LONDON (Alliance News) - UK stocks were mixed Thursday morning, amid a flurry of company earnngs reporting, with engineering group Rolls Royce leading the FTSE 100 gainers, while shares in Royal Dutch Shell were suffering as the oil & gas major reported a sharp fall in earnings in the first half of 2016.
The FTSE 100 index was down 0.3%, or 22.07 points, at 6,728.36. The FTSE 250 was flat at 17,267.21, and the AIM-All Share was also flat at 751.47.
Rolls-Royce Holdings shares were up 7.8%. The group said it swung to a big loss in the first half even as revenue ticked up, but it confirmed its earlier announcement of a dividend cut.
The aircraft engine and power turbine maker said it made a GBP2.15 billion pretax loss in the half to the end of June, compared to a GBP310.0 million profit a year prior. The loss was related to mark-to-market revaluations on derivatives contracts, Rolls-Royce said, which caused it to take a GBP2.2 billion charge.
Revenue edged up to GBP6.46 billion from GBP6.37 billion in the half but declined 5.0% in constant currencies, led by decline in its Civil Aerospace division and Marine arm. Rolls-Royce confirmed the cut to its interim dividend announced earlier in the year to 4.60 pence from 9.27p a year prior.
Anglo American was up 4.7%. The multi-commodity miner said it still expects to get net debt below USD10.00 billion by the end of this year after repaying substantial amounts in the first half as the group reported a 23% fall in underlying earnings.
The company lowered net debt to USD11.70 billion by the end of June from USD12.90 billion at the end of 2015. The miner is in the process of restructuring its portfolio and offloading a number of assets in order to shore up the balance sheet and repay its hefty debt pile.
As guided in December, Anglo American did not pay a dividend for the first half. In the first six months of 2015, the miner paid a interim dividend of USD0.32 per share.
Sky shares were up 3.9% after the pay-TV provider reported a rise in earnings and revenue for its most recently ended financial year and upped its total dividend payout.
Sky reported a fall in pretax profit to GBP752 million for the year to end-June from GBP1.52 billion the year before, on revenue of GBP11.97 billion, up from GBP9.99 billion, as a result of one-off gains from its sales of stakes in ITV and the National Geographic Channel the previous year.
Sky proposed a final dividend of 20.95 pence, taking its total dividend for the year to 33.5 pence, up from 32.80p the year before.
BT Group shares were up 3.0% after the telecommunications company said it is on track to deliver its outlook, as pretax profit rose in its first quarter. For the first quarter to end-June, BT reported a pretax profit of GBP717 million, up from GBP632 million the year before, on revenue of GBP5.78 billion, up from GBP4.36 billion the year before.
Intu Properties was up 2.7% despite the property group saying its pretax profit in its first half came in at less than a quarter of what it was a year earlier due to increased finance costs and the revaluation of its investment and development property.
Intu said its revenue grew to GBP285.5 million in the six months ended June 30, compared to the GBP281.9 million reported a year earlier, but said its pretax profit fell to GBP64.8 million from GBP265.6 million a year earlier.
Among the FTSE 100 decliners, Shell 'A' shares were down 3.6%, after the oil & gas major said earnings in the first half of 2016 plummeted by 87% compared to the previous year after revenue dropped and the group booked a number of exceptional items.
Shell said current cost of supply earnings in the first half of the year totalled USD1.05 billion compared to USD8.12 billion a year before. Excluding exceptional items, CCS earnings were down 65% year-on-year to USD2.59 billion from USD7.49 billion. Revenue in the half fell by 30% to USD110.00 billion from USD142.79 billion.
Shares in Lloyds Banking Group were down 4.1%. The lender, which runs the Lloyds Bank, Halifax and Bank of Scotland brands, said its pretax profit for the six months to the end of June grew to GBP2.46 billion, up from GBP1.19 billion a year prior due to substantially lower regulatory provisions booked for the period.
Underlying profit was down 5.0% year-on-year to GBP4.2 billion, with total income down 1.0% to GBP8.9 billion. Lloyds said its asset quality remains strong and said its balance sheet remains robust. The bank hiked its interim dividend 13% year-on-year to 0.85 pence per share and affirmed its guidance for 2016.
Medical devices maker Smith & Nephew was the worst blue-chip performer, down 4.5%, after reporting lower pretax profit for the first half despite some growth in revenue but raised its interim dividend. The group said pretax profit in the half to the end of June declined to USD327.0 million from USD411.0 million, hit by a weaker gross margin and higher administrative expenses.
Smith & Nephew will pay an interim dividend of 12.30 US cents per share, up from 11.80 cents a year prior.
In mainland Europe, the CAC 40 in Paris was flat, while the DAX 30 in Frankfurt was down 0.1%.
In Asia on Thursday, the Japanese Nikkei 225 index fell 1.1%. In China, the Shanghai Composite added 0.1%, while the Hang Seng index in Hong Kong continues down 0.3%.
In the economic calendar, eurozone's consumer confidence data are at 1000 BST. In the US, initial and continuing jobless claims are at 1330 BST, at the same time as the goods trade balance.
Already released, data from the Nationwide Building Society showed UK house prices increased by more than expected in July after Britons voted to leave the EU. Annual growth in house prices increased to a four-month high of 5.2% in July from 5.1% in June, while it was expected to ease to 4.5%. On a monthly basis, house prices advanced 0.5% after rising 0.2% in June. Prices were expected to remain flat in July.
By Daniel Ruiz; danielruiz@alliancenews.com
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