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LONDON BRIEFING: BAE Catches Up On Dividend Payments As Sales Rise

Thu, 25th Feb 2021 08:28

(Alliance News) - Aerospace and defence company BAE Systems on Thursday declared a 23.7p dividend for 2020 and similarly said it additionally will pay 13.8p as a catch-up of the 2019 final dividend that had been deferred due to Covid-19.

The good news on payouts for investors came as BAE reported profit after tax in 2020 of GBP1.37 billion, down from GBP1.53 billion in 2019. Operating profit however edged up to GBP1.93 billion from GBP1.90 billion.

Sales rose 3.7% to GBP20.86 billion from GBP20.11 billion. Order intake increase to GBP20.9 billion, and BAE said it has an order backlog of GBP45.2 billion.

Less positively, net debt ballooned to GBP2.72 billion from GBP743 million, after a GBP1 billion bond issue to fund BAE's UK pension scheme and also GBP1.7 billion in acquisitions.

"In 2021, we will continue to drive operational performance, progress our sustainability agenda and invest in high-end discriminating technologies to meet our customers' priorities, which will ensure we are well positioned to grow the business and contribute to the economic prosperity of the countries in which we operate," said Chief Executive Charles Woodburn.

BAE shares were up 1.7% early Thursday.

Here is what you need to know at the London market open:



MARKETS



FTSE 100: up 0.5% at 6,689.01



Hang Seng: up 1.2% at 30,074.17

Nikkei 225: closed up 1.7% at 30,168.27

DJIA: closed up 424.51 points, or 1.4%, at 31,961.86

S&P 500: closed up 44.06 points, or 1.1%, at 3,925.43



EUR: up at USD1.2176 (USD1.2127)

GBP: up at USD1.4130 (USD1.4100)

USD: flat at JPY106.07 (JPY106.00)

Gold: down at USD1,792.74 per ounce (USD1,796.20)

Oil (Brent): up at USD67.39 a barrel (USD67.02)

(changes since previous London equities close)



ECONOMICS AND GENERAL



Thursday's Key Economic Events still to come

EU virtual summit

1000 CET EU monetary developments in euro area

1100 CET EU business & consumer surveys

1100 GMT Ireland labour force survey

0830 EST US 2nd estimate gross domestic product

0830 EST US initial jobless claims

0830 EST US advance report on durable goods



First-time buyers are re-emerging in the UK housing market this year, after the impact of the coronavirus pandemic meant their plans were put on hold in 2020, property experts have said. However, the increase could add to the upward pressure on property prices climbing higher as demand for homes outweighs supply. Zoopla said the share of first-time buyers purchasing properties dipped to its lowest levels since 2016 last year. Their numbers now appear to be on the increase, with a 5% increase in demand in the first six weeks of 2021 compared with towards the end of 2020. Zoopla defined demand as people who are actively viewing and engaged in finding out more about property on its website. The share of first-time buyers across the UK reached its lowest level since 2016 last year, accounting for 31% of sales, down from a peak of 35% in 2018, according to Zoopla's calculations.



BROKER RATING CHANGES



UBS RAISES ASTRAZENECA TO 'BUY' (NEUTRAL) - PRICE TARGET 8000 (7500) PENCE



JEFFERIES RAISES RECKITT BENCKISER TO 'HOLD' (UNDERPERFORM) - PRICE TARGET 5,950 (5,845) PENCE



DEUTSCHE BANK RAISES RYANAIR PRICE TARGET TO 18.50 (16.20) EUR - 'BUY'



COMPANIES - FTSE 100



Associated British Foods guided to a sharp fall in half-year sales for fashion retailer Primark given virus restrictions in the period. AB Foods said Primark's sales for the 24 weeks to February 27 are estimated to be around GBP2.2 billion, down sharply on GBP3.7 billion a year ago. The FTSE 100 constituent noted that the majority of Primark stores were shuttered during November and from the end of December, estimating the loss of sales while stores were closed to be around GBP1.1 billion. "When stores were open, trading continued to be strong, with sales at minus 15% on a like-for-like basis compared to last year. This performance should be seen in the context of lower category spend and lower footfall reflecting government advice to limit journeys from home," the company said. Primark's adjusted operating profit for the half-year should be "marginally above break-even", compared to a profit of GBP441 million a year ago. "Our estimate for the sales which will be lost during the second half of our financial year in respect of the remaining periods of store closures is some GBP480 million, with a loss of contribution, after cost mitigation, of GBP170 million," the company added. Other segments fared better in the period. AB Foods said it expects revenue and profit in each of its Grocery, Sugar, Agriculture and Ingredients businesses to be ahead of both expectation and the first half of last year. However, as a consequence of the restrictions placed on Primark, AB Food expects half-year sales, adjusted operating profit and adjusted earnings per share for the group to be lower than last year.



Wealth Manager St James's Place reported an underlying cash result of GBP264.7 million for 2020, a touch above consensus, which lay at GBP260.2 million, but below 2019's GBP273.1 million. Pretax profit tumbled to GBP426.4 million from GBP708.9 million. Cirencester-headquartered St James's Place had already reported on its fund performance for 2020. In late January, the company said it ended last year with GBP129.34 billion in funds under management - a record for the company - compared to GBP116.99 billion at the same point a year before. St James's Place said the withheld final dividend for 2019 of 11.22 pence will be paid as an interim dividend during the first quarter of 2021. The company proposed a final dividend of 38.49p, with this being the firm's only dividend for 2020, versus a total payout of 49.71p for 2019, a figure that includes the withheld final dividend no set to be paid. "At the outset of the pandemic the board made the difficult decision to withhold 11.22 pence of the 2019 final dividend, until such time when the financial and economic impact of Covid-19 became clearer. I am pleased to report that we have not needed to utilise those funds and, whilst the pandemic is still on-going, we now have the confidence to pay this withheld amount as a further interim dividend during the first quarter," explained Chief Executive Andrew Croft. "In the near term, whilst we are encouraged by the moderate growth in new business we have seen in the early weeks of 2021, the external environment remains challenging."



Standard Chartered reported a sharp drop in profit for 2020, with both profit and income unable to match market consensus, but believes it is well placed to capture the benefits from a global economy returning to growth. Chief Executive Bill Winters said: "We are weathering the health crisis and geopolitical tensions very well. We remain strong and profitable, although clearly impacted by credit challenges and low interest rates. Our strategic transformation continues to progress well, and our outlook is bright." For 2020, the London-headquartered but Asia-focused bank recorded pretax profit of USD1.61 billion, down 57% from the USD3.71 billion reported in 2019. StanChart's profit came in below market consensus of USD1.85 billion. The bank upped its credit impairments in 2020 to USD2.29 billion from USD906 million, though below consensus of USD2.40 billion. StanChart proposed a 9 cent per share dividend, which it noted is the maximum allowed under current regulatory guidance.



Miner Anglo American reported a slip in 2020 earnings but lifted its final dividend. Revenue for 2020 grew 3% to USD30.90 billion, with underlying earnings before interest, tax, depreciation and amortisation falling 2% to USD9.80 billion. The firm declared a final dividend of USD0.72, up 53% on a year ago. "The resilience of our diversified business, following the operational disruptions of the first half and benefiting from strong metals prices in the latter months, generated underlying Ebitda of USD9.8 billion, with an increased mining Ebitda margin of 43%," said Chief Executive Mark Cutifani. "Our balanced investment programme is driving material business improvement, while also delivering margin-enhancing and sector leading volume growth of 20-25% over the next three to five years, that includes first copper production from Quellaveco in 2022. Together with our P101 and technology work, we are on track to deliver our targeted USD3-4 billion annual run-rate of incremental improvement by the end of 2022, also taking us towards our longer term target of a 45-50% mining Ebitda margin."



Hikma Pharmaceuticals reported growth in both revenue and profit for 2020. Revenue for 2020 rose 6% to USD2.34 billion while pretax profit increased 14% to USD558 million from USD491 million. The firm declared a full-year dividend of 50 cents per share, up from 44 cents in 2019. Injectables revenue grew 9% to USD977 million in 2020 with a core operating margin of 38.6% versus 38.0% in 2019. Generics revenue grew 3% to USD744 million with a core operating margin of 21.6% versus 17.2%. Branded revenue grew 5% at constant currency to USD613 million with the core operating margin weakening to 20.6% from 22.1%. For 2021, Hikma expects Injectables revenue to grow in the mid-single digits with a core operating margin in the range of 37% to 38%. Generics revenue is seen around USD770 million to USD810 million and a core operating margin around 20%. Branded revenue is expected to grow in the mid-single digits in constant currency.



COMPANIES - FTSE 250



Aston Martin Lagonda Global Holdings said its pretax loss multiplied in 2020 to GBP466.0 million from GBP119.6 million, as revenue fell 38% to GBP611.8 million from GBP980.5 million. However, the luxury car maker highlighted the successful launch of its DBX sports utility vehicle, with 1,516 units wholesaled amid strong customer demand and the first new variant planned for the third quarter of this year.



COMPANIES - GLOBAL



Bayer said it swung to loss in 2020 but expects to achieve stable earnings going forward. The German pharmaceutical and chemicals firm said sales were down 4.9% to EUR41.40 billion in 2020 when compared to the prior year. Earnings before interest, tax, depreciation, amortization and special items came in 0.1% lower year-on-year, at EUR11.46 billion. Net loss for the year was EUR10.50 billion, swinging from income of EUR4.09 billion a year earlier. This resulted from EUR23.26B in special item costs, versus EUR2.81 billion in 2019. The special items in 2020 were primarily provisions for agreements reached in litigations related to glyphosate, dicamba, PCB and Essure. These were combined with impairments charges in the Crop Science division, which is subject to many of the lawsuits over the Roundup glyphosate product from US acquisition Monsanto. Bayer said it will be paying a dividend of EUR2.00 per share for 2020, lower than EUR2.80 per share paid for 2019.



Anheuser-Busch InBev reported lower profit in 2020 as volumes and revenue were hit by Covid-19, leading to a smaller annual shareholder payout. AB InBev is a Leuven, Belgium-based drink and brewing company which owns brands such as Corona and Budweiser. AB InBev said profit in 2020 sank to USD2.20 billion from USD10.41 billion a year prior. Normalised earnings before interest, tax, depreciation and amortisation fell 13% to USD17.32 billion from USD21.08 billion. Revenue slipped 3.7% to USD52.33 billion from USD46.88 billion. "Following a strong start to the year, our overall results in 2020 were significantly impacted by the disruption caused by the Covid-19 pandemic," the company said. Total volumes dipped 5.7% to 530.64 million hectolitres from 561.43 million hectolitres.



US biotech firm Moderna said Wednesday that doses of its new Covid vaccine candidate aimed at the South African coronavirus variant had been shipped to the US National Institutes of Health for testing. "We look forward to beginning the clinical study of our variant booster and are grateful for the NIH's continued collaboration to combat this pandemic," said Chief Executive Stephane Bancel. The South African variant is considered among the more dangerous of current mutations because it evades some of the blocking action of antibodies that target the older coronavirus strain. This means that people who were infected with the classic strain are more susceptible to reinfection, and research has also shown it has partly reduced the protection of the current generation of vaccines. While initial testing has shown that Moderna's original vaccine called mRNA-1273 remains effective against emerging variants, the company said it was pursuing development of the variant-specific vaccine as part of a number of strategies being considered. The UK has ordered 17 million doses of Moderna's original vaccine, with delivery expected from the spring.



Thursday's Shareholder Meetings

Shaftesbury PLC - AGM

Virgin Money UK PLC - AGM



By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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