LONDON MARKET PRE-OPEN: Greggs Considers Rolling Out Special Dividend

(Alliance News) - Stock prices in London are seen opening in the green on Tuesday following a strong US close on Monday, as investors remain hopeful that central bank stimulus will bolster a virus-hit global economy.

In company news, quality assurance provider Intertek Group raised its dividend after strong annual results, and equipment rental firm Ashtead Group enjoyed a strong third quarter supported by its North America operations. Baker Greggs said it would consider paying a special dividend in 2020 after a "record" 2019.

IG futures indicate the FTSE 100 index is to open 10.41 points higher at 6,665.30. The blue-chip index closed up 74.28 points, or 1.1%, at 6,654.89 Monday.

Intertek said 2019 was the company's fifth straight year of revenue growth as the safety and inspection services provider hiked its annual dividend.

For 2019, revenue came in at GBP2.99 billion. up 6.6% from GBP2.80 billion in 2018 and pretax profit rose 5.9% to GBP483 million from GBP456.5 million. Interek said its performance was driven by broad-based organic growth of 3.3% at constant rates and contribution of acquisitions it made during the year.

Intertek raised its full-year dividend to 105.8 pence from 99.1p.

In addition, Intertek - which has factories in mainland China - said it was too early to quantify the effects of the coronavirus outbreak on 2020 earnings.

"Intertek is not immune to the impact of the novel coronavirus and our 2020 performance will be affected by the temporary disruption to the supply chains of our clients and any impact it might have on global trade activities. It is too early to quantify the impact of the novel coronavirus, and we will provide an update at a later stage once we have more visibility on the full resumption of the supply chain," the company said.

Intertek added its mid- to long-term outlook will benefit from structural growth drivers including, product variety, brand and supply chain expansion, product innovation and regulation.

Ashtead Group said it delivered a third quarter of "industry-leading rental revenue growth", buoyed by a strong performance in North American end markets.

For the quarter ended January 31, revenue came in at GBP1.25 billion, up 11% from GBP1.14 billion in the third quarter a year before, but pretax profit dipped 1% to GBP225 million from GBP241 million.

On an underlying basis, third-quarter pretax profit rose 6% to GBP257 million from GBP254 million.

In the nine months to January 31, the company reported record free cash flow of GBP363 million.

Ashtead - which makes a bulk of its revenue in the US via its Sunbelt unit - said in the nine months to January 31, revenue in North America rose to USD3.93 billion from USD3.39 billion.

"In North America our business continues to perform well in supportive end markets, while in the UK we have taken decisive strategic action to refocus the business in the challenging market conditions. Although construction markets are moderating, we expect results to be in line with expectations and the board continues to look to the medium term with confidence," Chief Executive Brendan Horgan said.

Greggs said it delivered an "exceptional performance" in 2019, due to what it called transformational changes made by its strategic investment programme.

For 2109, Greggs reported sales of GBP1.17 billion, up from GBP1.03 billion in 2018. Pretax profit was up 31% to GBP108.3 million from GBP82.6 million.

Greggs declared a full-year 33.0p per share dividend, up from 25.0p in 2018, giving a total ordinary dividend for the year of 44.9p. The company said it "will consider capacity for a special dividend at the time of interim results".

"We made a very strong start to 2020 in January, but in February saw a significant slowdown in sales growth as a result of the storms that have affected the UK. There is some uncertainty in the outlook, particularly given the potential impact of coronavirus. This aside we expect to make year-on-year progress and will do so from a strong financial position, supporting our investment for further growth whilst also delivering good returns for all stakeholders," said CEO Roger Whiteside.

In the US on Monday, Wall Street ended sharply higher, with the Dow Jones Industrial Average up 5.1%, S&P 500 up 4.6% and Nasdaq Composite up 4.5%. At 1,293.96 points, it was the Dow's biggest daily rise since March 2009.

Finance ministers and central bank chiefs from G7 countries will hold talks on Tuesday with global uncertainty rising over the coronavirus epidemic, the US Treasury said Monday.

US Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell "will lead a call with their G7 counterparts tomorrow morning", the department confirmed in a statement.

Top finance officials in Europe separately tried to calm fears about a damaging economic downturn as a result of the epidemic, as did the continent's central bank.

The Japanese Nikkei 225 index closed down 1.2%. In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong is up 0.1%.

The pound was quoted at USD1.2790 early Tuesday, firm from USD1.2773 at the London equities close Monday.

The euro was at USD1.1146, marginally lower from USD1.1157 at the London equities close Monday. Against the yen, the dollar was trading at JPY107.79, down from JPY108.02 late Monday.

Gold was at USD1,595.70 an ounce Tuesday morning, flat from USD1,594.61 late Monday. Oil was priced at USD52.53 a barrel, up from USD51.70 late Monday.

The OPEC club of oil-producing countries meets Thursday in Vienna as they consider how to react to a sharp drop in global oil demand due to the outbreak of the new coronavirus.

The extraordinary two-day meeting will see OPEC, led by Saudi Arabia, and its allies in the so-called OPEC+ group - foremost among them Russia - discuss how to halt the sharp fall in oil prices in the past two months as the epidemic has spread.

OPEC's "joint technical committee" met last month and recommended a cut of 600,000 barrels to ward off the effects of the coronavirus slowdown.

Ahead in the US, 14 states will cast their votes to nominate presidential candidates - who will eventually contest for the presidency in November's general election - in an event known as 'Super Tuesday'.

The economic events calendar on Tuesday has eurozone inflation readings at 1000 GMT. In addition, there is the latest grocery market share figures from Kantar Worldpanel at 0800 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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