Yahoo Finance What to watch: M&G to issue £410m dividend, Britvic 'well-placed' during crisis, stocks rise
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
M&G presses on with £410m dividend despite crisis
Insurer and investment manager M&G (MNG.L) on Wednesday vowed to pay its £410m ($505.7m) dividend, arguing that the payment was the “right thing” for its shareholders, many of whom are likely to be retirees.
The decision to pay the dividend flies in the face of a request from the Prudential Regulation Authority, which warned insurers to hold off on shareholder payouts during the coronavirus crisis.
The company, which was recently spun out of Prudential, suggested that its financial position was strong enough to justify the dividend.
“Many of our shareholders are income funds or individual savers who rely on these payments for part of their retirement income,” said chief executive John Foley.
“While markets have recovered from their March lows, I expect volatility to continue, but as an asset owner of scale we are well positioned to acquire assets at competitive prices.”
While insurers such as RSA and Aviva chose not to issue dividends, M&G joins Legal & General in plowing ahead with shareholder payouts.
“In the meantime, we will continue to manage the business in a prudent way, with our usual disciplined approach to capital management,” said Foley.
Shares rose almost 9% on Wednesday.
Britvic ‘well-placed’ to navigate coronavirus crisis
Britvic stock rose on Wednesday after the company reassured investors it was “well-placed to navigate the challenges of COVID-19”.
It came as Britvic, which makes soft drinks like Robinsons and J2O, said adjusted sales rose 1.4% in the first half of its financial year to £698.8m.
The figure was adjusted to reflect a 2-week shorter trading period this year due to accounting changes. Pre-tax profit rose 11.5% to £38.9m.
Britvic said it was “confident” about its liquidity but would take a decision on whether to pay out a dividend later this year.
“We entered the COVID-19 crisis with strong momentum, having delivered a robust first half performance, which continues our track record of consistent delivery since 2013,” chief executive Simon Litherland said.
“While these times are clearly unparalleled, soft drinks has proven itself to be a resilient category time and time again. As consumers increasingly turn to trusted brands, we are confident that our long-term strategy will continue to create value for all our stakeholders.”
Shares rose 5.5% on Wednesday.
Boohoo 'strongly refutes' cashflow claims of short-seller
Online fast fashion group Boohoo (BOO.L) has hit back at claims made by a short-seller that it has exaggerated its free cashflow.
British short-seller Shadowfall on Monday published a 54-page report accusing Boohoo of giving a “misleading impression” of the cashflow in its business.
Shadowfall alleged that Boohoo had overstated its free cashflow by £32.2m ($39.6m) in its latest set of accounts by not including tax charges and treating subsidiary PrettyLittleThing as a wholly owned investment. Boohoo owns 66% of PrettyLittleThing, with the remaining 34% owned by the son of Boohoo’s founder.
Boohoo’s stock lost 12% on Monday after the note was published. London-based Shadowfall disclosed it had placed a personal bet on the share price falling by short-selling — borrowing shares and then selling them in the market in the hope that the price falls before shares are bought back.
Renault, Nissan and Mitsubishi reboot alliance
Carmakers Renault (RNO.PA), Nissan (NSANY), and Mitsubishi (MSBHY) presented a new strategy designed to reinvigorate their 21-year alliance at a press conference on Wednesday.
The heads of the French and Japanese automotive companies said they would deepen their production co-operation to increase cost efficiency and ensure their survival as a group.
The new strategy is based on a “leader-follower” concept, meaning one of the carmakers will lead on one type of vehicle or technology and one geographical region, which would mean less doubling up on development and production costs.
The alliance said that the new strategy could reduce development costs for new models by 40%, and potentially some factories may close as a result of more synergy across production.
European stocks climb as countries continue to loosen lockdowns
European stocks rose on Wednesday as the continued loosening of coronavirus-related lockdown measures prompted renewed optimism among investors.
Authorities in some of Europe’s largest economies — Germany, Spain, France, and Italy — chose to ease restrictions, with markets hopeful that the moves will result in a rebound in consumer spending.
The pan-European STOXX 600 index (^STOXX) rose by around 0.3%. London’s FTSE 100 (^FTSE) climbed by 1% as retailers began announcing that they would reopen many of their stores from the middle of June.
Germany’s DAX (^GDAXI) was up by around 0.5%, while France’s CAC 40 (^FCHI) was 0.3% in the green.
“The increasing prospect that a slowing infection rate and falling death count will see economies start to slowly reopen next month has seen equity markets across the globe get off to a flying start this week, building on the gains we saw last week,” said Michael Hewson, the chief markets analyst at CMC Markets UK.
What to expect in the US
Futures were pointing to a higher open for US stocks on Wednesday.
S&P 500 futures (ES=F) and Dow Jones Industrial Average futures (YM=F) both rose by more than 0.5%, while Nasdaq futures (NQ=F) were up by more than 0.6%.
