2nd Feb 2017 11:15
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Consumer goods firm Reckitt Benckiser Group confirmed it is in talks for a proposed GBP13.2 billion takeover of US baby formula maker Mead Johnson Nutrition. Reckitt, whose consumer brands include Dettol, Strepsils and Calgon, is in talks with New York-listed Mead for a USD90 per share deal, to be financed with cash and debt. The deal was confirmed by Mead late Wednesday, and Reckitt released a statement also confirming that it is in "advanced negotiations" to acquire Mead early Thursday. "The parties are presently engaged in a period of due diligence and contract discussion," Reckitt said.
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Royal Dutch Shell reported a small decline in full year earnings in 2016, missing analyst expectations, but the company maintained its dividend and vowed to start investing large sums of money into new projects this year. The oil and gas behemoth reported current cost of supply (CSS) earnings of USD3.53 billion in 2016, down 8% from the USD3.84 billion recorded in 2015. Analysts use CCS earnings as Shell's headline figure, and the consensus had expected CCS earnings of USD8.17 billion in 2016. Excluding exceptional items, CCS earnings in 2016 fell 37% to USD7.18 billion from USD11.44 billion. Shell, as expected, maintained its total dividend for the full year of 1.88 cents per share.
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Vodafone Group reiterated its guidance for its current financial year, as the mobile operator said organic services revenue rose 1.7% in its third quarter. Vodafone continues to expect free cash flow of at least EUR4.0 billion for its full year to the end of March, and to deliver the lower end of its organic earnings before interest, tax, depreciation and amortisation growth range of 3% to 6%. For its quarter to the end of December Vodafone reported revenue of EUR13.69 billion, down from EUR14.25 billion the prior year, including a 4.0% percentage point hit from foreign exchange rate movements. On Vodafone's preferred organic service basis, revenue rose 1.7% in the quarter, slower than the 2.4% growth it reported the prior quarter.
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AstraZeneca reported a rise in pretax profit for 2016, despite seeing revenue hit by generic competition to its core anti-cholesterol statin Crestor, as AstraZeneca worked to control costs in the business. The pharmaceutical company reported pretax profit of USD3.55 billion, up from USD3.07 billion in 2015, despite revenue slipping to USD23.00 billion from USD24.71 billion, mostly as a result of a lower selling, general and administrative costs and research and development expenses. AstraZeneca proposed a second interim dividend of USD1.90 per share, taking its total dividend for the year to USD2.80, maintained from the previous year. The company reiterated its commitment to its progressive dividend policy.
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Glencore said its production was in line with guidance in 2016, reflecting production suspensions in copper, zinc, coal and oil, as the multi-commodity trader also reaffirmed its production guidance for 2017. Glencore's own-sourced copper production fell 5% in 2016 versus 2015. Zinc production was down 24%, coal production down 5%, and oil production down 29%, while nickel was the only commodity to experience a year-on-year lift, at 20%.
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Materials and technology developer Johnson Matthey said revenue in the third quarter soared by 25%, reporting sales growth from the majority of its product units. Revenue in the third quarter to the end of December amounted to GBP3.12 billion, rising 25% from GBP2.50 billion a year earlier. At constant currency, revenue was 14% higher year-on-year. "Our guidance for the full year remains unchanged for our continuing businesses on a constant currency basis and therefore we expect the group's performance to be slightly ahead of last year," said Johnson Matthey.
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Compass Group reported growth in organic revenue in the first three months of its financial year and said its outlook for 2017 remains positive. The catering and support services company said organic revenue in the three months ended December 31 grew by 2.8% year-on-year, in line with its expectations, on the back of "strong levels" of new business wins and good retention rates.
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A German prosecutor is investigating Deutsche Boerse Chief Executive Officer Carsten Kengeter's purchase of company stock just months before the exchange announced talks to acquire London Stock Exchange Group. Deutsche Boerse said the company and its CEO are fully co-operating with the public prosecutor. Deutsche Boerse noted that the transaction was part of a compensation program that was approved by the company's supervisory board.
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Private equity investors announced they have sold GBP606.6 million worth of shares in payment processing firm Worldpay Group. Private equity firms Advent International Corp and Bain Capital sold around 214 million shares in FTSE 100-listed group at a price of 282.75 pence per share, via their joint company Ship Global 2. The sale represents the entirety of Ship Global 2's holding in Worldpay. In a separate statement, Worldpay said it will appoint Peter Jackson as chief executive officer of its UK arm. Worldpay said Jackson will begin as CEO of Worldpay UK from March 1, reporting to Philip Jansen, group chief executive of Worldpay. Jackson joins from Banco Santander where he was head of global innovation, as well as previously being chief executive of foreign exchange company Travelex Group.
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Pork and poultry producer Cranswick said trading in the third quarter of its financial year was in line with the board's expectations. According to Cranswick, both total and underlying revenue in the three months ended December 31 were "well ahead" of the prior year, underpinned by strong volume growth and supported by a robust performance over the key Christmas trading period. Export sales continued to grow strongly, Cranswick said, with Far East revenue well ahead of the same quarter last year, reflecting both ongoing demand from the region and increased output from the group's two primary processing facilities.
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GVC Holdings raised its guidance for full-year net gaming revenue, after achieving good growth in the fourth quarter of 2016. The gaming company said net gaming revenue in the fourth quarter increased by 7% year-on-year, which it hailed "a particularly pleasing performance" given "adverse" sports results in the last few weeks of the year and a strong comparative period in 2015. The fourth quarter actually produced the highest daily NGR run rate of 2016, GVC said, noting that "the international diversity of our business combined with a proven portfolio of both sports and gaming brands helped cushion us against particularly punter friendly sports results in the UK and adverse currency movements in some of our markets".
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Aberdeen Asset Management said client money outflows drove a drop in its assets under management in its first financial quarter. Aberdeen reported its AuM at December 31 stood at GBP302.70 billion, down from GBP312.10 billion at September 30. The decline was driven by GBP10.50 billion in net outflows, partly offset by GBP3.30 billion in asset appreciation.
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MARKETS
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London shares were mixed on a on a busy day of UK corporate news. The pound was firm versus the dollar ahead of the Bank of England's latest monetary policy decision, alongside the release of its meeting minutes and inflation report at midday, followed by Governor Mark Carney's press conference at 1230 GMT. Gold hit its highest level for 2017, benefiting gold miners. Wall Street was pointed to a lower open.
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FTSE 100: up 0.2% at 7,122.59
FTSE 250: down 0.1% at 18,219.44
AIM ALL-SHARE: up 0.3% at 889.34
GBP: firm at USD1.2653 (USD1.2640)
EUR: up at USD1.0813 (USD1.0751)
GOLD: up at USD1,222.45 per ounce (USD1,203.59)
OIL (Brent): up at USD57.33 a barrel (USD56.51)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The US Federal Reserve left its benchmark interest rate unchanged amid slowing fourth-quarter growth and a recent uptick in unemployment in the US. The US central bank said that its Federal Funds rate, paid by banks for overnight loans, would remain at a range of 0.5 to 0.75%, still near an unprecedented low. At its last meeting in December, the Fed's monetary policy committee hiked the key rate by 0.25 percentage point for only the second time since establishing a near-zero level during the 2008 financial crisis.
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MPs will spend Thursday poring over a UK government White Paper setting out its Brexit strategy as the next battlegrounds in the debate over quitting the EU begin to emerge. They will also be studying a vast list of amendments from MPs of all sides to legislation which paves the way for Theresa May to trigger Article 50 of the EU treaties to begin Brexit. The European Union (Notification Of Withdrawal) Bill was overwhelmingly backed by a majority of 384 MPs at its second reading on Wednesday. However the major Commons skirmishes are expected during next week's committee stage.
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Robust domestic demand helped drive new order growth for small- and medium-sized manufacturers in the UK in January, according to a survey by the Confederation of British Industry, but unit costs spiked due to the weakness of sterling. The CBI's survey of 422 SME manufacturers showed new orders in the three months to January grew at the quickest pace in two years to a score of +13, driven by a pick-up in underlying domestic demand. However, new export orders only showed tepid growth in the period with a score of +4, disappointing high expectations. Additionally, the survey found that average unit costs rose at the fastest pace since April 2011, and correspondents expect a further growth in the next three months.
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UK construction sector growth slowed more-than-expected at the start of the year amid weaker expansion in business activity and orders, and strong input cost inflation, survey results from IHS Markit and the Chartered Institute of Procurement and Supply showed. The Markit/CIPS purchasing managers' index for the construction sector rose to 52.2 from 54.2 in December. Economists had forecast a score of 53.8. A reading above 50 suggests growth in activity. The latest reading indicated the weakest expansion since the recovery began in September 2016. All three sub-sectors - housing, commercial and civil engineering - recorded softer rates of output growth in January, the survey said.
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The White House had tough words for Iran over a recent ballistic missile test, calling the move a provocation and a violation of UN Security Council resolutions. "As of today we are officially putting Iran on notice," National Security Advisor Michael Flynn said, in his first appearance before reporters since Donald Trump became president last month. The missile test at the weekend, along with an attack this week on a Saudi naval vessel by Iran-backed Houthi militants, "underscore what should have been clear to the international community all along about Iran's destabilizing behaviour across the Middle East," Flynn said
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The US Senate confirmed Rex Tillerson as President Trump's secretary of state. The upper chamber of Congress approved the nominee for top diplomat 56-43 on a largely party-line vote after contentious confirmation hearings focused on Tillerson's ties to Russia while the chief executive of oil giant ExxonMobil.
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Trump slammed what he called a "dumb deal" with Australia to take hundreds of refugees from Australian-run detention facilities on Nauru and Papua New Guinea's Manus Island. "Do you believe it? The Obama Administration agreed to take thousands of illegal immigrants from Australia. Why? I will study this dumb deal!" he said in a late night tweet. The deal would see the US take 1,250 refugees currently languishing on the Pacific islands in off-shore detention camps which have been condemned by UN officials and human rights groups for their living conditions. The tweet came just days after Australian Prime Minister Malcolm Turnbull reported that Trump had agreed to honour the commitment in a telephone call on Saturday.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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