News Column

FTSE 100 dips on poor China data and disappointing Pearson and easyJet updates

January 23, 2014

Nick Fletcher,

Leading shares are edging lower in uncertain trading, with mining shares hit by poor Chinese data and disappointing updates from Pearson and easyJet . The FTSE 100 is currently 3.17 points lower at 6823.16, having recovered from a dip to 6811. Pearson is the biggest faller so far, down 103p at 11.95 after the publishing group warned 2013 earnings would be lower than expected due to higher restructuring costs and weak demand in its North American education business. Ian Whittaker at Liberum said education turned in a mixed performance, with emerging markets showing strong growth but development markets seeing weakness, but the real shock was on restructuring: Charges are higher (170m versus 150m guidance) and savings are lower (40m versus 50m), so the net 130m impact is 30m above the 100m guidance. For 2014, the wording is slightly confusing, but it looks like Pearson is now guiding to net restructuring costs of 50m versus the suggested positive benefit (we had a 25m positive effect on operating profit for 2014). While Pearson is still saying 2015 will be a growth year, the deeper restructuring charges - similar to what we have seen in other media sectors in the past that have been structurally challenged - suggest the structural pressures are accelerating. EasyJet is down 42p at 17.01 after the low cost airline reported a 7.7% rise in first quarter revenues but cautioned that the time of Easter in April would fall outside its first half and affect the results for that period. Mining shares have slipped after HSBC's purchasing managers' index for key commodities consumer China dipped to 49.6 this month from December's 50.5, the lowest since July. So Glencore Xstrata is down 10p at 744.5p, Rio Tinto is 21p lower at 32.25 and BHP Billiton has slipped 12.5p to 1821.5p. But Marks & Spencer has jumped 16.5p to 497.4p after Exane BNP Paribas moved from underperform to outperform.

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Source: Guardian Web

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