LONDON (Alliance News) - A slew of UK corporate news had stocks fluctuating between gains and losses Thursday afternoon, as shareholders in oil and gas major BP protested Chief Executive Bob Dudley's USD19.6 million pay package.
BP said shareholders have demonstrated their real concern over its remuneration policy for 2015 but suggested it will stick to its proposed payment plan, and will only propose a new policy next year.
"We have already spoken to a number of shareholders and they are seeking changes to our remuneration policy for the future. We will continue this engagement and bring a revised policy to our next AGM," said BP in a statement on Thursday afternoon.
The vote on BP's proposed remuneration policy came after shareholders highlighted concerns about remuneration for 2015, a year in which BP reported a USD9.57 billion pretax loss, compared with a USD4.95 billion profit the year before.
Sacha Sadan, director of corporate governance at Legal & General Investment Management, which owns about 3.0% of BP, said the oil company's remuneration committee should have "used discretion" to scale back bonus payments and long-term incentive awards to executive directors.
"LGIM voted against the remuneration report as we felt there was poor alignment between long-term shareholder returns and executive remuneration," Sadan said.
Media said shareholders voted against the remuneration report, with Bloomberg and others reporting that over 59% of shareholders voted against the proposal Thursday. Regardless, the vote was an "advisory" one, meaning BP does not have to take action and can still implement those pay packets. Shares in the oil giant ended down 1.6%.
The FTSE 100 ended up 2.21 points at 6,365.10. The mid-cap FTSE 250 index closed down 0.3%, or 46.56 points, at 17,001.40 and the AIM All-Share rose 0.2%, or 1.34 points, to 732.53.
The Bank of England's Monetary Policy Committee said that increasing uncertainty about the UK's June 23 referendum on whether to remain in the European Union or leave was weighing on domestic economic data, as it voted unanimously to maintain its bank rate at 0.5%.
The MPC said this has begun to "weigh on certain areas of activity" with capital expenditure and commercial property transactions being postponed pending the outcome of the vote.
"Referendum effects are likely to make macroeconomic and financial market indicators harder to interpret over the next few months, and the Committee is likely to react more cautiously to data news over this period than would normally be the case," the minutes of the bank's policy meeting read.
Andrew Wilson, head of investments at wealth advisor Towry, said the UK economy is arguably growing above trend but concerns surrounding a potential Brexit could hold it back.
"The uncertainty around Brexit is likely delaying decisions around hiring and capex for the time being, so a rate rise now would be rather tin-eared and unhelpful," Wilson said.
"The Bank of England won't want to act until after the EU Referendum, and how it acts will completely depend on the result," Wilson added.
By the London stock market close, the pound traded the dollar at USD1.4131, down from USD1.4211 at the same time on Wednesday.
In Europe, the French CAC 40 closed up 0.5% and the German DAX 30 ended up 0.7%.
Euro area consumer prices were unchanged in March after a decline in the previous month, revised data from Eurostat showed. The consumer price index showed no change from a year earlier, following a 0.2% drop in February. The headline inflation rate was revised from the 0.1% fall initially reported.
Headline inflation has been below the European Central Bank's target of 'below, but close to 2%' since early 2013.
At the European equity close, the euro traded the dollar at USD1.1252, down versus USD1.1276 at the close Wednesday.
There was also CPI data from the US. The Labor Department said its consumer price index inched up by 0.9% year-on-year in March after a 1.0% increase in February. It also fell below economists' expectation of a 1.2% rise.
Tame inflation combined with some weaker activity data in recent weeks will make it difficult for the hawks on the Federal Reserve to make a persuasive case for an interest rate hike at the April meeting, ING Chief International Economist Rob Carnell said.
"Even flagging a possible June hike in the April meeting now seems like a stretch," Carnell said following the release of the data. However, the US central bank's preferred measure of inflation is personal consumption expenditure and not CPI.
On Wall Street at the London close, the Dow 30 was up 0.2%, while the S&P 500 and Nasdaq Composite were both flat.
Elsewhere in UK corporate news, Persimmon ended among the worst large-cap performers, down 5.5%. The FTSE 100 housebuilder reported a strong start to 2016, with private sales rates and average selling prices continuing to rise, but noted UK planning delays are "hindering the drive" to boost house volumes.
Total forward sales revenue in the first 15 weeks of 2016, including legal completions taken so far this year, were up 8.0% at GBP2.15 billion, Persimmon said, compared with GBP2.00 billion in the year earlier period.
Planning delays continue to erode the total number of active outlets being developed by the industry, which it said is "hindering the drive to increase the volume of newly built homes delivered to the market".
"We are working hard to increase our active outlet numbers towards around 400 by the end of 2016, and will continue to focus on increasing our output to meet market demand," the company added.
Persimmon's results also hurt shares of peers Berkeley Group, down 4.3%, Barratt Developments, down 2.2%, and Taylor Wimpey, down 2.5%.
Burberry Group closed down 5.9% after the luxury coats and bags retailer reported deteriorating sales over the course of the past six months and warned of a challenging demand environment for its new financial year.
The outlook for the financial year ending March 2017 looks challenging, Burberry said, with underlying cost inflation pressures on the business still significant.
Wholesale revenue is expected to fall further in the first half due to tighter inventory controls among US customers and cautious ordering in other regions, Burberry said, while Japanese licensing revenue will continue to decline as licences expire.
Burberry said it expects adjusted pretax profit for 2017 to be at the low end of analyst expectations, even when including a potential benefit from foreign exchange, based on current rates.
In the FTSE 250, Entertainment One's share price was up 14%. The Canada-based entertainment company said it has received "no approach", following a Financial Times report that ITV is understood to be eyeing a takeover bid for the film and television producer.
Citing people familiar with the matter, the report said ITV held early talks with Entertainment One, the owner of the Peppa Pig franchise, about a potential deal, though no decision has been taken yet. ITV shares closed up 1.1%.
Renold shares rose 14%, making it the best performer in the FTSE All-Share, after the company said its expects its full-year results to be slightly ahead of previous forecasts. Volatility in sales and orders had less of an adverse impact in the final two months of its financial year to March.
The supplier of industrial chains and related power transmission products said the high level of volatility in sales and orders, reported in February, had continued to the end of the year in March, but its adverse impact had moderated.
Full-year underlying sales, which exclude the impact of foreign exchange rates, are therefore expected to be 1.0% higher than forecast in Renold's February trading statement, and around 9.0% lower than the prior year.
In commodities, Brent oil was trading at USD44.27 a barrel at the London close compared to USD44.26 at the same time Wednesday. The price of gold at the close Thursday was USD1,231.18 an ounce, lower than the USD1,244.08 an ounce seen at the close Wednesday.
The focus in the economic calendar Friday will be on Chinese data before the London open. At 0300 BST Chinese retail sales, industrial production and first-quarter GDP data are released.
Later in the day, Japanese industrial production is at 0530 BST, trade balance data from the eurozone at 1000 BST, the Empire state manufacturing index is at 1330 BST, industrial production and capacity utilisation are both at 1415 BST and a preliminary reading of the Reuters/Michigan Consumer Sentiment Index at 1500 BST.
In the UK corporate calendar, there are trading statements from hedge fund manager Man Group and electronics supplier Acal. Miner Polymetal International provides first-quarter production results and Henderson International Income Trust reports interim results.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
24 May 2016 07:34
