2015 review: The FTSE 100 winners and losers

16th December 2015


The commodity rout has claimed numerous victims in 2015, not just in the oil and mining sectors, but also in sectors servicing these industries. Hargreaves Lansdown looks at the firms which have soared and the shares which have flopped in 2015…

Companies exposed to emerging markets have also suffered. Brazil and Russia have fallen into recession and China’s growth has continued to slow, as it undertakes a painful economic restructuring.

Domestically-focused industries have fared much better, helped by a clear election outcome in May and a recovering UK economy. Defensive sectors, which have been capable of growing profits and dividends in the face of economic headwinds, have also been rewarded.

Overall, the FTSE 100 index is down 8% year-to-date, but this masks some huge individual movements.

The losers

The 10 worst performing shares so far in 2015 are listed below, along with their impact on the index

Company Sector % change Index impact (points)
Anglo American Mining -75 -46
Glencore Mining -71 -90
Standard Chartered Banking -47 -38
BHP Billiton Mining -43 -49
Antofagasta Mining -43 -5
Pearson Media -40 -15
Rio Tinto Mining -37 -53
Rolls Royce Aerospace & Defence -35 -22
Royal Dutch Shell B Oil -35 -75
Weir Group Industrial Engineering -33 -5

Source: Bloomberg (31/12/2014 to 14/12/2015)

The list includes five mining companies, one oil company and a business that serves the oil and mining industries (Weir Group). We may look back in five years and view this as a great buying opportunity. These sectors are deeply unloved. On measures such as price to book and price to cyclically-adjusted earnings, valuations for the oil and mining sectors are at multi-decade lows although remember prices could still fall further.

Much will depend on when commodity prices recover, but so far there is little sign of this happening. Chinese demand looks set to remain weak for a while, and new capacity commissioned in the boom years is still coming on stream. This supply-demand imbalance could take years to correct.

While low commodity prices persist, the pressure on cash flows and company finances will only intensify. Glencore has already been forced to raise equity to shore up its balance sheet. We would not be surprised to see Anglo American and Weir Group follow suit. BHP Billiton, Rio Tinto and Shell are less leveraged so may be able to muddle through without recourse to shareholders; we hope, but would not count on dividends being maintained. Antofagasta looks to be in strong shape to weather the current storm; with the business carrying little debt relative to its cash flow.

Standard Chartered has also found itself in the wrong place at the wrong time, with weakness in Asia and emerging markets impacting profits and forcing the company into a rights issue. In the long run, the group’s emerging market bias could be a huge positive but this also adds risk. Right now, China and India are more of a worry than a blessing.

Rolls Royce shares have halved over the last two years following a string of profit warnings; the latest coming in November. Sharp deteriorations in the corporate jet markets, both new sales and aftermarket revenues, were blamed. It seems unlikely to me that end market demand will recover in the short term.

Pearson’s transformation from print to digital education specialist seemed to be going to plan, until the company’s third quarter profit warning. Market conditions in the US and emerging markets are proving more challenging than expected. The bigger concern is whether the company can pull off the digital transition in the face of intense competition. If it can, the long-term opportunities could be enormous. For now, the jury is still out.

The winners

The 10 best performing shares so far in 2015 are listed below, along with their impact on the index.

Company Sector % change Index impact (points)
Taylor Wimpey Housebuilding +46 +8
Hargreaves Lansdown* Financial Services +43 +4
Barratt Developments Housebuilding +32 +6
Direct Line Nonlife Insurance +26 +5
Sage Software +25 +5
Mondi Forestry and Paper +25 +4
CRH Construction & Materials +24 +11
Persimmon Housebuilding +24 +4
ITV Media +24 +8
Admiral Nonlife Insurance +23 +2

Housebuilders have enjoyed another strong year, with Taylor Wimpey, Barratt Developments and Persimmon featuring in the top 10. Record low mortgage rates, a benign land market and favourable government policy are all playing their part; supporting margins, cash flows and dividends. The Bank of England will have to raise interest rates eventually, but any increases are likely to be gradual. This suggests to me the purple patch could last a while longer.

Direct Line’s performance continues to impress. The group has returned 87p, or 50%, of its IPO price as dividends since listing in 2012. Further capital returns will be considered alongside the 2015 full year results.

In an uncertain economic environment, businesses with recurring revenues, robust balance sheets and strong cash flows have been in demand. Sage ticks these boxes in my opinion. December’s full year results showed recurring revenue rising by 9%, driven by strong growth in software subscriptions and the roll-out of new products such as Sage One. The dividend was also increased, underpinning a prospective yield of 2.3% – variable and not guaranteed.

We highlighted ITV as one of our stocks to watch in 2015 and so far it has delivered. The group has seen regular profit upgrades, driven by an improving advertising outlook and a string of earnings enhancing acquisitions of production studios. I believe the outlook for 2016 looks encouraging. The UK economy appears to be in decent shape, the group’s push into the USA is bearing fruit and ITV’s strong balance sheet and cash flows can support further deals. The shares trade on a prospective P/E of 15.5 x and offer a yield of 2.8%.

1 thought on “2015 review: The FTSE 100 winners and losers”

  1. David Lilley says:

    I am impressed with this presentation. This is the first time I have seen a presentation that quantifies the impact of falling and rising stocks on the index. We can now see that some 10% of the fall in the FTSE 100 from its peak in April is down to one company, Glencore, if only we had been measuring from the peak.
    The FTSE 100 falls over 1,000 points since April and we have to wonder why when the UK is in recover. And the answer is that the FTSE 100 is not domestically focused but gets some 70% of its income from abroad and abroad, as in mining, China and commodities has not been doing well.
    But the presentation’s “explanatory value” in answering the BIG question “why has the FTSE 100 lost over 1,000 points since April when the UK is in recovery?” would be much enhanced if it considered the whole 100 and not just 20% of the 100 biggest companies. If the presentation had considered the whole of the FTSE 100 we could clearly distinguish that all of the pain came from abroad and the domestic economy was doing well. And we could get stuck into a Santa rally based on UK focused stocks.
    Please HL, re-run your presentation to include the whole 100 and beginning at the April peak. This would help answer the BIG question and take out the noise that may have been introduced if some of the big losers had done well prior to April.

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