BP halves quarterly dividend, Diageo proposes unchanged distribution

London open

The FTSE 100 is expected to open 10 points lower on Tuesday, having closed up 2.29% at 6,032.85 on Monday.

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BP halved its quarterly dividend as it swung to a heavy second quarter loss in a "volatile and challenging environment" and announced a 10-fold increase in low carbon investment by the end of the decade. The company, which has been hit hard by a slump in oil prices caused by the coronavirus pandemic, declared a dividend of 5.25 cents a share, compared to 10.5 for the previous quarter as part of a new distribution policy. Its underlying replacement cost loss for the quarter was $6.7bn, compared with a profit of $2.8bn a year ago.

Diageo proposed an unchanged final dividend as the drinks company reported a 15% drop in underlying annual profit. Operating profit before exceptional items for the year to the end of June fell to £3.49bn from £4.12bn a year earlier as net sales dropped 9% to £11.75bn. Diageo recommended a final dividend of 42.47p a share, taking the annual payout to 69.88p a share - up 2%.

Babcock said on Tuesday that underlying operating profit in its first quarter was around 40% lower than last year. The FTSE 250 company said around half of that reduction was due to lower levels of productivity in the core business amid the Covid-19 pandemic, while Magnox, South Africa and land adjacent market businesses accounted for the other half. Order intake in the quarter was £0.7bn, and in July the firm secured around £500m of new contracts in its aviation business, which it said was helped by coronavirus delays in bid decisions starting to clear.

Newspaper round-up

Advertising spend across the UK media fell by more than £1bn year on year during the coronavirus lockdown, according to figures that reveal the government has become the UK’s biggest advertiser during the pandemic. UK advertising spend on traditional media – TV, newspapers and magazines, radio and cinema as well as on poster sites and billboards across the country – almost halved from the start of lockdown on 23 March to the end of June. – Guardian

Boris Johnson’s plea that people “should be going back to work” in offices across England from Monday appeared to have gone unheeded in central Birmingham. In the Colmore business district, which normally has 35,000 workers, most office blocks were largely deserted and at the city’s train stations at rush hour only a handful of people sauntered out, mostly heading to work in shops or hospitals rather than to office-based jobs. – Guardian

Employers should not rush to bring staff back to workplaces despite new rules that allow bosses to compel workers back to the office coming into force on Monday, the Chartered Institute of Personnel Development has warned. – Telegraph

More than 3,000 jobs are in danger in the leisure and retail industries as Covid-19 continues to land heavy blows on the high street. About 1,700 jobs are at risk from the collapse of DW Sports, the retailer and gym group, while Hays Travel will cut 878 jobs. Hundreds more are set to go at M&Co, the Scottish clothing chain, as part of a pre-pack administration that will lead to about 50 of its 260 shops closing. – The Times

A takeover battle is brewing for the AA after the self-styled fourth emergency service attracted bid interest from private equity firms. The Times has learnt that at least two private equity firms have made initial contact, with one rumoured to have mooted an offer of 40p a share — equating to a market value of about £250 million, or about £2.9 billion including £2.6 billion of debt. – The Times

US close

Wall Street stocks closed higher on Monday as market participants turned their attention towards stimulus talks in Washington and a reading of July's purchasing manager index.

At the close, the Dow Jones Industrial Average was up 0.89% at 26,664.40, while the S&P 500 was 0.72% firmer at 3,294.61 and the Nasdaq Composite saw out the session 1.47% stronger at 10,902.80.

The Dow closed 236.08 points higher on Monday, carrying on with gains recorded at the end of the previous session after Apple, Amazon and Facebook all posted far-better-than-expected quarterly financial results the evening before.

Monday's main focus was talks between Republican and Democratic lawmakers on Capitol Hill as discussions reached an impasse over certain components of the nation's next Covid-19 relief bill. The key issue between the two parties was over the amount of a federal boost to unemployment assistance, which was set at $600 per week in March but had just expired during the previous week.

While the White House has indicated desires to reduce the federal assistance to just $200 a week, Democrats were backing a move to keep the $600 payments in place. Other provisions, such as another round of $1,200 stimulus checks, had broader support from both sides of the aisle.