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(Alliance News) - Stock prices in London are seen opening higher on Tuesday as earnings season in the UK gets well under way, while investors also await US consumer price index data due on Thursday.
In early company news, BP swung to an annual profit as the oil major pressed ahead with its clean energy transition. Online grocer Ocado hailed the performance of its smart platform. Irish support services firm DCC said third quarter trading was in line with expectations.
IG futures indicate the FTSE 100 index is to open 26.93 points higher at 7,600.40. The index closed up 57.07 points, or 0.8%, at 7,573.47 Monday.
BP reported a jump in earnings boosted by higher oil prices as the company said its transformation to an integrated energy company remains on track.
For 2021, BP posted attributable profit of USD7.57 billion, swinging from a USD20.31 billion loss in 2020. For the three months to December 31, attributable profit was USD2.33 billion, swung from USD2.54 billion loss in the fourth quarter of 2020.
For 2021, replacement cost profit - BP's preferred metric - was USD4.74 billion, swung from USD18.10 billion loss the year before. For the fourth quarter, RC profit was USD1.97 billion, swung from USD2.93 billion loss during the same period in 2020.
Further, BP said net debt reduced for seventh quarter in a row to USD30.6 billion end 2021.
BP declared a 2021 dividend of 21.63 cents per share, down from 26.25 cents in 2020. For the fourth-quarter, the company declared a 5.46 cents dividend, unchanged from the third quarter, but up from 5.25 cents in the fourth quarter of 2020.
In addition, BP said it intends to execute a further USD1.5 billion share buyback from 2021 surplus cash flow prior to announcing its first quarter 2022 results. It has executed a share buyback of USD500 million so far this year to offset the expected full year dilution from the vesting of awards under employee share schemes in 2022.
Based on BP's current forecasts, at around USD60 per barrel Brent oil and subject to the board's discretion each quarter, the oil major expects to be able to deliver share buybacks of around USD4.0 billion per annum and have capacity for an annual increase in the dividend per share of around 4% through 2025.
Separately, BP said it is now aiming to sustain earnings from resilient hydrocarbons out to 2031, despite focusing its oil and gas production and refining throughput. It also expects to increase the proportion of its capital expenditure in "transition growth businesses" to more than 40% by 2025 and is aiming for around 50% by 2030. It aims to generate earnings of USD9 billion to USD10 billion from these businesses by 20302, driven by five transition growth engines - bioenergy, convenience, electric vehicle charging, renewables and hydrogen.
"2021 shows BP doing what we said we would - performing while transforming. We've strengthened the balance sheet and grown returns. We're delivering distributions to shareholders with USD4.15 billion of buybacks announced and the dividend increased. And we're investing for the future. We've made strong progress in our transformation to an integrated energy company: focusing and high grading our hydrocarbons business, growing in convenience and mobility and building with discipline a low carbon energy business - now with over 5GW in offshore wind projects - and significant opportunities in hydrogen," said Chief Executive Officer Bernard Looney.
Ocado hailed its investment into new technologies and it has "re-set the bar" within grocery via its Ocado Smart Platform.
For the financial year that ended November 28, Ocado generated revenue of GBP2.5 billion, up 7.2% from GBP2.33 billion in financial 2020. It posted a pretax loss of GBP176.9 million, widened from a loss of GBP52.3 million.
Ocado said the loss reflected increased investment in its Solutions business, particularly the increasing roll out of the Ocado Smart Platform.
The online retailer said it saw "resilient" sales growth of 4.6% in the year, driven by a 22% increase in customer numbers to 832,000. This brought an increase in orders of 12%, to 357,000, offset by a reduction in basket size of 5.8% to GBP129.
Ocado highlighted the results were constrained in the second half by the still-tight labour market in the UK, as well as reduced capacity at one of its fulfilment centres because of a fire in July.
Chief Executive Officer Tim Steiner said: "The past year has further reinforced that demand for online grocery is here to stay. In the majority of mature markets, the fastest growing channel is online and to truly win here food retailers need to deliver the best offer with the best economics across all customer missions. The innovation that is powering the development of the unique and proprietary Ocado Smart Platform is focused on providing an unequalled customer experience through ground-breaking technology which leads to an unrivalled low cost operation.
"The new generation of Ocado technology, which we have called 'Ocado Re: Imagined', represents a transformational leap forward allowing our partners to comprehensively out-compete peers online...With the innovations to the Ocado Smart Platform announced in January 2022, we have again re-set the bar, demonstrating decisively that an online grocery service powered by OSP is able to offer what the customer wants with the economics the retailer needs".
DCC said operating profit for the third quarter ended December 31 was in line with expectations and ahead of the prior year.
The Dublin-based firm said it delivered a good trading performance and benefited from acquisitions completed in the prior year.
Further, DCC said the growth was achieved against the anticipated negative impact of currency translation. DCC continued to develop during the period and completed the acquisition of Almo, DCC's largest acquisition to date, at the end of the quarter.
Looking ahead, DCC continues to expect that the financial year ending March 31 will be another year of strong operating profit growth, in line with current market consensus expectations.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended up 0.7%, while the Hang Seng index in Hong Kong was down 0.9%. The S&P/ASX 200 in Sydney closed up 1.1%.
The UK retail sector had a strong start to 2022, with a combination of inflation, easier comparatives and a slight return to some pre-virus trends lifting sales in January.
According to the latest British Retail Consortium-KPMG tracker, retail sales jumped 12% yearly in January. They had fallen 1.3% annually last January, a month when the UK was under lockdown.
Compared to pre-pandemic times, UK retail sales were 7.5% higher. January 2022's annual growth tops the six-month average of 6.0%.
Russian President Vladimir Putin said he was ready for compromise and would look at proposals put forward by French leader Emmanuel Macron in talks on Monday, while still blaming the West for raising tensions over Ukraine.
Emerging from nearly five hours of talks in the Kremlin, the two leaders voiced hope that a solution could be found to the worst crisis between Russia and the West since the end of the Cold War.
Repeatedly thanking Macron for coming to Moscow, Putin said at a joint press conference that the French leader had presented several ideas worth studying.
"A number of his ideas, proposals...are possible as a basis for further steps," Putin said, adding: "We will do everything to find compromises that suit everyone."
The pound was quoted at USD1.3515 early Tuesday, down from USD1.3534 at the London equities close Monday.
The euro was priced at USD1.1400, down from USD1.1438. Against the Japanese yen, the dollar was trading at JPY115.52, higher than JPY115.05 late Monday in London.
Brent oil was quoted at USD92.48 a barrel on Tuesday morning, down from USD92.98 at late Monday. Gold stood at USD1,817.85 an ounce, higher against USD1,816.81.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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