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(Alliance News) - Stock prices in London are seen opening higher on Monday following heavy losses on Friday, as US bond markets stabilise and optimism grows over President Joe Biden's ambitious financial stimulus package.
In early company news, distribution and logistics firm Bunzl posted a rise in annual earnings as it maintained a long dividend track record. Telecommunications provier BT Group said its chair intends to retire this year. Wm Morrison Supermarkets extended its partnership with convenience store operator McColl's Retail Group.
IG futures indicate the FTSE 100 index is to open 45.77 points higher at 6,529.20. The blue-chip index closed down 168.53 points, or 2.5%, at 6,483.43 on Friday.
Bunzl reported a rise in 2020 earnings as the distribution firm said it played a vital role in quickly sourcing and delivering significant quantities of Covid-19 protective equipment, such as gloves and masks.
For 2020, revenue was GBP10.11 billion, up 8.4% from GBP9.33 billion in 2019, and pretax profit was GBP555.7 million, up 23% from GBP453.3 million.
Bunzl raised its dividend for the year 5.5% to 54.1 pence from 51.3p paid out the year before, as the company hailed its 28-year track record of consecutive annual dividend growth.
In addition, Bunzl said it has completed three further acquisitions. In January it bought Deliver Net, a healthcare distributor to care home groups in the UK with 2020 revenue of GBP20 million. In February, the company completed the acquisition of Disposable Discounter, an online distributor of food-service disposable products which generated GBP18 million of revenue in 2020.
Finally, Bunzl completed the acquisition of Pinnacle, a leading distributor of cleaning & hygiene in Saskatchewan, Canada, in February. Pinnacle generated GBP11 million of revenue in 2020.
"Overall in 2021 we expect robust revenue growth over the prior year at constant exchange rates, after excluding larger Covid-19 related orders which we do not expect to repeat. We anticipate that the recovery in sales of other products, as restrictions ease, will broadly offset the decline of smaller Covid-19 related orders, with recent acquisitions making an increasing contribution to the group's performance. It is part of our proven and consistent strategy to use our strong balance sheet and cash flows to consolidate the fragmented markets we operate in," said Chief Executive Officer Frank van Zanten.
"We committed GBP445 million to acquisitions in 2020, have announced three further acquisitions today and have an active pipeline supported by substantial financial headroom. Looking ahead, we also expect future growth to be supported by enhanced hygiene trends and our differentiated offering of sustainable and responsible solutions," van Zanten added.
BT said Chair Jan du Plessis intends to retire from the role in 2021 once a successor has been appointed. Du Plessis joined BT as a non-executive director in June 2017 and was appointed chair in November 2017. The board will now start a process for the appointment of a successor led by its senior independent director, BT said.
"BT is a fantastic company, and it is a huge privilege and responsibility to be its chairman. But after 17 years of demanding roles as chairman of significant FTSE companies, I know the time is now right for me to step down and focus on other interests. Until I hand over to my successor, I remain fully committed to BT and helping Philip [Jansen] continue to deliver for all our customers, colleagues and shareholders," du Plessis said.
Wm Morrison Supermarkets and McColl's are extending their wholesale supply partnership.
Morrisons said that, over the next three years, 300 McColl's convenience stores are to be converted to the Morrisons Daily convenience store brand. The stores will offer a full Morrisons convenience range and will be branded as Morrisons Daily, but will continue to be owned and operated by McColl's. The roll-out follows over 30 successful McColl's to Morrisons Daily conversions in recent months.
McColl's said the Morrisons Daily stores have "consistently delivered the strongest like-for-like sales performance" within the McColl's estate, driven by the higher mix of grocery sales, a range of offerings and value products.
In addition, Morrisons and McColl's have extended their partnership by a further three years, with Morrisons to act as McColl's sole wholesale supplier out to 2027, the blue-chip grocer noted.
"Today's agreement is another example of Morrisons extending the reach of our popular brand. In doing so, we are building a broader, stronger Morrisons for customers, and leveraging our existing assets to achieve capital light, profitable growth," said Morrisons CEO David Potts.
Expectations for a positive London shares open stem from a fall in US bond yields. The 10-year US Treasury note yield edged down to 1.4% early Monday from 1.5% late Friday, and falling further from one-year highs reached on Thursday.
Biden on Saturday called on the Senate to quickly vote on a USD1.9 trillion pandemic relief bill, hours after the proposal passed the House of Representatives.
"Now the bill moves to the US Senate, where I hope it will receive quick action. We have no time to waste," Biden said in brief remarks delivered at the White House.
The bill is a cornerstone of Biden's economic recovery plan for the US, and its passage in Congress would mark his first major legislative achievement as president.
The Japanese Nikkei 225 index closed up 2.4% on Monday. In China, the Shanghai Composite closed up 1.2%, while the Hang Seng index in Hong Kong is up 1.3%. In Sydney, the S&P/ASX ended 1.7% higher.
CMC Markets analyst Michael Hewson said: "The slightly more positive tone appears to be as a result of a pause in the move higher in yields, as bond markets stabilise after the choppiness seen at the end of last month, with markets in Asia enjoying a solid rebound after the big falls on Friday.
"The sharp decline in yields from their highs of last week, suggests there is still a fair degree of uncertainty about their overall future direction, in light of the rapid speed of the moves seen in the past few days. One of the reasons behind the sharp fall in bond prices has been an expectation that the new USD1.9 trillion stimulus plan, which passed through the House of Representatives at the end of last week, and now about to make its way through the Senate, could set off an inflationary impulse with markets starting to price in the prospect of a rate rise next year, and potentially another one the year after."
On the economic front, factory activity in China grew at the slowest pace in nine months in February, as business operations slowed over the country's Lunar New Year holiday, according to official data released Sunday.
The purchasing managers' index, a key gauge of manufacturing activity, fell to 50.6 points last month from 51.3, said the National Bureau of Statistics, with slowdowns seen in production, new orders and foreign trade.
Although this was the lowest reading overall since last May, when manufacturing PMI also came in at 50.6, the figure remains above the 50-point mark separating growth from contraction.
Elsewhere in Asia, the Japanese manufacturing sector improved in February, passing into expansion levels as firms started to recover from their pandemic woes, data from au Jibun Bank and IHS Markit showed.
The headline Jibun Bank Japan manufacturing purchasing managers index rose to 51.4 index points in February from 49.8 points in January, marking growth in the sector.
The improved performance was attributed to a rise in production volumes for the first time since the end of 2018, driven by recovering demand and increased orders for manufactured goods.
The pound was quoted at USD1.3984 early Monday, up from USD1.3940 at the London equities close Friday.
The euro was priced at USD1.2090, down from USD1.2111. Against the yen, the dollar was trading at JPY106.55, down from JPY106.62.
Brent oil was quoted at USD65.47 a barrel Monday morning, lower from USD66.10 late Friday. Gold was trading at USD1,756.01 an ounce, up strongly from USD1,728.20.
The economic events calendar on Monday has manufacturing PMI readings from Germany, the eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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