LONDON MARKET PRE-OPEN: Glencore Resumes Dividend Amid Earnings Beat

(Alliance News) - Stock prices in London are seen opening higher on Tuesday, with investors ...

Alliance News 16 February, 2021 | 7:48AM
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(Alliance News) - Stock prices in London are seen opening higher on Tuesday, with investors increasingly hopeful for economic recovery in the UK as coronavirus cases fall and the mass vaccination rollout continues.

In early company news, Swiss miner and commodities broker Glencore reinstated its dividend as net debt fell. Gambling and financial trading software provider Playtech signed a strategic US agreement with a casino and racetrack operator. Outsourcer Serco Group made inroads into the lucrative US defence market.

IG futures indicate the FTSE 100 index is to open 35.19 points higher at 6,791.30. The blue-chip index closed up 166.32 points, or 2.5%, at 6,756.11 Monday.

Glencore reinstated its dividend as it reported annual earnings against a tough backdrop brought about by the coronavirus pandemic.

For 2020, revenue was down 34% to USD142.34 billion from USD215.11 billion in 2019 and the net loss widened to USD1.90 billion from USD404 million.

Glencore's 2020 adjusted earnings before interest, tax, depreciation and amortisation was USD11.56 billion, marginally down from USD11.60 billion and beating consensus forecasts of USD10.70 billion. Adjusted Ebit came in at USD4.42 billion, up 6.5% from USD4.15 billion in 2019. The latest adjusted Ebit figure beat consensus of USD3.63 billion.

Glencore recommended a payout of USD0.12 per share, having scrapped its dividend in August last year due to the pandemic.

Glencore Chief Executive Officer Ivan Glasenberg said: "As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency. While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition."

Glencore is a major coal producer. It promised on Tuesday "responsible stewardship of declining coal business over time as industry decarbonises".

Referring to the dividend proposal, Glasenberg said: "Strong second half cash flows repositioned net debt of USD15.8 billion within our target range, allowing for the resumption of distributions."

Meanwhile, Anglo-Australian miner BHP Group hiked its interim dividend, as profit and revenue rose on higher metal prices and strong output at several of the group's assets.

For the six months to the end of December, pretax profit rose 13% to USD8.83 billion from USD7.79 billion the same period the year before, on revenue that grew 15% year-on-year to USD25.64 billion from USD22.29 billion.

BHP's profit performance was helped by a rise in iron ore and copper prices, as well as record output from its Western Australian Iron Ore business and record average concentrator throughput at the Escondida copper mine in Chile.

Profit from operations increased 17% to USD9.75 billion from USD8.31 billion the prior year.

BHP raised its interim dividend by 55% to 101.0 US cents from 65.0 cents the year before, while net debt as at December 31 fell 7% to USD11.84 billion from USD12.68 billion.

In the FTSE 250, Playtech said it has signed strategic agreements with various subsidiaries of Greenwood Racing, which owns and operates the Parx Casino in Bensalem, Pennsylvania.

The agreements include licensing of Playtech products to the Greenwood companies in the US states of Michigan, Indiana, New Jersey and Pennsylvania, commencing with the launch of online casino in Michigan on Playtech's IMS Platform and Player Account Management.

"This strategic partnership with the Greenwood companies represents a major milestone for Playtech and I'm excited to work with them to help achieve their growth plans in the coming years. The US is a highly strategic market and this multi-state, multi-product agreement highlights the demand for the full breadth of our product offering. This is the next step for Playtech in the US and we are delighted to work with the Greenwood companies to capture this exciting long-term opportunity," said CEO Mor Weizer.

Serco Group also expanded in the US. It said it has agreed to acquire Whitney, Bradley & Brown, a provider of advisory, engineering and technical services to the US military, for USD295 million from an affiliate of Miami, Florida-based private equity firm HIG Capital.

Serco said the acquisition will increase the "scale, breadth and capability" of Serco's North American defence business and will provide a strong platform from which to address all major segments of the US defence services market.

The acquisition will be immediately accretive to earnings and will be funded through existing debt facilities, the company said. It is expected to complete in the second quarter of 2021, subject to regulatory approvals, Serco added.

"Growing the scale, reach and capability of Serco in the largest defence market in the world is one of our strategic objectives, and the acquisition of WBB significantly advances that strategy. Following the acquisition of the Naval Systems business unit of Alion in 2019, which increased the size of our US Navy business by 70%, WBB takes our North American defence revenues to around USD1.1 billion and gives us credible positions in other parts of the market including Air Force, Space Force, Army, the Missile Defense Agency and the Office of the Secretary of Defense," commented Serco CEO Rupert Soames.

The Japanese Nikkei 225 index closed up 1.3%.

Japan is set to start giving Pfizer-BioNTech shots to 10,000 to 20,000 medical workers from Wednesday after the vaccine was approved by the health ministry on Sunday.

The Hang Seng index in Hong Kong was up 2.0%. The Hong Kong market reopened on Tuesday after being closed on Monday and for a half day on Friday. The Shanghai market remains closed for the Lunar New Year holiday, reopening on Thursday.

"Today's European open looks set to be a positive one after another strong Asia session this morning, with the Nikkei 225 kicking on further, as this week's early gains and positive vaccine story provide the catalyst that could well see new record highs for global stocks in the days ahead," commented CMC Markets analyst Michael Hewson.

The pound was quoted at USD1.3922 early Tuesday, up from USD1.3909 at the London equities close Monday.

UK Prime Minister Boris Johnson said he is "hopeful" coronavirus restrictions can be cautiously eased in the coming weeks, with vaccines providing "grounds for confidence".

Johnson said he wanted the current national lockdown to be the last - and for the unlocking to be "irreversible" - ahead of the publication of his road map next week.

Johnson will analyse data this week on coronavirus case numbers, hospital admissions, deaths and the impact of the vaccine rollout as he prepares his plan to reduce restrictions.

"The talk is now turning to when the various UK restrictions that have been in place since January 6 are likely to get eased. This could come as soon as March 8 as a roadmap out of lockdown starts to take shape, with some schools reopening, as investors look ahead to next Monday's announcement of a possible timetable to an economic restart," CMC's Hewson said.

The euro was priced at USD1.2131, flat from USD1.2129. Against the yen, the dollar was trading at JPY105.53, up from JPY105.36.

Brent oil was quoted at USD63.57 on Tuesday morning, higher against USD63.33 a barrel at the London equities close Monday. Gold was trading at USD1,820.32 an ounce, flat from USD1,819.49.

In the economic calendar for Tuesday, there is eurozone gross domestic product at 1000 GMT and the ZEW survey for Germany and the euro area due at the same time. Financial markets in the US reopen after being closed for a holiday on Monday.

By Arvind Bhunjun;

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Playtech PLC 673.00 GBX 0.22 -
Glencore PLC 369.90 GBX -0.54
Serco Group PLC 126.70 GBX -1.86 -

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