FTSE 100 movers: Sainsbury's in favour, RS Group tumbles

(Sharecast News) - FTSE 100 down 0.02% to 7,142.63 at 1450 GMT Supermarket chain Sainsbury's shares gained as it held guidance despite a profits slump in the six months ended 17 September.

Statutory pre-tax profits had sunk 29% year-on-year to £376.0m, despite reporting a 4.4% increase in interim group revenues. Earnings per share fell 27% to 12.3p.

The FTSE 100-listed group said grocery sales were up 0.2% year-on-year and statutory group sales were 4.4% higher, excluding VAT, while general merchandise sales were 6.1% lower and retain operating profit was down 9%.

Oil and gas company Harbour Energy was up on reporting a production rise, while unit operating costs decreased throughout the nine months ended 30 September.

Harbour Energy said production increased 27% year-on-year to 207,000 barrels of oil equivalent per day, leading the group to now expect full-year production to be in the upper half of its 200,000-210,000 boepd guidance.

Unit operating costs came to $14 per barrel of oil, a decrease of 18% on the corresponding prior period, with the group now forecasting 2022 operating costs to reduce to roughly $14 per barrel versus previous guidance of $15-16.

Revenues came to $4.1bn, while total capex guidance slipped from $1.2bn to $1.0bn, primarily driven by the late arrival of drilling rigs and the weaker pound sterling to US dollar exchange rate.

Harbour also stated that the recently enacted UK Energy Profits Levy and speculation about further fiscal changes had created "uncertainty" for independent oil and gas companies.

"As a result, evaluating expected returns from long-term investments has become more difficult and investors are advocating for geographic diversification," it noted.

Medical equipment maker Smith & Nephew was up after posting slightly lower-than-expected third-quarter revenues on Thursday as it said revenue growth for the full year was set to be in the middle of the previously guided range.

Revenue for the quarter came in at $1.25bn, up 4.8% on the same period a year earlier on an underlying basis, but down 1.2% on a reported basis due to a 600 basis points forex headwind. Analysts had been expecting revenue of $1.26bn.

S&N said all franchises and geographies contributed to the underlying revenue growth. Orthopaedics revenue rose 2.1%. Excluding China, it was up 5.6%. Revenues from sports medicine & ENT grew 7.1%, with recent product launches performing well.

Meanwhile, the advanced wound management segment saw revenues rise 6%.

The company said full-year underlying revenue growth was expected to be in the middle of the previously guided range of 4% to 5%, while guidance for the trading profit margin was unchanged at around 17.5%.

Chief executive Deepak Nath said: "Last quarter we set out our 12-point plan to improve business performance. We are executing at pace and have recorded a number of early successes, including reducing backorders and improving instrument set deployment in Orthopaedics.

"We also continue to deliver innovative new products and build on the value of our technology. During the quarter we became the first company to receive FDA approval for robotics-assisted revision knee surgery, launched a superabsorbent wound dressing, and published compelling new rotator-cuff repair data for REGENETEN."

BT Group fell as it seeks a further £500m of savings after being hit by surging inflation, including higher energy prices, the telecoms specialist confirmed on Thursday.

Posting interim numbers, BT said its financial performance remained on track, despite "turbulent" conditions.

Revenues in the six months to 30 September came in at £10.37m, a 1% improvement, with growth in its consumer and Openreach divisions partially offset by legacy declines in large corporate customers in the enterprise unit.

Adjusted earnings before interest, tax, depreciation and amortisation rose 3% to £3.87bn, boosted by revenue growth and strong cost control, but pre-tax profits fell 18% to £831m, because of depreciation from network build as well as higher costs.

Philip Jansen, chief executive, said: "BT remains on the front foot in these turbulent times. Our strategy is work, we're executing against our plan and we're confident that we'll deliver our long-term ambition."

But he added: "Given the current high inflationary environment, including significantly increased energy prices, we need to take additional action on our costs to maintain the cash needed to support our network investments.

"As a result, we are increasing our cost savings target from £2.5bn to £3.0bn by the end of the 2025 full year."

BT did not immediate detail how or where the additional cost savings would be made.

The group has delivered cost savings of £1.7bn since April 2020, with a total cost to achieve of £0.9bn. The increased 2025 target will cost £1.6bn.

RS Group - formerly Electrocomponents - tumbled as it announced that chief executive officer Lindsley Ruth will take a leave of absence with immediate effect for personal reasons.

In Ruth's absence, a management structure is in place to ensure continuity and maintain momentum in the execution of the group's strategy, it said. David Egan will assume his duties in addition to his role as chief financial officer.

Jefferies pointed out in a note that "when this also occurred in November 2019, the shares pulled back by circa 10%".

News of Ruth's leave of absence came alongside the company's first-half results, which showed a rise in profit and revenue.

In the half year to 30 September, pre-tax profit jumped 34% on the same period a year earlier to £182.5m, while revenues were ahead 21% to £1.5bn.

Egan said: "We have delivered a strong revenue and profit performance in the first half as our differentiated proposition continues to resonate with all our stakeholders. Our performance has been driven by our people who are aligned to our purpose-led culture and are working hard to improve our customer experience and commercial focus further.

"We continue to invest in our group to become stronger, more profitable and to take greater market share. While mindful of a slowing economic backdrop, we remain optimistic that we will continue to outperform the market."

Rolls-Royce fell despite holding annual guidance as the rebound in post-pandemic air travel continued and said recent market turmoil and inflation had not impacted cash flow.

The company, which gets paid when its engines are airborne, said hours flown by its customers were now at 65% of 2019 pre-Covid levels.

"The recent volatility in interest rates and foreign exchange rates have not had a material impact on our underlying cash flows or full-year 2022 group guidance, which is unchanged," Rolls said on Thursday, adding that it had also paid off £2bn in debt with proceeds from the sale of its ITP Aero unit.

"Many of our long-term contracts contain inflation-linked pricing clauses based on standard indices for energy, materials and wages that help to mitigate cost increases."

Rolls added that it it was managing energy and raw material inflation risks through supplier agreements and hedging policies.

"In October we agreed a 6.5% wage increase and additional £1,500 payment with UK represented staff, reflecting the substantial cost of living increases our people are experiencing. We aim to recover cost inflation though operational efficiencies as well as increased pricing."

"Supply chain pressures have led to higher levels of inventory, but we do not expect this to affect our ability to meet guidance and remain focused on delivering good cash conversion."

FTSE 100 - Risers

Sainsbury (J) (SBRY) 209.60p 5.94% Harbour Energy (HBR) 400.30p 4.11% Haleon (HLN) 276.05p 3.37% Smith & Nephew (SN.) 1,031.00p 2.54% British American Tobacco (BATS) 3,338.00p 1.95% Tesco (TSCO) 220.60p 1.75% Shell (SHEL) 2,462.50p 1.42% Imperial Brands (IMB) 2,096.00p 1.11% Standard Chartered (STAN) 532.00p 1.03% CRH (CDI) (CRH) 3,114.50p 1.01%

FTSE 100 - Fallers

BT Group (BT.A) 115.85p -9.32% RS Group (RS1) 884.00p -7.39% Rolls-Royce Holdings (RR.) 79.66p -4.09% Flutter Entertainment (CDI) (FLTR) 11,290.00p -3.42% Endeavour Mining (EDV) 1,480.00p -3.39% Halma (HLMA) 2,051.00p -3.16% Dechra Pharmaceuticals (DPH) 2,586.00p -3.07% SEGRO (SGRO) 764.40p -3.07% Persimmon (PSN) 1,281.50p -2.99% JD Sports Fashion (JD.) 97.94p -2.93%