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Reports UK

UK stock market morning note (February 20, 2014)

February 20, 2014, Thursday, 08:31 GMT | 03:31 EST | 13:01 IST | 15:31 SGT
Contributed by SVS Securities

The FTSE 100 is called to open lower this morning following the performances overnight on Wall Street and in Asia on the back of the preliminary HSBC Chinese manufacturing PMI data. The latter showed activity falling further below the key 50 level mark in February to 48.3 (49.5), although the timing of the Chinese New Year holiday may have impacted. Today's economic diary sees the release of the CBI industrial order expectations survey with attention then switching across to the US at lunchtime for the latest weekly jobless claims, inflation numbers and later this afternoon the publication of the Philly Fed manufacturing index. Commodity prices are flat to lower and on the foreign exchanges, the pound is weaker against both the dollar and the euro but trading in narrow ranges.

Company Announcements

BAE Systems Final Results see underlying EBITA rise by 3% to GBP1.9bn with underlying EPS up 9% to 42p on sales ahead 2% at GBP18.18bn. The full year dividend is raised 3% to 20.1p with the order backlog maintained at 2012 levels at GBP42.7bn with non UK/US order intake standing at GBP9.3bn. There was a non-cash goodwill impairment of GBP865m in the US businesses. It reiterated the equitable conclusion announced yesterday on price escalation negotiations with Saudi Arabia. It added that following last year's non-recurring benefit from the Salam price escalation settlement, together with ongoing US budget pressures, reported EPS is expected to fall by by between 5%-10% compared to 2013.   

Centrica Final Results see adjusted operating profit down 2% at GBP2.69bn with the full year dividend raised 4% to 17p a share. It noted that its group wide GBP500m cost reduction programme was completed and has set new targets for each area of the business. It added that market conditions are set to remain challenging this year with margin pressures and unusual weather patterns on both sides of the Atlantic, rising unit costs in the North Sea and weak economics for gas storage and gas fired power generation. Whilst it stated overall 2014 trading is in line with recent market forecasts, other than a one-off impact from the extreme weather conditions in Direct Energy, adjusted EPS for the year is expected to be lower than in 2013.  

Petrofac Oman Contract Award. It has been awarded a contract from BP worth USD1.2bn for the central processing facility for the Khazzan gas project in the Sultanate. This has been awarded on a convertible lump sum basis and will convert to a full lump sum contract at a pre-determined point during execution. The project is expected to be completed in 2017.

Micro Focus IMS reports that trading in the 3 months to end January 2014 was in line with management's expectations. It added that management's expectations for the year ending April 2014 remain that on a constant currency basis, revenues will show growth of between 3%-6% with underlying adjusted EBITDA in line with current market expectations.