Shell and Lloyds cheer FTSE on bumper earnings day

The FTSE 100 climbed as a crop of companies reported strong results, including soaring profits at Shell and a dividend increase at Lloyds.

The FTSE 100 opened higher on a swathe of strong half-year updates from the likes of Royal Dutch Shell (RDSB), which saw profits soar to a two-year high, and the restoration of dividends at Lloyds (LLOY).

The main market was up 0.5%, or 36 points, to trade at 7,052 as buoyant results boosted investor sentiment.

Pest control group Rentokil (RTO) jumped to the top of the blue chips, adding 4.5%, or 24p, to trade at 551p after announcing that half-year profits had topped consensus expectation, increasing 54% to £194m. This led the group to upgrade profit guidance for the full year by between £10m and £15m.

Anglo American (AAL) was up 4.3%, or 138p, at £32.63 after delivering record half-year profits following a bumper year for commodity prices. The miner announced its highest-ever dividend of 1.71¢ per share, up from 0.28¢ last year, paying a total of $2bn (£1.4bn). It also announced a 0.8¢-per-share special dividend at a cost of $1bn and is planning to spend another $1bn through a buyback programme.

Royal Dutch Shell added 3.7%, or 52p, to hit 502p after half-year profits surged to $5.5bn, allowing it to increase its dividend and start share buybacks.

Hargreaves Lansdown analyst Susannah Streeter said Shell investors had finally been rewarded for their patience but the green transition is far from over.

‘There will be questions raised about whether the payouts planned are far too generous given the scale of the mountain Shell still has to climb to reduce carbon emissions,’ she said.

‘Shell still has a tough time ahead. It needs higher oil prices to be sustained to keep on the front foot, and it could also be tripped up as it comes under increasing pressure to step up its renewable shift.’

Lloyds gained 1.3% to trade at 47p after reporting net income for the first half of £7.6bn. A £4.5bn swing in provisions for bad loans saw underlying profits jump from a £281m loss to a £4.1bn profit. The banking giant announced an interim dividend of 0.67p per share and plans for a progressive dividend policy.

Interactive Investor’s head of markets, Richard Hunter, said Lloyds was ‘riding the wave of generally improving conditions’ and like Barclays (BARC) yesterday has been able to scale back the amount of cash set aside for poorly performing loans.

‘Less positively, a faltering recovery in the UK over the coming months could put pressure o the banks generally, and Lloyds specifically will be keeping an eye on its key metrics,’ he said.

The FTSE 250 climbed 0.3%, or 71 points, to 23,078, led by mining stocks. RH Magnestia (RHIM) moved to the top of the mid-caps after gaining 4.8%, or 180p, to £39.34. It was followed closely by Ferrexpo (FXPO), which rose 4.3% to change hands at 501p.

Ground Rents looks around 

Ground Rents Income Fund (GRIO ) jumped 3%, or 2.25p, to 75p as the struggling property investment company said it was considering broadening its strategy to attract new investors, a move that could cut its yawning 31% share price discount. The company slashed its dividend by 24% as half-year results showed it battling costly litigation in Manchester, building safety reform and leaseholder compensation.

In other investment trust news, Chrysalis (CHRY) gained 2.3%, or 5.9p, to 257p after Lloyds confirmed it was buying retirement savings and platform company Embark Group for £390m. The pre-IPO investment company has invested 5% of its portfolio in Embark, and the sale to Lloyds’ subsidiary Scottish Widows represents a return of 63% to shareholders over two years, although this had already been factored into the trust’s valuation. 

Greencoat UK Wind (UKW ) firmed 0.6p to 136p on interim figures showing that while the first half was not very windy and the power it generated came in 20% below budget, that was offset by higher energy prices. Net asset value per share rose 2.5% to 125.2p with the 5%-yielder on track to pay 7.18p dividends this year. Stifel analysts said these were ‘a decent set of results’. 

Aberforth Split Level Income (ASIT ) also added 0.6p to 85.2p after the highly-geared UK smaller companies trust reported a 94.4% investment gain for the year to 30 June, trouncing its index benchmark return of 49.8%, but cutting full-year dividends by 21%. 

 

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