5th May 2022 10:47
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Shell reported a substantial rise in first-quarter earnings due to the surging price of oil, even as it joined energy peers in taking a write-down from exiting Russia following the invasion of Ukraine. For the the three months to March 31, income attributable to shareholders was USD7.12 billion, up 26% from USD5.66 billion in the first quarter last year. Current cost of supply earnings attributable to shareholders for the first quarter was USD5.02 billion, up 15% from USD4.35 billion. Shell explained income attributable to shareholders reflected post-tax charges of USD3.9 billion related to the phased withdrawal from Russian oil and gas activities. The oil major posted adjusted earnings of USD9.1 billion, nearly tripled from USD3.23 billion the year before. First quarter cash flow from operating activities was USD14.82 billion, up nearly 80% from USD8.29 billion. Shell raised its first quarter dividend by 47% to USD0.25 per share from USD0.17 a year ago.
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Enel said that higher average prices and higher quantities of electricity being produced had resulted in a strong opening quarter for the company. The Rome-based energy distributor reported net income of EUR1.43 billion in the three months to March 31, representing a 22% increase against the previous year's figure of EUR1.18 billion. Revenue surged 89% to EUR34.96 billion from EUR18.49 billion a year prior. Enel said this was driven by higher quantities of electricity produced and sold, as well as increasing average prices. Electricity sales amounted to 79.9 terawatt-hours in the quarter, up 1.4% against the previous year. Natural gas sales rose 8.1% to 4.0 billion cubic metres against the same period a year prior. Chief Executive Francesco Starace said: "In the first quarter of 2022, the soundness of our business model enabled us to achieve solid results in line with expectations, minimizing risks arising from the difficult geopolitical and economic scenario."
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Mondi announced it has decided to pull the plug on its Russian businesses through a divestment process that is "operationally and structurally complex". The Weybridge, England-based paper and packaging firm said it has decided to divest its Russian assets after assessing all options for its interests there. Mondi said the divestment of these "significant" assets is "operationally and structurally complex" and is being undertaken in an evolving political and regulatory environment. Also on Thursday, Mondi said it had delivered a strong quarterly performance underpinned by good demand across the business. Higher average selling prices more than offset continued cost pressures. Underlying earnings before interest, tax, depreciation and amortisation rose 63% to EUR574 million, from EUR353 million in the same period a year prior.
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Defence contractor BAE Systems said trading in the first quarter was in line with expectations with strong order intake and good operational performance being maintained. Ahead of its annual general meeting in Farnborough, England, BAE said it continues to expect a strong year of order intake and order flow to date has been positive especially on its long-term programmes. BAE Systems said its 2022 guidance unchanged from its annual results in February with sales expected to be up 2% to 4%. Underlying earnings before interest and tax are seen up 4% to 6%, also unchanged from prior guidance.
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Melrose Industries, which also is holding its AGM on Thursday, said trading for the four months to April 30 is in line with expectations for the year. The industrial turnaround specialist said that, consistent with industry trends, its Aerospace division was experiencing continued growth, with like-for-like sales up 6%. The Automotive and Powder Metallurgy divisions remain constrained by supply, with combined like-for-like sales down 4%, significantly below underlying consumer demand levels, Melrose noted.
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German luxury carmaker BMW beat expectations in the first quarter despite supply chain disruptions due to the war in Ukraine and coronavirus lockdowns in China. Earnings before interest and tax increased by 12% to EUR3.39 billion, the Munich-based group said. The company attributed the strong increase in earnings to full consolidation of Chinese joint venture BMW Brilliance Automotive, as well as sustained high demand for its premium vehicles. BMW booked an 8.9% operating profit margin in the car making division, far outperforming analysts' estimates. On balance, BMW posted a net profit of almost EUR10.2 billion, more than three times as much as a year ago. This was mainly due to the revaluation of the company's stake in its joint venture BMW Brilliance Automotive.
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US-European car maker Stellantis reported rising first-quarter revenues despite selling fewer vehicles in a market hobbled by parts shortages. Born of the merger between France's Peugeot-Citroen and Italian-American Fiat-Chrysler, the group took in EUR41.5 billion in sales in the three months to March 31, up 12% on a proforma basis from the year before at EUR37.0 billion. At almost 1.4 million cars over the three months, unit sales were down 12% on a proforma basis, with the manufacturer blaming "unfilled semiconductor orders". The pro forma results take into account the merger and presents results for 2021 as if the merger had gone through on January 1, 2021.
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Deutsche Lufthansa saw a significant rise in ticket sales in the first quarter, helping to slow down the German carrier's losses as it emerges from the coronavirus pandemic. Net loss decreased by 44% to EUR584 million compared to the same period last year, the company announced in Frankfurt on Thursday. The group generated a total revenue of EUR5.36 billion, compared with EUR2.56 billion a year ago. "The restrictions on air traffic have largely been overcome," CEO Carsten Spohr said in a statement. "The past few weeks in particular have clearly shown how great people's desire to travel is. New bookings are increasing from week to week - among business travellers, but especially for vacation and leisure travel." Owing to the rise demand, the group - which also includes SWISS, Austrian Airlines and Brussels Airlines - reaffirmed its full-year earnings outlook.
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Air France KLM cut its net loss for the first quarter to EUR552 million, one-third of the loss reported the year before, in a "promising" result the airline group said. The Franco-Dutch airline company, which has been hit hard by the coronavirus crisis which has cost it some EUR11 billion over two years, saw its business pick-up between January and March. Three times more passengers took to the skies on its planes than a year ago, and quarterly sales doubled to EUR4.44 billion, it said in a statement.
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Anheuser-Busch InBev reported an overall stronger performance in the first quarter of 2022, with a rise in profit in spite of higher supply chain costs and "anticipated commodity headwinds". For the three months ended March 31, the Leuven, Belgium-based drinks and brewing firm posted normalised earnings before interest, tax, depreciation and amortisation of USD4.49 billion, up 7.4% from USD4.27 billion the same period a year before. This was on revenue which grew 11% to USD13.24 billion from USD12.29 billion, partly driven by a 2.8% increase in total volumes to 139.3 million hectolitres from 135.6 million hectolitres a year prior.
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eBay reported a loss as the company suffered declining revenue, active buyers and gross merchandise volume in the first quarter of 2022. The San Jose, California-based e-commerce company swung to a net loss of USD1.34 billion in the three months to March 31 from a profit of USD641 million a year prior. Per share, eBay swung to a loss of USD2.28 from a profit of USD0.94 in the quarter. Revenue dropped to USD2.48 billion from USD2.64 billion, representing a 5.9% decline year-on-year. The company reported that its active buyers fell to 142 million, down 13% from 163 million a year prior. Gross merchandise volume also dropped 20% to USD19.41 billion from USD24.13 billion. Chief Executive Jamie Iannone said: "Our team has delivered another strong quarter, at the high end of our expectations. Despite the current macro headwinds, we remain confident in the long-term strategy we laid out during our Investor Day in March."
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A Netflix shareholder is seeking class action status for a lawsuit accusing the streaming television titan of not making it clear that subscriber numbers were in peril. A disclosed drop of just 200,000 users – less than 0.1% of its total customer base – was enough to send shares plunging after Netflix announced quarterly earnings in April. The company anticipates a much larger drop in the current quarter – of around two million net subscribers. The suit filed Tuesday in federal court in San Francisco accuses top executives at Netflix of not telling investors that subscriber growth was slowing due to people sharing accounts and competition ramping up in the market. "Defendants' positive statements about the company's business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis," read the suit filed by lawyers at Glancy Prongay & Murray on behalf of a shareholder.
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MARKETS
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Asian and European markets followed Wall Street higher on Thursday, after US investors on Wednesday responded to commentary by the head of the US central bank that was less hawkish than expected. However, key stock indices in New York were called to open lower on Thursday. The FTSE 100 was trailing European peers, despite index heavyweight Shell rising 2.6%. The Bank of England delivers its latest interest rate decision at 1100 GMT and is expected to follow the Fed in hiking.
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CAC 40: up 1.6% at 6,497.82
DAX 40: up 1.5% at 14,178.69
FTSE 100: up 0.8% at 7,555.31
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Hang Seng: closed down 0.4% at 20,793.40
Nikkei 225: Tokyo market closed for Children's Day holiday
S&P/ASX 200: closed up 0.8% at 7,364.70
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DJIA: called down 0.5%
S&P 500: called down 0.6%
Nasdaq Composite: called down 0.7%
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EUR: up at USD1.0600 (USD1.0560)
GBP: up at USD1.2545 (USD1.2501)
USD: down at JPY129.70 (JPY129.93)
Gold: up at USD1,893.50 per ounce (USD1,866.98)
Oil (Brent): up at USD109.85 a barrel (USD108.55)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US Federal Reserve Chair Jerome Powell said more half-point interest rate hikes will be on the table at forthcoming meetings after the central bank on Wednesday lifted interest rates by 50 basis points, as expected. This was the first time the US central bank has hiked rates by a half-point since 2000, and takes the federal funds rate to now stand at 0.75% to 1.00%. While noting that the invasion of Ukraine has created uncertainty, the Fed said the labour market appears in good shape and inflation remains elevated. Powell at a press conference following the decision said inflation is "much too high". As the Fed races to tame rampant inflation, Powell indicated there could be more 50 basis point interest rate hikes to come. "Our expectation is: if we see what we expect to see, then we would have 50 basis point increases on the table at the next two meetings," he said. But on the prospect of an even chunkier 75 basis point hike, Powell said it is not something the central bank is "actively considering". The Fed also decided to start reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at the start of June.
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Millions of people in Beijing returned to work on Thursday, many remotely, with scores of subway stations shut after a national holiday muted by the coronavirus curbs. Chinese authorities have pressed on with their zero-Covid policy involving lockdowns and mass testing as they battle the biggest outbreak since the early days of the pandemic, with entire neighbourhoods in the capital sealed over handfuls of infections. Beijing reported 50 local virus cases on Thursday, a day after it said people in its most populous district Chaoyang should work from home. Those in the area, home to around 3.5 million, who need to visit their offices were encouraged to drive themselves and avoid gatherings. Another Beijing district Tongzhou has also encouraged residents to work at home, while dozens of subway stations across the city remained closed.
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China's private sector continued to contract in April, with the return of Covid restrictions leading to a plunge in demand on both the manufacturing and services sectors, survey data from Caixin and S&P Global showed. The Caixin services purchasing managers' index fell to 36.2 points in April from 42.0 in March, marking the sharpest drop in activity since the virus first appeared in February 2020. Overall, China's private sector declined to its second lowest reading in survey records, with the composite index falling to 37.2 points in April from 43.9 in March.
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UK services sector activity slowed in April as strong inflationary pressures and the war in Ukraine limited the pace of expansion, S&P Global said. The UK services PMI registered 58.9 points in April, down from 62.6 in March. However, the latest print was higher than the preliminary figure of 58.3. The UK composite PMI, which includes manufacturing activity, decreased to 58.2 points in April from 60.9 in March. S&P said that, although the UK service sector remained firmly inside growth territory during April, there were signs that sustained increases in the cost of doing business and the war in Ukraine were limiting the pace of expansion at the start of the second quarter. In particular, new business growth slowed sharply and was the weakest in the year-to-date. Further, S&P highlighted that service providers reported an unprecedented increase in their input costs at the start of the second quarter, with prices rising to the greatest extent since the survey began in July 1996.
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Polling stations opened in the local elections in the UK, with council seats in Scotland, Wales, London and many parts of England up for grabs, and Northern Ireland electing its new assembly. Millions of voters are expected to cast ballots to select the local representatives they want to run services and facilities in their area. The ruling Conservatives will find out in the coming days as votes are tallied whether they will be made to pay the price for the so-called partygate saga in Downing Street, which has seen Prime Minister Boris Johnson and Chancellor Rishi Sunak fined for breaking coronavirus laws.
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Voting also is under way in the Northern Ireland Assembly election. The process is taking place amid speculation of a potentially seismic result. The DUP and Sinn Fein are vying for the top spot which comes with the entitlement to nominate the next first minister. A unionist party has always been the biggest in the Assembly, and previously the Stormont Parliament, since the formation of the state in 1921. This year a number of opinion polls have suggested that Sinn Fein will finish ahead of the DUP to become the first nationalist or republican party to emerge top.
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Ireland's private sector growth ebbed in April but remained robust on a continued expansion in new business, even as inflation concerns and the war in Ukraine continued to cast a shadow over confidence, survey results from S&P Global showed. The AIB services purchasing managers' index dropped to 61.7 points in April from 63.4 in March, marking the first slowdown in growth registered in 2022. The Ireland manufacturing PMI dipped to 59.1 in April from 59.4 in March, figures had shown on Tuesday. As a result, the composite PMI was at 59.6 points in April, down from 61.0 in March but still remaining firmly in expansion territory.
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German industrial orders dropped sharply in March, official data showed, as the Russian invasion of Ukraine hit demand. Incoming orders were down 4.7% on the previous month in March, according to the federal statistics agency Destatis. The drop was a "visible" indication of the impact the war in Ukraine is having on the German economy, the economy ministry said in a statement. "Increased uncertainty is reflected in much more restrained demand, especially from the non-euro area" the ministry said. Foreign orders from outside the eurozone dived by 13% in March, while demand from inside the bloc rose by 5.6%.
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Consumer prices in Switzerland came in slightly ahead of expectations in April. The consumer price index increased by 0.4% in April compared with the previous month, slowing from March's 0.6% monthly rise. Market consensus, cited by FXStreet, had seen prices rising 0.3% in April. Annually, consumer price inflation was 2.5% in March.
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By Tom Waite; [email protected]
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