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(Alliance News) - Stock prices in London are seen opening lower on Tuesday after disappointing annual results from miner BHP Group, while US-China relations continued to sour.
In other early company news, Persimmon slashed its dividend as the UK housebuilder felt the effects of the coronavirus crisis. Food, clothing and homeware retailer Marks & Spencer said it will axe around 7,000 jobs as it seeks to streamline the business. Contract caterer Compass Group has appointed a new chair.
IG futures indicate the FTSE 100 index is to open 10.04 points lower at 6,117.40. The blue-chip index closed up 37.40 points, or 0.6%, at 6,127.44 Monday.
Persimmon said it delivered a resilient first-half performance as it grappled with the challenges posed by the coronavirus crisis to home building.
For the half-year ended June 30, revenue fell 32% to GBP1.19 billion from GBP1.75 billion a year ago, and pretax profit fell 43% to GBP292.4 million from GBP509.3 million.
Home completions sank to 4,900 from 7,584, but the new home average selling price rose to GBP225,006 from GBP216,942.
The company said build delays caused by the onset of the Covid-19 pandemic resulted in a 35% reduction in first-half new home legal completions compared with last year.
Persimmon slashed its interim dividend 83% to 40 pence from the 235p paid out last year. The housebuilder said further dividend payments this year will remain "under close review".
Looking ahead, Persimmon said it has had an excellent start to the second half of 2020, with a 49% year-on-year increase in average weekly private sales rates per site since the start of July and a current forward order book of GBP2.5 billion - a 21% increase on last year.
Marks & Spencer Group said it was embarking on a "multi-level consultation programme" which will result in a reduction of around 7,000 roles over the next three months. The retailer said the job cuts will come in its central support centre, in regional management, and in UK stores.
The high street stalwart said it expects a significant proportion of the job reductions will be made through voluntary departures and early retirement.
M&S said it expects to create a number of new jobs as the company invests in online fulfilment and a new ambient food warehouse, as it seeks to reshape its stores over the course of the year.
M&S said the cost of the programme including redundancies will be reflected in a significant adjusting item to be included in its half-year results. The company noted that the streamlining programme was an "important step" in delivering on its cost-savings programme and ensuring it emerges from the Covid-19 crisis with a lower cost base and a stronger, more resilient business.
Turning to current trading, in the 13 weeks to August 8, Food sales were up 2.5%, while revenue in the Clothing & Home unit was down 39%. Group revenue fell 13% during the period.
"Overall the group year to date has performed ahead of the scenario we announced at the year-end in revenue and cash. However at this early stage, there remains substantial uncertainty about market conditions and the duration of social distancing measures, and we are retaining a cautious approach to planning for the balance of the year," M&S said.
M&S is scheduled to release interim results on November 4.
Compass Group said it has appointed Ian Meakins as non-executive chair and a director of the company. Meakins will join the board on September 1 and will assume the role on December 1 when the current chair, Paul Walsh, steps down. Meakins was previously chief executive of plumbing and heating products supplier Ferguson.
BHP lowered its annual dividend, as profit and revenue declined on lower prices and an increase in the closure of mines and of rehabilitation provisions, as a result of Covid-19.
For the financial year to the end of June, pretax profit dropped by 10% to USD13.51 billion from USD15.05 billion the year before, as revenue declined by 4.3% to USD42.39 billion from USD44.29 billion.
The Anglo-Australian miner's revenue performance came in short of company-compiled expectations, which were for USD43.07 billion.
Profit from operations decreased by 11% to USD14.42 billion from USD16.11 billion the prior year, while underlying earnings before interest, taxes, depreciation and amortisation slipped by 5% to USD22.07 billion from USD23.16 billion.
BHP declared an annual dividend of 120 US cents, down 10% from 130 cents the year before, as net debt as at June 30 was USD12.04 billion, up 28% year-on-year from USD9.45 billion. Analysts expected BHP to declare an annual dividend of 123 US cents.
Stocks in London were set to open lower after the US expanded sanctions on China's Huawei Technologies to further limit the telecoms firm's access to computer chips and other products. Officials said Huawei was using subsidiaries to circumvent measures in place to prevent exports of US-based technology.
Beijing had already slammed Washington for using "digital gunboat diplomacy" after President Donald Trump ordered TikTok's Chinese owner ByteDance to sell its interest in the Musical.ly app that it had bought and merged with TikTok.
The Japanese Nikkei 225 index closed down 0.3% on Tuesday. In China, the Shanghai Composite is up 0.3%, while the Hang Seng index in Hong Kong is flat.
"Equity markets in Asia are mixed as US-China tensions ticked up again. The US government will impose further restrictions on the Chinese telecommunications group Huawei - its access to commercially available chips will be reduced again. The Trump administration fears Huawei is essentially an arm of China's ruling communist party. European indices are expected to have a quiet start," said CMC Markets analyst David Madden.
The pound was quoted at USD1.3137 early Tuesday, up from USD1.3096 at Monday's equities close in London.
The euro was priced at USD1.1893, up from USD1.1867. Against the yen, the dollar was quoted at JPY105.65 in London, down from JPY106.00.
In commodities, Brent oil was trading at USD45.27 a barrel on Tuesday morning, up from USD45.04 at the London equities close Monday.
Gold was quoted at USD1,994.07 an ounce, up from USD1,984.00 an ounce at Monday's close in London.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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