UK equity markets are higher in early trading on Tuesday despite a mixed trading session in the US overnight. Investors were encouraged by positive results from BP (BP), SSE (SSE) and Bellway (BWY).
The most recent BRC-KPMG retail sales monitor also showed continuing resilience among consumers with sales growth of 11.9% in January 2022, compared to 2021. Growth was 7.5% on pre-pandemic 2020 figures.
In early trading the FTSE 100 is trading 0.5% higher at 7,612.41, while mid-caps are also firmer, the FTSE 250 adding 0.3% at 21,862.33.
MISSED EARNINGS DELIVERY
Shares in online grocery and delivery business Ocado (OCDO) slumped almost 12% to £12.395 following the announcement of full year results that missed both earnings and revenue forecasts.
Ocado reported full year 2021 earnings before tax depreciation and amortisation of £61 million, impacted by ongoing technology investment. Revenue increased 7.2%. Capital expenditure is set to increase to £800 million which will negatively impact cash burn.
For 2022 the group anticipates mid-teens revenue growth.
Shares in oil major BP (BP) barely moved despite the group reporting its biggest annual profit in eight years. BP posted pre-tax profit of $12.8 billion (£9.5 billion approximately) for 2021, and it made more than $4 billion in the final quarter of the year as oil and gas prices surged.
Yet investors shrugged off the profit figure, with the stock limping less than 1% higher to 412.15p, presumably given the 17% gains made so far in 2022.
Annual production fell 4.5% to 3.3 million barrels of oil per day year-year, with upstream output down about 6.6%.
Based on BP’s current forecasts, at around $60 per barrel, the company expects to be able to deliver share buybacks of around $4 billion per annum and have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025.
The dividend was held at $0.0546 per share.
Looking ahead, the company forecast first quarter 2022 upstream production to be lower than fourth quarter 2021, and full year 2022 upstream production to be broadly flat compared with 2021.
DIVIDEND GUIDANCE RAISED
Power utility SSE (SSE) has upgraded its annual earnings guidance. This is due to a robust showing from its thermal and hydro plants.
Adjusted earnings per share for the year to 31 March 2022 is now expected to be at least 90p, an increase from previous guidance of at least 83p.
SSE said it intended to recommend a full year dividend of 81p per share plus the retail price index.
Shares rose around 1.5% to £15.73 on the news.
Shares in support services group DCC (DCC) drifted 1.2% lower despite announcing that profit rose in the third quarter, from a year earlier, in line with expectations as acquisitions bolstered performance.
DCC LPG traded ‘robustly’ and in line with expectations during the third quarter despite ‘significantly’ increased cost of product which remained a headwind during the quarter, particularly in the natural gas and power segments of the division, the company said.
Looking ahead, DCC said it continued to expect that the year ending 31 March 2022 would be another year of ‘strong’ operating profit growth, in line with current market consensus expectations.
