Equities: Notes Of The Week

Here’s some of the things the equity analysts at Markit.com have noted during the past week. Vodacom, Sainsbury and Siemens are among the highlighted companies.

“We are in the process of recalculating our dividend forecasts based on the new dividend policy.”

Markit Dividend Research

The dividend research department at Markit issue every Friday a overwiev of the most notable events in the European stock markets that might affect the company’s ability to pay shareholders dividend. The Swapper will publish this update on a unregular basis. If you want to follow regularly, or subscribe to the service, just log on to markit.com.

Here is the latest edition of “A Week in Review: November 8th – November 12th 2010” provided by Markit Financial Information:

November 8th:

Vodacom Group Ltd (ZAE000132577 – FTSE JSE 40)
The interim dividend has been increased by 64% to ZAR(c) 180. The payment equates to 60% of underlying H1 earnings, up from a payout ratio of 40% in FY10. Customer usage was up in H1 with voice traffic up 14% and data traffic up 60%, guiding revenues up by 5% in South Africa, whilst margins were improved thanks to the continued progress of the Group’s cost reduction program. Vodacom also managed to reduce capital expenditure by 30% over H1 to ZAR 2.1bn, whilst net debt was cut by 21% to ZAR 11.8bn.

November 9th

Associated British Foods Plc (GB0006731235 – FTSE 100, Stoxx Europe 600)
The Board has declared a final dividend of GBp 16.2 (net), up 15% from last year, following a 26% increase in underlying operating profits to GBP 909m. The full-year payout of GBp 23.8 (net) is covered three times by underlying earnings for the first time since the restructuring of the EU sugar regime, which required the Group to invest capital in diversifying the business in order to reduce its dependency on the UK sugar business. Operating profit growth was strong across all businesses with the exception of the agriculture division, with contributions from the Primark business and the sugar business up 35% and 43% respectively.

Marks and Spencer Group Plc (GB0031274896 – FTSE 100, Stoxx Europe 600)
The interim dividend has been raised 13% to GBp 6.2 (net), in line with underlying operating profit growth over H1, with the Board reaffirming its intention to cover payments approximately twice by earnings in future. Like-for-like sales showed further improvement, driven by clothing and homeware, while gross margin was up 25 basis points to 42.0%. For the full-year, the Group expects gross margin to remain flat on FY10, with planned store openings to add 2% to existing footage and capital expenditure to range between GBP 500m-550m.

3i infrastructure Plc (JE00B1RJLF86 – FTSE 250)
The interim dividend has been increased 30% to GBp 2.86 after H1 portfolio income generation rose to GBP 30.5m, from GBP 13.9m in the same period last year. EBITDA growth began to normalize this year, following two years of high growth, and the Board has decided that it is more appropriate to distribute a greater proportion of its dividend objective at the interim stage. As such, this year’s interim dividend is expected to constitute 50% of the total annual payout, compared to 40% last year.

November 10th

Sainsbury (J) Plc (GB00B019KW72 – FTSE 100, Stoxx Europe 600)
The interim dividend has been increased 7.5% to GBp 4.3 (net), in line with the Group’s policy of paying approximately 30% of the previous year’s payout as an interim. Underlying operating profits were up 8.2% to GBP 370m thanks to a 7% increase in sales, to GBP 11.9bn, and an 8 b.p. increase in operating margin to 3.36%. The Group remains committed to its growth strategy and is hoping to generate funds through the sale and leaseback of some of its mature supermarkets. In addition, efficiencies are being implemented to offset the expected 2-3% inflation in costs for the full year.

Cellcom Israel Ltd (IL0011015349 – MSCI WORLD)
Announced a quarterly dividend of ILS 4.03, a 39% increase compared to the amount paid in the third quarter 2009. EBITDA increased 9.3%, reaching ILS 716m. Basic EPS for Q3 totalled ILS 3.36, compared to ILS 2.94 for the same period in FY’09. The dividend will be paid on 29th December 2010.

November 11th

Siemens AG (DE0007236101 – Eurostoxx 50, DAX 50)
Proposed a dividend increase of almost 70% for the FY’10 to EUR 2.70, compared with a stable dividend of EUR 1.60 paid in the last 3 years. The company announced this morning a new dividend policy aiming at distributing between 30 and 50% of the yearly net income. The EUR 2.70 dividend proposed today represents a payout of 46%. We are in the process of recalculating our dividend forecasts based on the new dividend policy.

Vedanta Resources Plc (GB0033277061 – FTSE 100, Stoxx Europe 600)
An interim dividend of USD 0.20 (net) has been declared, up 14% from last year. EBITDA was up 81% to USD 1.35bn, with growth almost entirely attributable to higher commodity prices, with increased volumes contributing just USD 72m towards the increase. Looking ahead, the Group is continuing to make progress towards the acquisition of Anglo American’s Zinc assets and taking a majority stake in Cairn India Ltd, and hopes to complete these transactions before the end of FY11.

Cookson Group Plc (GB00B3WK5475 – FTSE 250, Stoxx Europe 600)
With second-half performance coming in ahead of H1 this year, the Board has announced that it intends to resume dividend payments at the end of FY11. This follows a positive forecast for 2011 steel production volumes, which should have a positive impact on the Group’s ceramics division, and a positive performance from the Electronics division.

Euromoney institutional Investor Plc (GB0006886666 – FTSE 250)
Having revised its dividend policy to target a dividend cover of three times net earnings at the end of FY09, the Board has increased the final dividend by 52% to GBp 11.75 (net). Underlying net profit for the year was up 37% to GBP 87m, after the Group reversed the decline in revenues in H1 and improved operating margin from 25% to 30%. The Company expects the advertising environment to become more challenging in FY11 and is continuing to further invest in technology, but remains hopeful that subscriptions will continue to grow.

E.ON AG (DE000ENAG999 – EuroStoxx 50, DAX 30)
E.ON has clarified its dividend policy for the forthcoming three years in a strategic review statement. It will aim to pay a dividend of €1.50 per share for the 2010 financial year, unchanged from the prior-year dividend, and then anticipates paying out a minimum dividend of €1.30 per share for the 2011 and 2012 financial years. Markit has updated its estimates accordingly and these new forecasts are visible in the data feed today.


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