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Rolls-Royce leads FTSE rebound despite dividend cut

Rolls-Royce helps FTSE 100 rebound, soaring despite halving dividend, as fears of sixth profit warning in two years fail to materialise.

 
Rolls-Royce leads FTSE rebound despite dividend cut

Rolls-Royce has led a FTSE 100 rebound despite halving its dividend as the aircraft engine manufacturer crucially left its guidance for the year unchanged after a slew of profit warnings.

The UK blue-chip index jumped 89 points, or 1.6%, to 5,626, with Rolls-Royce (RR) the biggest riser, up 12.8% at 597.8p as investors welcomed the company's move to shore up its finances.

The embattled manufacturer halved its final dividend for the 2015 financial year to 7.1p per share, down from 14.1p in 2014, leaving full-year payments at 16.37p, down from last year's 23.1p full-year payout.

But the full-year results were welcomed by investors, after Rolls-Royce kept 2016 guidance unchanged, quashing fears of a further profit warning after five in the last two years.

Andy Chambers, analyst at Edison Investment Research, said the news should 'soothe the nerves of investors'. 'Clearly the much-feared sixth profit warning did not materialise with guidance for 2016 maintained, the dividend was cut by less than we anticipated and somewhat spurious fears of a fund raising are allayed,' he added.

Mining stocks were also in the ascendancy as metal prices rose. Anglo American (AAL) jumped 10.2% to 348.3p, Glencore (GLEN) rose 7.1% to 93.9p, BHP Billiton (BLT) added 6.2% to 673.4p, Rio Tinto (RIO) added 5.6% to £18.02 and Antofagasta (ANTO) traded 5.3% higher at 410.3p.

Oil stocks rose as the price of Brent crude jumped 4.9% to $31.60 a barrel on reports the Opec cartel of oil-producing nations was ready to cooperate on oil production cuts.

BP (BP) rose 3.5% to 320.9p, Shell (RDSb) was trading 2% higher at £14.75  and BG (BG) added 1.8% to £10.39.

Banks meanwhile rebounded from yesterday's slump, which was the latest leg in a sustained sell-off of the sector since the turn of the year.

Standard Chartered (STAN) jumped 5.9% to 409.3p, Barclays (BARC) rose 3.8% to 153.5p, Royal Bank of Scotland (RBS) added 2.4% to 228.8p and Lloyds (LLOY) was trading 2% higher at 57.1p.

2 comments so far. Why not have your say?

Anthony Tinslay

Feb 12, 2016 at 17:42

So Rolls Royce jump to 597p on anniouncing a halving of dividend.. Not really surprised as three days ago our dear friend Dumb Investor was selling his RR at 515pence. If he actually went ahead and sold at that price I cannot wait to see his next comment.

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Lee Whitehead

Feb 12, 2016 at 18:04

I thought exactly the same thing... I have RR in my portfolio too, good to see it finally adjust to the reality of its situation

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