26th Apr 2016 10:20
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Standard Chartered said it expects its performance to remain "subdued" throughout 2016, after a drop in first-quarter operating income hit profit. Pretax profit fell to USD589 million in the three months ended March 31, from USD1.44 billion in the corresponding quarter a year earlier, said the bank. Operating income fell by 24% to USD3.35 billion and operating expenses fell by 10% to USD2.25 billion, while impairment losses on bad loans improved slightly to USD471 million from USD476 million. Impairment charges for bad loans fell from USD1.13 billion in the final quarter of 2015. "Although trading conditions in the first quarter remained challenging, we continue to make good progress on our strategic objectives," Chief Executive Bill Winters said.
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Weak oil prices caused BP to swing to a loss in the first quarter of 2016 from a year before, the oil major said on Tuesday, but it kept its dividend flat as results improved on the fourth quarter of 2015. BP said its loss for the first quarter was USD583.0 million, compared to a USD2.6 billion profit a year earlier. The loss narrowed from the USD3.3 billion loss made in the fourth quarter of 2015. Underlying replacement cost profit, the preferred measure for analysts, fell to USD532.0 million from USD2.58 billion a year earlier but again improved on the USD196.0 million profit in the fourth quarter.
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British American Tobacco reported growth in revenue in the first quarter of 2016, but warned that adverse foreign exchange rates could hit profit in the full year. The tobacco company said revenue in the three months ended March 31 grew by 1.7% on the same period the prior year, although this was held back by unfavourable movements in foreign exchange rates. Revenue would have grown by 7.5% at constant currencies. Cigarette volume rose by 3.6% in the quarter.
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Whitbread reported growth in profit in its recently-ended financial year driven by sales growth at both the Premier Inn and Costa brands, and said it is confident in making further progress in the new year. The hotel and coffee shop owner said its pretax profit in the year ended March 3 grew to GBP487.7 million from GBP463.8 million the year before, as revenue rose to GBP2.92 billion from GBP2.61 billion. Whitbread will pay a total dividend of 90.35 pence for the year, a 10% increase on the 82.15p paid the year before.
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Kulczyk Investments completed the sale of GBP1.00 billion worth of shares in brewer SABMiller. Kulczyk placed 24.0 million SABMiller shares, or around 1.5% of the company, through Credit Suisse Securities. The shares were sold at 4,180 pence per share. SABMiller shares were down 0.3% to 4,205.5p early Tuesday. Following completion, Kulczyk will hold 1.5% of SABMiller shares.
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Wealth manager St James's Place shrugged off stock market volatility in the opening months of 2016 to report higher funds under management in the first quarter. Net inflows of client funds amounted to GBP1.36 billion in the three months ended March 31, versus GBP1.32 billion the corresponding quarter a year earlier. That helped to boost funds under management to GBP62.02 billion at the end of March, from GBP58.61 billion at the start of the quarter and GBP55.81 billion a year earlier. St James's Place had a GBP0.79 billion net investment return in the first quarter, versus GBP2.48 billion the corresponding quarter a year earlier.
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Bob Diamond, the former chief executive of Barclays, would "recuse" himself from talks in the event his London-listed African banking company Atlas Mara moves ahead with a plan to combine with his former employer's African arm. In a statement, Atlas Mara confirmed it had talks with a group of investors exploring an acquisition of Barclays' 62% stake in Barclays Africa. The talks also covered a potential combination of Atlas Mara with those Barclays assets. Members of the investor group include Atlas Merchant Capital, founded by Bob Diamond, and the Mara Group, founded by Ashish Thakkar. Both Diamond and Thakkar are founders and non-executive directors of Atlas Mara.
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AstraZeneca said it has signed a licensing agreement with Ironwood Pharmaceuticals covering exclusive US rights for Zurampic. Zurampic treats hyperuricemia associated with uncontrolled gout. Ironwood will acquire the exclusive US rights to Zurampic and will get the US rights for a fixed-dose combination of lesinurad and allopurinol. Ironwood will pay AstraZeneca sales-related and other milestones of up to USD265.0 million and royalties on product sales. Separately, AstraZeneca late on Monday said the US Food & Drug Administration has approved Bevespi Aerosphere for treating sufferers of chronic obstructive pulmonary disease.
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Cobham said trading in the first quarter missed its expectations and said it will launch a GBP500.0 million rights issue in the second quarter of 2016. The defence technology company said its trading profit in the first quarter was GBP15.0 million, well behind the GBP50.0 million made in the first quarter of 2015. The hit to its earnings, coupled with investment requirements in long-term development programmes, means Cobham now expects its group leverage may be close to a net debt to earnings before interest, taxation, depreciation and amortisation ratio of 3.5 times by the end of June. Therefore, the group has decided to cut its indebtedness and said it intends to raise GBP500.0 million through a fully-underwritten rights issue of shares in the second half.
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Investment company Allied Minds said it secured funding commitments for up to ten drug discovery programmes through its newly formed ABLS Capital business. Allied Minds said it secured USD80.0 million from investors for the ABLS Capital business, including Woodford Investment Management and Invesco Asset Management. ABLS will fund 80% of the lead optimisation phase of up to ten new drug candidates which pass initial feasibility studies funded by Allied Bristol Life Sciences, a partnership with US drug company Bristol-Myers Squibb. The remaining 20% will be funded by Bristol-Myers Squibb.
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Countrywide said it began 2016 with "real momentum", as transactions on buy to let properties and second homes accelerated ahead of the introduction of a new 3.0% stamp duty surcharge, but the group warned the housing market could slow in the second quarter. The estate agency and property services company said house exchanges across the group in the three months to March 31 were 30% ahead of the same period last year, which it said was reflected in a strong performance from both its Financial Services and Business to Business divisions. However, Countrywide noted that this was compared to a subdued first quarter in 2015 ahead of the UK general election.
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MARKETS
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UK indices were higher with Standard Chartered and BP leading big-cap risers amid a slew of UK corporate news. The pound hit its highest level against the dollar since February. Wall Street was pointed to a higher open.
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FTSE 100: up 0.5% at 6,290.26
FTSE 250: up 0.1% at 16,974.12
AIM ALL-SHARE: down 0.1% at 731.34
GBP: up at USD1.4559 (USD1.4492)
EUR: flat at USD1.1284 (USD1.1271)
GOLD: down at USD1,234.47 per ounce (USD1,240.50)
OIL (Brent): flat at USD44.77 a barrel (USD44.79)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Home loan approvals unexpectedly declined for a second straight month in March to their lowest level in three months, figures from the British Bankers' Association showed. The number of loans approved for house purchase dropped to 45,096 from 45,646 in February. Economists had forecast 47,000 approvals for March. The March approvals was the lowest since December, when they totaled 43,675. In January, approvals were 46,653.
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Home Secretary Theresa May entered the Brexit debate in earnest with a wide-ranging speech warning that leaving the EU would risk London's status as a global financial centre and reiterated her opposition to the UK's membership of the European Convention on Human Rights. Elsewhere, a prominent Leave campaigner claimed Prime Minister David Cameron was "out of touch" and compared him to English Civil War monarch Charles I and the Leave campaign attempted to capitalise on the junior doctors strike. Theresa May, making her first major speech of the campaign, having been largely quiet on the issue bar from expressing her preference to remain in the EU, said the UK's membership of the EU should be based on "hard-headed analysis of what is in our national interest".
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Thousands of junior doctors are staging the first all-out strike in the history of the NHS after the UK Health Secretary made it clear a new contract will go ahead. Jeremy Hunt appealed directly to medics on Monday not to withdraw emergency cover, which he said had particular risks for A&E departments, maternity and intensive care.An impasse between the government and the British Medical Association (BMA) will see junior doctors strike from 8am to 5pm Tuesday and again on Wednesday.
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The UK Labour party has accused former BHS owner Philip Green of extracting "hundreds of millions of pounds" from the high street chain and taking off "to his favourite tax haven". Shadow business minister Angela Eagle said the businessman and "vocal supporter of the Conservative party" had left others to plug a GBP571 million hole in staff pensions. Retailer BHS has collapsed into administration after last-ditch talks to find a buyer failed over the weekend, threatening the closure of up to 164 stores and putting 11,000 jobs at risk. Business minister Anna Soubry told the House of Commons the BHS pension scheme is in the early stages of an assessment by the Pension Protection Fund.
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Voters in five north-eastern US states will weigh in Tuesday on their choices to represent the Republican and Democratic parties in the November presidential election. Republican Donald Trump and Democrat Hillary Rodham Clinton hope to cement their leads by amassing substantial portions of the delegates up for grabs Tuesday in Maryland, Pennsylvania, Delaware, Connecticut and Rhode Island.
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US President Barack Obama announced on Monday he has approved the deployment of an additional 250 troops to Syria to support local forces in the fight against Islamic State. "They are not going to lead the fight on the ground but help in assisting local forces in pushing Islamic State back," Obama said in Hanover, Germany. He said the political initiative for peace was also needed "to end the suffering in Syria."
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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