(Alliance News) - The focus was on dividends Tuesday, as the UK earnings season continued apace.
BP followed oil peer Royal Dutch Shell in cutting its quarterly payout, as expected, while distiller Diageo raised its annual dividend slightly, despite profit halving.
Even more steady-on than the Tanqueray gin maker, motor insurer Direct Line Insurance raised its interim dividend by 2.8% and reinstated its previously cancelled final payout for 2019 by declaring a special dividend.
BP shares were up 4.0% early Tuesday in London, while Diageo was down 6.8%. Direct Line was up 5.8%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally higher, up 1.55 points at 6,034.40
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Hang Seng: up 2.3% at 25,015.47
Nikkei 225: closed up 1.7% at 22,573.66
DJIA: closed up 236.08 points, or 0.9%, at 26,664.40
S&P 500: closed up 0.7% at 3,294.61
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GBP: up at USD1.3080 (USD1.3041)
EUR: up at USD1.1774 (USD1.1737)
Gold: firm at USD1,972.12 per ounce (USD1,971.10)
Oil (Brent): down at USD43.87 a barrel (USD44.11)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1100 CEST EU producer price index
0855 EDT US Johnson Redbook retail sales index
0945 EDT US ISM-NY report on business
1000 EDT US manufacturers' shipments, inventories & orders (M3)
1630 EDT US API weekly statistical bulletin
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The UK government has announced more than 300 projects which will share a GBP900 million investment to build homes, infrastructure and create jobs as part of the country's economic recovery from coronavirus, PA reports. The successful projects in England will receive a portion of the GBP900 million Getting Building Fund, announced by the prime minister in June, with the investment expected to deliver up to 45,000 homes, create up to 85,000 jobs and reduce around 65 million kilogrammes of CO2 emissions across the country. Housing Secretary Robert Jenrick said the funding will not only "give a much-needed boost" to the country's economic recovery after the pandemic, but will also "help build the good quality, affordable homes the country needs". Recipients of the funding include GBP23 million for the first phase of the development of a commercial space at Mayfield Park in Greater Manchester, which is expected to create 3,200 jobs.
Also listed are a GBP14.88 million investment to accelerate the National Brownfield Land Institute, a project aiming to create a leader in sustainable construction and GBP12 million to support a new high-speed railway station in Thanet, Kent.
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BROKER RATING CHANGES
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BERENBERG RAISES BT GROUP TO 'BUY' ('HOLD') - TARGET 130 PENCE
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BERENBERG INITIATES FRESNILLO WITH 'SELL' - TARGET 1,000 PENCE
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DEUTSCHE BANK RAISES WILLIAM HILL TO 'BUY' ('HOLD')
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COMPANIES - FTSE 100
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BP halved its quarterly dividend as the oil major grappled with challenging trading conditions in oil and gas markets brought about the coronavirus pandemic. The oil producer said the Covid-19 pandemic continues to create a volatile and challenging trading environment. For the half-year ended June 30, BP swung to a replacement cost loss of USD18.29 billion from a profit of USD3.78 billion a year before. It reported an underlying replacement cost loss of USD5.89 billion from a profit of USD5.17 billion. The loss for the second quarter attributable to BP shareholders was USD16.8 billion. BP declared a quarterly dividend of 5.25 US cents per share, down 50% from 10.50 cents per share for the previous quarter. BP said the decision is aligned with its new distribution policy. Looking to the third quarter of 2020, BP expects higher product demand, but still significantly below last year's levels. The company also expects significant continued pressure on industry refining margins into the third quarter.
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Johnnie Walker scotch-maker Diageo said it put in a consistent first-half performance, but business was significantly dented by Covid-19 in the second half, hurting the distiller's annual performance. For the financial year ended June 30, Diageo reported an 8.3% drop in sales of GBP17.70 billion from GBP19.29 billion in financial 2019, and net sales of GBP11.75 billion, down from GBP12.87 billion. Pretax profit fell 52% to GBP2.04 billion from GBP4.24 billion. Diageo said organic net sales were down 8.4%, with growth in North America more than offset by declines in all other regions. According to company compiled consensus for financial 2020, it was expected to post a fall in organic net sales of 7.3%. Organic volumes were down 11%. Organic operating profit was down 14.4%, hurt by volume declines, cost inflation and unabsorbed fixed costs. Consensus had expected organic operating profit to fall 13.6%. Diageo raised its full-year dividend 1.9% to 69.9 pence from 68.6p. Looking ahead, Diago said that, due to the continued uncertainty caused by the ongoing Covid-19 pandemic, it is not able to provide specific financial guidance.
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COMPANIES - FTSE 250
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easyJet said its third-quarter performance was in line with expectations, ending the period with a re-start to flying. Total group revenue for the quarter ending June 30, was GBP7 million, from GBP1.59 billion in the third quarter last year. easyJet swung to a pretax loss of GBP324.5 million from a GBP174.2 million profit. The fleet was fully grounded on March 30 due to the Covid-19 pandemic. Having re-started flying on 15 June, easyJet carried 117,000 passengers with a total capacity of 132,000 seats in the remaining two weeks of the quarter. The initial schedule comprised only 10 lines of flying and delivered a load factor of 88.9%, it said. Looking ahead, easyJet expects to fly 40% of planned capacity for the fourth quarter. "I am really encouraged that we have seen higher than expected levels of demand with load factor of 84% in July with destinations like Faro and Nice remaining popular with customers. Our bookings for the remainder of the summer are performing better than expected and as a result we have decided to expand our schedule over the fourth quarter to fly 40% of capacity," said CEO Johan Lundgren.
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COMPANIES - MAIN MARKET AND AIM
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Roadside breakdown assistance provider AA confirmed a report in the Times newspaper that it has attracted bid interest from US-based private equity firms. AA said that as part of talks for a potential refinancing, it has been approached by jointly by Centerbridge Partners Europe and TowerBrook Capital Partners and also separately by Platinum Equity Advisors and Warburg Pincus International. AA said the possible offers would be in cash and would involve significant new equity being injected to pay down AA's huge debt pile. AA provided no other details on the approaches, but the Times had reported that one of the bidders made a potential offer of 40 pence a share, equating to a market value of about GBP250 million, or about GBP2.9 billion including AA's GBP2.65 billion of debt. Shares in AA closed at 25.00p each in London on Monday, valuing the company's equity at GBP155.2 million. AA also said it is considering an equity raise among its potential refinancing options.
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Tuesday's Shareholder Meetings
Babcock International Group
Pathfinder Minerals
Record
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By Tom Waite; thomaslwaite@alliancenews.com
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