(Alliance News) - Industrial turnaround firm Melrose Industries unveiled a bumper GBP730 million cash shareholder return, equivalent to 15 pence per share, as it sealed the GBP2.62 billion sale of its Nortek Air Management unit.
Melrose said it is taking a prudent stance on the proposed capital return given "these unprecedented circumstances", but added that, should encouraging sector recoveries continue, the board expects to be able to make another "significant" return to shareholders next year.
"We have taken a conservative view for the level of the current return of capital, but if markets continue to recover, we expect to announce a further significant return next year. For now, Melrose will proceed to return 15 pence per share to shareholders, in line with expectations. We believe Melrose is well positioned for the next stage of its journey," said Chief Executive Simon Peckham.
In addition, the company noted trading so far in the first half ending June 30 has been in line with expectations.
The company said: "Both the Automotive and Powder Metallurgy Divisions have seen recovery in the automotive sector, albeit currently tempered by the impact of the global semi-conductor shortage. While it remains too early to state with certainty, there are also some encouraging signs for the Aerospace Division that the start of a recovery for that sector is in sight."
Shares in Melrose were up 2.9% in opening trade at 163.00p, making the stock the top performer in the FTSE 100 index.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.3% at 7,086.14
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Hang Seng: down 0.2% at 28,427.27
Nikkei 225: closed up 3.1% at 28,884.13
DJIA: closed up 586.89 points, or 1.7%, at 33,876.97
S&P 500: closed up 1.4% at 4,224.79
Nasdaq Composite: closed up 0.8% at 14,141.48
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EUR: down at USD1.1900 (USD1.1915)
GBP: down at USD1.3903 (USD1.3915)
USD: up at JPY110.41 (JPY110.15)
Gold: down at USD1,783.56 per ounce (USD1,786.00)
Oil (Brent): up at USD75.13 a barrel (USD74.21)
(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
1600 CEST EU FCCI flash consumer confidence indicator
1100 BST Ireland WPI
1100 BST UK CBI industrial trends survey
1000 EDT US existing home sales
1000 EDT US Richmond Fed business activity survey
0855 EDT US Johnson Redbook retail sales index
1400 EDT US Fed Chair Powell testifies at House committee hearing on Fed's response to Covid-19 pandemic
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UK government borrowing fell in May as Covid-19 curbs eased, figures from the Office for National Statistics showed. The public sector net borrowing figure for the month remained stubbornly high, however, with the latest number being the second highest May total on record. According to the Office for National Statistics, public sector net borrowing was GBP24.3 billion in May, trimmed from GBP43.7 billion a year earlier. In April, the figure amounted to GBP28.3 billion. "Provisional May 2021 estimates of central government receipts were GBP56.9 billion, GBP7.5 billion more than in May 2020, while central government bodies spent GBP81.8 billion, GBP10.9 billion less than in May 2020," the ONS added. In May, public sector net debt stood at GBP2.196 trillion, around 99.2% of gross domestic product. This was the UK's chunkiest debt to GDP ratio since recording 99.5% in March 1962. In April 2021, the figure stood at 98.5%.
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The US economy remains on a positive trajectory even as it contends with higher inflation, according to congressional testimony released Monday by the head of the Federal Reserve. Fed Chair Jerome Powell, in prepared remarks ahead of a House hearing Tuesday, reiterated that the central bank will continue its supportive stance to ensure that the "sustained improvement" since the depths of Covid-19 pandemic is extended. The labor market has improved, but progress has been "uneven," said Powell, in remarks consistent with his response to questions at a news conference last week. "We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery," Powell said in the testimony. Powell acknowledged that inflation has "increased notably in recent months" due in part to higher oil prices and the hit from supply chain disruptions.
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As the Covid pandemic recedes dramatically in the West, Europe is opening its doors to Americans – but the reverse is not holding true, with the US not budging on restrictions imposed 15 months ago. US President Joe Biden has hailed progress on vaccination, with a goal of reaching 70% of Americans with at least one dose by July 4, and health authorities have eased recommendations on masks, but the language on travel restrictions has remained constant. "We look forward to the resumption of transatlantic travel as soon as the science permits," State Department spokesman Ned Price said Monday.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES SSE TO 'BUY' ('HOLD') - TARGET 1670 (1500) PENCE
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CITIGROUP RAISES EASYJET TO 'NEUTRAL' (SELL)
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INVESTEC CUTS BOOHOO TO 'HOLD'
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COMPANIES - FTSE 100
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DS Smith said revenue in the year ended April 30 fell 1.1% to GBP5.98 billion from GBP6.04 billion amid weaker paper prices. "Despite higher box volumes, Packaging revenue saw a reduction in realised selling prices, largely reflecting the decline in paper price benchmarks in H2 2019/20 and H1 2020/21," the company explained. Pretax profit fell 37% to GBP231 million from GBP368 million. Profit was "adversely impacted by Covid-19, particularly in Q1", though the company said its fortunes improved somewhat in the second half. DS Smith proposed an 8.1p final payout, taking the annual total to 12.1p. It did not propose any dividends for the previous financial year. DS Smith added: "The current year has started well, with the volume momentum of the final quarter of FY21 continuing into this year. Inflationary cost pressures have also continued, in particular old corrugated cases (OCC), but also other costs such as energy, transport and labour. Packaging prices have started to increase and we expect to fully recover these increasing costs."
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COMPANIES - FTSE 250
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Luxury carmaker Aston Martin said it has sued Swiss dealer Nebula Project for failing to pay some back some customer deposits for orders of the Valkyrie sports car. "Both Aston Martin and its customers have been impacted by Nebula Project AG's and its board members' behaviour. Aston Martin is fully committed to supporting and working with those customers affected to ensure that they will still receive delivery of their Valkyrie programme vehicles as scheduled, prioritising customer relationships, despite the company not having received all the deposited funds," Aston Martin explained. Going forward, Aston Martin said it will ensure all deposits for special vehicles go straight to the company, rather than through a third party. The net financial impact will be "positive over time" but for 2021, cashflow and earnings before interest, tax, depreciation and amortisation will be hit by GBP15 million, which includes a GBP5 million provision of trade debtors. The carmaker added that trading so far in 2021 has been strong. It affirmed its medium-term targets.
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COMPANIES - GLOBAL
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Steven Spielberg will produce multiple new films for Netflix every year, the company said Monday, in a major deal that highlights how fully Hollywood has embraced streaming platforms. The partnership with arguably Tinseltown's top director is a coup for Netflix at a time when competition with streaming rivals including Disney+ and HBO Max is heating up. It also follows reports that Spielberg had been skeptical about streaming in recent years, and had even moved to bar Netflix films from Oscars eligibility – claims that the legendary "Jaws" and "Schindler's List" director has since dismissed as false. In a joint statement about the Netflix deal, Spielberg praised "this new avenue for our films" as an "amazing opportunity to tell new stories together and reach audiences in new ways."
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Generali said it will acquire a majority stake in the AXA Affin joint ventures and plans to purchase 100% of MPI Generali. The Italian insurer said the total cost for the deal will be EUR262 million. AXA SA will net EUR140 million from selling its Malaysian operations. Generali has signed an agreement to buy a majority stake AXA SA and Affin Holdings joint ventures of AXA Affin General Insurance Berhad and AXA Affin Life Insurance BerhadGenerali will hold a 53% stake in AXA Affin General Insurance and 70% of AXA Affin Life Insurance - buying up AXA's holdings in the ventures. The Italian firm will also take full control of its own Malaysian joint venture, MPI Generali, from partner Multi-Purpose Capital Holdings Berhad. Generali then plans to merge MPI Generali and AXA Affin General Insurance.
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Tuesday's Shareholder Meetings
Caerus Mineral Resources PLC - AGM
Coca-Cola HBC AG - AGM
Cora Gold Ltd - AGM
EPE Special Opportunities Ltd - AGM
Frenkel Topping Group PLC - AGM
Intelligent Ultrasound Group PLC - AGM
RTW Venture Fund Ltd - AGM
Surgical Innovations Group PLC - AGM
Urban Exposure PLC - GM re cancellation from AIM, liquidation
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By Lucy Heming; lucyheming@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
