Market report

M&G buyback | Menzies delay | Capricorn Energy | Greggs


10pm: Wall Street lower

On Wall Street the Dow Jones Industrial Average was down 0.56% while the S&P 500 was 0.72% softer and the Nasdaq Composite was 0.28% weaker.

The Dow extended losses recorded in the previous session after oil prices surged to a multi-year high amid the ongoing Russia-Ukraine war, heightening fears the conflict will slow the US economy and raise inflation.

Brent crude, which hit its highest price since July 2008 on Monday, was another 4.5% higher at $128.75 a barrel.

The FTSE 100 traded broadly flat for most of the session as the UK and US announced further sanctions on Russian oil and the index closed just 6.63 points ahead at 6,964.11.

Stocks in New York were lower at the London equities close. The DJIA was down 0.3%, the S&P 500 was down 0.6% and the Nasdaq Composite was 0.7% lower.

M&G announces buyback

M&G ended the best performer in the FTSE 100, up 15%, after the investment manager announced a £500 million buyback and achieved cost savings a year ahead of schedule.

It said strong capital generation allowed it to announce a £500 million shares buy-back programme, expected to start shortly.

Chief executive John Foley said: “Together with dividends paid, we will have returned £1.8 billion of capital to shareholders, equivalent to 32% of M&G’s market value at demerger.

“Alongside this, we have achieved our annual shareholder cost savings target of £145 million one year ahead of schedule.”

Adjusted operating profit before tax came in at £721 million (2020: £788 million), with the reduction in part due to lower benefits from changes to longevity assumptions

Assets under management and administration increased 0.8% year on year to £370 billion, including strong net client inflows of almost £6 billion from the institutional asset management franchise and continued improvement in retail asset management flows.

The company declared a second interim dividend of 12.2p per share.

Menzies offer delayed

Aviation logistics company John Menzies said the deadline for the recommended revised offer from National Aviation Services, a subsidiary of Agility Public Warehousing, has been extended from 9 March to 30 March.

Menzies said its reshaped business is emerging from Covid in a strong position for profitable growth. It announced figures in dollars for the first time, showing a $30m pre-tax profit against a $155m loss last time.

Revenue was up 27% on the previous year to $1.35bn while underlying operating profit came in at $76m against a $24m loss last time.

Greggs special dividend

High street bakery chain Greggs lost 3.4% even as it lifted its annual dividend and declared a special payout.

The board has proposed a 40p special dividend after it returned to the black and restored profit-sharing for staff.

It posted a pre-tax profit of £145.6 million for 2021 against a £13.7m loss in 2020 and a sharp rise on 2019 profit of £108.3m.

Total sales were up 5.3% on 2019 level to £1.23 billion (2020: £811.3m, 2019: £1.17bn).

A final recommended dividend of 42p per share gives a total of 57p (2020: nil, 2019: 11.9p). Staff will share £16.6m.

The company plans to extend late opening to 500 shops in the year ahead, offering its core menu and hot food trials.

Chief executive Roger Whiteside said: “We have started 2022 well, helped by the easing of restrictions.  Cost pressures are currently more significant than our initial expectations and, as ever, we will work to mitigate the impact of this on customers, however given this dynamic we do not currently expect material profit progression in the year ahead.

“Despite these near-term pressures, we continue to believe that the opportunities for Greggs have never been more exciting.  Our investment over recent years has left the business well-placed to move quickly as the economy recovers and we drive our ambitious plans to become a larger, multi-channel business.”

Capricorn Energy

Capricorn Energy (formerly Cairn Energy) said it expects to return $500m to shareholders in Q2 2022 by way of a tender offer to close in April, alongside an ongoing share repurchase programme of up to US$200m, both subject to shareholder approval.

Simon Thomson, chief executive, said: “2021 was a transformational year for Capricorn; we continued to successfully reshape our portfolio and achieved a positive resolution of our Indian tax dispute.

“From the proceeds of asset sales and the Indian tax refund we have committed to nearly $1 billion of capital returns to shareholders in 2021 and 2022.

“We acquired an attractive portfolio of low breakeven oil and gas production in Egypt, where we are already delivering production growth and emission reductions, and which has significant further opportunities for value creation. We also retain the balance sheet capacity to further expand the production base through value-accretive acquisitions.

“We look forward to continuing to deliver our strategic aims in 2022 with a strong commitment to safety, social responsibility and our pathway to net zero carbon emissions by 2040.”

The company reported an operating loss of $131m (2020 restated: $130m operating loss) from continuing operations.

Global markets

The FTSE 100 was heading for a big opening fall as oil and gas prices soared to new record highs, with Russia threatening to cut off gas supplies to Europe.

London’s blue-chip benchmark is set to fall 110 points, according to two spread-betting platforms.

There was a heavy sell-off on Wall Street overnight, with the steepest daily fall in 17 months. The Dow Jones Industrial Average lost 2.37%, the S&P 500 went down 2.95%, while the Nasdaq Composite fell 3.62%.

Retail sales across the UK accelerated last month as shoppers were drawn back to stores following an easing of pandemic restrictions, according to figures from the British Retail Consortium.

Its latest sales monitor with KPMG showed retail sales increased 2.7% on a like-for-like basis from February 2021,

Helen Dickinson, chief executive of the British Retail Consortium, said: “February saw continued sales growth, although dampened by Storm Eunice and falling consumer confidence.

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