British American Tobacco rolls up record year, Barclays looks to double its dividend
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The FTSE 100 is expected to open down 66 points on Thursday, having closed ahead 0.48% at 7,281.57 on Wednesday.
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British American Tobacco reported on what it claimed was a record year on Tuesday, with its “transformational deal” of acquiring Reynolds American leading to a 37.6% surge in revenue to £20.29bn. The FTSE 100 tobacco giant said its adjusted, organic revenue was ahead 2.9% at constant exchange rates at £15.71bn, while its adjusted, organic profit from operations was up 3.7% at £5.91bn. That was off a total profit from operations of £6.48bn - up 39.1% on 2016.
Barclays declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits last year. The bank confirmed a 3.0p payout for 2017, as expected, as it reported 10% increase in annual profit to £3.5bn but an attributable loss of £1.9bn after costs associated with the sale of its African subsidiary sale and US tax reforms.
A weak second half in Centrica's UK business, due to falling customer numbers and a possible government-imposed price cap led to a 17% fall in adjusted operating profits to £1,252m.
Newspaper round-up
The Cabinet did not agree to Theresa May's negotiating strategy for the transition period after Brexit before it was sent to EU nations, senior ministers have told Telegraph. The official strategy document, which was published on Wednesday, prompted a furious backlash after raising the prospect of an open-ended transition period after Brexit. - Telegraph
Britain is at risk of the first sustained rise in inequality since the late 1980s as poorer families face three years of stagnating incomes, according to the Resolution Foundation. The thinktank warned that government cuts to working-age benefits were damaging prospects for 8 million low and middle-income households, as the rollout of £14bn of welfare reductions offsets the gains from policies such as the “national living wage”. - Guardian
Gavin Williamson, the defence secretary, has raised “serious concerns” with Greg Clark, the business secretary, over a £7.4 billion hostile takeover bid of GKN. The business, energy and industrial strategy committee will hold a session on 6 March to hear from the two companies, as well as the Unite union, which is campaigning against the takeover. Ministers are also assessing whether the bid should be blocked on national security grounds. - Times/Guardian
…Williamson also announced the launch of a combat air strategy aimed at finding the next generation of fighter jets and shoring up British aerospace jobs. The strategy involves consultation between the Ministry of Defence, industry and with the UK’s international partners. It follows completion of a similar strategy for shipbuilding that was completed in September. - Guardian
Ministers are to delay Commons votes on the customs union for up to two months amid fears that they could result in defeats that jeopardise Brexit negotiations. Theresa May is facing two rebellions — one from Remainers and the other from Brexiteers, both of which would effectively tie her hands on future EU customs arrangements if they were to succeed. - The Times
The Bank of England has warned that economic uncertainty caused by the Brexit vote will knock 5% off UK wage growth by the year end. Mark Carney, the bank’s governor, said British workers had already suffered a loss in earnings growth of 3.5% - compared with pre-referndum froecafter inflation is taken into account, and would see that loss swell to 5% by the end of the year as wages growth remained below inflation. - Guardian
US close
Wall Street stocks finished lower on Wednesday, after the minutes from the latest Federal Reserve policy meeting suggested more interest rate hikes are on the way.
The Dow Jones Industrial Average fell 0.67% to 24,797.78, the S&P 500 lost 0.55% to 2,701.33, and the Nasdaq 100 slipped 0.3% to 6,759.26.
In the minutes from the Federal Open Market Committee’s January meeting, members revised their December economic forecasts upwards from December.
And despite not raising target rates at the meeting - chair Janet Yellen’s last - they did clearly suggest that the path ahead was for higher interest rates.
“A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,” the summary of the minutes read.
It said almost all participants saw inflation hitting the Federal Reserve’s 2% goal in the medium term, as growth remained above trend and the labour market retained its strength.