4th May 2016 10:16
LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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J Sainsbury said it swung to a pretax profit in its recently-ended financial year, as business picked up from the prior year when it booked a loss, but revenue still slipped in a tough UK market for grocery retailers and Sainsbury's also cut its dividend. The supermarket chain said it made a pretax profit of GBP548 million in the year ended March 12, having suffered a GBP72 million pretax loss the prior year. Revenue slipped to GBP23.51 billion from GBP23.78 billion, while like-for-like sales fell by 0.9%, which Sainsbury's said was due to ongoing food price deflation. Sainsbury's cut its dividend for the year by 8.3% to 12.1 pence from 13.2p the year before.
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Sales fell for all four of the big supermarkets in the UK, the latest set of grocery data released by Kantar Worldpanel showed, the first time all four have seen sales fall for a year. In the 12 weeks ended April 24, UK supermarket sales increased by only 0.1% year-on-year, slowing down from the 1.1% growth reported in April which had been boosted by an earlier Easter. Sainsbury's posted the smallest sales fall out of the big four grocers, although this is the first time the retailer has dipped into decline since July last year. In the 12 weeks, Sainsbury's sales fell by 0.4%, but its market share remained flat at 16.5%. Tesco saw sales fall 1.3%, as its market share also slipped to 28.0% from 28.4%. Wm Morrison Supermarkets sales fell 2.6%, as its market share slipped to 10.6% from 10.9%.
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Next said sales fell in the first quarter of its financial year as unseasonably cold weather led to a reduced demand for spring clothing, leading it to lower its full-price sales guidance for the full year. The clothing and homewares retailer said total sales in the first quarter ended May 2 fell by 0.2% on the same period the year before, as full-price sales declined by 0.9%. The latter was at the lower end of its sales guidance of a 1% decline to 4% growth. By division, full-price sales at Next Retail fell by 4.7%, while full-price sales at Next Directory grew by 4.2%.
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Royal Dutch Shell said earnings plummeted in the first quarter of the year and warned earnings will fall even further in the next quarter as all of its divisions will suffer from reduced production, while exceptional costs will rise thanks to the BG Group acquisition. However, the oil giant also said its full-year expenditure is likely to be considerably lower than previously guided. Shell said its current cost of supply earnings dropped to USD814.0 million in the first quarter of 2016 from the USD4.80 billion reported a year earlier. Before exceptional items, CCS earnings halved to USD1.60 billion from USD3.70 billion.
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Imperial Brands reported a drop in profit in the first half of its financial year as it booked higher costs, but revenue rose helped by its acquisition of ITG Brands in the US last year. The tobacco company said its pretax profit in the six months ended March 31 more than halved to GBP452 million from GBP1.05 billion in the first half of the prior year, despite revenue rising to GBP12.81 billion from GBP12.13 billion. Imperial will pay an interim dividend of 47 pence per share, which is up 10% on the prior year.
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Direct Line Insurance Group said its first-quarter gross written premium for ongoing operations were up 4.2% on a year earlier, to GBP777.8 million, with continued growth in motor partially offset by a reduction from home-insurance partnerships. The insurer said its motor and home own-brands in-force policies grew for a second successive quarter, with growth seen in Green Flag direct and Commercial direct. There were strong customer retention rates in motor and home, Direct Line said.
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Standard Life said it agreed to buy wrap platform Elevate from the UK arm of French insurer AXA, in a move to boost the Edinburgh-based life insurer and asset manager's presence in the UK pensions and savings market. Standard Life, which is funding the acquisition with existing cash, will take on Elevate in a move to create one of the UK's largest adviser platform businesses with combined assets under administration of GBP36.4 billion, 350,000 customers, and net asset inflows of GBP5.7 billion in 2015. The company did not say how much it will pay for Elevate.
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Intu Properties affirmed its net rental income growth target for 2016, as the shopping centre owner said it had seen little impact on customer footfall from any uncertainty arising ahead of the UK's vote on its place in the European Union. Intu said it remains on track to deliver like-for-like net rental income growth of 2% to 3% for 2016. For the period from the start of 2016 to May 4, footfall grew 1.4% year-on-year, and Intu's occupancy rate was slightly higher, up to 95.3% from 94.3% a year earlier, though this represented a slight slip from 95.8% at the end of December.
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Defence contractor BAE Systems said trading so far in 2016 has been in line with its expectations. Ahead of its annual general meeting, BAE said its outlook for 2016 remains unchanged, with underlying earnings per share anticipated to rise by between 5% and 10% against the adjusted 36.6 pence posted for 2015. The underlying result for 2015 of 40.2p was adjusted for a 4.3p tax provision release and 0.7p currency benefit.
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Glencore said production of the majority of its commodities fell during the first quarter of the year due to planned cuts, but said its full-year guidance remains intact apart from its oil unit which has made a slight reduction to its target. Glencore made proactive production cuts in 2015 in response to declines in commodity prices and excessive supply in some markets, leading to year-on-year reductions in production of copper, zinc, lead, coal and oil in the first quarter of 2016. Overall, Glencore's full-year production guidance remains intact, apart from its oil E&P division which has reduced its full-year target by 300,000 barrels due to "reductions in the drilling campaign".
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Brazilian prosecutors have filed a USD43 billion civil lawsuit against iron miner Samarco Mineracao, and its owners BHP Billiton and Vale for social, environmental and economic compensation in relation to the failure of the Fundao tailings dam at the Samarco iron ore operation in Minas Gerais, Brazil in November 2015. The lawsuit follows the collapse of a dam they owned that caused a huge mudslide, polluted a river, and killed 19 people. BHP Billiton said it has not received formal notice of the claim.
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Paddy Power Betfair said earnings, net revenue and total stakes all grew in the first quarter. The bookmaker said total net revenue for the quarter to the end of March was GBP339.0 million, up 16% year-on-year from GBP293.0 million. Earnings before interest, taxation, depreciation and amortisation grew 27% to GBP59.1 million from GBP46.7 million.
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Pub operator JD Wetherspoon said like-for-like and total sales grew in the third quarter but said its operating margin was weaker year-on-year. The company said like-for-like sales grew 3.8% year-on-year in the 13 weeks to April 24, with total sales up 5.5%. But Wetherspoons said its operating margin declined to 6.4% in the third quarter, compared to 7.5% a year earlier, reflecting an increase in starting rates for hourly paid staff which came into force in August 2015.
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MARKETS
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London stock indices were lower with miners weighing on the FTSE 100 amid a raft of UK corporate news. Wall Street was pointed to a lower open.
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FTSE 100: down 1.3% at 6,104.83
FTSE 250: down 0.6% at 16,631.06
AIM ALL-SHARE: down 0.2% at 724.70
GBP: down at USD1.4479 (USD1.4538)
EUR: down at USD1.1485 (USD1.1511)
GOLD: down at USD1,277.96 per ounce (USD1,286.52)
OIL (Brent): flat at USD44.89 a barrel (USD44.82)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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British construction growth eased by more than expected in April to the weakest level in almost three years, survey data from Markit Economics and the Chartered Institute of Procurement & Supply showed. The Markit/CIPS UK Construction Purchasing Managers' Index fell to 52.0 in April from 54.2 in the previous month. Economists had expected the index to drop slightly to 54.0. However, any reading above 50 indicates expansion in the sector. Moreover, the latest reading signalled the slowest expansion of business activity since mid-2013.
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The House of Lords has warned a Brexit may result in a substantial period of uncertainty while new trade deals are negotiated, as Tony Blair entered the debate and economic jitters reach a high in Britain. The Lords EU Committee said leaving the EU would result in "difficult and lengthy negotiations" which may take years to complete. Specifically, the committee said determining the rights of two million UK expatriates living in the EU would make up a "complex and daunting" part of the talks to exit. Also wading into the debate was Tony Blair, the former Labour prime minister, who said "rational" voters in the UK will listen to the warnings made by US President Barack Obama about the dangers of the UK leaving the EU.
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Business mogul Donald Trump steamrolled to victory in the Indiana Republican primary - forcing nearest competitor Ted Cruz to suspend his campaign, giving the frontrunner a clear path to his party's nomination for the presidential race in November. Meanwhile, Vermont Senator Bernie Sanders edged former Secretary of State Hillary Clinton to win the Democratic race. With 85% of the vote counted, Trump had 53.2% of the vote, while Texas Senator Ted Cruz was far behind at 36.7% and Ohio Governor John Kasich was third at 7.5%.
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Japanese Prime Minister Shinzo Abe and the European Union's top officials pressed for a conclusion of free trade negotiations between the two sides by the end of 2016, a year later than initially planned. The EU began to negotiate a free trade deal with Japan in 2013, in the hope of striking an ambitious deal that could boost exports and spur economic growth and job creation on both sides. But the talks, which both sides had initially hoped to conclude last year, have been bogged down by issues such as EU tariffs on Japanese vehicle imports and barriers to trade created by Japanese rules on car safety standards, among other things.
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Syrian rebels' shelling of government-held areas of Aleppo killed 14 people Tuesday, state media reported, even as Syria's ally Russia suggested a ceasefire in the northern city could be reached within hours. Russian Foreign Minister Sergei Lavrov, who met UN Syria envoy Staffan de Mistura in Moscow, said he would not rule out a truce that includes Aleppo.
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Brazil's chief federal prosecutor asked the Supreme Court to open an investigation against former president Luiz Inacio Lula da Silva and dozens of other officials over corruption at state-owned oil giant Petrobras, according to local media reports. General Prosecutor Rodrigo Janot requested authorization to investigate Lula, an ally of embattled President Dilma Rousseff, and 38 others including members of her government.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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