Dividends take centre stage in early trade on Tuesday as banking giant HSBC (HSBA) and mining group BHP Billiton (BHP) maintain payouts to investors, while hotels operator Intercontinental Hotels (IHG) ups its own shareholder hand out by 10%.
HSBC continues to demonstrate what a profitable core business it has as it increasingly concentrates on Asia, posting a near 16% rise in pre-tax profit for 2018 to $19.9bn. That compares to the previous year’s $17.2bn yet it still falls well short of analyst expectations, which had been anticipating around $22bn of pre-tax profit, according to Reuters.
The UK’s biggest listed bank talks about ‘more challenging market conditions’ and a ‘weaker global economic outlook’ and that appears to resonate with investors most, dragging HSBC shares down more than 3% to 641.7p, making it’s the day’s biggest FTSE 100 loser in early trade.
The mood appears to be catching, with Standard Chartered (STAN), another Asian-facing banking business, also weal, its stock off by around 2.8% at 610.4p, presumably in sympathy. This comes after Standard’s boardroom reshuffle yesterday.
MULTIPLE PROFIT MISSES
Also weighing on UK markets on Tuesday is another profits miss, this time from mining group BHP. The group is blaming production disruptions and a decline in commodity prices for its 8% half year pre-tax profit decline.
Underlying profit from continuing operations for the six months ended 31 December fell to $4.03bn from $4.40bn a year ago. That was some way below analyst estimates of $4.209bn.
This leaves the FTSE 100 index modestly on the back foot, starting the day’s trade down around 14 points, or about 0.2%, at 7,204.65.
Profits are also going in reverse at InterContinental Hotels, which reported a 26% fall in full year pre-tax profit due to exceptional costs.
The company, which owns the Crowne Plaza, Holiday Inn and Staybridge Suites hotel chains, saw pre-tax profit slump to $485m, a huge fall from the $656m in 2017. Yet investors are in forgiving mood, presumably assuaged by today’s 10% dividend hike.
Else, rampant demand for its new lines of vegan sausage rolls helps baker Greggs (GRG) make an ‘exceptionally strong start to 2019’.
In the seven weeks to 16 February 2019, total sales grew 14.1% while like-for-like sales, which strip out new shop openings, increased by 9.6%, far faster than last year’s 2.9% comparable figure.
This means Greggs is now confident that its full year profits will be higher than expected, even though the pace of sales has eased off since, which may raise questions about the pace of growth going forward. Shares in the business rally nearly 9% in early trade to a record high £17.41.
PLANES ROW SETTLED
Cobham had been struggling to get payments withheld by the US plane maker for work on the KC-46 aerial tanker aircraft. The pair have now come to an arrangement that will see Cobham meet damages claims made by Boeing, forcing the UK group to write-off a £160m charge.