23rd Feb 2016 11:14
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 swung to its first annual loss since 1989, with the bank's operating income coming under pressure in 2015 amid a costly restructuring and deteriorating financial markets. Standard Chartered, which makes most of its money in Asia and emerging markets, said it expects a "subdued" financial performance in 2016. The bank's USD1.52 billion pretax loss in 2015 came as a surprise to the market, and measured up against a pretax profit of USD4.24 billion in 2014. Its net loss of USD2.36 billion contrasted with the prior year's USD2.51 billion net profit.
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GKN guided to a tougher year for its aerospace business and said continued difficulties in its land systems arm, though profit and revenue for 2015 both increased. GKN said it remains confident on its prospects for growth in 2016, helped by good conditions for its Automotive division and the integration of Fokker Technologies, the Dutch aerostructures business it bought last year. However, the company said aerospace markets have entered a transition phase over to new programmes by the big manufacturers and the overall market in 2016 is set to be slightly weaker than in 2015. Aerospace sales are set to be broadly flat for GKN in the coming year, though it will benefit from the contribution from Fokker.
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Persimmon said its pretax profit surged in 2015 following a very strong year for the UK housebuilding industry, with revenue up and operating margins improving as it sold more houses at higher prices. The group said its pretax profit for the year to the end of December was GBP637.8 million, up from GBP475.0 million a year earlier, as its total revenue for the year increased to GBP2.9 billion from GBP2.6 billion. Persimmon said it will further accelerated its capital return programme thanks to the strong performance of the business and will now return 110.0 pence per share in cash to shareholders by the start of April, a massive rise on the 10.0p it had been intending to return under its original plans. The total value of its capital return programme has been increased to GBP2.76 billion, up from the GBP1.90 billion it had outlined back in 2012.
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Subprime lender Provident Financial said it has made a "good start" to 2016, with its Vanquis Bank credit cards business and vehicle finance provider Moneybarn trading strongly and "very satisfactory" collections for its home credit business. The update on trading in the first few weeks of the year came as Provident reported that pretax profit grew to GBP273.6 million in 2015, from GBP224.6 million in the prior year. The lender increased its dividend for the year as a whole by almost 23% to 120.1 pence from 98.0p.
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InterContinental Hotels Group said it will pay a special dividend to shareholders following the sale of two trophy properties in 2015, in line with its new asset-light approach, as operating profit grew but revenue dipped. IHG said it will pay a total dividend of 85.0 cents per share, up from 77.0 cents per share a year earlier thanks to the confidence it has on its outlook. This includes a final dividend of 57.50 cents, an 11% year-on-year rise. In addition to this, IHG declared a USD1.50 billion special dividend, which will be paid by means of a share consolidation in the second quarter. The special dividend is worth about USD6.33 per share. The size of the special dividend was higher than the USD1.0 billion that Numis analysts had forecast IHG would declare and follows the sales of the InterContinental Paris - Le Grand and InterContinental Hong Kong hotels last year.
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Home Retail Group late Monday said the deadline by which J Sainsbury must make a firm offer or walk away from the potential deal to acquire the owner of Argos and Homebase has been extended to March 18. The extended deadline for Sainsbury to make an offer coincides with the deadline by which Steinhoff International Holdings has to make a firm offer or walk away from the deal.
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Drax Group said its strong operations mitigated severe market deterioration and difficult regulatory challenges in 2015, but the power generation company still reported large falls in profit and earnings, leading to a more than 50% dividend cut. The company said its pretax profit in 2015 plummeted to GBP59.0 million from GBP165.9 million in 2014 despite reporting a 9.3% rise in revenue to GBP3.06 billion from GBP2.80 billion. As a result, Drax slashed its dividend for the year to only 5.7 pence from 11.9 pence - in line with its policy to pay 50% of underlying earnings to shareholders, which dropped to GBP46.0 million in 2015 from GBP96.0 million.
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Aerospace and defence components and sub-systems engineer Meggitt said its pretax profit edged higher in 2015 thanks to growth in revenue and said it is confident on its prospects for 2016 despite experiencing a tough past year. The group, which was demoted from the FTSE 100 to the FTSE 250 in 2015, said its pretax profit for the year to the end of December rose to GBP210.2 million in 2015 from GBP208.9 million in 2014, while revenue rose to GBP1.65 billion from GBP1.55 billion. Still, Meggitt said it is confident on its outlook for the coming year and pushed its final dividend up to 9.80 pence per share, up 3.0% year-on-year, to send its total dividend up 5.0% to 14.40p.
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Ladbrokes reiterated its outlook for 2016 as it reported a swing to a pretax loss in 2015 as a result of heavy exceptional costs and an increase in gambling taxation, though it said it remains focused on reaching or exceeding its financial targets for 2017 and said its merger with Gala Coral Group Ltd remains on track. The company undertook a "short and intense" internal review, and in July set out a three year investment programme to build its UK retail, digital and Australian recreational customer base. However, the company said this plan "came at a cost", as it addressed an urgent need to invest more heavily in its business, which resulted in cutting its dividend to finance its strategy. As a result the company proposed a final dividend of 2 pence, taking its full year dividend to 3 pence, down 66% from 8.9 pence a year before.
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Croda International reported higher pretax profit and revenue for 2015 despite taking a currency translation hit, as it posted underlying growth across the business and said it will pay a special dividend thanks to its strong cash generation. Croda's pretax profit for the year to the end of December was GBP252.3 million, up from GBP229.4 million a year earlier, as revenue rose 2.9% to GBP1.08 billion from GBP1.05 billion. Croda also said it will pay a final dividend of 38.0 pence per share, taking its total dividend for 2015 up to 69.0p from 65.5p. In addition, Croda said it will pay a 100.0p special dividend to shareholders, which will be combined with a share consolidation.
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John Wood Group said it plans to continue growing its dividend despite reporting a large decline in profit in 2015 as the ongoing rout in the oil and gas sector continues. The oilfield services and engineering firm saw its pretax profit from continuing operations in 2015 plummet to USD138.6 million from USD475.1 million as revenue fell to USD5.85 billion from USD7.61 billion. However, John Wood still significantly raised its dividend for the year to 30.3 cents per share - more than 10% above the 27.5 cents paid in 2014. More importantly, the company said there is "no change to our dividend approach" and said it intends to grow the dividend this year by a "double-digit percentage".
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Animal genetics company Genus said its performance in its first half was "overall in line with expectations" for its full year, and proposed a 10% increase for its interim dividend as it reported a fall in pretax profit. Genus reported a pretax profit of GBP12.9 million for its half year to end-December, down from GBP28.6 million a year before, as revenue declined to GBP188.3 million from GBP198.5 million. Genus proposed an interim dividend of 6.7 pence, up from 6.1 pence the previous year.
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Unite Group said its pretax profit surged thanks to a big gain made on the valuation of its portfolio and hiked its dividend as it pointed to another robust year for the business. Unite said its pretax profit for the year to the end of December rose to GBP388.4 million, a massive rise on the GBP108.4 million it made a year earlier after it made a big gain on the valuation of its properties and booked a big profit on its shares of its joint venture projects.
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MARKETS
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The UK's main stock indices were lower with Standard Chartered and BHP Billiton leading blue-chip fallers. Wall Street was pointed to a lower open.
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FTSE 100: down 0.8% at 5,991.01
FTSE 250: down 0.3% at 16,245.17
AIM ALL-SHARE: up 0.1% at 687.11
GBP: flat at USD1.4107 (USD1.4142)
EUR: flat at USD1.1013 (USD1.1024)
GOLD: up at USD1,218.40 per ounce (USD1,209.90)
OIL (Brent): flat at USD34.30 a barrel (USD34.18)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Syrian President Bashar al-Assad has accepted a ceasefire deal agreed by Russia and the US that is set to begin later this week, the state-run SANA news agency reported. The agreement, which does not apply to Islamic State and other UN-designated terrorist groups, will begin at midnight local time Saturday, according to the State Department. Al-Assad also excluded "terrorist" groups, including the al-Qaeda linked al-Nusra Front, saying they are not parties. The Syrian opposition has been more cautious. The Higher Negotiations Committee of rebel and opposition groups said its agreement is conditional on there being international guarantees that Russian and Iranian forces will respect the truce.
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Leaving the EU would threaten Britain's security and economy, Prime Minister David Cameron said on Monday, accusing campaigners for Brexit of pushing voters to accept "risk, uncertainty and a leap in the dark." "Leaving Europe would threaten our economic and our national security," Cameron told parliament as he presented his case for Britain staying in the EU ahead of an in-out referendum on June 23. He said cooperation could help Western states to stand up to threats such as Russia and the Islamic State, saying Russian President Vladimir Putin "likes to see disunity in the West." Cameron added: "In my view this is no time to divide the West."
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British manufacturers see improvement in productivity over the next two years but there are concerns about UK manufacturing lagging behind global peers. About 64% of manufacturers reported productivity growth in the last two years and 57% expect further improvements over the next two years, a report from EEF, the manufacturers' organization, and leading technology company, Infor showed Tuesday. Despite outpacing other sectors, 49% of manufacturers agree that UK productivity lags behind competitor nations.
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As Ireland prepares for Friday's general election, weak support for governing Fine Gael and falling support for two of the other largest parties has blown the election wide open, with opinion polls pointing to a hung parliament. A poll conducted for the Irish Times and published on Monday showed support for Fine Gael at 28%, down three points since campaigning began. Labour stands on 6%, down two percentage points.
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The main opposition party in Japan said it will launch a new party through a merger with a smaller opposition group, local media reported. The merger of the Democratic Party of Japan with the Japan Innovation Party is an attempt by a fractious opposition to mount a bigger challenge in upper house elections this summer. The move comes as Prime Minister Shinzo Abe's government has been rocked by a slew of scandals involving members of his cabinet and the ruling Liberal Democratic Party.
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Germany's economic growth remained stable in the fourth quarter, a detailed report from Destatis showed. Gross domestic product grew 0.3% from the third quarter, when it rose at the same pace. The sequential growth rate matched preliminary estimate. On a calendar-adjusted basis, GDP increased 1.3% year-on-year following a 1.7% expansion in the previous quarter. The unadjusted GDP grew 2.1% annually in the fourth quarter, after 1.7% increase in the previous three months. The statistical office confirmed the annual growth figures for the fourth quarter. For the whole year of 2015, GDP climbed 1.7% from last year as estimated.
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The US will eventually lead oil production gains after the global market rebalances in 2017, the International Energy Agency said in its medium-term outlook. Within the next five years, the IEA said, "the US and Iran are seen leading production gains among non-OPEC and OPEC countries respectively." US production is expected to reach a record high of 14.2 million barrels per day by 2021.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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