11th Feb 2016 11:09
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Rio Tinto said it is targeting further cost savings in 2016, which will include a change to its dividend policy from "progressive" to "flexible", as it continues to battle the downturn in the market after the miner reported a substantial net loss in 2015. The miner alleviated some concerns Thursday by sticking to its dividend for 2015, but warned its progressive policy is unsustainable moving forward as it outlined hefty cuts to its budgets to try to adjust to the current environment. Underlying earnings, used to measure the underlying performance of the business, fell 51% in 2015 to USD4.54 billion from USD9.30 billion, after revenue dropped to USD34.80 billion from USD47.60 billion. Revenue missed analyst expectations of USD36.62 billion. Net cash from operating activities fell 34% year-on-year to USD9.38 billion from USD14.28 billion last year. That caused Rio Tinto to swing to a hefty USD866.0 million net loss from a USD6.52 billion profit in 2014.
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Glencore reported mixed production results for 2015 and said most commodities will see production fall this year. The miner and commodities trading company reported year-on-year falls in production of copper, nickel and coal in 2015, whilst production of zinc, ferrochrome and oil increased - with commodities continuing to receive lower prices. Glencore also said it has signed a long-term streaming agreement with Franco-Nevada Corp that will result in Glencore supplying silver and gold to the company from the Antapaccay mine in Peru. The sales agreement will assist Glencore in reducing its debt, as Franco-Nevada will make an advanced payment of USD500.0 million to Glencore's subsidiary once the agreement is finalised, which is expected to occur before the end of this month.
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DCC reiterated expectations that it will see operating profit and adjusted earnings per share "very significantly ahead" of the previous year and in line with market expectations for its current year to end-March. In the year to end-March 2015, DCC reported an operating profit of GBP221.7 million, and adjusted earnings per share of 202.2 pence. The distribution and logistics company said Thursday its group operating profit for its third quarter to end-December was "very significantly ahead" of the previous year, it said.
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Imperial Brands reported a rise in net revenue in the first quarter of its financial year and said it is on track to meet its full-year outlook. The company, which recently changed its name from Imperial Tobacco, said tobacco net revenue at constant currencies was up 17% in the three months ended December 31, in line with its guidance, and up 10% on a reported basis, supported by a GBP226 million contribution from ITG Brands in the USA. However, total tobacco volume fell 3.0%, which it said was largely due to the turmoil in Iraq and Syria.
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Worldpay Group is launching into Canada through a partnership with the Peoples Trust Co, The Financial Times reported. The London-listed payments processor's move gives it a domestic licence for its customers to accept card payments in Canada. Previously, Worldpay would have had to opt for cross-border transactions - a more expensive option - to accept payments in Canada, the report said. The partnership enabled Worldpay to form a deal to manage Canadian ebook seller Rakuten Kobo's online payment processing.
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Royal Bank of Scotland Group said it has poached Peter Flavel, the chief executive of JP Morgan's private wealth management business in Asia, to take responsibility for its Coutts & Co and Adam & Co private banking operations. The appointment comes about two weeks after RBS said it will take a GBP498 million goodwill impairment charge for its private banking business in the fourth quarter of 2015, primarily due to lower-for-longer interest rates, higher tax rates, pressure on margins and higher capital allocations. The private banking unit is withdrawing from international activities in favour of focusing on UK clients.
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Marks & Spencer Group said it has reached an agreement with its pension scheme trustees regarding the triennial actuarial valuation of its UK defined benefit pension scheme. The valuation as at March 31 resulted in a statutory surplus of GBP204 million, the fashion, food and homewares retailer said, which is an improvement on the GBP290 million deficit at March 31, 2012. M&S said this was due to an outperformance of return-seeking assets over the period, while the scheme was insulated from the effect of falling gilt rates due to it being fully hedged for interest rate purposes.
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Thomas Cook Group reported a marginally wider pretax loss in the first quarter of its financial year, as revenue slipped amid decreased customer demand following the terrorist attacks in Tunisia, Egypt, France and Turkey, although the travel operator said it is seeing signs of recovery. Thomas Cook said its pretax loss in the seasonally light three months ended December 31 widened slightly to GBP116 million from GBP115 million the year before, as revenue slipped to GBP1.40 billion from GBP1.52 billion, although revenue rose by 1% on a like-for-like basis.
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Tate & Lyle said it remains on track to deliver full-year results in line with expectations and said its longer term outlook remains positive despite some of its divisions continuing to face headwinds. The company said its results for the full year should meet expectations, aiming for an adjusted profit before tax from continuing operations at a constant currency rate of around GBP193.0 million, flat from last year.
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Informa said it expects to see further earnings and cash flow growth in 2016 as it undertakes the third and final year of its 'Growth Acceleration Plan', and reported a swing to a profit for 2015. The company reported a pretax profit of GBP219.7 million for 2015, swung from a pretax loss of GBP31.2 million in 2014, as a result of a rise in revenue to GBP1.21 billion from GBP1.14 billion and lower exceptional costs. Informa proposed a final dividend of 13.55 pence, taking its total dividend for the year to 20.1 pence, up from 19.3 pence a year before.
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Ashmore Group backed the investment case for key asset classes in emerging markets, as the investment manager reported a fall in assets under management and first-half pretax profit. Ashmore reported that assets under management fell to USD49.4 billion at the end of December from USD58.9 billion at the end of June. Pretax profit fell to GBP62.7 million in the six months ended December 31, versus GBP110.7 million the corresponding half the prior year, as net revenue dropped to GBP116.4 million from GBP164.0 million. Ashmore maintained its interim dividend at 4.55 pence.
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Dairy Crest Group said the outlook for its full financial year remains in line with its expectations, while noting it now expects the proceeds from the sale of its Dairies operations to be around the lower end of its guidance. The dairy producer said its cheese and spreads brands performed well in the nine months ended December 31, as combined sales of Cathedral City, Country Life, Clover and Frylight remained broadly in line with the same period last year and volume increased by 2%.
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MARKETS
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UK indices were in the red with the FTSE 100 falling to its lowest level since July 2012. Gold was trading at its highest level since May last year, boosting precious metals miners Randgold Resources and Fresnillo. Wall Street was pointed to a lower open.
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FTSE 100: down 2.2% at 5,555.54
FTSE 250: down 1.5% at 15,279.75
AIM ALL-SHARE: down 1.0% at 666.96
GBP: flat at USD1.4461 (USD1.4480)
EUR: up at USD1.1316 (USD1.1211)
GOLD: up at USD1,224.20 per ounce (USD1,191.26)
OIL (Brent): flat at USD30.48 a barrel (USD30.76)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK economy grew at a slightly slower pace in three months to January due to the weakness in the production sector, the National Institute of Economic and Social Research said. The monthly estimates of gross domestic product suggested that output climbed 0.4% in three months ending January compared to a 0.5% expansion in three months to December. "Despite our estimates indicating a subdued start to 2016, we do expect the economy to grow by 2.3% this year, primarily driven by consumer spending," James Warren, NIESR Research Fellow, said.
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The US Federal Reserve will stick to its plan to modestly increase interest rates, despite potential risks to the economy stemming from low oil prices and a slowdown in Chinese growth, Chair Janet Yellen said Wednesday. "Foreign economic developments, in particular, pose risks to US economic growth," Yellen told a congressional finance committee. But she noted that continued progress in the US labor market along with higher wages offered positive signals about private consumption. The Fed "expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen," Yellen said.
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The US Senate voted unanimously to tighten sanctions on North Korea in the wake of nuclear and missile tests by the reclusive regime in recent weeks. The legislation "leaves no doubt about our determination to neutralize any threat with robust, realistic diplomacy to reach the clear goal of a denuclearized Korean Peninsula," Senator Bob Menendez, one of the its sponsors, wrote in an op-ed published Wednesday. The lower House of Representatives, which passed a similar measure last month, must now pass the Senate version before it can be submitted to the president, or both chambers can pass a compromise bill.
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Greece is trying to figure out how it will accommodate record numbers of migrants stranded there should countries further along the Balkan migration route block access for refugees. Greece is expecting "unilateral moves" from Macedonia, the minister in charge of migrants, Ioannis Mouzalas, told Greek TV channel Mega Wednesday. A day earlier, he said that closing the Balkan borders would strand tens of thousands of migrants in the EU's south-easternmost country. Around 1 million people, including many refugees from war zones in the Middle East, passed along the Balkan route in 2015, most of them in the latter half of the year.
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Information obtained from the first of three black boxes out of two commuter trains that collided head on in southern Germany shows no indication of a technical failure, Transport Minister Alexander Dobrindt said. Dobrindt said that the remaining two black boxes would have to be examined to draw conclusions as to the cause of the crash near the Bavarian town of Bad Aibling, which killed 10 people and injured 81 early Tuesday. Prosecutors and police are trying to determine why an automatic safety system designed to avoid head-on collisions failed to prevent the accident, allowing two commuter trains carrying a total of 150 people to collide at full speed on a single-track line.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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