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Results dominate on an otherwise indifferent day

This morning’s focus was mainly on a raft of corporate results with the FTSE 100 index generally becalmed and down around 20 points mid-morning.

The most shocking statistic came from Taylor Wimpey which announced a huge landbank writeoff leading to a £1.54bn H1 loss. It said that with regards to its debt, constructive discussions with the relevant lenders were ongoing and the board was of the view that a satisfactory conclusion would be reached. The shares initially dropped back but rebounded on recovery hopes, but our view is that this is a dangerous sector to be involved in.

In the resource sectors, Antofagasta raised H1 earnings by 8.8% to 80.4c, slightly above forecasts, as output picked up and the copper price climbed. It said that the copper and molybdenum markets should continue strong into next year, but the shares were virtually unmoved. Petrofac pleased the market as it saw interim net income surge by 57% to $121.2m from a year ago, helped by strong demand for new oil and gas facilities. It added that results for the full year would be at the top of end of expectations, and the shares deservedly rose, with more to come here in due course.

Tullow Oil also did well with underlying net profits more than doubling in H1 to £126m, boosted by the higher crude price. They said that production was now expected to be between 68,000 and 70,000 barrels of oil equivalent per day for 2008. Phase 1 of the Jubilee development was on track for first oil in the second half of 2010, and we can see more new highs here as and when the price of crude improves.
 

Head of Research at Blue Index, specialists in trading

27/08/2008

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