(Alliance News) - Oil major BP said Tuesday it hit its USD35 billion net debt target during the first quarter of 2021, due to the early delivery of disposal proceeds and a positive operating performance, paving the way for share buybacks.
BP had previously guided that it would get its debt down to USD35 billion by the end of 2021. It had said net debt actually was expected to increase during the first half, due to severance payments, a payment to Norway's Equinor for the completion of their US offshore wind joint venture, and BP's annual USD1.2 billion Gulf of Mexico oil spill redress payment.
The oil major said during the first quarter it received around USD4.7 billion of disposal proceeds, the largest being USD2.4 billion from the sale of its 20% interest in Oman's Block 61.
BP now expects disposal proceeds in 2021 to be at the top end of the previously announced USD4 billion to USD6 billion range.
BP also reported a strong business performance during the first quarter, driven by "trading, the price environment and resilient operations".
On reaching this net debt target, BP said it is committed to returning at least 60% of surplus cash flow to shareholders by way of share buybacks, for which it announce further details at its first quarter results on April 27.
"We are pleased to announce that we now expect to have reached our USD35 billion net debt target during the first quarter 2021. This is a result of earlier than anticipated delivery of disposal proceeds combined with very strong business performance during the first quarter. We look forward to updating the market at our first quarter results, including further information on share buybacks," said Chief Executive Officer Bernard Looney.
BP shares were up 2.3% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.1% at 6,809.67
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Hang Seng: Hong Kong market closed for holiday.
Nikkei 225: closed down 1.3% at 29,696.63
DJIA: closed up 373.98 points, 1.1%, at 33,527.19
S&P 500: closed up 1.4% at 4,077.91
Nasdaq Composite: closed up 1.7% at 13,705.59
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EUR: up at USD1.1808 (USD1.1765)
GBP: up at USD1.3907 (USD1.3830)
USD: down at JPY110.25 (JPY110.60)
GOLD: up at USD1,735.23 per ounce (USD1,728.70)
OIL (Brent): down at USD62.90 a barrel (USD63.63)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1100 CEST EU unemployment
0855 EDT US Johnson Redbook retail sales index
1630 EDT US API weekly statistical bulletin
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UK Prime Minister Boris Johnson said he plans to stick "like glue" to his plan for easing restrictions despite scientific advisers warning it could create a wave of Covid infections akin to that seen during spring last year. Johnson confirmed shops, hairdressers and pub beer gardens will reopen from April 12 in England and urged the public against complacency when it came to obeying the rules. Johnson, setting out the move to the second step of the road map on Monday, said the shift was "fully justified by the data" and that he had seen "nothing" to make him think he would have to "deviate" from his intention to scrap all restrictions by June 21 at the earliest. His comments come despite modelling from the Scientific Advisory Group for Emergencies showing that, while stage two of the unlocking is unlikely to exert pressure on the NHS, the proposed changes for May and June when social mixing is set to be permitted again could cause hospital admissions to rise to levels seen during January's winter peak.
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Demand for new cars in the UK grew by 11% last month compared with March 2020, preliminary figures showed. Around 283,000 new cars were registered in the UK last month despite showrooms remaining shut, the Society of Motor Manufacturers & Traders said. The year-on-year increase was still around 37% down on the average March total between 2010 and 2019.
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BROKER RATING CHANGES
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GOLDMAN SACHS CUTS ITV TO 'NEUTRAL' ('BUY') - TARGET 135 (118) PENCE
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RBC RAISES CENTRICA PRICE TARGET TO 75 (55) PENCE - 'OUTPERFORM'
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BERENBERG CUTS GULF KEYSTONE TO 'HOLD' ('BUY') - TARGET 190 (180) PENCE
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COMPANIES - FTSE 100
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Sage Group has agreed to sell its Swiss business to Infoniqa, a human resources software provider majority-owned by Warburg Pincus. Accounting software firm Sage is selling the unit for CHF50 million, equivalent to around GBP39 million, payable in cash on completion. The deal is expected to complete within the next twelve months. For the year ended September 30, 2020, the business achieved revenue of GBP25 million and operating profit of GBP4 million. Sage previously announced the unit was held for sale in its full-year results announcement in November. At the start of March, Sage completed the disposal of its Polish business to funds advised by Mid Europa Partners LLP for GBP66 million.
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COMPANIES - FTSE 250
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Homeserve said it delivered a good performance in financial 2021, with pretax profit in line with consensus forecasts. Homeserve estimates adjusted pretax profit for the year that ended March 31 to be around GBP191 million, up 5.5% from GBP181 million in financial 2020. Consensus adjusted pretax profit, the mean average of 16 analyst estimates, stands at GBP190.2 million. Homeserve said renewed focus on homes during the virus pandemic highlighted the value of HomeServe's core propositions across its Membership and Home Experts businesses, it noted.
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Oxford Biomedica said it has signed a new three-year development and supply agreement with German pharmaceutical company Boehringer Ingelheim for the manufacture and supply of viral vectors. The deal builds on the partnership started between the two companies in 2018. "We now have a portfolio of partnerships spread across development of [chimeric antigen receptor T cells], [T-cell receptors] and in vivo gene therapeutics, utilising lentiviral vectors. We are proud to partner with Boehringer Ingelheim, a business with proven excellence in complex manufacturing projects, as well as expertise in developing innovative medicines for patients with serious unmet medical needs," said CEO John Dawson.
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Wizz Air said it carried 480,203 passengers in March, down 73% from a year before. Load factor dropped to 63% from 92%.
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COMPANIES - MAIN MARKET AND AIM
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Cybersecurity startup Darktrace is planning an initial public offering in London, Sky News reported. The Cambridge-based company may announce the IPO this week, and shares could begin conditional trading by around the end of the month. Darktrace's advisors are planning a more conservative approach to pricing after Deliveroo plunged on its first day of trading last Wednesday. The company is expected to be valued at around GBP3 billion, rather than the GBP5 billion mooted in recent months, according to Sky. The IPO will probably involve the sale of about GBP250 million of new and existing shares. Unlike Deliveroo, Darktrace will not have a dual-class share structure.
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COMPANIES - GLOBAL
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Credit Suisse Group warned of a sizeable first quarter loss and said two key members of its key team will depart the company, in the wake of a US-based hedge fund defaulting on a margin call and the collapse of supply chain finance firm Greensill Capital. Brian Chin, the chief executive of the Swiss financial services firm's investment banking arm, will depart on April 30. Chief Risk & Compliance Officer Lara Warner stepped down from the Credit Suisse executive board effective Tuesday. What's more, Credit Suisse said two investigations will be carried out by "external parties". One probe will be centred on the hedge fund matter and another on its supply chain finance funds.
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Tesla posted first-quarter sales growth, shaking off global chip worries and helped by boosted demand in China. Tesla's first quarter deliveries more than doubled to 184,800 vehicles from 88,400 a year earlier. Production rose to 180,338 vehicles from 102,672. "We are encouraged by the strong reception of the Model Y in China and are quickly progressing to full production capacity. The new Model S and Model X have also been exceptionally well received, with the new equipment installed and tested in Q1 and we are in the early stages of ramping production," Tesla said. The company added that the final first quarter figures could vary by up to 0.5%. Friday's "slightly conservative" delivery count only includes transactions where all paperwork is correct.
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Tuesday's Shareholder Meetings
Capital Gearing Trust PLC - GM re issue of new ordinary shares
Polarean Imaging PLC - GM re share placing
SSP Group PLC - GM re rights issue
XLMedia PLC - GM re acquisition of Sport Betting Dime
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By Tom Waite; thomaslwaite@alliancenews.com
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