25th Aug 2022 10:33
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Novartis announced plans to separate its generic and biosimilar division, Sandoz, into a standalone entity by a 100% spin-off, to be listed in Zurich. The pharmaceutical company said the split would results in the "number 1 European generics company and a global leader in biosimilars, and a more focused Novartis". Sandoz brought in some USD9.6 billion in sales in 2021. It plans for Sandoz to be incorporated in Switzerland, and be listed on the SIX Swiss Exchange, and in the US via an ADR programme. Sandoz is due for its next "wave of growth", with its existing biosimilars pipeline of 15 plus molecules, the firm said. It would be targeting an investment grade credit rating to fund its growth plans, and deliver "attractive" dividends. "Novartis aims to become a focused innovative medicines company with a stronger financial profile, and improved return on capital," it explained. Completion of the spin-off is targeted for the second half of 2023.
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The UK Competition & Markets Authority confirmed concerns over the proposed merger of Paris-based utility service providers Veolia Environnement and Suez. The CMA has ordered Veolia to sell three business arms in order to clear the combination. The competition watchdog said Veolia has to sell the Suez UK waste management arm, its UK industrial water operation & maintenance service business, and its European mobile water service business. The CMA said Thursday's final report confirms May's provision findings, being that the merger would lead to competition concerns in five waste markets and two water treatment markets.
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AstraZeneca shared its latest regulatory successes in a key market, winning approvals for three treatments in Japan. The Cambridge, England-based pharmaceutical firm said Japan's Ministry of Health, Labour & Welfare signed off on three medicines - Tagrisso, Ultomiris and Lynparza - for different indications.
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Irish building materials firm CRH raised its dividend after robust half-year results, though it said it contended with a challenging inflationary cost backdrop. For the six months to June 30, revenue was USD15.0 billion, up 14% from USD13.2 billion last year and pretax profit rose 29% to USD1.2 billion from USD929 million. First-half earnings before interest, tax, depreciation and amortisation was USD2.2 billion, up 22% from USD1.8 billion the year before. The Dublin-based company declared a 24.0 US cents interim dividend, up 4.3% on 23.0 US cents in the prior year. Looking ahead, CRH expects annual Ebitda to be USD5.5 billion, up 10% from USD5.0 billion in 2021, in a "challenging cost environment". CRH also said its acquisition pipeline remains strong and its "significant" balance sheet capacity provides flexibility to capitalise on opportunities to deliver further value for shareholders. "CRH has delivered another strong performance with further growth in sales, Ebitda and margin despite a challenging and volatile cost environment," said Chief Executive Officer Albert Manifold.
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South32 announced another special dividend as the global miner continued to benefit from a significant tailwind of commodity prices. The Perth, Australia-based diversified miner's pretax profit multiplied to USD3.69 billion for the financial year that ended June 30 from just USD42 million in financial 2021. Attributable profit after tax was USD2.67 billion, swung from a USD195 million loss. Revenue surged by 69% to USD9.70 billion from USD5.48 billion, helped in part by record production at Worsley Alumina, while Hillside Aluminium and Mozal Aluminium continued to test "maximum technical capacity". South32 declared a final dividend of 14.0 US cents, raising the total ordinary payout for the year to 22.7 cents, up from just 4.9 cents the year before. It also declared a special dividend of 3.0 cents, up 50% from 2.0 cents last year.
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Woolworths Group reported annual results "below aspirations" owing to the "extremely challenging" conditions faced by the Sydney-based retailer. For the year ended June 26, Woolworths' attributable profit was flat at AUD1.51 billion, about USD1.05 billion, versus AUD1.50 billion a year before. Earnings before interest and taxes, before significant items, slipped 2.7% to AUD2.69 billion from AUD2.76 billion. Annual sales, before significant items, were up 9.2% to AUD60.85 billion from AUD55.73 billion. Including Endeavour Group, sales were down 9.6% from AUD67.32 billion. Woolworths demerged its Endeavour arm in July 2021.
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Australia's Qantas Airways said its business had started to bounce back after three years of pandemic turmoil, which cost the airline USD17 billion in revenue. "These figures are staggering and getting through to the other side has obviously been tough," Chief Executive Alan Joyce said. "We always knew travel demand would recover strongly, but the speed and scale of that recovery has been exceptional." By the end of June, domestic travel was above pre-pandemic levels, Qantas reported, with 20 new routes added to meet demand for leisure travel around Australia. A sluggish rebound in international travel – still lagging below 50% of pre-pandemic highs – was "offset by a record performance" in the group's freight business. But the fourth quarter travel surge was not enough to make up for a year plagued by Omicron and Delta wave lockdowns, which caused a third straight loss before tax of AUD1.19 billion, about USD830 million.
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Salesforce.com reported a sharp drop in its second-quarter profit as the firm announced its first-ever share buyback programme. In the three months ended July 31, the San Francisco-based software firm posted USD68 million in net income, a sharp drop from USD535 million the previous year. Basic earnings per share also dropped to USD0.07 from USD0.57. Profit was hurt by a 23% rise in total operating expenses to USD5.40 billion. Revenue, however, climbed by 22% year-on-year to USD7.72 billion from USD6.34 billion. In constant currency, revenue grew by 26% against the prior year. The company announced its first-ever share buyback programme as part of its path to USD50 billion in revenue by financial 2026.
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Nvidia said its second-quarter revenue inched higher, as the chipmaker grapples with a "challenging macro environment". However, Nvidia expects a third-quarter revenue slide, citing a hit from its Gaming & Professional Visualization arm, as demand cools. In the second quarter ended July 31, the Santa Clara, California-based firm reported revenue of USD6.70 billion, up 3.0% annually from USD6.51 billion. Profit tumbled, however. Pretax profit slumped 80% to USD475 million from USD2.39 billion a year earlier. Nvidia reported total operating expenses of USD2.42 billion during the quarter, up 36% year-on-year. "We are navigating our supply chain transitions in a challenging macro environment, and we will get through this," Chief Executive Jensen Huang said.
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Elon Musk's lawyers jumped on the revelations of a Twitter whistleblower to try to force the platform to surrender vast amounts of information for their fight to cancel the billionaire's buyout bid. The Tesla boss's team told a US judge the former Twitter security chief's allegations of major security gaps and problematic practices had bolstered their case, which has struggled for momentum in court. Musk attorney Alex Spiro cited repeatedly Twitter whistleblower Peiter Zatko in a 90-minute hearing on what data the firm should be forced to hand over ahead of their October trial.
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MARKETS
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Equities were trading positively ahead of the start of the Jackson Hole Economic Symposium on Thursday. The dollar was slightly lower, allowing the euro to recover parity. US Federal Reserve Chair Jerome Powell addresses the meeting of central bankers at 1400 GMT on Friday. Among companies in the news on Thursday, Novartis was up 0.6% in Zurich, and CRH was up 2.5% in London, but Woolworths ended down 3.2% in Sydney.
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CAC 40: up 0.6% at 6,423.16
DAX 40: up 0.6% at 13,304.82
FTSE 100: up 0.6% at 7,516.81
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Hang Seng: closed up 3.6% at 19,968.38 in storm-shortened trading day
Nikkei 225: closed up 0.6% at 28,479.01
S&P/ASX 200: closed up 0.7% at 7,048.10
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DJIA: called up 0.6%
S&P 500: called up 0.8%
Nasdaq Composite: called up 1.0%
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EUR: up at USD1.0004 (USD0.9981)
GBP: up at USD1.1847 (USD1.1813)
USD: down at JPY136.42 (JPY136.80)
Gold: up at USD1,764.22 per ounce (USD1,752.55)
Oil (Brent): up at USD101.74 a barrel (USD100.77)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The German economy grew slightly in the second quarter, revised figures from the country's statistics office showed. German gross domestic product grew 0.1% in the second quarter from the first. Whilst slowing from 0.8% quarter-on-quarter growth in the first quarter, the figure was better than expected, improving from Destatis' preliminary estimate of no growth whatsoever. On a price-adjusted annual basis, GDP grew 1.8% in the second quarter, compared to 3.9% in the first quarter. This was an improvement from initial estimates of 1.5%.
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A key business climate indicator for Germany edged lower in August, according to the Ifo institute, amid fears Europe's largest economy is headed towards a recession. The Germany Ifo business climate index decreased to 88.5 points in August from an upwardly revised 88.7 in July. The latest reading was the lowest since June of 2020, but was better than market forecast, cited by FXStreet, of 86.8. Ifo said companies were "somewhat less satisfied" with their current business, while the strong pessimism in their outlook for the coming months is virtually unchanged. Uncertainty among the companies remains high, and the German economy as a whole is expected to shrink in the third quarter.
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Producer prices in Spain remained flat in July from June, but remained elevated on an annual basis. According to INES, the industrial price index registered a monthly change of 0.0% in July, showing prices were unchanged from June. The index had risen by 1.9% in June from May. On an annual basis, producer prices continued to surge, registering a 40.4% change in July, the inflation rate easing slightly from the 43.2% change in June.
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Half of China's vast territory is now experiencing drought, including parts of the frigid Tibetan Plateau, official data showed – with more high temperatures forecast for hundreds of millions of people enduring the country's hottest summer on record. The world's second-largest economy has been hit by record heat, flash floods and droughts – phenomena that scientists say are becoming more frequent and intense due to climate change. Southern China has recorded its longest continuous period of high temperatures since records began more than 60 years ago, the agriculture ministry said this week. Experts have said the intensity, scope and duration of the heatwave could make it one of the worst recorded in global history.
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UK Chancellor Nadhim Zahawi has insisted "nothing is off the table" when it comes to action on soaring energy bills – although he also insisted a freeze in the price cap would not deliver "targeted help" for those who need it most. With bills due to rise again, the Treasury is currently "working up options" to support households as their finances come under further strain. This will allow the new prime minister to "hit the ground running" when the come into Downing Street on September 5, the chancellor said. His comments came as he accused Russian President Vladimir Putin of using "energy and gas as a tool against the British people because of the help we're giving to Ukraine".
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The US responded to Iran's suggestions on reviving a 2015 nuclear deal as momentum builds to bring back the landmark agreement trashed by former president Donald Trump. Just weeks after the deal looked dead, the EU put forward on August 8 what it called a final text to restore the agreement, in which Iran would see sanctions relief and be able to sell its oil again in return for severe limits on its nuclear program. Iran came back last week with a series of proposed changes, to which the US formally responded on Wednesday, a day after Tehran accused its arch-enemy of stonewalling. Iran, the US and the EU all confirmed the US response, but none immediately discussed it in depth.
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Russian shelling of the Chaplyne train station in Ukraine's central Dnipropetrovsk region killed at least 22 people on Wednesday, Ukrainian President Volodymyr Zelensky. Five of the dead were recovered from a car on the railway track and search and rescue operations are ongoing, Zelensky said in an evening video address. More than 50 people were injured in the shelling, according to earlier information. It is not possible to independently verify the details.
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By Tom Waite; [email protected]
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