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(Alliance News) - Stock prices in London are seen opening sharply lower, with the FTSE 100 called down almost 200 points, amid fear of a full-scale war in eastern Europe after Russia announced the beginning of a military operation in Ukraine.
In early company news, lender Lloyds Banking and drugmaker Hikma Pharmaceuticals launched share buybacks after upbeat annual results. Jet engine maker Rolls-Royce expressed optimism in its prospects as it announced the departure of its chief executive.
IG futures indicate the FTSE 100 index is to open 190.38 points lower at 7,307.80. The blue-chip index closed up 3.97 points, or 0.1%, at 7,498.18 Wednesday.
Lloyds said 2021 was a year of solid financial performance with continued business momentum embodied by strategic execution, ongoing investment and continued franchise growth.
Lloyds generated net income of GBP15.76 billion in 2021, up 9% from GBP14.40 billion in 2020, though net interest income was down 9% to GBP9.37 billion from GBP10.75 billion. Even so, pretax profit was almost seven times higher at GBP6.9 billion from GBP1.2 billion, benefiting from higher income and a net impairment credit.
Common equity tier 1 ratio - a key measure of a bank's financial strength - increased over the year to 17.3% from 16.2% in 2020.
The bank declared a 2021 total dividend 2.0 pence, up sharply from 0.57p in 2020. Lloyds also announced its intention to implement an share buyback programme of up to GBP2.0 billion, given the strong capital position.
"I am confident that the group's purpose, customer focus, unique business model and significant competitive strengths, embodied in our ambitious strategy will ensure the group is able to deliver higher, more sustainable long-term returns and capital generation for our shareholders, whilst meeting the needs of broader stakeholders," said Chief Executive Officer Charlie Nunn. It was Nunn's first annual results, having taken over as Lloyds boss back in August.
Rolls-Royce said it delivered an improved financial performance in 2021, driven by both business growth and cost reduction.
Separately, the London-based firm said Chief Executive Officer Warren East decided to step down at the end of 2022, after nine years on the board and almost eight years as CEO. As a result, the board will now launch a "thorough and extensive" search for his successor.
For 2021, Rolls-Royce's pretax loss narrowed sharply to GBP294 million from a GBP2.80 billion loss in 2020. This was on revenue of GBP11.22 billion, down from GBP11.49 billion driven by a decline in Civil Aerospace revenue.
In 2021, Rolls-Royce said it powered 7.4 million large engine flying hours, up 11% on 2020 with gradual recovery in international flying activity, which continued to be hit by Covid-19 travel restrictions.
"We expect low-to-mid-single digit revenue growth, and we expect our operating profit margin to be broadly unchanged as underlying operational improvement is balanced with increased engineering spend to develop sustainable growth opportunities. We expect to generate modestly positive free cash flow in 2022, seasonally weighted towards the second half of the year," the company said looking ahead.
Hikma Pharmaceuticals reported strong results for 2021 in what the generic drugmaker said was a year of solid growth and continued strategic momentum.
Hikma posted revenue of USD2.55 billion, up 9.0% from USD2.34 billion in 2020, though pretax profit edged down 2.5% to USD544 million from USD558 million.
Hikma declared a full-year dividend 54 US cents, up from 50 cents. It also launched a share buyback of up to USD300 million, saying this reflects its strong cash generation, balance sheet strength, and confidence in future growth prospects.
Looking ahead, Hikma expects Injectables division revenue growth in the low to mid-single digits, with core operating margin in the range of 35% to 37%. Generics revenue growth is forecast in the range of 8% to 10% and core operating margin in the range of 24% to 25%.
"Our Injectables business is now supplying US hospitals with sterile compounded pharmaceutical products, has expanded into Canada, and is set to grow further with the acquisition of Custopharm and our expansion into US biosimilars. Our Generics business is bringing more complex and specialty products to market, launching Kloxxado and generic Advair Diskus in 2021, and with additional product launches planned for this year," said CEO Siggi Olafsson.
Stocks in London were called sharply lower following an escalation in the Ukraine crisis.
Russian President Vladimir Putin launched a military operation in Ukraine on Thursday with explosions heard across the country and its foreign minister warning a "full-scale invasion" was underway.
Weeks of intense diplomacy and the imposition of Western sanctions on Russia failed to deter Putin, who had massed between 150,000 and 200,000 troops along the borders of Ukraine.
"I have made the decision of a military operation," Putin said in a surprise television announcement that triggered immediate condemnation from US President Joe Biden and other Western leaders.
Putin justified the operation by claiming the government was overseeing a "genocide" in the east of the country.
Shortly after the announcement, explosions were heard in Ukraine's capital, Kyiv, and several other cities. Ukrainian border guards reported being under attack along the Russian and Belarusian frontiers.
Ukraine's President Volodymyr Zelensky declared martial law and said Russia was attacking his country's "military infrastructure", but urged citizens not to panic and vowed victory.
Russian military forces have been shelling eastern Ukraine, but the situation is "under control", the General Staff of the Ukrainian army wrote on Facebook early Thursday, adding that there have been no Russian troop landings in the port city of Odessa.
Biden condemned the "unprovoked and unjustified attack by Russian military forces", and urged world leaders to speak out against Putin's "flagrant aggression". He vowed Russia would be held accountable.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.4%, S&P 500 down 1.8% and Nasdaq Composite down 2.6%.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.8%. Tokyo reopened after a holiday on Wednesday. In China, the Shanghai Composite ended down 1.7%, while the Hang Seng index in Hong Kong was down 3.6%. The S&P/ASX 200 in Sydney closed down 3.0%.
Brent oil was quoted at USD103.67 a barrel on Thursday morning, up sharply from USD97.90 at the London equities close Wednesday. The North Sea benchmark breached the USD100 mark for the first time since September 2014.
Safe-haven asset gold stood at USD1,940.62 an ounce, much higher than USD1,906.84 late Wednesday.
The pound was quoted at USD1.3471 early Thursday, down from USD1.3554 at the London equities close Wednesday.
The euro was priced at USD1.1237, down from USD1.1313. Against the safe-haven yen, the dollar was trading at JPY114.47 in London, lower against JPY115.06.
Thursday's economic calendar has US gross domestic product and the latest jobless clams figures at 1330 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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