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What to watch: Standard Life Aberdeen cuts dividend by a third, M&G profit beats estimates, Domino's boosted by lockdown pizza boom

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LaToya Harding
·Contributor
·4-min read
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The UK’s second-largest asset manager cut its full-year dividend to 14.6p (20.2 cents) a share, down from 21.6p last year. Photo: Igor Golovniov/SOPA/LightRocket via Getty
The UK’s second-largest asset manager cut its full-year dividend to 14.6p (20.2 cents) a share, down from 21.6p last year. Photo: Igor Golovniov/SOPA/LightRocket via Getty

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

Standard Life Aberdeen cuts dividend by a third

Standard Life Aberdeen (SLA.L) slashed its dividend by a third following a fall in profits during 2020.

The UK’s second-largest asset manager cut its full-year dividend to 14.6p (20.2 cents) a share, down from 21.6p last year. The reduction was anticipated by analysts as the payout was not fully covered by earnings.

It came as the company's statutory pre-tax profit slumped from £838m to £243m. The group’s net outflows dropped sharply from £17.4bn to £3.1bn, marking a slowdown in investors exits compared to recent years.

Assets under management also edged lower, from £544.6bn to £534.6bn.

Stephen Bird, who has been chief executive since September, said: "We have seen growing momentum in the second half of 2020 with improved investment performance and flows which represent an inflection point as we pull out of the post-merger era."

He added that his priority was to return the business to revenue and earnings growth, as well as aiming to cut the company's cost to income ratio from 85% to 70% to ensure that the dividend would remain sustainable.

Shares fell 1.25% in London on the back of the news.

Shares in Standard Life Aberdeen fell on Tuesday after it slashed its dividend by a third. Chart: Yahoo Finance
Shares in Standard Life Aberdeen fell on Tuesday after it slashed its dividend by a third. Chart: Yahoo Finance

M&G profit beats estimates

Investment manager M&G received a boost from investors on Tuesday after its full-year profit beat City estimates despite a year-on-year decline.

The company, which was demerged from Prudential in 2019, announced an adjusted pre-tax operating profit of £788m, above estimates but around a third lower compared to the year prior.

Assets under management rose from £351.5m to £367.2m.

Chief executive John Foley said: "Our balance sheet has remained robust throughout the COVID-19 pandemic and capital generation was strong at £995 million for the year.

"We remain committed to our ambitious three-year £2.2bn target for total capital generation to the end of 2022 and to our current policy of a stable or increasing dividend."

READ MORE: Frozen £2.5bn property fund could be 'first domino to fall'

M&G said a second interim dividend of 12.23p per share will be paid at the end of April, up from 11.92p in 2019, taking the full year total to 18.23p.

Shares in the company rose 5%.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "M&G offered investors a dividend yield of nearly 9% going into these results. That’s normally a sign investors are worried a cut is on the way, so the fact the group’s actually boosted the final dividend by 2.6% has sent the shares soaring.

"M&G makes a lot more sense as a standalone business than it did in the hodgepodge of Prudential before going its own way."

European stock markets muted

European equities had a flat open on Tuesday after the Bank of England (BOE) governor warned on the prospect of rising inflation.

The FTSE 100 (^FTSE) fell 0.32% after opening, while the CAC (^FCHI) edged 0.02% lower and the DAX (^GDAXI) was 0.28% down.

On Monday BOE governor Andrew Bailey signalled renewed concern about the possibility of rising inflation as the UK recovers from the health crisis. He said that the risks were now “increasingly two-sided.”

Bailey said the central bank was not about to raise interest rates in response to a rapid recovery and would need to see “clear evidence” that inflation would be sustainable at the 2% target before it made a decision.

However, he added that the Bank was preparing for negative rates if the recovery disappointed, as well as working on how best to tighten policy if rapid spending growth rose inflationary pressures.

Watch: What are negative interest rates?

Domino's boosted by lockdown pizza boom

Domino's Pizza (DOM.L) stock ticked 12.1% higher after the opening bell in London, as the chain reported strong full-year results due to customers turning to takeaways under COVID-19 lockdowns.

Its underlying profit before tax was £101.2m, up £2.4m, even after COVID-19 costs of £9m to support franchisees to trade safely.

Domino's said that statutory profit after tax hit £39.7m, up from £2.8m. The loss on discontinued international operations reduced to £42.5m from £56.5m the previous year, including £22.6m of impairments of international operations.

Alongside this, free cash flow increased by 73% to £99m.

As with other businesses, Domino's underwent a digitisation drive, with the acceleration of online and app sales meaning that 94.3% of its delivery sales were online in the UK in the last year.

The company said it is expecting to deliver our medium-term ambition of total system sales of £1.6bn to £1.9bn.

Watch What UK government COVID-19 support is available?