LONDON MARKET PRE-OPEN: Smith & Nephew launches buyback, names new CEO

(Alliance News) - Stock prices in London were called to open lower on Tuesday over intensifying fears about a possible war between Russia and Ukraine after Moscow sent troops into two separatist regions in eastern Ukraine.

In early company news, InterContinental Hotels reinstated its dividend after a recovery in 2021. Soft drinks bottler Coca-Cola HBC reported robust annual results. Medical devices maker Smith & Nephew launched a share buyback and appointed a new chief executive.

IG futures indicate the FTSE 100 index is to open 33.73 points lower at 7,450.60. The index closed down 29.29 points, or 0.4%, at 7,484.33 on Monday.

InterContinental Hotels Group said trading improved significantly in 2021 as vaccination rates rose and travel restrictions were lifted around the world.

For 2021, IHG swung to a pretax profit of USD361 million from a loss of USD280 million in 2020 on total revenue that was up 21% to USD2.91 billion from USD2.39 billion.

IHG declared a total dividend 85.9 US cents for 2021, having paid out nothing the year before.

"With the strong financial improvements delivered in 2021, including more than doubling our operating profit from reportable segments and substantially reducing our net debt, the board is pleased to be recommending the reinstatement of a dividend. The signs are encouraging that we are nearing the end of the pandemic, and we are confident in the strength of IHG's enterprise, market positioning and ability to drive attractive levels of long-term, sustainable growth," said Chief Executive Officer Keith Barr.

Coca-Cola HBC said "effective execution" in a volatile environment drove a strong recovery in 2021.

The soft drinks bottler reported 2021 net sales revenue of EUR7.17 billion, up 17% from EUR6.13 billion in 2020, with net profit of EUR547.2 million, up 32% from EUR414.9 million.

Coca-Cola HBC declared a EUR0.71 dividend, up 11% from 2020. It raised its payout ratio target to 40% to 50% from 35% to 45% previously, saying this reflected its positive long-term outlook.

Chief Executive Officer Zoran Bogdanovic said: "Revenue growth management actions focused behind both premium and affordable offers, as well as pricing and ongoing productivity improvements have enabled us to continue investing behind our strategic priorities, including in capabilities development, whilst achieving Ebit margin expansion."

Comparable earnings before interest and tax rose 24% to EUR831.0 million in 2021 from EUR672.3 million in 2020. Ebit margin expanded to 11.2% from 10.8% and comparable Ebit margin to 11.6% from 11.0%

"We are encouraged by the momentum we see in the business. We expect 2022 to be a year of strong sales supported by ongoing volume momentum, pricing actions and beneficial category mix. While mindful of inflationary headwinds and other risks, our track record and continuous focus on efficiencies give me confidence in delivering another year of Ebit growth."

Smith & Nephew reported a rise in annual revenue as the medical devices maker launched a share buyback programme.

For 2021, Smith & Nephew posted a trading profit of USD936 million, up 37% from USD683 million in 2020 on revenue of USD5.21 billion, up 14% from USD4.56 billion. Pretax profit was USD586 million, more than doubled from USD246 million.

Smith & Nephew declared a final dividend of 23.1 US cents. It also made a new commitment to return surplus cash to shareholders in the form of a regular annual buyback, expected to be between USD250 million and USD300 million in 2022.

Looking ahead, Smith & Nephew is targeting underlying revenue growth of 4% to 5% for 2022.

Separately, Smith & Nephew appointed Deepak Nath as its new CEO, succeeding Roland Diggelmann, who will step down by mutual agreement. Nath will take up the role on April 1 and Diggelmann will leave on March 31.

Nath joins from Siemens Healthineers where most recently he was president of the German company's Diagnostics business segment.

Earlier Tuesday, HSBC Holdings reported a sharp jump in profit in 2021, with all of the bank's regions recording a positive year but was unable to match market expectations.

London-headquartered HSBC reported pretax profit of USD18.91 billion, doubled from USD8.78 billion in 2020 - but coming in behind market forecasts of USD19.12 billion.

Annual revenue slipped to USD49.55 billion from USD50.43 billion. HSBC's net interest margin in 2021 worsened to 1.20% from 1.32% in 2020 - which was in line with market forecasts. Net interest income fell to USD26.49 billion from USD27.58 billion, but was able to be slightly ahead of consensus of USD26.35 billion.

The stock was down 3.1% in Hong Kong on Tuesday.

The lower call for the London market comes as Russia-Ukraine tensions intensify.

Russian President Vladimir Putin will recognise the independence of eastern Ukraine's separatist republics, the Kremlin said in a statement Monday, adding that he had informed the French and German leaders of his decision.

"In the near future, the president plans to sign the order," the Kremlin said, in a statement published before an anticipated national address from Putin.

It added that French President Emmanuel Macron and German Chancellor Olaf Scholz had "expressed disappointment" over the decision in phone calls with Putin.

"At the same time, they indicated their readiness to continue contacts," the Kremlin said. France and Germany are mediators in the conflict between Kyiv and pro-Russia rebels in eastern Ukraine.

The West has repeatedly warned Russia not to recognise the separatists - a move that effectively buries a fragile peace process in the region.

The US and its allies rounded on Russia during an emergency Security Council session Monday, denouncing Vladimir Putin's recognition of rebel-held areas in Ukraine and his ordered deployment of troops as a gross violation of international law and "pretext for war".

Addressing the council, US Ambassador Linda Thomas-Greenfield heaped scorn on Putin's assertion that the Russian troops would take on a peacekeeping role in the Donetsk and Lugansk areas. "He calls them peacekeepers. This is nonsense. We know what they really are," Thomas-Greenfield said.

In Asia on Tuesday, the Japanese Nikkei 225 index closed down 1.7%. In China, the Shanghai Composite ended down 1.0%, while the Hang Seng index in Hong Kong was down 3.1%. The S&P/ASX 200 in Sydney closed down 1.0%.

"With US markets closed yesterday, today's market price action is likely to be spicy to say the least with European markets set to open sharply lower, as the drumbeat of war gets ever louder," commented CMC Markets analyst Michael Hewson.

The pound was quoted at USD1.3575 early Tuesday, down from USD1.3607 at the London equities close Monday.

The euro was priced at USD1.1298, down from USD1.1338. Against the yen, the dollar was trading at JPY114.67 in London, lower against JPY114.83.

Brent oil was trading at USD97.70 a barrel Tuesday morning, up sharply from USD95.19 late Monday.

Gold stood at USD1,912.80 an ounce, advancing from USD1,896.42 late Monday amid a flight to safety.

Tuesday's economic calendar has the German Ifo index at 0900 GMT and a US PMI at 1445 GMT. Financial markets in the US will re-open on Tuesday after Monday's Presidents Day holiday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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