2nd Feb 2021 07:52
(Alliance News) - Stock prices in London were called for a positive open on Tuesday, tracking global peers higher, with sentiment buoyed by US stimulus hopes.
Oil major BP swung to an annual loss as the coronavirus pandemic battered oil prices and brought global travel to a standstill. Electricity utility SSE said it anticipates annual operating profit in the middle of its guided range. Irish support services firm DCC said it saw a strong third quarter.
IG futures indicate the FTSE 100 index is to open 42.58 points higher at 6,509.00. The blue-chip index closed up 58.96 points or 0.9%, at 6,466.42 Monday.
The Japanese Nikkei 225 index closed up 1.0%. In China, the Shanghai Composite ended up 0.8%, while the Hang Seng index in Hong Kong was up 1.6%. The S&P/ASX 200 in Sydney closed up 1.5%.
BP swung to an annual loss following a tumultuous year in which the global oil and gas industry faced severe challenges.
For 2020, BP swung to a replacement cost loss of USD18.10 billion from a RC profit of USD3.52 billion in 2019 on revenue of USD183.50 billion, down 35% from USD282.6 billion.
More positively, for the fourth quarter to December 31, BP swung to a RC profit of USD825 million from a loss of USD644 million in the third quarter and a loss of USD4 million in the fourth quarter of 2019.
The oil major said its performance was driven by lower oil and gas prices, significant exploration write-offs and refining margins and depressed demand.
BP declared a fourth quarter dividend of 5.25 US cents, in line with the second and third quarter payouts, but halved from 10.25 cents in the fourth quarter 2019. This brings the full-year payment to 31.50 cents, down 23% from 41.00 cents in 2019.
Looking ahead, BP said its future financial performance, including cash flows and net debt, will be heavily influenced by the extent and duration of the current market conditions brought about by the Covid-19 pandemic. The company said it is "difficult to predict when current supply and demand imbalances will be resolved and what the ultimate impact of Covid-19 will be".
Year-end net debt was USD39 billion, down by USD1.4 billion over the quarter and USD6.5 billion over the course of 2020.
BP said net debt is expected to increase in the first half of 2021 before reducing in the second half of the year supported by growing operating cash flow and divestment proceeds. BP continues to expect to reach its USD35 billion net debt target around fourth quarter 2021 and first quarter 2022. However, this assumes oil prices in the range of USD45 to USD50 a barrel.
Brent oil was trading at USD56.92 a barrel Tuesday morning, up from USD55.82 a barrel at the London close Monday.
"These results reflect a truly tough quarter, with a challenging price environment and COVID-19 related demand impacts. Nonetheless, we made strong progress in reducing net debt again, to USD39 billion in the quarter. We remain on track to meet our target of USD35 billion between the fourth quarter of 2021 and first quarter of 2022, which will trigger the start of share buybacks, subject to maintaining a strong investment grade credit rating," said Chief Financial Officer Murray Auchincloss.
UK electricity utility SSE said the damage caused by the coronavirus on full-year operating profit will be towards the middle of the GBP150 million to GBP250 million range originally estimated in the annual results in June.
SSE said it still expects adjusted earnings per share will be in its previously guided 85 pence to 90p range. The company intends to recommend a full-year dividend of 80p per share plus RPI for financial 2021 and continues to target annual RPI increases to 2023 as set out in its five-year dividend plan.
SSE said it continues to make good progress on its five-year, GBP7.5 billion investment and capital expenditure plan. In November, financial close was reached on Dogger Bank A and B ahead of the 10% stake sale, and construction continues at Viking onshore and Seagreen offshore wind farms.
Finance Director Gregor Alexander said: "With solid operational performance and strong strategic execution, SSE is well positioned as we move towards the end of our financial year. Our robust business model is mitigating the impact of coronavirus, our disposal programme is proceeding at pace and at Dogger Bank we have shown yet again that we can develop opportunities and create value from world-class assets.
"With a number of uncertainties lifting and an increasingly supportive policy environment which further underpins our clear strategic focus on the transition to net zero, SSE is on a strong strategic footing for the rest of 2020/21 and beyond."
DCC said its operating profit for the third quarter ended December 31 was strongly ahead of the prior year despite the disruption and uncertainty caused by the global pandemic. DCC said it recorded strong organic operating profit growth, whilst also benefiting from acquisitions completed in the prior year.
"The outlook for all economies in which the group operates remains very uncertain, with restrictions generally now increasing again. However, DCC's diverse and resilient business model and the essential nature of the Group's products and services has seen it respond well to the challenges of the pandemic and trade robustly. Assuming normal weather conditions for the balance of the financial year, DCC expects that the year ending 31 March 2021 will be another year of development and good growth in operating profit, ahead of current market consensus expectations," the company said.
Early Tuesday, investor sentiment in global markets was lifted as US President Joe Biden on Monday held a meeting with a group of Republican lawmakers to discuss their stimulus counter-proposal as the new administration looks to push through a bipartisan deal.
The USD600 billion plan pushed by Republicans is less than a third of the one put forward by the White House, and includes smaller handouts and no provision for state and local governments - two issues that Democrats are likely to reject.
The talks ended with no agreement but Republican Senator Susan Collins described them as "frank and very useful".
Axi's Stephen Innes commented: "Of course, 'bigger' is always better when it comes to stimulus and stock market concerns. Still, with worries over the new variants possibly leading to lengthier mobility restrictions so the medical community can better monitor vaccine efficacy on the ground, any stimulus big or small will come at a most welcome time for families that make rent, and one in four small businesses are closing permanently or have already closed."
Meanwhile, the EU defended its troubled vaccination programme and insisted that renewed pledges of vaccine deliveries would make up for a production shortfall.
A new study showed that Covid-19 treatments and improved hospital care had reduced death rates in intensive care by more than a third, but warned that this progress might be stalling.
New, more contagious virus variants have also added pressure, with Lithuania on Monday becoming the latest country to detect a case of a strain that first emerged in Britain.
The UK said it would increase testing for a variant first detected in South Africa after nearly a dozen cases were confirmed.
Delays have dogged both the procurement and rollout of vaccines in the EU, and German Chancellor Angela Merkel has come under fire for allowing the European Commission take the lead in securing vaccines for the 27-nation bloc.
But Germany's BioNTech and its US partner Pfizer said Monday that improvements in their production capabilities would allow them to speed up supplies, pledging to send 75 million doses in the spring.
The pound was quoted at USD1.3680 on Tuesday morning, up from USD1.3666 at the London equities close Monday.
The euro stood at USD1.2070, marginally lower from USD1.2076. Against the yen, the dollar was trading at JPY105.00, edging up from JPY104.95.
Gold was quoted at USD1,849.91 an ounce early Tuesday, down from USD1,860.90 late Monday.
The economics calendar on Tuesday has eurozone GDP at 1000 GMT and the US Redbook index at 1355 GMT.
By Arvind Bhunjun; [email protected]
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