FTSE recovers as European fears recede, FirstGroup is off track, CRH targets margin improvement

“The FTSE 100 moved back above the 7,700 mark on Thursday morning as the euro rallied, reflecting reduced concern over the future of the eurozone,” says AJ Bell investment director Russ Mould.

FIRSTGROUP

“If rails and buses business FirstGroup was looking for validation for its decision to rebuff a bid from US private equity firm Apollo then today’s results do nothing to provide it.

“In fact, its erstwhile suitor may be thinking it dodged a bullet after the group reported a loss for the year to 31 March 2018 and announced that chief executive Tim O’Toole is stepping down with immediate effect.

“O’Toole, a former head of the London Underground, is departing after nearly seven years in the role. If the share price is used as an arbiter, then his tenure can hardly be counted as a success with its market value less than a third of what it was when he joined.

“Current chairman Wolfhart Hauser will become executive chairman. His first job is to look at ways to, in his words ‘mobilise the considerable value inherent in the group’.”

CRH

“Today’s update from Irish building materials firm CRH was brief but investors still found enough encouragement to lift the shares to the top of the FTSE 100 leaderboard.

“The company is set to combine and thereby streamline certain of its businesses in Europe and the US, underpinning a target to boost margins as much as 3% by 2021.

“There had been speculation the company was considering a spin-off of its US arm, but this would have been at odds with the company’s long-standing strategy of being diversified across different products, geographies and end-uses to soften the impact of fluctuating demand at different points of the economic cycle.

“Guidance on cash generation is impressive with the company signaling it should have €7bn at its disposal over the next four years even after it has paid dividends and met all its capital expenditure commitments. This should enable it to pursue M&A opportunities.”

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