21st Jun 2016 10:22
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Whitbread reported growth in sales in the first quarter of its financial year and said it is confident of making good progress in the full year. The owner of the Premier Inn hotel chain and Costa coffee shop brand said total sales in the 13 weeks ended June 2 grew by 8.0% on the same period the year before, as like-for-like sales rose by 1.8%. At Premier Inn, total sales were also up 8.0% and like-for-likes were up 2.1%, while Costa saw total sales growth of 12% as like-for-likes increased by 2.6%. Whitbread noted that Costa started the year well and remains on track to open 230 to 250 stores worldwide in the full year, while increasing its target to install new Costa Express machines this year to at least 1,250.
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Anglo-Australian miner Rio Tinto said it will realign its business structure under new Chief Executive Jean-Sebastien Jacques and later in the day said it will cut its gross debt by USD3.0 billion via its June tender offers. From July 2, Rio Tinto said its product group structure will shift to four operating divisions. These will be Aluminium, Copper & Diamonds, Energy & Minerals, and Iron Ore, plus a new Growth & Innovation corporate division to compliment the operating units. Rio's business previously also was split into four units, covering Aluminium, Iron Ore, Copper & Coal and Diamonds & Minerals. Rio Tinto said the move will better-align its assets with its business strategy to drive further efficiencies in the company and optimise its performance. Rio also said it will reduce its gross debt by USD3.0 billion after accepting the purchase of USD1.25 billion under its maximum tender offer and USD1.75 billion under its any-and-all offer.
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Anglo-Australian miner BHP Billiton outlined plans to improve returns from its coal business, focused on boosting productivity, cutting costs and releasing latent capacity. Mike Henry, the president of the company's Australian minerals operation, said the company sees a significant opportunity to increase the competitiveness of its coal business. BHP said it has delivered USD3.0 billion in productivity gains in its coal business, focused on costs and volumes, since 2012 and is targeting another USD600.0 million by the end of its 2017 financial year.
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Capita said it has agreed to acquire software reseller Trustmarque Solutions for GBP57.0 million in cash from owner Ardbid. Trustmarque provides an enterprise-as-a-service model designed to help customers integrate and better manage technology services. The group provides software asset management and strategic cloud consultancy services, Capita said. For 2015, Trustmarque made earnings before interest, taxation, depreciation and amortisation of GBP7.3 million on revenue of GBP191.9 million.
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The chief executive of British Airways-owner International Consolidated Airlines Group has issued a new warning on the cost of a third runway at Heathrow and told ministers a rival scheme may become the preferred option, Sky News reported. Sky said Willie Walsh, the CEO of IAG, has written to the UK Department for Transport in recent weeks to argue Heathrow Hub, a scheme to extend the northern runway at the airport, should be given serious consideration.
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Saga said trading remains on track to meet its expectations for the year to the end of January 2017. The company, which provides products and services for over-50s, said it has continued to make progress on its strategic priorities so far in the current financial year, with solid trading in its core insurance and travel units. The group added it has continued to make progress on its push to become a more "customer-driven business" and said it continues to invest in new opportunities in order to grow the business.
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Oil services company Petrofac said it is on track to meet its net profit guidance for 2016 and said it remains confident on its outlook given a robust order book. The company said net profit for 2016 is set to meet its expectations and will be broadly evenly split between the first and second halves. Petrofac said its order backlog at the end of May was at USD18.9 billion, down from USD20.7 billion at the end of December, which it said provides "excellent revenue visibility".
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Senior warned ongoing problems in the end markets of its Flexonics division will bruise second half margins. Flexonics has been hurt by weaker conditions in the truck and off-highway vehicle markets and by ongoing softness in the oil and gas sector. Senior said activity for Flexonics in the second quarter of 2016 reflected those continuing problems in its end markets, and while the division continues to focus on cutting costs and improving efficiency, a reduction in volumes and adverse change in its sales mix will mean divisional margins for the first half of 2016 will be lower than expected. Senior anticipates the first-half margin for Flexonics will sink to around 8-9%, a big decline on the 14.3% margin it reported for 2015.
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MARKETS
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London shares were lower with mining stocks weighing on the FTSE 100. The pound was up against the dollar, nearing 2016 highs. Wall Street was pointed to a higher open.
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FTSE 100: down 0.4% at 6,187.64
FTSE 250: down 0.5% at 16,869.60
AIM ALL-SHARE: down 0.2% at 720.50
GBP: up at USD1.4764 (USD1.4689)
EUR: flat at USD1.1342 (USD1.1318)
GOLD: down at USD1,280.43 per ounce (USD1,285.75)
OIL (Brent): flat at USD50.19 a barrel (USD50.39)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK budget deficit narrowed in May, data published by the Office for National Statistics showed. Public sector net borrowing decreased by GBP0.4 billion from last year to GBP9.7 billion in May. Nonetheless, it was above the expected level of GBP9.4 billion. Of this GBP9.7 billion, about GBP7.8 billion related to the cost of the "day-to-day" activities of the public sector, while GBP1.9 billion related to the spending on infrastructure. At the end of May, public sector net debt was GBP1.607 trillion, equivalent to 83.7% of gross domestic product.
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Prime Minister David Cameron was forced to defend himself against criticism that he had used the murder of MP Jo Cox as political capital. Nigel Farage, the UK Independence Party leader, claimed David Cameron had engaged in a "despicable" attempt to use the death of Cox to boost the Remain campaign's chances of winning Thursday's referendum. Cameron defended his comments, saying he was intending only to deliver a tribute to Cox, though he has faced criticism for retweeting the final article penned by Cox which put forward her argument for Britain remaining in the EU. The Remain camp got another very prominent backer in David Beckham, the former England and Manchester United footballer. He said: "We live in a vibrant and connected world where together as a people we are strong. For our children and their children, we should be facing the problems of the world together and not alone."
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Billionaire currency trader George Soros has warned a vote by UK voters to Leave the EU will trigger a plunge in the pound greater than Black Wednesday - but without the benefits seen after the crisis that made him a fortune. The veteran financier said he was certain sterling would fall steeply and quickly should voters back Brexit on Thursday, leading to a "Black Friday" scenario more immediate and dramatic than when Britain crashed out of the European Exchange Rate Mechanism in the 1990s. However, unlike the departure then, there would be none of the benefits to the economy seen by a devalued pound and most voters will be left "considerably poorer", he predicted.
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Remain campaigners have warned voters will be hit hard in the pocket if Britain quits the European Union, while the Leave camp has highlighted immigration pressures as the referendum campaign enters its final stages. Unions warned families face an extra GBP580 a year bill if the country backs Brexit and retail chiefs said the impact of quitting would be "catastrophic". David Cameron's former policy guru, meanwhile, claimed the Prime Minister was told four years ago that it was "impossible" for the government to meet its immigration promises as long as the UK remained in the 28-member bloc.
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Members of the Bank of Japan's monetary policy board said that the country's overall economic recovery was unaffected by recent weak data, minutes from the bank's April 27 and 28 meeting revealed. The members also felt that Japan faced several downside risks - not the least of which came from overseas economies. "The economy was expected to head toward a moderate recovery, supported partly by the effects of the government's policies, while the employment and income situation continued to improve. However, attention should be given to the increased uncertainty in overseas economies," the minutes said.
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Japan's all industry activity expanded at a faster pace in April, the Ministry of Economy, Trade and Industry showed. The indices of all industry activity advanced 1.3% on a monthly basis in April, faster than the 0.2% increase seen in March and a 1.2% rise forecast by economists.
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One of the architects of Donald Trump's presidential campaign was fired in the face of sagging poll numbers and increased pressure from within the Republican Party. Trump's campaign issued a statement carried by multiple US media saying controversial campaign manager Corey Lewandowski "will no longer be working with the campaign" and thanked him for his hard work.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
Copyright 2016 Alliance News Limited. All Rights Reserved.
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