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BHP, Royal Bank of Scotland, Reckitt Benckiser and other news
Natural resources group BHP (BHP) disappointed the market with its half-year results as earnings missed expectations thanks to operational problems with several of its mines.
The FTSE 100 constituent should benefit from higher iron ore and copper prices in the second half of its financial year but the outlook is still highly sensitive to economic activity in China.
‘Despite BHP’s operating issues and capital intensive assets, the commodity price cycle should enable the company to grow free cash flow and deliver sizable capital returns,’ says Jefferies analyst Christopher LaFemina.
Royal Bank of Scotland (RBS) got the UK banking sector’s results season off to a solid start. Investors focused on the delivery of a special dividend of 7.5p per share instead of a disappointing margin performance and marked the shares higher to 255p, its highest level since September 2018.
On 18 February consumer goods giant Reckitt Benckiser (RB.) gave its shareholders a boost as it delivered full year growth of 3%, at the top end of its targeted range and a material step up from the 2% posted in the first nine months of the year.
The strong finish to 2018 reflected a big contribution from sales of baby formula in the US – where the company bought Mead Johnson for $16.6bn in 2017 – and demand for household products in emerging economies. Chief executive Rakesh Kapoor is set to retire
at the end of 2019.
While guidance is for a stable final year under Kapoor with margins flat and growth of between 3% and 4%, speculation is likely to mount through the course of the next 12 months on how his successor might take the business forward.
Results from Micro Focus (MCRO) suggested the company may be on the cusp of putting the troubled integration of its £7bn acquisition of Hewlett Packard Enterprise’s software arm behind it.
The company extended its share buyback programme by 28% to $510m as it bolstered the cash return credentials which generated strong interest in the stock in the first part of this decade.
While the Micro Focus ship is being steadied, casual dining firm Restaurant Group (RTN) is looking shaky following the surprise resignation of chief executive Andy McCue for personal reasons.
His exit is untimely when you consider the company has just completed the £559m acquisition of Wagamama. The deal attracted some criticism, particularly for the price tag, and the company has a job to do to demonstrate this was the right move for the business as well as building on the necessary improvements to its existing portfolio.