Greggs and Next unveil special dividends | car sales slow
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5pm: London takes step back
Shares in London followed a global slump on the back of the US Fed’s warning that it may have to enact tightening measures sooner than first planned. The FTSE 100 closed 66.6 points (0.88%) lower at 7,450.37.
Banks topped the index as they looked towards higher interest rates. Standard Chartered closed up 3.7%, the best blue-chip performer, while NatWest gained 2.6% and HSBC rose 2.1%.
Ex-dividend stocks such as Aveva, down 5.4%, and Experian, down 4.4%, were among the biggest fallers.
Shares in Next fell 3.3% after adding a note of caution to otherwise upbeat figures (see below).
Footwear company Dr Martens was the worst performer in the FTSE 250, ending down 11% after shareholder IngreLux disposed of a 6.5% stake.
Greggs fell 8% despite reporting that it expects its full year outcome for 2021 to be slightly ahead of its previous expectations.
4pm: Travel alignment
The Scottish government has aligned pre-departure and return testing requirements for travellers with those in England.
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “The development of the new Scottish Aviation Strategy must be a catalyst for the Scottish Government to support the recovery of these hard-hit industries and restore, renew and expand Scotland’s international connectivity.
8.30am: FTSE falls
As forecast, the FTSE 100 fell sharply at the open following dips in the US (see below) and was trading 76 points lower at 7,441.02.
7am: Greggs dividend
Fast food chain Greggs said it had made “great progress” in the year to 1 January, sales were 5.3% up on 2019 and it plans an additional dividend for shareholders.
In a trading update it said: “We enter 2022 with a strong financial position that will support our ambitions to accelerate the rate of growth in our shop estate whilst developing new digital channels and extending the trading day.
“Whilst conditions in the first few months of 2022 are likely to remain challenging, we are confident that we are well placed to make progress on the many attractive opportunities that lie ahead.
“Having taken into account the company’s investment requirements, working capital movements through the year and the intention to maintain our progressive dividend policy, the board expects to be in a position to make an additional distribution to shareholders of £30-40 million in 2022.
“A decision on the size and timing of any special dividend distribution is expected to be made in the first half of 2022, subject to trading conditions.”
The company has appointed Roisin Currie, currently Greggs retail and property director, as chief executive, succeeding Roger Whiteside who will retire at the close of the AGM in May.
7am: Next pays special dividend
Fashion retailer Next lifted full year profits guidance and announced a special dividend after Christmas sales exceeded expectations.
It said full price sales in the two months to Christmas Day were up 20% compared with pre-pandemic trading.
This is £70m ahead of previous guidance and marks the fifth time in 10 months that numbers have been adjusted upwards.
Annual pre-tax profit guidance was lifted by £22m to £822m. Next also forecasts a 7% rise in full price sales for the year to January 2023 against the current fiscal year and a 4% increase in profit to at £860m.
The board declared a further special dividend of 160p per share to be paid at the end of this month and said it intended to return to its pre-pandemic ordinary dividend cycle in the year ahead.
7am: New car sales subdued
Demand for new cars in the UK increased by just 1% last year despite a surge in electric vehicles, new figures are expected to show.
Around 1.65 million new cars were registered in 2021, compared with 1.63 million the previous year, the Society of Motor Manufacturers & Traders said.
This is a “bleak picture” and “not what we’d hoped for”, SMMT chief executive Mike Hawes said.
The Vauxhall Corsa was expected to top the ranking of new car registrations in 2021, followed by the Tesla Model 3 (pictured).
It was the best year on record for plug-in cars, both battery electrics and plug-in hybrids, with 305,000 registered, accounting for around one in six of all new cars bought.
More battery electric vehicles were registered last year than between 2016 and 2020 combined.
Some buyers are being deterred by having to wait up to a year for a new car because of the global chip shortage, prompting a hike in the prices of secondhand cars.
7am: Capricorn updates on India tax
Capricorn Energy, formerly Cairn Energy, says it has entered into the final stage of undertakings with the Government of India by withdrawing all global enforcement proceedings over an unpaid tax rebate.
This concludes all the necessary steps required in the case and the Government of India will pay the Edinburgh-based company a tax refund of approximately $1.06bn.
The previously announced special dividend is expected to be paid in early this year.
12.01am: Price rise concerns
Companies in the UK are suffering from continuing supply chain disruption, soaring inflation and rising energy costs, a business group is warning.
The survey by the British Chambers Commerce of almost 5,500 firms showed continued stagnation in the proportion of firms reporting improved cashflow and increased investment.
Two-thirds of respondents cited inflation as a concern, also a record high, while one in four were worried about rising interest rates.
The FTSE 100 was expected to turn sharply lower, following sharp falls in the US and Asian markets.
London’s blue-chip benchmark was called down 106 points by IG Markets, reversing the new year optimism after US traders were spooked by minutes of the Federal Reserve’s open market committee meeting.
It revealed that the central bank may need to raise interest rates sooner than expected and reduce asset holdings quickly.
Wall Street saw the Dow Jones drop 1.07% whilst the S&P 500 dropped 1.94% and the Nasdaq lost 3.3%.
Asian indices also fell. Japan’s Nikkei shed 2.88% while Hong Kong’s Hang Seng was 0.4% lower and the Shanghai Composite index was 0.23% lower.
China’s business activity growth in December accelerated at its strongest rate since July, survey results from IHS Markit showed.
The improvement was driven by stronger rates of output growth across both manufacturing and service sectors at the end of the year.