Centrica (LON:CNA) has been one of today’s most notable UK share prices to watch as the company expectedly took the axe to its dividend after experiencing what it referred to as ‘exceptionally challenging environment’. Tomorrow meanwhile will see bailed-out lender Lloyds Banking Group (LON:LLOY) kick off the FTSE 100 banking reporting season.
Centrica slumps while BP rallies
Centrica’s shares have taken a heavy hit today as the British Gas owner disclosed a fall in revenue and profits, and further slashed its payout to shareholders amid the UK energy price cap and additional pension contributions which have pressured the company’s cash flow.
“Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows,” the group’s chief executive Iain Conn said in the statement, adding that the company had “regrettably had to make the decision to rebase the dividend”. The company also announced that Conn will be stepping down next year.
“The results were even worse than expected, and the problem everyone has now is when its left with this consumer facing business what is that actually going to be worth?” said Peter Atherton, an associate at consultancy Cornwall Insight, as quoted by Reuters. Centrica’s shares have given up more than 15 percent in early afternoon trade and are weighing on the benchmark FTSE 100 index which has been little changed.
By contrast, BP (LON:BP) is rallying this Tuesday as the company’s underlying replacement cost profit for the second quarter of the year beat analyst estimates. The group’s chief executive Bob Dudley told CNBC’s ‘Squawk Box Europe’ that this was about the 10th quarter in a row now that the numbers had been above the company’s expectations.
“The group’s cash flows are robust and the outlook for dividends is a lot brighter today than it has been for some time,” said Steve Clayton, who manages the HL Select UK Income Shares fund, which features BP in its portfolio, as quoted by Proactive Investors. BP’s shares are changing hands about three percent higher.
Reckitt Benckiser (LON:RB) has also expectedly been among today’s UK share prices to watch, falling into the red after trimming its full-year revenue target following weaker-than-expected performance in the first half of the year. The consumer goods giant now expects to deliver like-for-like growth of between two percent and three percent this year, down from its previous guidance of between three percent and four percent revenue growth. Reckitt Benckiser’s shares are changing hands about 2.6 percent in the red.
Silver miner Fresnillo (LON:FRES) has also tanked as it posted a drop in revenue and profits for the six months to June 30.
“As we previously disclosed in our second quarter production report, continued challenges at our Fresnillo, Saucito and Herradura mines, combined with higher costs, have impacted profitability for the period,” the group’s chief executive Octavio Alvídrez explained in today’s statement, adding that the performance of the company’s “business in the first half has not met our expectations”.
“Overall the results are disappointing, even accounting for first half production that was already released and with guidance already downgraded,” analysts at Numis noted, as quoted by the Financial Times. Fresnillo’s shares are down by about 14 percent.
UK share prices to watch tomorrow
Lloyds will be in focus tomorrow, with its interims set to kick off the FTSE 100 banking reporting season. IG reports that the bailed-out lender is expected to report pre-tax profit of £4.3 billion, up from £3.1 billion a year earlier, while revenue is expected to have climbed to £9.4 billion.
“However, the bank’s first quarter results will likely still be on the minds of many investors after revealing flat revenues and showed the lender remains burden by a rise in bad loans on its balance sheet,” Aaron Fronda at IG commented in a note this week.
BAE Systems (LON:BA) will also be among tomorrow’s UK share prices to watch, with its interims due out after the company recently signalled a one-off tax-related non-cash benefit to its earnings per share for 2019.
Just Eat (LON:JE) is also due to post results after agreeing a merger deal in principle with Dutch company Takaway.com, which sent the FTSE 100 group’s shares rallying on Monday. Other FTSE 100 companies reporting tomorrow include St James’s Place (LON:STJ), Taylor Wimpey (LON:TW), Rentokil Initial (LON:RTO), Smith & Nephew (LON:SN), Next (LON:NXT) and Direct Line (LON:DLG).
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