Cash returns to shareholders in the first half exceeded Morgan Stanley’s expectations and imply a total payout ratio of 70% and a base dividend pay-out of 50%. Operating earnings were slightly ahead of estimates.
Guidance for capital expenditure and operating costs is unchanged, although the broker assesses the earnings upside from the productivity program has been slightly reduced for 2019.
Morgan Stanley maintains an Equal-weight rating and GBP47 target. Industry view is In-Line.
Current Price is $93.67. Target price not assessed.