3rd Mar 2016 11:17
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Mining giant BHP Billiton announced that Samarco Mineracao and its two shareholders, Vale and BHP Billiton Brasil, have entered into an agreement with Brazilian authorities for the restoration of the environment and communities affected by the Samarco dam failure in November. BHP said Samarco agreed to pay BRL2 billion this year, BRL1.2 billion in 2017 and another BRL1.2 billion in 2018. Annual contributions for 2019, 2020 and 2021 will vary between BRL800 million and BRL1.6 billion depending on project needs. The term of the agreement is 15 years, renewable for periods of one year successively until all obligations under the agreement have been performed.
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The UK's Financial Conduct Authority said it will investigate six life insurers following a review of the treatment of closed-book customers. The six firms are Deutsche Bank's Abbey Life, Chesnara's Countrywide Assured, Old Mutual, Police Mutual, Prudential and Lloyds Banking Group's Scottish Widows. A total of 11 firms were included in the FCA's thematic review. No conclusion has been reached as to whether there have been any breaches of regulatory requirements, the regulator said, adding that the investigation will not necessarily result in disciplinary action. The investigation could be extended to other firms in the life insurance sector.
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Admiral Group declared 2015 as "the year of the uncut diamond", as the motor insurer lifted its dividend and reported higher profit. Pretax profit rose to GBP368.7 million in 2015, from GBP350.7 million the prior year, as net revenue increased to GBP904.8 million from GBP884.6 million and total expenses fell to GBP525.0 million from GBP529.3 million. Admiral lifted its total dividend for 2015 to 114.4 pence from 98.4p. "I would describe 2015 as: the year of the uncut diamond. When the year started many people thought it would turn out to be a lump of coal. But no, 2015 was no lumpy coal year," Chief Executive Officer Henry Engelhardt said.
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Schroders confirmed that Michael Dobson will succeed Andrew Beeson as chairman, after handing over the role of chief executive to fellow board member and head of investment Peter Harrison. Schroders acknowledged that the UK Corporate Governance Code states that, ordinarily, the chief executive should not go on to be the chairman. But the asset manager said it has consulted its major shareholders to explain the reasoning behind the decision. The succession planning came as Schroders reported higher annual pretax profit in 2015 and raised its dividend. Pretax profit rose to GBP589.0 million in 2015, from GBP517.1 million in 2014, Schroders said, lifting the dividend for the year to 87.0 pence per share from 78.0p the prior year.
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Satellite communications provider Inmarsat proposed an increased dividend for 2015 as it reported a small fall in pretax profit for the year, and outlined expectations for revenue growth in the coming year. Inmarsat reported pretax profit of USD338.0 million, down slightly from USD342.3 million in 2014, as revenue slipped a little to USD1.27 billion from USD1.29 billion. On an adjusted basis, stripping out USD10.8 million in revenue in 2014 from energy-related assets that were sold, revenue was mostly flat. Inmarsat proposed a final dividend of 31.78 cents per share, taking its total dividend for the year to 51.39 cents, up 5% from 48.49 cents a year before.
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Whitbread reported growth in sales in both the 11 weeks and 50 weeks to February 11. The hotel and coffee shop owner said total sales in the 11-period grew 7.7%, while like-for-like sales increased by 1.7%. In the 50 weeks to the same date, total sales were up 10% as like-for-likes rose by 3.2%. Whitbread said it expects to report full-year profit in line with expectations.
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Irish building materials company CRH posted higher pretax profit and revenue for 2015, driven by acquisitions it made and a robust US market. CRH said its pretax profit for the year to the end of December was EUR1.03 billion, up from EUR761.0 million a year earlier, while revenue rose 25% to EUR23.64 billion from EUR18.91 billion thanks to the significant volume of acquisitions made in the year. CRH acquired EUR6.5 billion of assets from France's Lafarge and Switzerland's Holcim during the year, after the pair were forced to divest as part of their EUR41.0 billion merger. CRH also spent USD1.3 billion on US group CR Laurence Co, a Los Angeles-based manufacturer of customer hardware and installation products for the professional glazing industry.
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Builders' merchant Travis Perkins posted lower pretax profit for 2015 despite a rise in revenue, driven by writedowns taken on two acquisitions due to weak market conditions. The group said pretax profit for the year to the end of December was GBP224.0 million, sinking 30% from the GBP321.0 million posted a year earlier. Revenue increased to GBP5.94 billion from GBP5.58 billion, but like-for-like revenue growth slowed to 3.8% from 7.3%. Travis will pay a final dividend of 29.25 pence per share, taking its total dividend up to 44.0p from 38.0p, a 16% year-on-year rise.
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Cobham said it has increased its dividend in 2015 after reporting robust underlying results, but the aerospace group ultimately posted a pretax loss for the year after booking impairments and restructuring charges. Cobham reported a pretax loss of GBP39.8 million in 2014, swinging from a GBP24.3 million profit in 2014 despite experiencing a 12% lift in revenue to GBP2.07 billion from GBP1.85 billion and improving its trading margin.
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Construction and support services company Carillion said its pretax profit and revenue increased in 2015, driven by good organic growth across its divisions. The FTSE 250-listed firm said pretax profit for the year to the end of December rose to GBP155.1 million from GBP142.6 million, as revenue increased to GBP4.59 billion from GBP4.07 billion.
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Aggreko said its profit and revenue dipped in 2015 as it took a hit from the low oil price, a price reduction on a contract extension in Bangladesh, and slower payments in Venezuela and Yemen. The FTSE 250-listed temporary power company said its pretax profit fell to GBP226.0 million in 2015 from GBP289.0 million in 2014, in line with its expectations as it took a hit from lower demand from the oil and gas industry and pricing pressures which drove its trading margin down to 16% from 19%.
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Online household appliances retailer AO World said Non-Executive Chairman Richard Rose will step down from his role once a successor has been appointed. The company expects to announce a successor by the time of its next annual general meeting in July.
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Amec Foster Wheeler said it was awarded a GBP125.0 million contract from BP to build a new refrigeration plant to maintain operations at BP's Forties pipeline system. BP wholly owns the oil and gas liquid transportation and processing system, which has the capacity to move in excess of 1.0 million barrels per day serving the central area of the North Sea, taking product from 50 offshore fields. Amec said the contract covers BP's Refrigerated Liquid Petroleum Gas site in Grangemouth, Scotland, which is part of BP's Kinneil Liquid Petroleum Gas Chilldown project.
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MARKETS
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UK indices were flat to higher with insurer Admiral leading the gainers. The pound was flat aginast the greenback after UK service sector growth came in lower than expected. Wall Street was pointed to a higher open.
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FTSE 100: up 0.4% at 6,169.50
FTSE 250: up 0.2% at 16,758.33
AIM ALL-SHARE: flat at 696.60
GBP: flat at USD1.4070 (USD1.4055)
EUR: flat at USD1.0875 (USD1.0831)
GOLD: up at USD1,242.55 per ounce (USD1,237.02)
OIL (Brent): down at USD36.82 a barrel (USD37.17)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK service sector expanded at the weakest pace in nearly three years in February, survey figures from Markit Economics showed. The Chartered Institute of Procurement & Supply/Markit services Purchasing Managers' Index dropped to 52.7 in February from 55.6 in the previous month. Economists had expected the index to fall slightly to 55.1. However, any reading above 50 indicates expansion in the sector.
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UK house price annual inflation remained unchanged in February, defying expectations for an acceleration as prices fell from the previous month, survey data from the mortgage lender Halifax showed. The Halifax house price index rose 9.7% year-on-year, the same as in January. Economists had forecast 10.4% increase. House price declined 1.4% from January, when they rose 1.7%. Economists had expected prices to remain unchanged. The latest monthly decline was the first since September last year.
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A vote for Brexit could result in migrant camps being moved from Calais to the British side of the English Channel, a French government minister has suggested. Finance Minister Emmanuel Macron indicated that British withdrawal from the EU could lead to Paris ending a 2003 treaty which allows UK border guards to be stationed in Calais, where thousands of migrants live in makeshift encampments awaiting their opportunity to cross the Channel. Speaking ahead of talks between UK Prime Minister David Cameron and French President Francois Hollande in the French city of Amiens, Macron also suggested France would "roll out the red carpet" for bankers wanting to "repatriate" from the City of London to Paris if Britain quit the EU.
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Ireland's service sector activity grew significantly again in February, as rates of expansion in activity and new business remained sharp, survey figures from Markit Economics showed. The seasonally adjusted Purchasing Managers' Index, or PMI, dropped to 62.1 in February from 64.0 in the previous month. However, any reading above 50 indicates expansion in the sector.
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The services sector in China continued to expand in February, albeit at a slower pace, the latest survey from Caixin showed with a PMI score of 51.2. That's down from 52.4 in January, although it remains above the line of 50 that separates expansion from contraction.
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After decades of growth at a breakneck pace, China's economy grew by only 6.9% in 2015, the slowest growth in more than a quarter of a century. The growth missed the 7% target that the government had set for the year and is the weakest since 1990. That means this year's annual parliament, set to open Saturday in Beijing's Great Hall of the People, will focus on plans for economic rejuvenation, analysts say. The parliament is expected to approve a proposal for an economic and social development blueprint for 2016 to 2020 that will guide policy at all levels of government and in state-owned enterprises.
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North Korea fired several short-range rockets off its the eastern coast, South Korea said, just hours after the UN imposed its strictest sanctions ever on Pyongyang. The rockets were fired in the morning from Wonsan on the east coast, and all fell in the sea, a Defence Ministry spokesman said. The sanctions on Kim Jong Un's regime agreed in New York are aimed at stopping North Korea's nuclear and ballistic missile programmes, following a nuclear test and a rocket launch by Pyongyang earlier this year.
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EU and Turkish leaders are due to hold high-stakes migration talks on Monday, amid signs that efforts to stem the crisis are failing, while border fences along the migration route are creating chaos and leaving thousands stranded. Some analysts have expressed little hope that the Brussels talks will deliver a breakthrough in the crisis, which has pitted those backing a European solution - such as Germany and Greece - against countries taking unilateral steps to stem the flows.
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Federal appeals court judge Jane Kelly is being vetted by the White House as President Barack Obama's potential Supreme Court nominee, according to a report from the New York Times. Citing a person with knowledge of the process, the New York Times said the Federal Bureau of Investigation has been conducting background interviews on Kelly. A former public defender, Kelly currently serves on the US Court of Appeals for the Eighth Circuit. Her nomination to the court was approved unanimously three years ago. However, Republican Senators have repeatedly said they will not hold hearings on any nominee made by Obama, arguing that the decision should be left up to the next president.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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