LONDON: BP and Rolls-Royce have driven the FTSE 100 higher after the oil giant and aircraft engine maker delivered better-than-expected results.
Shares in Rolls-Royce jumped 9.6% to 973p after it reported profits of £1.9 billion in the six months to the end of June, reversing the £2.2 billion loss made over the same period last year. The FTSE 100 rose 57 points, or 0.8%, to 7,429.
Free cashflow, viewed as a major gauge of Rolls-Royce’s performance, fell by £339 million, but that was a better result than the £461 million fall analysts had expected.
Sandy Morris, analyst at Jefferies said free cashflow was ‘the key measure of success for Rolls-Royce and that the less-bad-than-feared performance on that front showed signs of its turnaround bearing fruit.
‘For our 2020 free cashflow forecast of £1.2 billion to be met, Rolls-Royce must get established on the right course and remain on that course through 2018 and 2019,’ he said.
‘We believe the first-half results show that after a period of significant upheaval, Rolls-Royce has established its course and we admit to a moment of exuberance about that.’
Shares in BP meanwhile jumped 3.7% to 462.3p as the oil giant reported a turnaround of its own, eking out a $144 million (£109 million) profit in the three months to the end of June, compared to a $1.4 billion loss in the same period last year.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the upstream business, which delivered earnings of $710 million, smashing analysts expectations of $390 million had displayed a strong recovery.