Profits take a hit at Entertainment One. FT Opening Quote is your early Square Mile briefing. You can sign up for the full newsletter here.

Efforts to strengthen Entertainment One’s film division will hit its full-year profits by almost £50m, the company announced today, after it renegotiated one of its main distribution agreements, writes FastFT.

Entertainment One is best known for producing television programmes such as Peppa Pig, but has been working to reduce its reliance on the popular cartoon through investments in film production and distribution.

Today the company said it has terminated one of its contracts and replaced it with a new distribution agreement. It said the new agreement will increase its underlying profitability and cash flow, but will require a one-time payment of $25m which will be included in its upcoming financial results for the year to March.

Further investments in “reshaping” the film division will lead to an additional £27m of one-off costs, as the company works to shift from a focus on physical distribution activities to digital content.

Together, the costs will have a total impact of around £47m, but the company said its underlying earnings for the year will be in line with management expectations, and chief executive Darren Throop said the changes will have “a positive impact” over time.

German steel and capital goods group ThyssenKrupp warned of a “significant net loss for the year” owing to the sale of its Brazilian steel business and said that free cash flow for the year before M&A would be negative.

The group on Friday posted a net loss to shareholders of €870m for last quarter, versus a €45m profit a year before. Sales rose 12 per cent to €11bn, ahead of forecasts at €10.3bn.

Thyssenkrupp said it will remain in the red for the year, “exclusively as a result of the negative earnings impact from the sale of CSA,” its steel producing business in Brazil, which resulted in a €900m writedown. It announced the sale of the business in February as part of a transition from making steel to producing goods and services, including making elevators, submarines and car components.

The group also said it would generate negative free cash flow in the “mid-three-digit million euro range”, due to a “significant increase in net working capital at our materials businesses”. It had previously forecast “slightly positive” cash flow.

Finally, Matthew Vincent writes: In the UK, US and Europe, SuperGroup has just achieved a 27 per cent increase in sales of T-shirts that proudly declare “目娱 乐 节今日” and “極端に乾いださい”. If the clothing brand’s 20-to-30-something devotees ever took selfies with the Google Translate app switched on, they might discover that the fashion statement they are actually making is: “Project Entertainment Section Today” and “Extremely Desiccated Please”.

For more on SuperGroup, as well as GSK and Lloyds, see Matthew’s Lombard column.

Beyond the Square Mile

Asian markets have had a mixed day, following on from a retreat on Wall Street. Sydney’s S&P/ASX 200 was down 0.9 per cent, Tokyo’s Topix dropped 0.6 per cent and in Hong Kong the Hang Seng up just 0.1 per cent. China’s Shanghai Composite rose 0.4 per cent.

In New York on Thursday, the S&P 500 slipped 0.2 per cent from a record high in its biggest one-day fall in three weeks. Low levels of volatility have kept market moves subdued.

The Japanese yen was 0.2 per cent firmer at ¥113.66 per dollar in Asian trading.

The dollar index, a measure of the US currency against a basket of global peers, was fractionally lower at 99.58.

Sterling was flat at $1.2888 in Asia, recovering about a quarter of Thursday’s decline when weak industrial production data offset a more upbeat tone from the Bank of England as it kept interest rates on hold.

Oil prices were set for their first three-day increase in a month. Brent crude, the international benchmark, was up 0.1 per cent at $50.84 a barrel, while West Texas Intermediate was up 0.2 per cent at $47.92.

Gold was up 0.1 per cent at $1,226.48 an ounce.

Intraday

In the US, the S&P 500 is tipped to drop 0.2 per cent when trading begins in New York.

Corporate earnings reports out today include Allianz, Innogy and Interserve.

The economic calendar on Friday is as follows (all times London):

07.00: Germany Q1 GDP, consumer price index
07.45: France Q1 wages
08.00: Spain consumer price index
10.00: eurozone industrial production

The markets at 07:50

Asian markets
Nikkei 225 down -77.65 (-0.39%) at 19,884
Topix down -6.15 (-0.39%) at 1,581
Hang Seng up +28.41 (+0.11%) at 25,154

US markets
S&P 500 down -5.19 (-0.22%) at 2,394
DJIA down -23.69 (-0.11%) at 20,919
Nasdaq down -13.18 (-0.22%) at 6,116

European markets
Eurofirst 300 down -6.90 (-0.44%) at 1,550
FTSE100 up +1.39 (+0.02%) at 7,387
CAC 40 down -17.04 (-0.32%) at 5,383
Dax down -46.40 (-0.36%) at 12,711

Currencies
€/$ 1.09 (1.09)
$/¥ 113.71 (113.84)
£/$ 1.29 (1.29)
€/£ 0.843 (0.8426)

Commodities ($)
Brent Crude (ICE) up +0.19 at 50.96
Light Crude (Nymex) up +0.18 at 48.01
100 Oz Gold (Comex) unchanged 0.00 at 1,223
Copper (Comex) unchanged 0.00 at 2.50

10-year government bond yields (%)
US 2.38%
Germany 0.43%

CDS (closing levels)
Markit iTraxx SovX Western Europe at 19.9bp
Markit iTraxx Europe +0.16bps at 62.35bp
Markit iTraxx Xover +1.96bps at 254.86bp
Markit CDX IG +0.49bps at 62.13bp

Sources: FT, Bloomberg, Markit

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