5th Aug 2015 10:05
LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Standard Chartered slashed its interim dividend and said it is yet to decide whether ask shareholders for new capital, as the emerging markets bank reported a drop in first-half pretax profit and a jump in impairment charges for bad loans. Standard Chartered, which makes the bulk of its money in Asia, the Middle East and Africa, said its pretax profit amounted to USD2.10 billion in the six months to the end of June, compared with USD3.25 billion in the corresponding half of the prior year. The emerging markets focused bank halved its interim dividend to 14.4 cents per share, and said it expects to make a similar percentage adjustment to the final dividend.
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Legal & General Group reported an 18% increase in first-half operating profit, driven by growth in four of the insurance and investment company's six divisions. Legal & General increased its interim dividend by 19% to 3.45 pence per share from 2.90p, as operating profit increased by 18% to GBP750 million in the six months to the end of June, ahead of the 3.36p interim dividend and GBP692 million operating profit analyst forecast provided by the company. Operational cash generation increased to GBP624 million from GBP578 million, which was ahead of the GBP618 million forecast by analysts.
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London Stock Exchange Group reported a 17% increase in first-half operating profit, driven by higher revenue from the acquisition of Frank Russell Co. In a statement, the company said it made a GBP239.4 million operating profit in the six months ended June 30, compared with GBP205.7 million in the corresponding half of 2014. Revenue increased by 90% to GBP1.16 billion when including the acquisition of Frank Russell. Revenue from continuing operations was up 9%, the group said. The group increased its interim dividend by 11% to 10.8 pence, and said it wants to provide an update on capital allocation, including its longer-term dividend policy, in March 2016.
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Glencore said the directors of its Optimum Coal Holdings and Optimum Coal Mine have started business rescue proceedings in South Africa amid an ongoing dispute with local utility Eskom on the coal supply agreement between the two. Glencore said Optimum has spent the past six months taking a number of steps to restructure its operations and cut costs, including downscaling its operations and reducing its production, but has continued to face financial difficulties due to the supply agreement it has in place with Eskom.
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Baxalta rejected an unsolicited USD30 billion takeover bid from Ireland-based pharmaceutical company Shire, saying that its board of directors determined the all-share offer is not in the best interests of Baxalta or its shareholders. Wayne Hockmeyer, chairman of the board of Baxalta said: "The board today reaffirmed its conclusion that Shire's proposal significantly undervalues Baxalta and its attractive prospects for growth and value creation, and that a merger at this time would be severely disruptive at this very early stage of Baxalta's existence as a public company and presents a significant and real risk to value creation for our shareholders." Baxalta, which was spun off from healthcare company Baxter International in early July, noted that it received this same proposal privately from Shire on July 10.
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A 24-year-old man was killed Tuesday after an oil furnace exploded at a site owned by the UK pharmaceutical giant GlaxoSmithKline in Belgium, local media reported. The production technician was seriously injured by the explosion and later died in hospital. Three other workers were treated for shock in an infirmary at the GlaxoSmithKline site, according to the Belga news agency. The vaccine research and development facility is located in Rixensart, about 20 kilometres south of Brussels. Several furnaces located outside production buildings on the property were undergoing maintenance at the time of the blast, Belga quoted a company spokesman as saying. The explosion propelled a lot of debris, injuring the nearby technician, Belga said.
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IP Group said it's seeing opportunities to increase the deployment of capital within its existing portfolio of companies, and that it has a "healthy pipeline" of new and potential business opportunities. IP Group, which works with universities to help develop and commercialise their intellectual property, said the value of its portfolio amounted to GBP478.2 million at the end of June, up from GBP349.9 million six months earlier and from GBP319.6 million at the same stage last year. Its portfolio, which consisted of interests in 96 companies at the end of June, benefitted from a net unrealised fair value gain of GBP73.7 million.
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Spirax-Sarco Engineering said currency effects dragged down its pretax profit and revenue in the first half, along with costs associated with the start-up of its business in India and with the restructuring of its UK operations. The company, which makes steam management systems and peristaltic pumps, said pretax profit in the first half was down by 10% to GBP57.3 million from GBP63.5 million a year earlier, primarily due to the GBP8.2 million in exceptional costs it booked in the half from the start-up of its business in India and from the job cuts it made in the UK.
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MARKETS
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UK stocks are mixed with Standard Chartered and some miners leading blue-chip risers, while the UK services purchasing manager's index reading came in below economists expectations.
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FTSE 100: up 0.1% at 6,692.25
FTSE 250: down 0.3% at 17,687.44
AIM ALL-SHARE: flat at 754.84
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GBP: flat at USD1.5570
EUR: down at USD1.0860
GOLD: flat at USD1085.96 per ounce
OIL (Brent): down at USD50.12 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The president of the Federal Reserve Bank of Atlanta has said the economy is ready for its first increase in short-term rates and added it would take a significant deterioration in economic data to convince him not to push for a rate hike in September, The Wall Street Journal reported. Dennis Lockhart, speaking in an interview with the WSJ, said: "I think there is a high bar right now to not acting, speaking for myself."
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The UK services sector growth slowed more than expected in July, survey data from Markit Economics showed. Still the survey signalled strong growth in the dominant services sector moving into the second half of 2015. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell to 57.4 in July, from 58.5 in June. It was forecast to drop marginally to 58 in July.
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The UK economy is set to see a reasonable pace of growth in the second half of the year driven by consumption and business investment, the National Institute of Economic and Social Research said. The growth outlook for 2015 was retained at 2.5%. The think tank said growth will remain close to this rate throughout the forecast period. The NIESR said the increase in unemployment rate in three months to May was only temporary. It will be reversed in the coming quarters as the jobless rate gradually falls to its long-run level of 5% to 5.5%. Further, it assessed inflation to continue to hover around zero throughout the remainder of this year.
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Shop prices in the UK were down 1.4% on year in July, the British Retail Consortium said, after slipping 1.3% in June. Food prices were up 0.1% on year, following the 0.4% decline in June, but non-food prices tumbled an annual 2.3%. Home entertainment prices were down 5.5% on year, while clothing prices dipped 4.9%. On a monthly basis, prices were down 0.8%, marking the 27th consecutive month of decline.
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The services sector in China continued to expand in July, and at an accelerated pace, the latest survey from Caixin showed, with a PMI score of 53.8. That's up from 51.8 in June, and it moves further above the level of 50 that separates expansion from contraction. The composite index came in with a score of 50.2, down from 50.6 in the previous month.
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Eurozone retail sales declined more-than-expected in June, after rising in the previous two months, figures from Eurostat showed. Retail sales fell a seasonally adjusted 0.6% year-over-year in June, in contrast to a 0.1% slight increase in May, which was revised down from a 0.2% climb. The expected rate of drop was 0.2%. In April, sales had risen 0.7%.
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The rate of expansion in Eurozone economic activity slowed slightly at the start of the third quarter, final data from Markit Economics showed. Nonetheless, growth remained close to June's four-year high. The composite output index fell to 53.9 in July from 54.2 in June. It was above the flash estimate of 53.7.
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US State Secretary John Kerry said he had a "good meeting" on Wednesday with Chinese Foreign Minister Wang Yi, amid tensions over territorial claims in the South China Sea. Kerry was later to meet with foreign ministers of the Association of South-East Asian Nations, assembled in Kuala Lumpur this week. Several ASEAN members have expressed concern over Chinese construction to build up shoals or expand islets in areas disputed with neighbouring countries.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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Related Shares:
Ip GroupLSE.LStandard CharteredLegal & GeneralGlaxosmithklineGlencoreShireSpirax-Sarco