1,732.00p -5.36%
Prudential (PRU) 1,018.00p -3.92%
Scottish Mortgage Inv Trust (SMT) 703.20p -3.62%
Beazley (BEZ) 502.00p -3.55%
Hargreaves Lansdown (HL.) 813.20p -3.17%
Anglo American (AAL) 2,272.50p -2.99%
Antofagasta (ANTO) 1,603.50p -2.91%
Schroders (SDR) 439.50p -2.79%
Admiral Group (ADM) 2,074.00p -2.63%
Entain (ENT) 1,346.50p -2.50%

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