Markets report

Diageo profits surge | Shell, BAE Systems | TSB | BT


5pm: Market buoyed by strong earnings

The market was led higher by a number of positive earnings and dividend announcements from a range of corporates, which indicated faster economic growth.

The FTSE 100 closed 61 points higher, or 0.88%, at 7,078, off the session peak of 7,093.

Shell jumped 3.8% after a leap in second quarter profits, while BAE Systems was 2.18% higher on dividend news and drinks firm Diageo rose 0.77% on a surge in annual profits.

BT failed to impress and saw its shares fall.

See announcements below.

8.45am: Macomics funding

Macomics, the Scottish biotech firm, has closed a follow-on financing of £4.24 million from its 2020 seed round, bringing the total amount raised to £7.44m.

Full story here

8.30am: TSB recovers

Profits recovered at TSB driven by the lender releasing loan-loss provisions set aside in anticipation of a wave of defaults.

TSB reported a statutory profit before tax of £42.9 million, compared to a pre-tax loss of £65.5 million in H1 2020, and a pre-tax profit of £21.1 million in H1 2019. 

Net interest margin was broadly stable at 2.44% (H1 2020: 2.49%) with higher new business margins in mortgages offset by lower deposit margins and a reduction in the mix of unsecured lending.

Chief executive Debbie Crosbie said on a conference call: “Progress puts TSB back to being the main challenger bank.”


7am: Diageo profits surge

Ivan Menezes with Johnnie Walker man

The Johnnie Walker to Guinness group reported a 74.6% surge in operating profit to £3.7 billion for the year to the end of June on an 8.3% rise in net sales to £12.7 billion, with strong organic growth, partially offset by an adverse foreign exchange impact.

The company has proposed an increased recommended final dividend by 5% to 44.59p per share, a 4% uplift on the total dividend to 72.55p a share.

Ivan Menezes, chief executive, said: “These results demonstrate the strength and relevance of our brands and the extraordinary efforts of our talented people.

“We were well-positioned to successfully manage the challenges created by Covid-19, we have responded quickly to changing consumer trends and we have emerged stronger.”

7am: Shell boosts payout


Royal Dutch Shell boosted its dividend for a second consecutive quarter by 38% to 24 cents, a year after it cut its dividend for the first time since the 1940s.

It has launched a $2 billion share buyback programme after second quarter profits jumped to their highest in over two years following a sharp rise in oil and gas prices.

The Anglo-Dutch company saw a surge in cash generation, driven by higher commodity prices and a recovery in global energy demand from the pandemic slump, which also helped it to cut debt.

Adjusted earnings rose to $5.53 billion, the highest since the fourth quarter of 2018, exceeding an average analyst forecast provided by the company for a $5.07 billion profit.

7am: BT ahead of expectations

BT reported a better-than-expected 3% rise in adjusted first-quarter earnings, which it said showed it was in good shape.

The company, which aims to build fibre connections to 25 million homes by the end of 2026, reported adjusted core earnings of £1.87 billion on revenue of £5.07bn, down 3% and short of market expectations, for the three months to end-June.

Chief executive Philip Jansen said the results were overall in line with the company’s expectations, with a good performance in Britain offsetting challenging conditions in markets for its global business.

7am: BAE Systems lifts payout

BAE Systems has increased its dividend and announced a £500m share buyback after reporting a 61% increase in first-half profit.

Operating profit for the six months to the end of June rose to £1.3bn from £808m as revenue increased to £9.34bn from £9.18bn.

The defence and aerospace company increased its interim dividend by 5% to 9.9p a share and said it would buy back £500m of its shares over the next 12 months.

7am: Lloyds confirms Embark deal, moves into profit

Lloyds Banking Group has confirmed the £400 million acquisition of Embark, the privately-owned savings and retirement products group, and declared a return to dividend payments.

The bank swung to a first-half profit, boosted by a surging house buying market and improved economic outlook in Britain.

Full story here

Global markets

Wall Street stocks were mixed on Wednesday after the FOMC meeting, which made only minor tweaks from June’s statement.

Chairman Jerome Powell acknowledged that the economy has made progress towards achieving the central bank’s long-term inflation and employment goals, but said “substantial further progress” is needed to require tapering to begin.

The Fed held interest rates unchanged and maintained asset purchases at $120 billion a month, in line with market expectations.

The Dow Jones closed 0.36% lower and the S&P 500 dipped just 0.01% while the Nasdaq rose 0.7%.

Markets in Asia rebounded strongly on reports that Chinese regulators have decided that Chinese firms would be allowed to list in the US as long as they meet listing requirements.

Japan’s Nikkei climbed 0.64% and Hong Kong’s Hang Seng advanced 3.1%. The Shanghai Composite rose 1.4%.

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