23rd Feb 2016 08:35
LONDON (Alliance News) - London shares were lower soon after the open Tuesday on a busy day for UK company reporting, with bank Standard Chartered, miner BHP Billiton and engineer GKN leading FTSE 100 fallers, while housebuilder Persimmon, hotels operator IHG and subprime lender Provident Financial were at the top of the blue-chip index.
BHP Billiton reported a big interim loss and slashed its dividend by more than half, but IHG and Persimmon both increased their payouts. Provident Financial said it made a "good start" to 2016 and raised its payout, while FTSE 250-listed Croda International also lifted its dividend for the year.
Standard Chartered reported it swung to an annual loss in 2015, with the bank hit by restructuring costs and falling commodity prices, and said it expects a "subdued" financial performance in the current year. The bank had previously said it would pay no final dividend.
The FTSE 100 was down 0.8%, or 50.14 points, at 5,987.59.
The FTSE 250 was down 0.1% at 16,270.02, and the AIM All-Share was down 0.1% at 686.28. European stocks also opened lower, with French CAC 40 down 0.7% and the German DAX 30 down 0.9%.
BHP Billiton was down 3.3% after it cut its dividend more than 70% and adopted a payout ratio, as it posted a swing to a massive loss in the first half of its financial year.
The Anglo-Australian miner, publishing its results in Australia, said it made an earnings before interest and tax loss of USD7.03 billion in the first half to the end of December, compared to USD7.93 billion a year earlier, as revenue dropped 37% to USD15.71 billion. BHP's attributable loss to shareholders in the half was USD5.67 billion, swung from a USD4.27 billion profit.
In line with the dividend cut announced by rival Rio Tinto, BHP slashed its total dividend payout 74% to 16.0 cents per share from 62.0 cents the year prior, a move to shore up its balance sheet as it embarks on a big restructuring to cope with the tough conditions in commodities markets at present.
BHP has adopted a dividend payout ratio providing for a minimum 50% payout of underlying attributable profit in every reporting period, with any payments to be made above the minimum to be assessed at the close of each reporting period.
Other mining stocks were down as well, giving back their gains on Monday, with Glencore down 2.3%, Anglo American down 2.5% and Rio Tinto down 1.8%.
Engineering group GKN was down 2.7%, despite saying pretax profit rose in 2015 and its revenue grew thanks to the acquisition of Fokker Technologies, prompting it to increase its dividend. The company, which makes driveline systems for cars and aerospace parts, said pretax profit for the year to the end of December rose to GBP245.0 million from GBP221.0 million a year earlier.
Revenue was up to GBP7.23 billion in 2015 from GBP6.99 billion, helped by the acquisition of Dutch aerostructures manufacturer Fokker, which was completed in October, but also good performances in GKN's Automotive and Aerospace units. Those divisions helped to offset a weaker performance for its Land Systems business, which is trading in a tough agricultural market environment.
GKN said it will pay a final dividend of 5.8 pence per share, up from 5.6p a year earlier, meaning its total dividend will rise 4.0% to 8.7p from 8.4p.
At the other end of the index, Persimmon was the best blue-chip performer, up 4.9%. The group said its pretax profit surged in 2015 following a very strong year for the UK housebuilding industry, with revenue up and operating margins improving as it sold more houses at higher prices. The group said its pretax profit for the year to the end of December was GBP637.8 million, up from GBP475.0 million a year earlier, as its total revenue for the year increased to GBP2.9 billion from GBP2.6 billion.
The company sold 14,572 homes in 2015, up 8.0% from 13,509 in 2014, and sold those homes for an average of GBP199,127, up from GBP190,533. Its operating margin for the year improved to 21.9%, up from 18.4%, thanks to the higher prices, and this accelerated further in the second half, hitting 23%. Persimmon's forward sales position at the end of the year was GBP1.68 billion, up from GBP1.49 billion a year earlier.
Persimmon also said it will further accelerated its capital return programme thanks to the strong performance of the business and will now return 110.0 pence per share in cash to shareholders by the start of April, a massive rise on the 10.0p it had been intending to return under its original plans.
The total value of its capital return programme has been increased to GBP2.76 billion, up from the GBP1.90 billion it had outlined back in 2012.
Shares in InterContinental Hotels Group were up 4.0%, after it said its operating profit rose but revenue dipped in 2015 as it hiked its dividend on its confidence for the coming year and declared a special payout as well.
The hotels operator said its operating profit rose to USD680.0 million in the year to the end of December from USD651.0 million a year earlier, despite revenue dipping to USD1.80 billion from USD1.86 billion, due to the sale of two hotels in Paris and Hong Kong. Pretax profit, which includes proceeds from the two hotel sales, came in at USD1.41 billion, up from GBP600 million in 2014.
Revenue per available room rose 4.4% on a comparable basis in for the year, though this slowed to 2.4% in the fourth quarter, with growth across all its operation regions. Net room growth for the year hit 4.8%, it said. IHG said it will pay a total dividend of 85.0 cents per share, up from 77.0 cents per share a year earlier thanks to the confidence it has on its outlook. This includes a final dividend of 57.50 cents, an 11% year-on-year rise.
In addition, IHG declared a USD1.5 billion special dividend, which will be paid by means of a share consolidation in the second quarter. The special dividend is worth about USD6.33 per share.
Provident Financial said it has made a "good start" to 2016, with its Vanquis Bank credit cards business and vehicle finance provider Moneybarn trading strongly and "very satisfactory" collections for its home credit business.
The update on trading in the first few weeks of the year came as Provident reported that pretax profit grew to GBP273.6 million in 2015, from GBP224.6 million in the prior year. The lender increased its dividend for the year as a whole by almost 23% to 120.1 pence from 98.0p.
Shares in Provident Financial were up 2.8%.
In the FTSE 250, specialty chemicals company Croda International reported higher pretax profit and revenue for 2015 despite taking a currency translation hit, as it posted underlying growth across the business and said it will pay a special dividend thanks to its strong cash generation.
Croda's pretax profit for the year to the end of December was GBP252.3 million, up from GBP229.4 million a year earlier, as revenue rose 2.9% to GBP1.08 billion from GBP1.05 billion. In constant currencies, revenue would have increased 4.2%.
The group said it saw good underlying sales growths in all its product sectors and regional operations, particularly in newly-launched product line. Personal Care products performed well and Life Sciences showed excellent growth, it said.
Croda also said it will pay a final dividend of 38.0 pence per share, taking its total dividend for 2015 up to 69.0p from 65.5p. In addition, Croda said it will pay a 100.0p special dividend to shareholders, which will be combined with a share consolidation. The return is being made due to the strong cash generation the group has shown over the course of 2015 and will return it to its targeted leverage range, it said.
Shares in Croda were up 1.3%.
But it was Morgan Advanced Material that was at the top of the mid-cap index, up 6.9%. The ceramic products manufacturer said its pretax profit pushed higher in 2015 due to lower one-off charges, but its underlying profit and revenue both fell amid tough market conditions.
Pretax profit for the year was up to GBP59.0 million from GBP31.5 million, mostly as a result of it booking a GBP22.1 million one-off charge in its results in 2015, compared to GBP51.9 million a year earlier.
Its underlying pretax profit, however, stripping out the one-off items, fell to GBP88.2 million from GBP91.6 million as its revenue dipped to GBP911.8 million from GBP921.7 million.
Investors will look later Tuesday to the US, where Saudi oil minister Ali Al-Naimi will speak in Houston at the IHS Energy CeraWeek, often considered the Davos of the energy industry. Other senior oil officials also will participate in the meeting, which will last until Friday.
The speech comes after the recent agreement between Saudi Arabia, among other OPEC members, and Russia to freeze oil production. The accord has provided some support to oil prices, following a sharp decline that sent Brent oil to a low near USD27 a barrel earlier this month, while West Texas Intermediate touched a low near USD26 a barrel.
Brent crude was quoted at USD34.05 a barrel Tuesday after the London equities open. It stood at USD34.18 at the London close Monday, having touched a high of USD34.87 a barrel.
In Asia on Tuesday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite ended down 0.8%, while the Hang Seng index in Hong Kong finished down 0.2%.
Wall Street ended higher on Monday, with the Dow Jones Industrial Average up 1.4% and the S&P 500 and the Nasdaq Composite both up 1.5%.
In the economic calendar, Germany's IFO business climate data are due at 0900 GMT. Bank of England Governor Mark Carney will address the UK Parliament Treasury Select Committee at 1000 GMT. In the US, the Redbook index is due at 1355 GMT, while US consumer confidence and the Richmond Federal Reserve manufacturing index are at 1500 GMT.
By Daniel Ruiz; [email protected]
Copyright 2016 Alliance News Limited. All Rights Reserved.
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