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UK stock market morning note (February 14, 2013)

The FTSE 100 is called to open flat this morning after its late rally in the previous session with a degree of consolidation around current levels. The main economic event today is at lunchtime with the publication of the latest weekly US jobs claims. Commodity prices are slightly firmer and on the foreign exchanges the pound is weaker against both the dollar and the euro post yesterday's Bank of England inflation report which revealed that inflation will remain high until 2016. Vodafone may remain in focus on speculation that it is in the early stages of considering a bid for the German cable operator Kabel Deutschland.

Company Announcements

AMEC Full Year Results saw adjusted PBT up 8% at GBP336m on revenue ahead 28% at GBP4.16bn with underlying revenue growing by 21%. The order book stood at GBP3.6bn and the dividend is raised 20% to 36.5p. It noted that it expects to see good revenue growth in the conventional oil and gas market in 2013, offsetting softening in the oil sands and mining markets. It remains on track to achieve its targeted EPS of greater than 100p ahead of 2015. It added that the full impact of acquisitions made in 2012 will further boost revenue growth with procurement activity in 2013 expected to be GBP200m lower than in 2012 and expects low to mid single digit revenue growth for the group on an underlying basis, excluding procurement for 2013. Group margins are expected to improve gradually at the headline level in 2013 taking into consideration the reduced procurement.

Rolls-Royce Full Year Results saw underlying PBT up 24% to GBP1.4bn on underlying revenue ahead 8% at GBP12.2bn. The order book rose 4% to GBP60.1bn and the payment to shareholders is up 11% to 19.5p a share. It added that for 2013 it expects modest growth in underlying revenue and good growth in underlying profit with cashflow around breakeven as it invests in the business. It also separately confirmed the appointment of Ian Davis as its new Chairman with effect from May 2013. 

Rio Tinto Full Year Results saw underlying earnings fall 40% to USD9.3bn and a net loss of USD3bn after impairments of USD14.4bn, mainly from its aluminium business as well as its coal assets in Mozambique. The dividend is raised 15% to 167 cents per share. It is targeting cumulative cash cost savings of over USD5bn by the end of 2014, reducing capex on approved and sustaining projects to USD13bn in 2013 and lowering exploration and evaluation spending by USD750m (pre-tax) this year.