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UK stock market morning note (January 17, 2013)

The FTSE 100 is called to open lower this morning following the mixed performances on Wall Street and in Asia overnight with markets now looking ahead to the speech tomorrow by the Prime Minister on the UK's relationship with the European Union. The economic diary today is focused on data from the US with building permits, housing starts, the latest weekly jobless claims and the Philly Fed manufacturing index all due out. Commodity prices are mixed in trading and on the foreign exchanges, the pound is slightly weaker against both the dollar and euro ahead of the speech on the UK's future in Europe.

Company Announcements

Rio Tinto Impairments and Management Changes. It expects to recognise a non-cash impairment charge of USD14bn (post tax) in its 2012 full year results. These include USD3bn for its Mozambique coal deal, reductions in the carrying values of its aluminium assets in the range of USD10-USD11bn and a number of smaller asset write-downs amounting to USD500m. Chief Executive, Tom Albanese has stepped down with immediate effect to be replaced by iron ore Chief Executive, Sam Walsh. Doug Ritchie who led the acquisition and integration of the Mozambique coal assets has also stepped down by mutual agreement.

Associated British Foods IMS reports that revenue in the 16 weeks to 5 January 2013 rose 10%, driven by Primark which was ahead 25% with the remaining businesses trading in line with expectations. As previously noted, full year results from Sugar are expected to be lower than last year but it anticipates that this will be more than offset by Primark's growth and some recovery in Grocery. It now expects to make further progress in adjusted operating profit for the full year, but the improvement will be heavily weighted towards H1.

Dixons Trading Statement notes that in the 12 weeks to 5 January 2013, total group sales rose 2% with lfl sales ahead 3%. The UK & Ireland 'traded well' with lfl growth of 8%. Group gross margins were down 0.5% mainly due to product mix and full year underlying PBT is expected to be in line with market expectations of GBP75m-GBP85m.

Home Retail IMS reports that it expects benchmark PBT for the financial year to be GBP10m above current market consensus of GBP73m and its year end cash balance to be in excess of GBP300m. Argos lfl sales in the 18 weeks to 5 January 2013 rose 2.7% with Homebase lfl sales down 3.9%.