20th Feb 2025 16:57
(Alliance News) - The FTSE 100 ended lower on Thursday, not helped by a weak start on Wall Street, hurt by a handful of its heavyweight names going ex-dividend.
The FTSE 100 index closed down 49.56 points, 0.6%, at 8,662.97. The large-cap benchmark was hit by the likes of AstraZeneca and BP, who traded lower as shares went ex-dividend.
The FTSE 250 ended down 95.02 points, 0.5%, at 20,612.77, while the AIM All-Share closed down 2.89 points, 0.4%, at 716.54.
The Cboe UK 100 ended down 0.7% at 867.44, the Cboe UK 250 shed 0.6% at 17,923.24, while the Cboe Small Companies fell 0.2% at 15,884.79.
In European equities on Thursday, the CAC 40 in Paris ended up 0.1%, while the DAX 40 in Frankfurt fell 0.5%.
On the FTSE 100, shares in Lloyds Banking Group closed up 4.9%, just shy of a 12-month high, as it forecast a "reasonable clip" in earnings in 2025, and further acceleration in 2026, despite the "significant uncertainty" over the ongoing car finance probe.
Chief Executive Charlie Nunn stressed there remains "significant uncertainty" surrounding the outcome of the car finance investigation. The lender took an extra GBP700 million provision in the fourth quarter for potential remediation costs relating to motor finance commission arrangements in the UK, taking the total charge so far to GBP1.15 billion.
Lloyds said pretax profit in 2024 fell 20% to GBP5.97 billion from GBP7.50 billion a year prior. Total income fell 3.2% to GBP34.28 billion from GBP35.41 billion, with a 7.7% decline in net interest income to GBP12.28 billion, hurting its top line. Lloyds reported a banking net interest margin of 2.95% for 2024, down from 3.11% in 2023. It had expected a banking NIM outcome of "greater than 290 basis points".
Chief Financial Officer William Chalmers pointed to a "significant and accelerating" tailwind to income from the structural hedge. The structural hedge reduces interest rate risk and smooths net interest income over the interest rate cycle.
Chalmers expects 2025 structural hedge income to be around GBP1.2 billion higher in 2025 than the GBP4.2 billion in 2024, with a further GBP1.5 billion growth in 2026 from 2025.
The CFO explained 90% of the hedge expectation for 2025 is "locked in", as is 75% for 2026, so "we are pretty certain" it is going to happen.
Centrica was also in favour, up 5.6%, pleasing the market with a surprise share buyback and confident outlook, although a drop in energy prices saw profits plunge.
The Windsor, England-based owner of British Gas said pretax profit plunged 74% to GBP1.68 billion in 2024 from GBP6.47 billion in 2023, as revenue fell 25% to GBP19.91 billion from GBP26.46 billion.
Adjusted operating profit fell 44% to GBP1.55 billion from GBP2.75 billion, just shy of analyst consensus for GBP1.58 billion. Higher energy prices had boosted prior-year earnings in the wake of the war in Ukraine.
Within this, adjusted operating profit for Retail, which includes British Gas, fell 47% to GBP427 million from GBP799 million. British Gas itself saw adjusted operating profit fall 60% to GBP297 million from GBP751 million.
The full-year dividend was increased by 13% to 4.5p from 4.0p, and Centrica plans to increase the payout to 5.5p in 2025. It also announced an additional GBP500 million share buyback extension.
Citi analyst Jenny Ping commented: "This is a solid set of numbers, accompanied by a very robust outlook, underpinned by management's confidence on the quality and stability of earnings at Centrica. Investor expectations were limited going into the result, but today's announcement should provide new visibility to the equity story."
US financial markets were lower at the time of the London close. The DJIA was down 1.3%, the S&P 500 was 0.8% lower, and the Nasdaq Composite was also 0.8% worse off.
Walmart slid 6.1% as solid fourth-quarter earnings were accompanied by soft guidance for financial 2025.
The retailer guided to full-year adjusted earnings per share of USD2.50 to USD2.60, below Street projections of USD2.78. This includes a 5 US cents currency headwind.
The pound was quoted at USD1.2638 at the London equities close Thursday, up from USD1.2572 at the close on Wednesday.
The euro firmed to USD1.0470 at the European equities close Thursday, against USD1.0409 at the same time on Wednesday.
Against the yen, the dollar was trading lower at JPY149.64 compared to JPY151.62 late Wednesday.
BAE Systems led the FTSE 100 fallers, down 3.6%, after plans by US Defence Secretary Pete Hegseth to reduce military spending were reported.
Bloomberg disclosed that a memo, issued by Hegseth, showed a planned 8% cut in defence spending for each of the five fiscal years starting with 2026.
BAE Systems makes nearly half its group revenue in the US.
On the FTSE 250, Ithaca Energy jumped 9.3% after reporting oil production rose faster than the market forecast in the year just gone.
The London-based oil and gas company operating in the North Sea said production was 80,200 barrels of oil equivalent per day in 2024, at the top end of market guidance range and 14% higher than 70,239 in 2023.
It was a better day for John Wood which rose 4.3% after it said it has won a USD120 million contract extension with Shell UK, part of oil major Shell, a rare bit of good news of late for the engineering services and consulting firm.
Thursday's contract announcement came at a difficult time for John Wood.
After the London market close on Wednesday, it said Chief Financial Officer Arvind Balan had resigned with immediate effect after it emerged that his professional qualifications had been incorrectly described in public statements.
The resignation came as the Aberdeen-based company is struggling with weak trading and financial difficulties. On Friday last week, John Wood said it was implementing further cost-cutting measures and considering refinancing options to offset cash outflows and mounting liabilities.
Elsewhere, Ferrexpo slumped 28% after Reuters reported Ukraine has moved to nationalise the Poltava mining and processing plant, its largest asset of Ferrexpo, amid an investigation into alleged misappropriation of funds related to illegal mining.
Brent oil was quoted at USD76.83 a barrel at the London equities close on Thursday, up from USD76.41 late Wednesday.
Gold was quoted higher at USD2,945.48 an ounce at the London equities close on Thursday against USD2,925.48 at the close on Wednesday.
Friday's UK corporate calendar has full-year results from Asia-focused bank Standard Chartered.
The economic calendar for Friday has UK retail sales figures at 0700 GMT, a slew of composite PMI readings in Europe, the UK, and the US, and existing home sales data in the US at 1500 GMT.
By Jeremy Cutler, Alliance News reporter
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