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“The FTSE 100 traded modestly higher on Tuesday morning despite heavy losses in US technology stocks overnight,” says AJ Bell Investment Director Russ Mould.
BP
“For a long period in the wake of 2014’s oil price crash the key question was whether or not BP could maintain its generous dividend payments.
“Well the debate has now moved on after the company came up with a modest increase in the quarterly dividend alongside better than expected results for the three months to 30 June. This dividend hike had already been flagged on Friday hence the relatively modest share price reaction today.
“However, the beat itself is also of note given expectations will have been raised by the increase in the oil price and after US peers ExxonMobil and Chevron both came in short of forecasts with their own second quarter updates last week.
“A key factor in BP’s ability to reward shareholders more handsomely is its increasingly streamlined approach from which last week’s $10.5bn acquisition of US shale assets from BHP Billiton was an interesting departure.”
Travis Perkins
“Tool hire and building materials supplier Travis Perkins is blaming the impact of a weak home DIY market on its consumer arm Wickes for downgraded full year profit guidance.
“There are likely to be two contributing factors to this negative trend. First, economic uncertainty means consumer sentiment is weak and spending on home improvement like all other big ticket items is under pressure. Second, the next generation of homeowners are much more reluctant to take on DIY projects themselves and would rather pay someone else to do it.
“Notably the rest of the business, which sells almost entirely to professional customers, held up pretty well through the first half of 2018.
“The company is due to update investors on strategy in December and the long-term position of Wickes within the business may be a key talking point.”
Centrica
“Energy firm Centrica continues to struggle as its consumer facing British Gas division loses customers at a rapid pace.
“This weak performance places greater pressure on the credibility of pledges to maintain dividend payments. Particularly as chief executive Iain Conn linked the fate of the full year dividend to achieving targeted levels of net debt and cash flow.
“Chief financial officer Jeff Bell is set to leave, to be replaced by former Smiths Group numbers man Chris O’Shea, and Conn will be coming under increasing pressure given the weak financial and share price performance under his tenure.”
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