BUSINESS LIVE: Bumper January budget surplus; HSBC profits hit $30.3bn; BAE Systems earnings jump

Rio Tinto suffered a 12 percent profit drop last year, in line with forecasts, but the miner paid a better-than-expected final dividend thanks to easing cost pressures.

The FTSE 100 company’s underlying profits rose to $11.8 billion for 2023, up from $13.4 billion a year earlier, mainly due to lower aluminum prices and its minerals division. This was largely in line with the LSEG consensus estimate of $11.7 billion.

Rio declared a final dividend of 258 cents per share, up from 225 cents per share in 2022 and ahead of LSEG’s estimate of 247 cents per share.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

‘BAE Systems continues to go from strength to strength, with its full-year revenue and underlying operating profit exceeding its previous guidance. The group manufactures heavy military equipment such as fighter jets, aircraft and submarines, and recent world events keep demand for its products strong.

‘Despite being a UK-based company, a whopping 42% of its sales came from the US last year, making it the largest single contributor. In absolute terms, US military spending exceeds any other country in the world, so having huge exposure here is proving hugely beneficial and has helped the group generate a record £37.7bn in orders in 2023.

‘But BAE Systems doesn’t stop there. The UK’s largest defense contractor closed the deal last week for the £4.4bn acquisition of US-based Ball Aerospace, which should further increase its footprint across the pond. Ball has unique positions in critical space and nuclear deterrence technologies, and the deal appears to be a good strategic fit.

‘The new business should improve revenue growth and margins, contributing positively to the group’s expectations for sales and profits to grow at double-digit rates this year. Against a backdrop of heightened global tensions and growing military budgets, the sky looks bright for this aircraft manufacturer.’

BAE Systems has increased its dividend after the British defense group’s profits soared 14 percent in full-year profits last year, as the Ukraine war continues to boost government military spending.

The group said it expects further growth in 2024 as government orders for defense equipment increase due to rising geopolitical tensions.

Underlying earnings per share at the country’s largest defense contractor came in at 63.2 pence, compared with a consensus forecast of 62.5 pence and its guidance for a rise of 10 to 12 per cent.

The company, whose biggest customers are the United States, Britain, Saudi Arabia and Australia, posted sales of £25.3 billion last year, up 9 percent on 2022.

For this year, BAE, which makes Typhoon submarines and fighter jets in Britain, said it expected earnings per share to grow 6 percent to 8 percent on sales forecast to rise 10 percent to 12 percent. hundred.

“Our performance, combined with our global presence and record order intake, means we are well positioned for sustained growth in the years ahead,” said CEO Charles Woodburn.

HSBC has posted a record 2023 pre-tax profit of $30.3 billion, missing market forecasts after gains from higher interest rates were offset by a hefty $3 billion charge for its stake in a chinese bank

The lender’s profits rose 78 percent from a year earlier, but were worse than a brokerage estimate of $34.1 billion.

But HSBC has rewarded investors with a new $2 billion share buyback and said it would consider a special dividend of $0.21 per share in the first half of 2024 once its sale in Canada is completed.

However, the record annual profit was marred by a $3 billion impairment in the bank’s stake in the Bank of Communications of China.

Monzo is forecasting a valuation of £4bn in its latest funding round, not much more than it was worth three years ago.

The online bank will reportedly close a deal in the next two weeks to raise up to £350m from new and old investors.

Rachael Griffin, Tax and Financial Planning Expert at Quilter:

‘With the Government’s Spring Budget now just two weeks away, the impact of its current tax policy has been laid bare this morning, as new HMRC figures reveal April PAYE and NIC1 income tax receipts from 2023 to January 2024 were £336.2 billion, which is equivalent to £336.2 billion. 22.7 billion more than in the same period last year.

‘This skyrocketing tax take has persisted even though these figures include the first month of the government’s 2% cut to National Insurance from 12% to 10% for the main rate of Class 1 employee NICs. Although time will tell whether the NI cut will cause a slowdown in the rate at which this increase in tax collection grows, the fiscal drag effect caused by the frozen income tax thresholds, coupled with wage growth driven by Inflation will likely keep the figure rising.

‘The cut to NI allows basic rate taxpayers to save a maximum of £754 a year. However, these savings are already being consumed as households face higher costs elsewhere, such as the council tax increase coming from April. The changes mean the average Band D household will now face an annual bill of £2,168, an increase of £103 compared to the current financial year.

‘Given the pressures on households, rumors suggest the government is considering a further income tax or NI cut during the budget. Polls suggest the Conservatives are struggling, so we can expect them to pull out all the stops on the budget in an attempt to sway voters as we get closer to the election. If a further cut were to materialize as part of this, we could see a considerable drop in tax revenue.

‘The inheritance tax had been making headlines as an area of ​​possible change, including suggestions of outright abolition, but those rumors have since been silenced. With inheritance tax receipts between April 2023 and January 2024 being £6.3bn, £0.4bn more than the same period last year and on track for another record year, it is likely May the government leave him alone. Although higher house prices and frozen thresholds have seen more people caught in the IHT net in recent years, it ultimately affects relatively few families but contributes a considerable sum to boost government coffers which he will not be willing to give up, especially if other tax cuts are implemented. They are on the table.’

Britain posted its biggest monthly budget surplus since 1993 of £16.7bn in January, as tax revenues soared to £111.4bn for the month, new data from the Office for National Statistics shows.