UK stocks opened modestly higher on Tuesday after a boost from oil and gas giant BP (BP.) and continued weakness in the pound was offset by Centrica's (CNA) decision to slash its dividend.

Investors are also keeping an eye out on the US Fed interest rate decision tomorrow, with a cut largely expected. The FTSE 100 added around 13.5 points, or 0.17%, in early trade to 7,700,.10, while the mid cap FTSE 250 edged up similarly to 19,896.86.

BP PROFITS BEAT

Oil giant BP reported $2.8bn in second quarter profits, unchanged from the prior year, but higher than analysts’ expectations, sending the share price 3.2% higher to 544p, heading the FTSE 100 leader board.

Chief executive Bob Dudley said that the company is right on track with the midpoint of its five-year plan, and he points out what he calls a ‘reliable performance and disciplined growth across the business.’

A dividend of $0.1025 a share was announced for the quarter.

By far the FTSE 100's biggest loser on Tuesday is British Gas-owner Centrica after plunging into the red, cutting its dividend and waving goodbye to its boss.

Shares in the company tumbled more than 12% to 79.9p after the electricity and gas supplier reported an operating loss of £446m for the six months to 30 June, blaming an extremely challenging’ market environment.

The company is also slashing its dividend to 1.5p per share, down from last year's 3.6p equivalent last year, and announced plans to sell its oil and gas production operations, a move that many investors have been crying out for for years.

The company said that the cut was needed as the circumstances had changed, ‘including the UK energy price cap and increased demands on our cash flows, including additional pension contributions.’

This dismal performance sees chief executive Iain Conn call time on his rough five-year tenure, announcing his departure set for next year.

RECKITT TAPERS GROWTH GUIDANCE

Dettol-to-durex consumer products company Reckitt Benkiser (RB) saw its shares fall 5% to £63.23 after lowering its full year like for like revenue target to 2% to 3% from the previous 3% to 4% range.

Adjusted operating profit fell 1% to £1.475bn, and adjusted operating margin also decreased, dropping by 10bps to 23.6%.

Chief executive Rakesh Kapoor admits the like-for-like performance in the first half is ‘below our expectations,’ although he flagged a better showing from Hygiene Home which delivered another quarter of consistent top line growth.

The Health division was hit by a slowdown in demand for its infant formula in the US and China, its biggest market, the firm reported just a 1% increase in net revenue to £6.24bn in the six months to 30 June.

Also on the slide today were shares in vegan sausage roll maker Greggs (GRG). The stock declined 2.4% to £23.28 after the company said that it expected costs in the second half to be at the higher end of its expectations.

First half revenues to 29 June 2019 were up 14.7% to £546m, while underlying pre-tax profit excluding property gains was up 58% to £40.6m.

Cash generation was strong, prompting the company to announce a special dividend of 35p, on top of an 11.2% increase in the ordinary dividend to 11.9p.

On the rise were shares in mobile power company Aggreko (AGK) up 1.7% to 790p after reporting a ‘good start’ to the year at the interim stage to 30 June, and saying that it ‘underpins our confidence in achieving our mid-teens ROCE target in 2020.’

Shares in testing and control firm Spectris (SXS) were down 3% to £26.75 after it reported a sharp slowdown in organic sales growth in the first half of the year.

For the six months to 30 June, like for like revenues grew by just 1% to £759m, with weakness in the Test & Measurement business due to strong growth last year and in Industrial Controls due to the impact of US-China trade tariffs.

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Issue Date: 30 Jul 2019