Shares round-up: Unilever, G4S, Sage, Tate & Lyle

A number of household names published updates today. Here are some of the most significant. 

Unilever (LSE:ULVR), G4S (LSE:GFS) and Sage (LSE:SGE) today put investors in a more positive frame of mind as the City prepares to gauge the impact of Covid-19 on the outlook for earnings and dividends.

The reporting season is due to step up a gear next week with results from a large number of blue-chips, including Lloyds Banking Group (LSE:LLOY), AstraZeneca (LSE:AZN) and Royal Dutch Shell (LSE:RDSB).

Those reporting today appear to have performed more resiliently than most expected at the height of the pandemic, even if forward-looking guidance remains in short supply.

The updates in London and across Europe helped to offset fears about ongoing US-China tensions, with the FTSE 100 index and Euro Stoxx 50 up by 0.4% to 6,233.7 and 0.25% to 3379.1 respectively.

Dual-listed Unilever was a big factor in those performances after it reported a smaller-than-expected fall in underlying sales of 0.3% in the second quarter. It was assisted by strong demand for its homecare and hygiene brands, such as Dove, Domestos and Cif.

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With half-year operating profits coming in 8% ahead of consensus, shares jumped 9% to 4,709p in the FTSE 100 index. Rival company Reckitt Benckiser (LSE:RB.), whose brands include Nurofen, Strepsils and Dettol, is due to publish its half-year figures on Tuesday.

Third quarter figures from accountancy software firm Sage (LSE:SGE) were also better than expected, leading to a 5% surge in its share price to 744p. It is now close to recouping all the losses from the February and March market sell-off, when the stock plunged as far as 534p.

Full-year guidance is now for recurring sales growth of between 7% and 8%, which will be closer to the company's original target of 8%-9% than many investors had been expecting.

Chief financial officer Jonathan Howell said:

“We are confident that our sustained investment in Sage Business Cloud throughout the economic cycle will form a strong base for the long-term success of Sage.”

While upgrades now seem likely for 2020 forecasts, UBS noted that today's update implied a slowdown to growth next year. The bank has a “sell” recommendation and 707p price target.

G4S (LSE:GFS) shares surged by more than 7% to 146.5p, even though the security business flagged last week that today's half-year results would be significantly above the market consensus.

After selling most of its cash businesses to Brink’s, G4S is now focused on integrating technology and data analytics into its Secure Solutions operation. The division held half-year revenues at £3.1 billion for adjusted profits of £202 million, a rise of £3 million on a year earlier.

Despite the resilience, CEO Ashley Almanza said the unclear economic outlook meant G4S would not be paying an interim dividend. He said:

“The board intends to resume dividend payments once the uncertainty surrounding the pandemic has reduced to an acceptable level.”

Other large cap companies reporting today included food ingredients producer Tate & Lyle (LSE:TATE), whose shares rose 2% after it revealed an improvement in demand in June. Sales were still down 5% across the quarter, but with revenues from new products up 9%.

Shares in speciality chemicals firms Johnson Matthey (LSE:JMAT) and Croda International (LSE:CRDA) were both broadly unchanged after their updates, while Daily Mail & General Trust rose 3%.

Some businesses continue to benefit from the impact of the pandemic, with lockdown conditions perfect for trade at Gear4music (LSE:G4M). The online retailer of musical instruments and equipment said sales jumped 68% in the three months to June, with the trading momentum continuing into this month.

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Despite being early in its financial year, the York-based company said the combination of strong sales and higher gross margin meant profits should be meaningfully ahead of its previous expectations. Shares rose by a third to 540p, the highest level since the end of 2018.

AIM-listed Equals Group (LSE:EQLS), which used to be known as FairFX, rose 3% to 30p after a trading update highlighted the benefits of an earlier decision to reduce its focus on the travel money segment. The e-banking and international payments firm performed strongly in the business-to-business arena, where revenues are 30% higher at £9 million so far this year.

Analysts at Canaccord Genuity said:

“Equals management has acted decisively and in a considered manner post the upheaval caused by Covid-19. Equally, managing the transition to a business with a greater focus on higher margin B2B activities continues to yield results.”