What to Watch: Royal Mail delivers divi, Irn Bru profits slump, and banks stabilise

File photo dated 14/12/16 of vans for the Royal Mail, which is installing efficiency-boosting technology on its van fleet in a bid to further cut emissions. Issue date: Thursday February 18, 2021.

Royal Mail vans. Photo: PA

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Royal Mail declared divi

Shares in Royal Mail (RMG.L) rallied on Tuesday as the posite announced a bumper payout for investors.

Royal Mail said it intended to pay a dividend of 10p per share after the pandemic led to a strong year for post. The company said it was on track to make an operating profit of £700m ($ 963.9m) for the year.

“Royal Mail is currently in a sweet spot as the pandemic has accelerated the shift from physical to online retail, thereby creating a massive tailwind for companies that deliver parcels,” said Russ Mould, investment director at stockbroker AJ Bell. “It will be hoping that this trend remains intact even when people start to go back to work in offices and get out of the house more.”

Shares rose 1.8%.

Irn Bru profits slump

Shares in Irn Bru maker AG Barr (BAG.L) dropped more than 2% after the drinks company revealed a slump in annual profits.

Pre-tax profits slumped by almost a third to £26m for the year to January 24. Sales fell 11.2% to £227m.

AG Barr kept its dividend on hold, having paused them last April, but said it remained “committed” to restarting shareholders payouts.

“Whilst there now appears to be a route out of lockdown, the immediate future remains uncertain,” chief executive Roger White said.

“Notwithstanding this current backdrop, our strategy for the year ahead is to support our core growth initiatives with significant investment.”

Banking stocks staged a partial recovery on Tuesday as the panic that had gripped the sector just a day before began to ease.

Shares in banks sold off sharply around the world on Monday after details emerged of the likely collapse of Archegos Capital. The little-known family investment office had relationship with major investment banks around the world and investors were left scrambling to work out how big losses would be and where they might fall.

The selling eased on Tuesday as the fallout became clearer. Credit Suisse (CSGN.SW), one of the hardest hit, rose 1.1%. The Euro Stoxx Banks 30 (EXX1.DE), which tracks Europe’s biggest banks, rallied over 2% to erase losses seen at the start of the week.

In Japan, Nomura (8604.T) managed to stem losses. The stock fell 0.6% in Tokyo, following a slump of 14% on Monday.

European stocks opened higher on Tuesday as investors ignored the fallout from a major hedge fund collapse and instead focused on US resident Joe Biden’s upcoming infrastructure investment speech.

The FTSE 100 (^FTSE) rose 0.6% at the open in London, while the DAX (^GDAXI) was up 0.6% in Frankfurt and the CAC 40 (^FCHI) was half a percent higher in Paris.

Investors are focusing on a major infrastructure investment speech Biden is due to make on Wednesday, which will set out the details of a huge stimulus package. The scale means the ripple effects are likely to be felt across the globe.

Momentum was lacking in New York as investors await the details of Biden’s latest fiscal package. S&P 500 futures (ES=F) were flat, Dow futures (YM=F) were up 0.1%, and Nasdaq futures (NQ=F) were down 0.4%.

Stocks in Asia were broadly positive overnight. Japan’s Nikkei (^N225) rose 0.2%, the Hong Kong Hang Seng (^HSI) gained 0.9%, the Shanghai Composite (000001.SS) rose 0.5% and the South Korean KOSPI (^KS11) rallied 1.1%.

Pub chain JD Wetherspoon (JDW.L) has announced an ambitious plan of investing £895m to upgrade pubs as well as open new ones in a move it said will create 22,000 jobs.

However, founder and chairman Tim Martin warned that this “is conditional on the UK opening back up again on a long-term basis, with no further lockdowns or the constant changing of rules.”

In the first phase of this plan, Wetherspoon will invest £145m in building 18 new pubs plus extending and upgrading 57 current ones, creating some 2,000 jobs.

Its next step will include investing another £750m to open 15 new pubs and expand 50 existing pubs each year for ten years. It believes this will result in 20,000 new jobs.

Confirmation that Deliveroo will price its initial public offering (IPO) at the bottom end of its proposed price range has started to filter through from funds and City banks.

Reuters reported that banks involved in the deal confirmed on Tuesday the offering would come in a 390 pence per share, giving a value of £7.6bn.

The bookrunners said that the final pricing is expected to close at midday on Tuesday.

On Monday, the startup had said it cut its potential valuation, following a revolt from the City of London over the company’s treatment of drivers. This knocked up to £1bn off the potential value of the company.

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