All aboard as Stage­coach shares rise on profit hopes

Daily Mail - - City & Finance - by Matt Oliver

IN­VESTORS jumped aboard Stage­coach after the train and bus op­er­a­tor raised its profit fore­casts.

In a trad­ing up­date, the com­pany said sales were up across al­most all its di­vi­sions in the se­cond half of the fi­nan­cial year.

This in­cluded strong growth from its UK bus op­er­a­tions and the Vir­gin Rail Group, in which it has a 49pc stake.

Its wider rail busi­ness is set to be boosted by a set­tle­ment with the Gov­ern­ment and Net­work Rail over dis­rup­tion at Water­loo sta­tion in Lon­don two years ago.

An­a­lysts at RBC Cap­i­tal es­ti­mate Stage­coach will get up to £ 7m for the prob­lems, which caused se­vere de­lays on South West ser­vices it for­merly ran. It was wel­come news for in­vestors after the com­pany posted a £22.6m half-year loss in De­cem­ber.

Stage­coach said it also ex­pected the £214m sale of its North Amer­i­can arm to pri­vate equity firm Vari­ant to be fin­ished by the end of this month. It sent shares in the trans­port group 3.5pc, or 5.4p, higher to 160.2p. Stage­coach re­ports full-year re­sults in June.

Over on the FTSE 100, which rose 27.16 points to 7418.28, firms sen­si­tive to the twists and turns of Brexit climbed higher as in­vestors became more con­fi­dent the UK was in for a soft Brexit.

Per­sim­mon rose 3.7pc, or 79p, to 2241p and fel­low builder Tay­lor

Wim­pey was up 8pc, or 16p, to 187.05p. Bank­ing groups Lloyds (up 2.3pc, or 1.48p, to 64.88p) and

Bar­clays (up 2.5pc, or 4p, to 164p) were also lifted higher.

But to­bacco stocks tum­bled after fig­ures from the US showed cig­a­rette sales had weak­ened in March. Im­pe­rial Brands fell 4.1pc, or 108.5p, to 2519.5p and Bri­tish Amer­i­can To­bacco fell 1.9pc, or 59.5p, to 3119p.

Burberry was the third big­gest blue-chip faller after it was hit by two glum an­a­lyst notes, dip­ping 2pc, or 40p, to 1934p.

Re­searchers at JP Mor­gan slashed their profit fore­casts for the lux­ury re­tailer over Brexit con­cerns, while Bank of America Mer­rill Lynch has down­graded it from ‘neu­tral’ to ‘un­der­per­form’.

Lynch’s rat­ing change came after its an­a­lysts raised doubts about the speed of Burberry’s turn­around plans.

Since the ar­rival of new cre­ative di­rec­tor Ric­cardo Tisci, the com­pany has been try­ing to at­tract younger cus­tomers and take the brand more up­mar­ket to re­vi­talise sales. But Lynch an­a­lysts said: ‘While we have no doubt man­age­ment will re­main con­fi­dent in tone, we think there are few signs of a turn­around.’

Iron ore pel­let maker Fer­rexpo, which is listed in Lon­don but based in Switzer­land, was down 3.6pc, or 9.7p, to 278.3p after an an­a­lyst down­grade. JP Mor­gan cut its rat­ing from ‘over­weight’ to ‘neu­tral’ just days after Fer­rexpo an­nounced it would de­lay the pub­li­ca­tion of full-year re­sults to the end of April, over an in­ves­ti­ga­tion into the pos­si­ble mis­use of char­i­ta­ble do­na­tions.

The FTSE 250 firm is prob­ing ‘un­ex­plained dis­crep­an­cies’ in bank state­ments re­lated to Bloom­ing Land, a char­ity it set up in Ukraine. Among the small caps, Photo

Me In­ter­na­tional was a big faller after blam­ing a profit warn­ing on Brexit woes.

The Sur­rey com­pany, which op­er­ates photo booths, amuse­ment ma­chines and laun­dry ma­chines, said full-year prof­its would be lower than ex­pected after a ‘chal­leng­ing’ se­cond half.

For the year end­ing April, it is now ex­pect­ing to bring in ‘slightly’ less than its pre­vi­ous £44m fore­cast. Last year Photo-Me gen­er­ated £50.2m in profit after rev­enues of £229.8m. Its shares fell 5.6pc, or 4.7p, to 79.7p.

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