DCC ahead of expectations, buses drag down FirstGroup

London open

The FTSE 100 is expected to open 37.3 points lower on Friday, after closing down 0.24% at 6,654.47 on Thursday.

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International marketing, distribution and business support services company DCC issued an interim management statement ahead of its AGM in Dublin, at 1100 BST on Friday. It said overall group operating profit for the first quarter ended 30 June was significantly ahead of the prior year, and modestly ahead of expectations, driven by the performance of DCC Energy which benefited from acquisitions completed in the prior year, and also from strong organic operating profit growth. “Trading in each of DCC Healthcare, DCC Technology and DCC Environmental was ahead of the prior year and in line with expectations,” the board said in the statement. “DCC Technology benefitted from cost saving initiatives implemented in the prior year and the first time contribution from the acquisition of CUC.”

Homeserve said it was trading in line with expectations and expected to deliver “good growth” in the current year. “Trading, as usual, will be weighted towards the second half of the financial year, reflecting the seasonality of our marketing activity and associated renewals profile,” Homeserve said. “The UK business is performing as anticipated and during July we signed a new affinity partnership with Dee Valley Water, a business providing water services to over 250,000 customers in North East Wales and North West Cheshire.” Homeserve said it continued to build its prospects pipeline In the USA and on 1 July completed the acquisition of Utility Service Partners Inc (USP), adding 0.4m customers and bringing the total number of US customers to 2.7m.

Transport operator FirstGroup said first quarter revenue decreased by 1.4% in constant currency, with revenue growth in First Student, First Transit and First Rail offset by decreases in First Bus and Greyhound. It added that there was no change to overall outlook for the current year, “recognising that the degree to which potential net currency benefits as a result of our significant US dollar based businesses will be offset by a more challenging macroeconomic outlook for our UK businesses is uncertain, following the outcome of the EU referendum”. The company said it was too soon to judge the overall effect of the UK's decision to leave the European Union on the group.

Newspaper round-up

European banks could be forced to put as much as €40bn of extra capital into their UK branches as a result of the country’s decision to quit the EU, according to a report from the Boston Consulting Group. The BCG report also says Brexit will trigger an 8-22 per cent rise in annual costs for the banks’ capital markets divisions and says this may prompt lenders to withdraw from some activities. – Financial Times

Volkswagen’s “cynical” cheating of emissions controls should be investigated and the company possibly prosecuted by the UK Government, according to the Transport Select Committee. MPs on the committee have also criticised the British government of “trying to pass the buck” to the EU over the scandal, saying challenging the giant German car maker is a national responsibility, rather than one to be passed on to the European community. – Telegraph

About 3,500 Post Office workers are being forced to take a cut in pension benefits as the government-backed service tries to cut costs. About half the Post Office’s 7,000-strong workforce is being forced to shift from a final salary pension scheme to a defined contribution scheme, a move that unions say could cut retirement benefits by 30% or even more in some cases. – Guardian

US close

Equities in the United States closed at new record levels on Thursday, after the Bank of England hinted at a loosening of monetary policy in August, and as the markets were in the thick of the new earnings season.

The Dow Jones Industrial Average closed at an all-time high of 18,506.41, up 0.73%, while the S&P 500 also set a record 2,168.99, adding 0.53%, and the Nasdaq hit its best level of the year, adding 0.57% to 5,034.06.

The UK’s central bank stood pat on interest rates, against market expectations for a 25 basis point cut to 0.25%, which would have been the first rate cut in seven years.

“In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the committee expect monetary policy to be loosened in August,” read the central bank’s meeting minutes.