Oil major BP said its decision to exit its stake in Russia’s Rosneft will not harm its ability to increase payouts.
Over the weekend, BP said it will sell its near 20% stake in Russian oil producer Rosneft, which it co-owns with the Kremlin, after facing pressure from the UK government.
Chief Executive Bernard Looney is resigning from the Rosneft board with ‘immediate effect’, BP said. Looney was one of two BP-nominated directors, having held the position since 2020. The other is former BP CEO Bob Dudley, who has also resigned.
‘Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region,’ said BP Chair Helge Lund. ‘BP has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change.’
UK Business Secretary Kwasi Kwarteng held a virtual call with Looney for around 20 minutes on Friday to discuss the company’s position.
BP said the exit from Rosneft shareholding does not change its distribution guidance and its financial frame guidance remains unchanged. The oil major said it still expects to have capacity for 4% annual increases in dividend through 2025. It also still expects to deliver a 7% to 9% compound annual growth rate in earnings before depreciation and amortisation to 2025.
BP said it will report a material non-cash charge in its first-quarter results in May, due to the required changed accounting treatment of the Rosneft stake.
BP shares were down 3.5% in London early Monday. The stock remains up 3.9% so far in 2022 and 23% in the past 12 months.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.0% at 7,415.37
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Hang Seng: down 0.3% at 22,700.65
Nikkei 225: closed up 0.2% at 26,526.82
S&P/ASX 200: closed up 0.7% at 7,049.10
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DJIA: closed up 834.92 points, or 2.5%, at 34,058.75
S&P 500: closed up 2.2% at 4,384.65
Nasdaq Composite: closed up 1.6% at 13,694.62
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EUR: down at $1.1191 ($1.1258)
GBP: down at $1.3375 ($1.3409)
USD: soft at JP¥115.56 (JP¥115.61)
GOLD: up at $1,899.01 per ounce ($1,887.00)
OIL (Brent): up at $102.61 a barrel ($97.16)
(changes since previous London equities close)
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The Russian ruble collapsed against the dollar and the euro on the Moscow Stock Exchange on Monday as the West punished Moscow with new sanctions over the Kremlin’s invasion of Ukraine. The ruble was trading at 90 rubles to the dollar, compared to 83.5 rubles on Wednesday, before the invasion of Ukraine the next day, and 101.19 to the euro, compared to 93.5 before the assault.
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ECONOMICS AND GENERAL
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Monday’s key economic events still to come
1100 GMT Ireland retail sales index
0830 EST US international trade in goods
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Russia’s central bank announced it is raising its key interest rate to 20% from 9.5% as the West pummelled the country with sanctions over Moscow’s invasion of Ukraine. ‘The Bank of Russia’s board of directors has decided to raise the key rate to 20%,’ the central bank said in a statement Monday. It said it was taking the emergency measure because the Russian economy’s situation had ‘drastically changed’. The bank said that this would allow it to ‘support financial and price stability and protect citizens’ savings from depreciation’.
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The Ukrainian military said on Monday that Russian troops had slowed down their offensive as Moscow’s assault against Ukraine went into its fifth day. ‘The Russian occupiers have reduced the pace of the offensive, but are still trying to develop success in some areas,’ the general staff of the armed forces said. Russia invaded Ukraine on Thursday. Ukraine forces, backed by Western arms, have managed to slow the advance of the Russian army. The Ukrainian military also accused Russia of launching a missile strike on residential buildings in the cities of Zhytomyr and Chernigiv, cities in the country’s northwest and north.
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BROKER RATING CHANGES
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Jefferies cuts Ferguson to ’hold’ (buy) - price target 12,374 (15,708) pence
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Jefferies cuts Aveva to ’underperform’ (hold) - target 2,000 (3,300) pence
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JPMorgan raises Qinetiq to ’neutral’ (’underweight’) - target 320 (260) pence
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COMPANIES - FTSE 100
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Associated British Foods forecast higher first-half sales and adjusted operating profit. For the six months ending March 5, AB Foods expects sales and adjusted operating profit to be strongly ahead of a year before. It also expects sales and adjusted operating profit to be ahead of the pre-Covid levels achieved in the half year to February 29, 2020. At its Primark fashion shops, sales for the first half are expected to be over 60% ahead of last year at constant currency with an operating profit margin of around 11%. This, it explained, reflected the fact that all stores remained open and trading throughout the period except for short periods in Austria and the Netherlands ‘We expect growth in adjusted operating profit for the group in the second half. As a result, our outlook for the full year is unchanged with significant progress expected in adjusted operating profit and adjusted earnings per share for the group,’ AB Foods said.
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Distribution firm Bunzl is confident in its 2022 prospects after robust annual results. Bunzl said it continued to perform strongly during the virus pandemic, with ongoing growth in 2021, prompting the distribution firm to raise its dividend. For 2021, Bunzl posted a pretax profit of £568.7 million, up 2.3% from £555.7 million in 2020, on revenue of £10.29 billion, up 1.7% from £10.11 billion. Bunzl declared a 57.0 pence annual dividend, up 5.4% from 54.1p paid out in 2020. Looking ahead, Bunzl expects moderate revenue growth in 2022, driven by acquisitions completed in the past 12 months and supported by a slight increase in organic revenue. A continued recovery of the base business is expected to be offset by the further normalisation of sales of Covid-19 related personal protective equipment, albeit these are expected to remain ahead of 2019 levels, it noted. Bunzl also expects its operating margin in 2022 to be slightly higher than historical levels, as the mix of sector and product sales continues to transition to more typical levels.
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COMPANIES - FTSE 250
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Ferrexpo said it has decided to delay the publication of its full-year results, originally set for March 16, due to the Russian forces in Ukraine. The iron ore pellet producer said the situation in Ukraine remains ‘complex and changeable’ and is aware of reports of the Ukrainian railway network providing limited capacity to its freight customers. Ferrexpo confirmed that it has dispatched a proportion of its production to the western border of Ukraine to customers in Europe. ‘It remains unclear as to the ongoing availability of railing capacity and, if available, the quantity of pellets that the group may be able to deliver to its European customers,’ Ferrexpo said.
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COMPANIES - MAIN MARKET AND AIM
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CentralNic launched an equity raise to pay for the acquisition of an e-commerce services firm in Germany. The London-based online marketing services company will raise up to £42 million in a placing at 120 pence per share, plus £3 million from an open offer at the same price. CentralNic will buy Berlin-based VGL Verlagsgesellschaft for an enterprise value of €60 million. VGL provides comparisons for more than 150,000 product listings. It recorded adjusted earnings before interest, tax, depreciation and amortisation of $10.9 million on $55.3 million in revenue in 2021. CentralNic said the acquisition will be double-digit earnings enhancing in 2022 before synergies. CentralNic also reported its own 2021 results. It swung to a pretax profit of $1.6 million from a $11.8 million loss, as revenue nearly doubled to $410.5 million from $240.0 million.
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Monday’s shareholder meetings
Alternative Liquidity Fund Ltd - EGM
Ramsdens Holdings PLC - AGM
Sareum Holdings PLC - EGM re share consolidation
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