UK Stocks Decline; M&S Net Rises

Arthi Gupta, Mayank Mehta and Sanjay Barot
25 May, 2010
New York City

The UK benchmark index dropped but recovered from the lows of the day. UK services output growth eases slightly in March and first quarter GDP rises to 0.3% on an upward revision in manufacturing. Marks and Spencer Group plc net up.

[R]4:00 PM London, 11:00 AM New York – The UK benchmark index dropped but recovered from the lows of the day. UK services output growth eases slightly in March and first quarter GDP rises to 0.3% on an upward revision in manufacturing. Marks and Spencer Group plc net up.[/R]

U.K. stocks declined following the news that the North Korean premier instructed his military to be prepared after South Korea alleged that its neighbor was responsible for the sinking of its warship.

Moreover, lingering concerns about European debt worries and the prospect of the Greek debt contagion spreading to Spain and Portugal kept investors jittery.

Plunging Asian markets, weak commodity prices, and declining bank stocks also rattled investor confidence.

In London FTSE 100 Index closed lower 128.93 or 2.5% to 4,940.68 and the pound edged lower to close at $1.434 and edged higher to close at €1.173.

Royal Bank of Scotland and Lloyds Banking Group led the decliners among financials amidst speculation about Europe's financial instability. Four regional savings banks in Spain have announced to merge operations to form a single group worth around €135 billion in assets. This has added to worries about debt problems in weaker euro-zone economies.

U.K.'s services output rose 0.5% in March from the previous month, slower than the 0.6% growth seen in February, the Office for National Statistics reported Tuesday. The largest contribution to the increase was distribution which rose 5.5%.

Year-on-year, output of the service sector for March rose 0.8%.

The UK economy grew more than initially expected in the first quarter on the upward revision in production and better investment. The Office for National Statistics said economy expanded 0.3% sequentially in the first quarter, revised up from an increase of 0.2% published in April. However, growth slowed from 0.4% increase seen in the fourth quarter of 2009

UK-based clothing retailer Marks and Spencer Group plc reported a higher profit for fiscal 2010, driven by sales growth reflecting the improvement in market conditions and consumer spending. The company, however, remains cautious about the outlook for the year ahead.

Gainers & Losers

The BSS Group plc fell 0.4% to 310.10 pence. The distributor of specialist trades said fiscal year 2010 revenues rose 0.7% to £1.35 billion from £1.34 billion a year ago. Net profit for the year fell 23% to £31.4 million or 25.3 pence per diluted share compared to net profit of £41.0 million or 33.2 pence per share a year ago.

Cluff Gold plc fell 5.1% to 73.00 pence after the gold miner said 2009 revenues were $39.7 million. Net loss for the year was $34.3 million compared to net loss of $945,000 a year ago.

De La Rue plc fell 1.0% to 882.00 pence. The banknotes printer said fiscal year 2010 revenues rose 12% to £561.1 million from £502.4 million a year ago. Net profit for the year fell 81% to £69.9 million or 5.70 pence per diluted share compared to net profit of £363.0 million or 275.0 pence per share a year ago.

Education Development International plc fell 3.7% to 102.00 pence. The provider of educational qualifications and assessment services said first half revenues rose 5.2% to £13.4 million from £12.8 million a year ago. Net profit for the first half rose 3.4% to £3.0 million or 5.30 pence per diluted share compared to net profit of £2.9 million or 5.06 pence per share a year ago.

Entertainment One Ltd closed unchanged at 61.00 pence after the film distributor said fiscal year 2010 revenues rose 30% to £444.2 million from £342.6 million a year ago. Net profit for the year was £6.55 million or 4.3 pence per diluted share compared to net loss of £30.4 million or 23.2 pence per share a year ago.

Homeserve plc fell 0.7% to 1,896.00 pence. The repair and maintenance group said fiscal year 2010 revenues rose 24.6% to £379.2 million from £304.3 million a year ago. Net profit for the year was £30.7 million or 46.8 pence per diluted share compared to net loss of £35.3 million or 56.2 pence per share a year ago.

HSBC Infrastructure Company Limited fell 0.4% to 115.50 pence. The infrastructure investment company said fiscal year 2010 revenues rose 54% to £102.6 million from £66.5 million a year ago. Net profit for the year was £6.0 million or 1.6 pence per diluted share compared to net loss of £14.1 million or 4.3 pence per share a year ago.

Imagination Technologies Group plc, the chip designer fell 5.5% to 221.60 pence.

KCOM Group PLC increased 2.9% to 43.50 pence. The telecommunications and internet service provider said fiscal year 2010 revenues fell 12.6% to £412.8 million from £472.4 million a year ago. Net profit for the year was £17.7 million or 3.38 pence per diluted share compared to net loss of £106.5 million or 20.70 pence per share a year ago.

Marks and Spencer Group plc fell 0.8% to 330.70 pence. The retailer of clothing, food and home products said fiscal year 2010 revenues rose 5% to £9.54 billion from £9.06 billion a year ago. Net profit for the year rose 3.6% to £526.3 million or 33.2 pence per diluted share compared to net profit of £508.0 million or 32.3 pence per share a year ago.

Pennon Group Plc rose 2.5% to 502.00 pence after the water group said fiscal year 2010 revenues rose 11.6% to £1.07 billion from £958.2 million a year ago. Net profit for the year rose 55% to £139.5 million or 39.7 pence per diluted share compared to net profit of £89.8 million or 25.7 pence per share a year ago.

Telecom plus PLC fell 4.2% to 315.75 pence. The low-cost multi-utility supplier said fiscal year 2010 revenues rose 33% to £369.1 million from £278.3 million a year ago. Net profit for the year fell 17% to £13.4 million or 19.5 pence per diluted share compared to net profit of £16.2 million or 23.9 pence per share a year ago.

Torotrak plc fell 6.0% to 21.60 pence. The provider of full-toroidal traction-drive transmission technology said fiscal year 2010 revenues rose 65% to £7.6 million from £4.6 million a year ago. Net profit for the year was £0.4 million or 0.23 pence per diluted share compared to net loss of £1.8 million or 1.22 pence per share a year ago.