De­fence duo bol­stered by div­i­dend call

The Daily Telegraph - Business - - Business - louis ash­worth

DE­FENCE com­pa­nies topped both the blue-chip and mid-cap in­dexes af­ter

BAE Sys­tems and Ul­tra Elec­tron­ics both con­firmed they will pay div­i­dends.

Both com­pa­nies had de­ferred a de­ci­sion on share­holder pay­outs dur­ing April as they waited to see how the mar­ket fared.

But as they posted in­terim re­sults, man­age­ment at both com­pa­nies said that de­fence sales which make up the bulk of the rev­enues were strong enough that they had con­fi­dence to go ahead with div­i­dends.

FTSE 100-listed BAE rose 28.10pc to 505p, while mid-cap­per Ul­tra gained 202p to £23.90.

BAE said it would pay 13.8p in Septem­ber, plus an in­terim div­i­dend of 9.4p for the first half. The an­nounce­ment came as BAE said un­der­ly­ing rev­enues rose 4.8pc to £9.9bn in six months to the end of June, and profit be­fore tax fell from £776m to £689m.

Charles Wood­burn, chief ex­ec­u­tive, added that af­ter dis­rup­tions from lock­downs, the com­pany’s de­fence op­er­a­tions, which rep­re­sent 90pc of the busi­ness, were now op­er­at­ing “at close to nor­mal” lev­els and pre­dicted the sec­ond half of the year would be in line with orig­i­nal fore­casts.

The rises left the pair in a nar­row group of ris­ers on a poor day for Euro­pean mar­kets, which dropped amid his­toric eco­nomic con­trac­tions in Ger­many and the United States, and a chock-full cor­po­rate re­port­ing cal­en­dar that laid bear the financial dev­as­ta­tion be­ing caused by Covid-19.

BAE’s only heavy­weight com­pan­ion was pharma group As­traZeneca, which climbed 136p to £87.51 af­ter beat­ing an­a­lysts’ es­ti­mates with its sec­ond-quarter re­sults as high de­mand for its new medicines drove a strong per­for­mance.

Pest con­trol group Ren­tokil also man­aged to hold in the green. It posted a fall in first-half prof­its, de­spite marginally higher rev­enues, as in­creased costs and busi­ness clo­sures weighed on its bot­tom line. The FTSE 100 group’s on­go­ing rev­enue rose 1pc to £1.3bn, but profit be­fore tax nearly halved, down 45pc to £61.8m. Its shares rose 8.73p to 557.13p.

Lloyds Bank­ing Group led fall­ers on the FTSE 100, drop­ping 2.22p to 26.15p af­ter the lender warned of an ex­tra £2.4bn im­pair­ment in the sec­ond quarter, “re­flect­ing a sig­nif­i­cant de­te­ri­o­ra­tion in for­ward look­ing eco­nomic out­look”.

It pulled the financial sec­tor down with it, with peers such as Le­gal & Gen­eral, Pru­den­tial, Aviva and NatWest all slip­ping. The big­gest drag came from Royal Dutch Shell, which dropped 68p to £11.58 af­ter swing­ing to a deep statu­tory loss.

Else­where on the FTSE 250, out­sourcer Equiniti’s shares touched a record low af­ter an­a­lysts branded its first-half re­sults as dis­ap­point­ing. It closed down 26.40p at 116.80p.

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