(Alliance News) -Â The FTSE 100 edged up in opening trade on Tuesday, gains for BP on the promise of share buybacks offsetting a slide for Aveva.
There was caution as the US Federal Reserve kicks off its two-day meeting late on Tuesday. This follows the Bank of Japan which raised its growth forecasts but left its ultra-loose monetary policy in place.
As a busy week for corporate earnings gets underway globally, focus will turn to the US where the likes of Alphabet, Microsoft and Visa report later on Tuesday.
The blue-chip FTSE 100 index was up 6.71 points, or 0.1%, at 6,969.83 early Tuesday. The mid-cap FTSE 250 index was down 14.97 points, or 0.1%, at 22,562.37. The AIM All-Share index was down 0.1% at 1,273.92.
The Cboe UK 100 index was flat at 693.58. The Cboe 250 was down 0.1% at 20,187.08, and the Cboe Small Companies down 0.1% at 14,472.56.
Topping and tailing the FTSE 100 in early trade were BP and Aveva.
BP shares rose 3.0% after the oil major said it will start share buybacks after reducing net debt below USD35 billion.
BP reported a replacement cost profit for the first quarter of 2021 of USD3.33 billion, swinging from a loss of USD628 million a year ago, while underlying RC profit jumped to USD2.63 billion from USD791 million.
"This result was driven by an exceptional gas marketing and trading performance, significantly higher oil prices and higher refining margins," the company said.
Brent oil was trading at USD66.04 a barrel early Tuesday, higher than USD65.50 late Monday and triple its value compared to a year ago.
BP ended the period with net debt of USD33.31 billion, well down on the USD51.40 billion reported at the same date a year ago. BP's net debt stood at USD38.9 billion at the end of 2020.
"We generated around USD11 billion of cash inflow in the first quarter, enabling us to reach our USD35 billion net debt target significantly ahead of plan and move to the second phase of our financial frame. We are starting buybacks in the second quarter with the intent to offset the full-year dilution from employee share schemes. In addition, we intend to distribute 60% of surplus cash flow for 2021 through share buybacks, with the remaining 40% being used to further strengthen our balance sheet," said Chief Financial Officer Murray Auchincloss.
BP plans to buyback USD500 million of shares in the second quarter. It will provide an update on third-quarter buyback plans at the time of its second-quarter results, it said.
Chief Executive Bernard Looney said: "With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early. We are commencing share buybacks in the second quarter which, alongside our resilient dividend, support the growth in distributions to shareholders."
BP's dividend was held steady at 5.25 cents for the first quarter of 2021 with that paid out for the fourth quarter of 2020 - though half of the 10.50 cents dividend paid for the first quarter of 2020.
Aveva stumbled 3.7%, as the engineering and industrial software provider's chief executive decided to return to the US for personal reasons and will leave after the annual general meeting in July. His employment will cease at the end of January 2022.
Peter Herweck will be seconded from Schneider Electric on request of Aveva to the role of CEO, effective May 1. Herweck, who is currently executive vice president of Industrial Automation at Schneider Electric, has over 30 years of experience in automation, digitalisation and industrial software and his experience. France's Schneider Electric has a 60.2% stake in Aveva following a merger of software businesses back in 2018.
Aveva said it recorded double-digit revenue growth during the second half of the financial year ended March 31 on a standalone organic constant currency basis. This resulted in annual revenue being flat year-on-year, on the same basis, reflecting disruption related to the Covid-19 crisis during the first half.
Whitbread shares fell 1.8% after the Premier Inn hotel owner swung to a huge full-year loss.
Revenue for the financial year that ended February 25 sank 72% to GBP589.4 million from GBP2.07 billion the year before, sending Whitbread to a pretax loss of GBP1.01 billion from a profit of GBP280.0 million.
The loss included an impairment charge of GBP348.0 million relating to goodwill in Germany, property, plant and equipment and right-of-use assets, as a result of impairment reviews triggered by the Covid-19 situation and its impact on current and future growth rates.
No payout was recommended for the recently ended year, after a total dividend of 32.7p paid for the 2020 financial year.
Whitbread said dividends will not be paid during its current revolving credit facility covenant waiver period, which lasts until March 2023, as a condition agreed with lenders and pension trustees, or until the original covenant tests are passed.
"The board hopes to return to paying dividends again following the normalisation of the group's financial position and performance," Whitbread said.
On AIM, Jet2 rose 2.2% as, despite guiding to a loss for its recently ended financial year, said the rollout of vaccines is encouraging.
The airline and package holiday operator expects to report a loss before foreign exchange revaluation and tax from continuing operations for the financial year ended March 31 between GBP375 million to GBP385 million, swinging from a profit of GBP264.2 million the year before.
The UK's vaccine rollout and increasing momentum in Europe are both encouraging for the financial year ahead, Jet2 said, though it highlighted uncertainty over the UK government's proposed Covid-19 travel restrictions for the 2021 summer season.
"Unsurprisingly given the short-term uncertainty, customers are booking significantly closer to departure for Summer 21. However, we continue to be encouraged by the volume of customer bookings for both Winter 21/22 and for Summer 22, for which package holiday bookings are displaying a materially higher mix of the total," it said.
In mainland Europe, the CAC 40 in Paris was flat while the DAX 30 in Frankfurt was down 0.2% early Tuesday.
In Tokyo, the Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong was down 0.2%. The S&P/ASX 200 in Sydney ended down 0.2%.
While lender HSBC traded 1.8% higher in Hong Kong, the performance in London was more muted, shares advancing just 0.5%.
Pretax profit in the three months to March 31 improved 79% to USD5.78 billion from USD3.23 billion the year before. In the first quarter, HSBC's expected credit losses came out as a net release of USD400 million compared to the mammoth USD3.0 billion charge seen a year before.
The bank on Tuesday reported growth from all regions, with Asia profit growing slightly to USD3.76 billion but European and North American operations swinging to profit from a loss a year before.
The US dollar firmed on Tuesday morning. Sterling was quoted at USD1.3881 early Tuesday, soft on USD1.3885 at the London equities close on Monday. The euro traded at USD1.2073, flat on USD1.2075 late Monday.
The dollar was quoted at JPY108.30, higher versus JPY108.18 late Monday in London.
Gold was quoted at USD1,781.51 an ounce early Tuesday, rising from USD1,777.60 on Monday.
The economic calendar on Tuesday has a US monthly house price index print at 1400 BST.
By Lucy Heming;Â lucyheming@alliancenews.com
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