LONDON MARKET PRE-OPEN: BAT Raises Dividend As Annual Profit Rises

(Alliance News) - Stock prices in London are seen opening higher on Wednesday as the economic ...

Alliance News 17 February, 2021 | 7:47AM
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(Alliance News) - Stock prices in London are seen opening higher on Wednesday as the economic recovery-fuelled rally shows no signs of slowing.

In early company news, Dunhill cigarette maker British American Tobacco raised its dividend. Imperial Brands appointed a new finance head. Auction Technology set out the terms for its initial public offering.

IG futures indicate the FTSE 100 index is to open 18.84 points higher at 6,767.80. The blue-chip index closed down 7.25 points, or 0.1% at 6,748.86 on Tuesday.

British American Tobacco said it delivered resilient earnings against unprecedented challenges posed by the Covid-19 pandemic.

For 2020, revenue was down 0.4% at GBP25.78 billion from GBP25.88 billion in 2019 but pretax profit was up to GBP8.67 billion from GBP7.91 billion.

BAT raised its full-year dividend by 2.5% to 215.6 pence from 210.4p paid out in 2019.

Looking ahead to 2021, BAT expects constant currency revenue growth in a range of 3% to 5%. It also said it was making continued progress towards its New Categories revenue target of GBP5 billion in 2025.

Chief Executive Officer Jack Bowles said: "Last year we increased the number of consumers of our non-combustible products by 3 million to 13.5 million, doubling the rate of consumer adoption in the second half of 2020. We have excellent momentum in New Categories, with accelerating volume and value share gains.

"Our investment behind New Categories has increased by a further GBP426 million compared to 2019, enabled by a 5th consecutive year of value share growth in combustibles. Enabled by Project Quantum, we continued to simplify the company and drive efficiencies, delivering GBP660 million of cost savings (being well on track to deliver our ambitious GBP1 billion of savings by 2022), further supporting new capabilities investment."

BAT's peer Imperial Brands said Lukas Paravicini, chief financial officer of agricultural commodities and brokerage group ED&F Man Holdings, will be appointed as its new CFO on August 5 or at an earlier date to be announced.

Paravicini succeeds Oliver Tant, who will step down from the role and leave the business following a handover.

Rio Tinto upped its annual payout with a record final dividend as the miner shrugged off Covid-19 to post a hefty profit rise for 2020. Revenue in 2020 was up 3.3% to USD44.61 billion from USD43.17 billion. Its pretax profit surged 38% to USD15.39 billion from USD11.12 billion.

The Anglo-Australian miner raised its annual dividend by 26% to 557.0 US cents from 443.0 cents.

"USD9.0 billion full-year dividend, equivalent to 557 US cents per share and 72% of underlying earnings, includes USD5.0 billion record final ordinary dividend (309 US cents per share) and USD1.5 billion special dividend (93 US cents per share) declared today," Rio Tinto explained.

Rio Tinto's earnings follows peer BHP's upbeat interim results on Tuesday which saw the company declare a record dividend of its own. Also on Tuesday, commodities trader and miner Glencore restored its payout to shareholders.

London's IPO market remains in ruddy health as Auction Technology set its IPO price at 600p per share, giving a market capitalisation of GBP600 million. Auction is offering up to 41.2 million new shares so as to raise expected gross primary proceeds of approximately GBP247.4 million. Conditional dealings will start next Tuesday.

CEO John-Paul Savant said: "With a 50-year track record, proven commercial model and leading positions in a market supported by significant structural growth trends, we believe that ATG will thrive as a listed business. We are delighted with the high-quality investor support we have had to date which reflects this potential.

"An IPO of Auction Technology Group will support the continued momentum of the business and our focus will remain the same - enhancing our services for auctioneers and bidders and driving long-term sustainable growth."

TP ICAP said it received acceptances for 98.3% of the 225.3 million shares offered in its 2-for-5 rights issue at 140.0p. Underwriters HSBC, BofA Securities, JP Morgan and Peel Hunt will find subscribers for the remaining shares or subscribe themselves. The rights issue will raise about GBP315 million.

Signature Aviation said it has agreed to sell its engine repair & overhaul business to Scottsdale, Arizona-based Standard Aero, a provider of maintenance, repair and overhaul services, for USD230 million.

Signature Aviation said it will receive about USD140 million in net proceeds after fees and price adjustments, which it will deploy in line with its target of keeping net debt at no more than 2.5 to 3.0 times underlying earnings before interest, tax, depreciation and amortisation.

"We are committed to delivering long-term sustainable value for shareholders and this sale focuses us on Signature Aviation our strong cash generative business," said CEO Mark Johnstone.

The Japanese Nikkei 225 index closed down 0.6% on Wednesday, while the Hang Seng index in Hong Kong is up 1.1%. The Shanghai market remained closed on Wednesday for the Lunar New Year holiday and will re-open on Thursday.

The pound was quoted at USD1.3888 early Wednesday, down from USD1.3911 at the London equities close Tuesday.

UK inflation edged higher annually in January with the country in lockdown, according to the latest figures from the Office for National Statistics.

On an annual basis, UK consumer prices rose 0.7% in January, accelerating from 0.6% in December. The reading beat market consensus, cited by FXStreet, for an 0.5% increase.

On a monthly basis, consumer prices fell 0.2% in January following a rise of 0.3% in December. Consensus had expected the reading to come in at negative 0.4%.

The NHS is likely to remain "at full stretch" for at least another six weeks, a leading health official said as he warned UK Prime Minister Boris Johnson against easing lockdown too quickly.

Chris Hopson, chief executive of NHS Providers, which represents NHS trusts in England, has written to Johnson calling for a focus on "data, not just dates" when it comes to the government's approach to the route out of lockdown.

Johnson will scrutinise 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.

Johnson has said he will aim to give target dates for restrictions being eased when he sets out his plan next Monday, but "won't hesitate" to delay plans if infection rates make it necessary.

The euro was priced at USD1.2088, lower from USD1.2110. Against the yen, the dollar was trading at JPY105.92, up from JPY105.78.

Brent oil was quoted at USD63.55 a barrel Wednesday morning, up from USD62.98 at the London equities close Tuesday. Gold was quoted at USD1,790.33 an ounce, down against USD1,803.32.

In the economic calendar for Wednesday, there are US producer prices and retail sales due at 1330 GMT. Minutes from the last US Federal Reserve meeting are out at 1900 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Signature Aviation PLC
British American Tobacco PLC 2,607.00 GBX 0.50
Imperial Brands PLC 1,581.50 GBX 0.16
TP ICap PLC 158.68 GBX -1.13 -

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