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Prudential drags FTSE higher on special divi cheer
Insurer weathers storm to post impressive profits and reward shareholders with special dividend on top of hike in ordinary payout.
Prudential (PRU) has lifted the FTSE 100 higher as investors cheered a special dividend from the insurer alongside a rise in its ordinary payout.
Shares in Prudential rose 2.7% to £13.61 as the insurer announced a 10p special dividend as operating profits for the year hit £4 billion, ahead of analyst expectations of £3.8 billion.
That was alongside a 26.47p final dividend for 2015, taking the year's ordinary payout to 38.78p, a 5% increase on last year's dividends.
'We have delivered a strong performance in 2015,' said chief executive Mike Wells. 'We continue to grow across our key metrics despite the macroeconomic uncertainty and the challenges presented by low long-term interest rates.'
Eamonn Flanagan, analyst at Shore Capital, said the results were 'quite remarkable'. 'Despite a series of headwinds across the globe, regulatory and economic, the group's results exceeded both our and the market's expectations across each of the main financial metrics, demonstrating the strength of the company's diversification across many markets.'
That helped the FTSE 100 edge 14 points, or 0.2%, higher to 6,140. But the index was held back from further gains from a slump in the shares of Burberry (BRBY), down 6.5% at £13.67 after HSBC downgraded the luxury goods maker to 'hold' from 'buy'. That wiped out the gains from a rally yesterday, on reports the company was seeking help to defend itself from a potential takeover bid.
Ashtead (AHT) was another faller, down 3.4% at 831.8p as analysts at Credit Suisse downgraded the tool hire company to 'underperform' from 'outperform'.
But the big movers were to be found outside the FTSE 100. Among 'mid cap' stocks, Restaurant Group (RTN) tumbled 17.9% to 446.3p as the company, which runs the Chiquito and Frankie & Benny's chains issued a gloomy trading outlook.
'The more challenging trading conditions we saw at the end of last year have continued into the early part of 2016, reflecting a softening in consumer demand and weaker overall consumer confidence,' it said. 'Whilst still early in the year, our assessment is that this more challenging environment and recent trading patterns are likely to persist.'
Nick Batram, analyst at Peel Hunt, said that confidence in the business had taken a 'seismic hit' and would take time to recover.
'The big question is whether the horse has bolted or whether there is worse to come?' he said. 'However, the business remains highly cash generative, the balance sheet is robust and we wouldn't be surprised if private equity were not taking a closer look at these levels.'
G4S (GFS) was another heavy faller, down 10.9% at 189.7p as the outsourcing group shouldered an extra £65 million charge on loss-making government services.
'G4S failed to woo investors with an increased dividend as attention remains fixed on losses on its government to house asylum seekers,' said Russ Mould, investment director at AJ Bell.
SIG (SHI) meanwhile slumped 8% to 133.1p after the building products distributor reported a 1.4% dip in full-year revenues.
Shares in Cairn Energy (CNE) were the top risers on the FTSE 250, up 9.1% at 185p after the oil producer reported better-than-expected results from its SNE-2 well in Senegal.
Among 'small cap' stocks, Lakehouse (LAKE) was a strong riser, up 10.5% at 43.6p on news that founder Steve Rawlings and Slater Investments, the fund group headed by Mark Slater, are leading a shareholder revolt at the embattled housing maintenance contractor.
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- Prudential PLC (PRU.L)
- Burberry Group PLC (BRBY.L)
- Ashtead Group PLC (AHT.L)
- Restaurant Group PLC (RTN.L)
- G4S PLC (GFS.L)
- SIG PLC (SHI.L)
- Cairn Energy PLC (CNE.L)
- Lakehouse PLC (LAKE.L)
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by Gavin Lumsden on Jul 22, 2016 at 16:24