London’s FTSE 100 finished Wednesday’s session up a modest 0.3% at 6,575.7 as the pound weakened ahead of prime minister Boris Johnson’s dinner with European Commission president Ursula von der Leyen to discuss Brexit.
UK blue chips were buoyed by rising investor optimism that US lawmakers will strike a new stimulus deal for the world’s largest economy as well as Johnson & Johnson’s notification that its single-dose vaccine will complete final trials in January.
TESCO TO PAY SPECIAL DIVIDEND
In company news, supermarket group Tesco (TSCO) ticked up 1.3% to 227.5p on news it expects to complete the $10.8 billion sale of its businesses in Thailand and Malaysia later this month following the satisfaction of all the deal’s conditions.
Tesco plans to return about £5 billion of the cash to shareholders via a special dividend, set to be paid on 26 February.
The company had agreed in March to sell the assets to CP Group, which has now received the go-ahead from Thailand’s competition regulator. Malaysia’s antitrust regulator had approved the transaction last month. The deal is set to be completed on 18 December.
Security company G4S (GFS) rose 0.4% to 256.3p after it accepted a sweetened £3.8 billion takeover bid from rival Allied Universal.
The new bid would see investors offered 245p per share, higher than Allied’s previous 210p offer. The new offer trumped a rival 235p per share bid from Garda World Security, which also had been sweetened in an attempt to win over G4S’s board.
Tobacco giant British American Tobacco (BATS) edged 0.7% higher to £29.23 as it upgraded annual revenue to the high end of its guidance range amid an improved outlook on volumes.
Constant currency adjusted revenue growth is now expected to be at the high end of the 1%-to-3% range as 2020 global industry cigarette and THP volume is forecast to decline by 5%, an improvement on the 7% decline previously estimated.
The adjusted diluted EPS guidance of mid-to-single percentage constant currency growth was maintained, with the impact from a strong pound expected to be 3.3% in 2020 and 2% to 3% for 2021.
BALFOUR BEATTY’S BUYBACK
Construction company Balfour Beatty (BBY) cheapened 0.75% to 266.4p despite announcing plans to resume its dividend and lining up a £50 million stock buyback from January after lifting guidance on its order book.
The year-end order book is expected to be around £17 billion, significantly higher than 2019’s £14.3 billion thanks to the award of the notice to proceed on HS2 in April. The company said it expected full-year group revenue to be in line with the prior year's £8.4 billion and profit from operations to be in line with the board’s expectations.
Full-year average monthly net cash was now forecast to be around £500 million, ahead of the previous guidance of £430 million to £460 million, and above last year’s £325 million, it added.
Bus and train operator Stagecoach (SGC) gained 7.8% to 79.7p despite reporting a large fall in first-half profit and scrapping its interim dividend as the pandemic crunched demand for public transport.
Pre-tax profit for the six months through September dropped to £5.4 million, down from £65.9 million year-on-year, as revenue sank 43% to £454.6 million.
Stagecoach said the fact that it was able to remain profitable reflected management actions to respond to Covid-19 and support from Government and local authorities.
Housebuilder Vistry (VTY) improved 1.3% to 874.5p as it considers reinstating a ‘modest’ final dividend, citing the strength of its balance sheet.
Vistry reiterated guidance given on 12 November that it expected to deliver a pre-tax profit for the year through December at the top end of a £130 million-to-£140 million range.
The company also in November said it expected to resume dividends with an interim payment for 2021. ‘Given the strong cash performance and accelerated deleverage, the board will consider reinstating a modest final dividend in respect of 2020,’ the company said.
Kitchen and joinery products supplier Howden Joinery (HWDN) rallied 4.5% to 671.2p as it upgraded its profit outlook, citing a continued strong performance since a previous update on 2 November.
SMALL CAP WRAP
Auto dealer Marshall Motor (MMH:AIM) was marked up 8.2% to 144.5p as it upgraded its annual profit guidance, even after another temporary closure of its showrooms.
Pre-tax profit for the year through December is now expected to be at least £19 million, up from previous guidance of £15 million.
Photobooth and laundry services group Photo-Me International (PHTM) fell 3.2% to 57p on plans to remove 4,900 photobooths across the globe to adjust to a drop in demand.
The company expects its first-half revenue to fall 26% as the pandemic shrinks footfall in busy locations.
Alternative capital solutions provider Duke Royalty (DUKE:AIM) softened 1.7% to 29.5p despite announcing plans to resume its dividend after reporting an increase in first-half profit on higher income.
For the six-months ended 30 September 2020, pre-tax profit was £4.9 million, up from £3.7 million year-on-year as total income jumped to £7.1 million from £5.9 million.
Duke said it intended to revert to the payment of cash dividends, with a 0.5p per share dividend announced for the third quarter of fiscal 2021.