6th Aug 2015 10:09
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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RSA Insurance Group presented itself as an insurer that can thrive as an independent company, reinstating its interim dividend and beating analyst forecasts, as Zurich Insurance Group considers whether to make a takeover offer. "The ball is in their court," RSA Chief Executive Stephen Hester told journalists in a conference call. "Under takeover rules, clearly there are very, very strict constraints on my ability to discuss what is at the moment is only theoretical in terms of what they're ultimately going to do." RSA was reporting results for the first half of 2015, which showed that operating profit on a management basis increased to GBP259 million in the six months to the end of June, compared with GBP141 million in the corresponding half of the prior year. RSA reinstated its interim dividend at 3.5 pence per share. "We believe the value of RSA standalone can be strong for many years to come." Hester added.
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Zurich Insurance, which itself reported lower second-quarter net profit, said Thursday that RSA looks a good fit. “We have informed the market that we are evaluating a potential offer for RSA Insurance Group PLC. We believe that a transaction could bring significant benefits to us and to our investors in terms of the complementary fit of RSA’s business with our own operations and in financial terms. But any capital deployment would need to meet the same hurdles that we apply to any other investment," Chief Executive Martin Senn said in a statement.
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Earlier the Daily Telegraph reported that Zurich Insurance is considering a lower-than-expected bid for RSA. The newspaper said advisers to Zurich are said to be basing their preparations for a bid of around 525 pence per share, lower than the 550p to 600p per share it was reported to be considering. RSA shares were quoted at 514.50p Thursday.
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Old Mutual reported a 19% increase in adjusted operating profit for the first half of 2015, and increased its interim dividend by 8%. The Anglo-South African financial services company said its adjusted operating profit amounted to GBP904 million in the six months to the end of June, a 20% increase at constant currency. It increased its interim dividend to 2.65 pence from 2.45p. Funds under management increased to GBP335.7 billion, up 5% on a reported basis and by 7% at constant currency.
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Aviva said the integration of Friends Life, the rival insurer it bought for GBP5.6 billion, is ahead of schedule. The insurer said that GBP63 million of run-rate synergies have been generated so far through the acquisition and integration of Friends Life, and said it's confident of meeting the overall GBP225 million synergy target. UK Life value of new business increased to GBP253 million in the six months to the end of June, against GBP177 million in the corresponding half of 2014, including the acquisition of Friends Life. Aviva increased its interim dividend to 6.75 pence from 5.85p.
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Rio Tinto said the fall in world commodity prices caused its earnings to drop by around USD3.60 billion in the first half of 2015, but the miner still reported results that beat analyst expectations. The FTSE 100-listed miner also continued to slash costs, cutting its capital expenditure budget in 2015 and 2016, alongside increasing its cost-saving target by USD250 million for the 2015 full year. The company reported a pretax profit of USD1.74 billion in the first half of 2015, less than a third of the USD6.09 billion profit made a year earlier, as revenue fell to USD17.98 billion from USD24.33 billion.
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Randgold Resources said its pretax profit fell in the first half of 2015 due to lower gold prices and higher costs but said its results stood strong against a sector "buckling under the pressure of the gold price downturn". The FTSE 100-listed gold miner reported a pretax profit of USD72.0 million in the second quarter of 2015, falling from a USD92.1 million profit a year earlier, as revenue dropped to USD285.0 million from USD294.9 million.
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Satellite communications company Inmarsat reported a fall in pretax profit for its first half, hit by delays to the launch for its Global Xpress satellite and in turn the launch of its Global Xpress global commercial service, but it raised its interim dividend. In May the company suspended its guidance of an 8% to 12% compound annual growth rate in revenue from wholesale mobile satellite services over 2014 to 2016, as the launch of the third Global Xpress satellite was delayed, due to the failure to launch of the Proton Breeze M rocket. However, the company said that it now expects the satellite to be launched for the end of August, and it is targeting for the introduction of its GX global commercial service by the end of the year.
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The Royal Bank of Scotland Group said it has priced USD3.15 billion in Additional Tier 1 Capital Notes. The bond issue is split between USD2 billion in 7.50% perpetual subordinated contingent convertible notes, known as "CoCos", callable in August 2020, and USD1.15 billion in 8.0% perpetual subordinated contingent convertible notes, callable in August 2025.
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Low-cost airline easyJet said it carried more passengers in July compared to a year earlier and increased its load factor year-on-year. The budget carrier said it carried 7.0 million passengers in July, up from 6.4 million a year earlier, for a 9.4% rise. On a rolling 12-month basis, passenger numbers are up 6.1% to 67.7 million, it said. It also said its load factor for the month improved, up by 1.4 percentage points to 94.3% from 92.9% a year earlier.
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Anglo-South African paper and packaging company Mondi posted a rise in pretax profit and revenue for the first half on the back of robust performances in all of its operating units, as it got a boost from the weaker euro and from the falling oil price. The company said its pretax profit in the first half to the end of June rose to EUR392.0 million from EUR312.0 million a year earlier, as revenue increased to EUR3.46 billion from EUR3.15 billion. It said it will pay an interim dividend of 14.38 euro cents, up from 13.23 cents. Mondi said all of its business units posted significantly improved results in the half and said its capital projects and acquisitions all are performing in line.
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Aerospace and defence manufacturer Cobham said its reported pretax profit was dragged lower by the acquisition of telecommunications equipment maker Aeroflex in the first half, though the same acquisition meant its revenue jumped higher and sent its underlying pretax profit up. Cobham said its pretax profit for the six months to the end of June was down to GBP4.0 million from GBP54.0 million a year earlier, entirely due to a surge in administrative expenses and financing costs in the half related to the Aeroflex deal. Stripping out the effects of the Aeroflex acquisition, and other exceptional costs, pretax profit for the group rose to GBP135.0 million from GBP118.0 million.
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MARKETS
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UK stocks are trading lower mid-morning with Inmarsat the best performer in the FTSE 100.
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FTSE 100: down 0.4% at 6,721.51
FTSE 250: down 0.4% at 17,703.02
AIM ALL-SHARE: down 0.4% at 752.92
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The pound dipped following the report of a fall in UK industrial production and ahead of the much-anticipated Bank of England monetary policy decision, minutes and inflation report at 1200 BST.
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GBP: up at USD1.5618
EUR: down at USD1.0893
GOLD: flat at USD1085.08 per ounce
OIL (Brent): down at USD49.50 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK industrial production declined unexpectedly in June, while manufacturing output recovered from the prior month, data from the Office for National Statistics revealed. Industrial output dropped 0.4% in June from May, when it was up 0.3%. This was the first fall in five months. Production was forecast to rise marginally by 0.1%. Meanwhile, manufacturing output grew 0.2%, reversing a 0.6% drop in May. Economists had forecast 0.1% rise.
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UK house prices dropped unexpectedly in July from June, data from Lloyds Banking Group's Halifax division revealed. House prices decreased 0.6% from June, which was the first fall in five months and confounding expectations for a 0.4% rise. Prices had increased 1.6% in June. The annual house price growth eased for three months to July, to 7.9% from 9.6% in June and was at its lowest since December 2014. Prices were expected to rise 8.3%.
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Ireland's services sector expanded further in July on improving economic conditions, and at the fastest pace since September 2006, survey figures from Markit Economics and Investec showed. The Investec services Purchasing Managers' Index rose to 63.4 in July from 63.3 in the previous month. A reading above 50 indicates expansion in the sector. The services activity increased at the strongest pace since September 2006 and now risen on a monthly basis throughout the past three years.
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Germany's factory orders increased at a faster-than-expected pace in June, after falling in the previous month, preliminary figures from Destatis showed. Factory orders climbed a seasonally and working-day-adjusted 2.0% month-on-month in June, reversing a 0.3% drop in May, which was revised from a 0.2% fall. Economists had expected only a 0.3% increase for the month. In April, orders grew 2.2%. Export orders rose 4.8% monthly in June, while orders in the domestic market went down by 2.0%.
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Swiss consumer sentiment weakened sharply in July as strong franc weigh on future economic and financial expectations, survey results from the State Secretariat for Economic Affairs showed. The consumer confidence index dropped to -19 in July from -6 in April. It was forecast to drop marginally to -7 in July.
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The flaperon found on the French Reunion Island a week ago was a part of the missing Malaysia Airlines flight MH370, Malaysian Prime Minister Najib Razak has announced. "Today 515 days since the plane disappeared it is with a very heavy heart that an international team of experts have conclusively confirmed that the aircraft debris found on Reunion Island is indeed from MH370," Razak said in a press briefing in the Malaysian capital. The Beijing-bound MH370, with 239 people aboard, disappeared without a trace about an hour after it left Kuala Lumpur International Airport, making it one of the greatest aviation mysteries in recent times.
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US President Barack Obama continued his strenuous defence of the international agreement on Iran's nuclear program. Speaking at American University in Washington, DC, Obama argued that many of the critics of the deal with Iran are the same people that pushed for the US invasion of Iraq. "The same mind-set, in many cases offered by the same people who seem to have no compunction with being repeatedly wrong, led to a war that did more to strengthen Iran, more to isolate the US, than anything we have done in the decades before or since," Obama said.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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Related Shares:
InmarsatCobhamOld Mutual PLCAvivaRio TintoRandgold ResourcesRSA.LeasyJetMondi