Results round-up: Barclays, BAE Systems, Centrica, BAT

Barclays posted fourth-quarter results shy of consensus and cut its dividend, as expected, but said it would complete its restructuring six months earlier than previously planned.

For the fourth quarter, adjusted pre-tax profit jumped almost fourfold to £0.3bn but was just half of the consensus of analyst forecasts as there was a larger than expected exceptional cost from a rejigging of how bonus structures are recognised on the income statement.

Reported pre-tax profits for 2016 almost tripled to £3.2bn, with profit before tax and excluding notable items was up 4% to £6.4bn, delivering a 9.4% return on tangible equity up over 10% to £41bn.

Profits for 2016 were boosted as even though revenue fell 6% to £19.1bn, the FTSE 100-listed bank chopped its litigation and conduct costs down by two thirds to £1.4bn.

Within those costs, provisions for customer redress for payment protection insurance were cut to £1bn from over £2.6bn.

Of the core business, UK pre-tax profits leapt 190% to £1.7bn from £585m while international income grew to £4.2bn from £3.2bn.

While basic earnings per share returned to the black at 10.4p the final dividend of 2.0p per share resulted in a total 3.0p dividend per share for the year, less than half the 6.5p from 2015. This was as guided by management, who also have said the 2017 dividend is likely to remain unchanged with growth resuming thereafter.

The growth in profits drove a 100 basis points improvement in organic capital ratio to a CET1 ratio of 12.4%, up by 80bps in the fourth quarter, beating consensus of 11.9% and said to be on track to meeting revised CET1 capital ratio of 150bps-to-200bps, providing a 400-450bps buffer to the Bank of England stress test systemic reference point.

BAE Systems

FTSE 100 defence group BAE Systems reported a rise in full-year profit before tax on Thursday, with revenue and order intake up as defence budgets recover.

For the year to the end of December, profit before tax jumped to £1.15bn from £1.09bn the year before, with revenue up to £17.79bn from £16.79bn.

Meanwhile, the order intake increased to £22.4bn from £14.9bn

The company declared a final dividend of 12.70p per share, taking the total payout to 21.30p, up 2% on the year.

For the year ending 31 December 2017, the company said it expects underlying earnings per share to be 5% to 10% higher than full-year underlying EPS in 2016 of 40.3p.

BAE said that following the two-year Bipartisan Budget Act signed in 2015, the defence market outlook in the US is improving with encouraging signs of a return to growth in defence budgets. It is also seeing the ramp-up of production on a number of the group's long-term programmes.

In the UK, the business continued to perform well, benefiting from good programme execution and stability in customer requirements following the UK Strategic Defence and Security Review in 2015.

Centrica

Energy and utility services company Centrica posted its preliminary results for the year to 31 December 2016 on Thursday, with adjusted operating profit and adjusted earnings both up 4% to £1.52bn and £895m respectively, and adjusted earnings per share falling 2% to 16.8p.

The FTSE 100 firm posted a revenue decline of 3% to £27.1bn, while adjusted operating cash flow was up 19% to £2.68bn, which included a £357m working capital inflow in the UK business.

Underlying adjusted operating cash flow growth of 14%.

The company said its efficiency programme delivered £384m of cost savings and an over-3,400 like-for-like reduction in direct headcount in 2016, with both measures ahead of target.

A further £250m of efficiency programme delivery was expected in 2017.

The exploration and production division’s £166m free cash flow positive reflected reduced capital expenduture and lower cash production costs, the board explained.

Net debt was down 27% to under £3.5bn.

Looking ahead, the board said it had “continued confidence” in at least 3-5% per annum underlying adjusted operating cash flow growth on average for the 2015-20 period, underpinned by the “strong delivery” in 2016.

Adjusted operating cash flow was expected to exceed £2bn in 2017, with capital expenditure to be limited to £1bn.

The board declared a full year dividend of 12.0p, and added that in the prevailing environment, restoration of a progressive dividend was currently expected when group net debt is in the range £2.5-£3.0bn, targeted by the end of 2017.

British American Tobacco

Cigarette maker British American Tobacco lifted full year pre-tax profits to £6.2bn from £5.8bn as volumes and market share grew.

Revenue grew 12.6% to £14.75bn on the back of the collapse in the pound. In constant exchange rates, the rise was 6.9%.

BAT said its share in its key markets continued to grow strongly, with global volumes up 0.2% year-on-year to 665bn. On a like-for-like basis, cigarette volumes were down 0.8%, though this was ahead of the 3.0% decline in the overall market.

Shareholders will receive a final dividend of 118.10p making a total of 169.40p a share.

Inn January BAT agreed to buy the remaining 57.8% of Reynolds American that it does not own for $49bn.

"Strategically, this deal will create a truly global business with a world class portfolio of tobacco and next generation products which will be available across the most attractive markets in the world," BAT said.

"Financially, it will be earnings accretive with enhanced cash generation while maintaining a solid investment grade credit rating. We expect the transaction to close during the third quarter of 2017, subject to obtaining the relevant shareholder and regulatory approvals."