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WINNERS & LOSERS SUMMARY: Pearson, IAG, Imperial Brands Warn On Profit

(Alliance News) - The following stocks are the leading risers and fallers within the main London ...

Alliance News 26 September, 2019 | 10:44AM
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(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Thursday.

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FTSE 100 - LOSERS

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Pearson, down 17%. The education publisher warned annual adjusted operating profit would be at the lower end of its guidance range due to weaker-than-expected trading in its highly profitable US Higher Education Courseware business. Pearson said it anticipates 2019 revenue to stabilise, but adjusted operating profit to be at the bottom of its guidance range of GBP590 million to GBP640 million. Adjusted earnings per share also is predicted to be at the bottom of the guidance range of 57.5p to 63.0p. In 2018, adjusted operating profit totalled GBP546 million, while adjusted earnings per share was 70.3p. Pearson said revenue from US Higher Education Courseware is down by around 10% in the first nine months of 2019, mainly due to significant acceleration of print attrition in the key trading season, with students returning to school turning away from print products more rapidly than anticipated. It also blamed lower college enrolments and use of open educational resources. The company now predicts revenue from the business will decline by between 8% to 12% for 2019, weaker than original guidance for a 0% to 5% reduction.

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Imperial Brands, down 11%. The tobacco firm cut its revenue guidance due to a challenging vaping and e-cigarette market in the US and changes to its Africa, Asia & Australasia forecast. Imperial predicts net revenue growth for its financial year ending Monday next week will be 2%, slashing its previous 2.5% growth forecast, as several US local governments enact e-cigarette bans over serious health concerns and the US federal government threatens the same. The company has "stepped up" its retail engagement programmes in the US over the second half of the year, and has generated improved customer off-take, but it was "less than expected" due to the "slowdown in the US vapour category combined with increased competitor discounting". This has hurt the firm's overall revenue and profitability, although the overall NGP business it set to grow revenue by approximately 50% in financial 2019, even if this is below previous expectations. Peer British American Tobacco was down 2.5%.

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International Consolidated Airlines Group, down 2.7%. The British Airways parent warned over a drop in annual profits and said industrial action and other recent disruption has cost the company EUR170 million. IAG said the net financial impact of allowing customers to re-book flights or receive refunds due to pilot strikes has resulted in a EUR137 million hit with other "disruption events" at Heathrow costing the company a further EUR33 million. Booking trends in low cost airlines in IAG's portfolio will also knock the company's finances, the firm said. At current fuel prices and currency exchange rates, IAG expects its 2019 operating profit before exceptional items to be EUR3.27 billion, 6.6% lower than the EUR3.49 billion pro-forma figure achieved in 2018. Previously, IAG had guided for profit in 2019 to be flat on the year before.

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WM Morrison Supermarkets, down 1.5%. The stock went ex-dividend meaning new buyers no longer qualify for the latest payout.

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FTSE 250 - LOSERS

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SSP Group, down 5.5%. The travel sector food and beverage outlets operator predicted a rise in fourth-quarter revenue, but expects to see turbulence from economic uncertainty and airline capacity cuts going forward. In the quarter ending September 30, SSP expects revenue to rise 10% from a year before, or by 7.8% at constant currency. The company also explained that the trend of like-for-like sales growth that was seen in third quarter, persisted in the fourth. For the full-year the company expects like-for-like sales growth of just under 2.0%. The Upper Crust and Millies Cookies owner reported the air sector in the UK was "resilient" in the quarter though in rail, performance "remained softer" but benefited from lesser disruption. Slow passenger growth in the Nordic countries and Spain impacted like-for-like sales in continental Europe. The grounding of Boeing Co's Max 737 aircraft also hurt like-for-like sales growth in North America, SSP said. Looking further ahead, SSP expects challenges from "ongoing economic uncertainty" and "airline capacity cuts".

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IG Group, down 4.8%, Bovis Homes, down 2.0%. The stocks went ex-dividend.

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OTHER MAIN MARKET AND AIM - LOSERS

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Xaar, down 36%. The inkjet printer head maker's interim results were blighted by the decision to close its thin film business, amid an exodus of senior management. For the six months ended June, pretax loss deepened sharply to GBP52.3 million from GBP1.2 million the year prior. This was after revenue sank to GBP22.5 million from GBP35.3 million the year before. Profit performance was hurt by a GBP39.0 million impairment booked for the closure of its thin film printhead unit. Xaar also experienced a number of management changes following the thin film closure. Xaar boss Edwards will leave at the end of 2019, with current printhead unit chief John Mills selected as CEO designate to replace him. Edwards will remain available to Xaar until the end of March 2020 in order to "ensure an orderly succession". Xaar Chair Robin Williams and Chief Financial Officer Shomit Kenkare also announced their intentions to leave the firm. Williams will stand down at the end of March 2020, Kenkare from the end of 2019. Williams will be replaced as chair by Non-Executive Director Andrew Herbert, who has been in post since 2016. The search for a replacement for Kenkare has begun.

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By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
SSP Group PLC 656.00 GBX -0.46 -
Morrison (Wm) Supermarkets PLC 199.30 GBX 1.48
Pearson PLC 671.60 GBX -1.00
Bovis Homes Group PLC 1,168.00 GBX 0.69 -
British American Tobacco PLC 2,878.00 GBX 0.91
IG Group Holdings PLC 662.40 GBX -0.72 -
Xaar PLC 50.00 GBX 6.16 -
Imperial Brands PLC 1,752.60 GBX 1.17
International Consolidated Airlines Group SA 548.60 GBX -1.58 -

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