16th Apr 2014 10:37
LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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British supermarket chain Tesco reported another drop in annual group trading profit for its last financial year, as it saw falling sales in the UK and Europe. Revenue for the grocer held up, with group sales including VAT of GBP70.89 billion for the year. Group sales were down 0.2% at constant exchange rates when compared with GBP70.71 billion the prior year. However, the grocer continues to struggle to keep up with better-performing rivals and maintain market share, all of which have put increasing pressure on Chief Executive Philip Clarke to perform and drive the business forward. The group's overall trading profit for the year fell by 6% at actual exchange rates, and even further at constant exchange rates to GBP3.31 billion, down from GBP3.53 billion a year earlier, as profit from all its markets fell, and in Europe dropped by almost 28%.
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Rolls-Royce Holdings said it had reached an agreement with Daimler which puts a fair market value of EUR2.43 billion on the 50% stake in the companies' joint venture that the UK engine maker is buying from the German car maker. In early March, Daimler had decided to exercise a put option that it had on its stake in the Rolls-Royce Power Systems joint venture, meaning that Rolls-Royce would buy the stake. At that time, Rolls-Royce had said Daimler's option was valued at about GBP1.9 billion in its balance sheet at the end of 2013, and it would pay for Daimler's stake using cash and its existing funding facilities. At current exchange rates Wednesday, the agreed fair value is worth about GBP2.01 billion.
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Burberry Group Wednesday said that total revenue in its second-half of the year rose 16% on a reported basis, as sales growth continued to be driven by strong sales of its outerwear and leather goods, particularly in Asia. However, the retailer warned that the strength of sterling hit profits across the business, and is expected to continue to do so in the year ahead. Burberry said that the current strength of the sterling would wipe about GBP30 million off its reported profit for its retail and wholesale division, and around GBP10 million in reported licence revenue.
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RSA Insurance Group said the Chief Executive of the business which houses its troubled Irish operations has resigned in order to become Executive Chairman, underwriting and distribution, at business partner A J.Gallagher. RSA's UK & Western Europe Chief Executive Adrian Brown has resigned from the board but will carry on in his executive role until a successor is found. No departure date is currently set in stone but RSA said it expects Brown to leave in the second-half after 25 years at the FTSE 100 insurer.
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Hargreaves Lansdown reported GBP1.83 billion in net inflows over the third-quarter, which helped to propel its assets under administration to GBP45.7 billion, boosted by an influx of new clients and accounts. Overall, assets under administration increased by GBP2.3 billion in the three months to March 31. Third-quarter operating net revenue increased to GBP73.7 million from GBP69.5 million in the corresponding quarter a year earlier, driven by higher asset values and new business inflows, along with strong share dealing volumes, which at 855,000 deals for the quarter were up 44% on the same quarter last year.
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Evraz said its crude steel production fell in its first quarter due to scheduled maintenance, and average selling prices fell in Russia for its steel products compared to the previous year. The Russian steel maker said its crude steel production fell 9.2% to 3.7 million tonnes for the three months ended March 31, from 4.1 million tonnes the previous year, due mainly to scheduled maintenance works at its Russian steel mills. The company said that as a result, its gross output of steel products fell 5.8% to 3.8 million tonnes from 4.0 million tonnes.
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Weir Group said there was no guarantee it would change the terms of its takeover approach to Metso Oyj, after the Finnish company rejected the approach, saying it wouldn't be in the best interests of its shareholders. Metso said it doesn't see any reason to begin talks with Weir about a combination, and it remains confident in its standalone prospects.
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Housebuilder Persimmon said it has been boosted by the UK government's flagship mortgage financing scheme, after selling around 5,000 new homes through Help to Buy. Chief Executive Jeff Fairburn said a "good proportion of buyers" are using the scheme which has been criticised for causing a new house price bubble, particularly in London and the south east of England, and making prices more unaffordable, particularly for the first-time buyers it is designed to help most. Of the 5,000 new homes sold, Persimmon said 2,203 were legally completed in 2013. Its visitor levels are up and cancellation rates are falling.
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Reckitt Benckiser Group reported lower first-quarter revenue as it was hit hard by currency fluctuations, but it reiterated its revenue target at constant exchange rates for 2014 as it hit the top end of the target range. The firm said total net revenue fell 6% to GBP2.37 billion in the first quarter of 2014, as exchange rate moves wiped 9% off the figure. The revenue decline was 5% excluding the pharmaceuticals business it is reviewing options for.
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BHP Billiton raised its full-year production outlook for iron ore and metallurgical coal after production of the commodities during the third quarter rose 23% and 28% year-over year, respectively. However, the mining giant's copper production for the third quarter declined 5% from last year. BHP Billiton raised its 2014 iron-ore production guidance to 197 million tons from the prior forecast of 192 million tons. The company now projects total metallurgical coal production for the year of 43.5 million tonnes, up from the prior forecast of 41 million tons.
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Fresnillo said total silver production increased in its first quarter as Silverstream production jumped, but gold production fell compared to the previous year as a result of explosion permit problems and stoppages.
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Aviva has moved to further simplify its Italian business, building on the sale of its stake in Eurovita, by agreeing changes that will restructure its life joint ventures in the country in a transaction that that will require a GBP25.0 million balancing payment.
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Distribution and outsourcing company Bunzl said its pre-items operating profit was up 10% in the first quarter of the year, driven by a 5% rise in revenue at constant exchange rates and higher operating margins in three of its four businesses. In a trading update, the company said it had been hit by fluctuating exchange rates, but its underlying revenue growth was at a similar level to that of the first quarter of 2013.
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Digital inkjet printing technology company Xaar said it remains confident that it will meet its expectations in 2014, after trading met its hopes in the first few months of the year. In a statement, the company said its operating margin fell as expected in the first quarter, due to revenue seasonality and the investment it is making in expanding the capacity of its Huntingdon facility, as well as research and development spending.
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MARKETS
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The supermarkets are leading UK stock indices higher after Tesco announced full-year results ahead of expectations, although indices are off their early highs as concerns over Ukraine continue to drag.
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FTSE 100: up 0.3% at 6563.22
FTSE 250: up 0.8% at 15706.93
AIM ALL-SHARE: up 0.3% at 820.47
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The pound has jumped to a near four-and-a-half year high on strong UK unemployment and wage growth data.
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GBP-USD: up at USD1.6792
EUR-USD: up at USD1.3839
GOLD: down at USD1300.00 per ounce
OIL (Brent): up at 110.00 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The UK unemployment rate declined below the 7% threshold during three months to February, data from the Office for National Statistics showed. The jobless rate was 6.9% of the labor force, down from 7.1% in September to November period, and below 7.9% posted in three months to February 2013. Last year, the Bank of England pledged not to hike interest rate until the jobless rate hit 7%. As the unemployment started falling faster than estimated, the BoE assured markets that interest rates will not be raised before the second quarter of 2015.
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China's gross domestic product gained 7.4% on year in the first quarter of 2014, the National Bureau of Statistics showed. That topped expectations for 7.3% following the 7.7% gain in the previous three months.Among the sub-industries, primary industry added 3.5% on year, while secondary industry jumped 7.3% and tertiary industry climbed 7.8%. On a seasonally adjusted quarterly basis, GDP added 1.4% - shy of expectations for 1.5% and slowing from 1.8% in the three months prior.
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A Ukrainian army formation in the eastern city of Kramatorsk has reportedly defected to join pro-Russian separatists, video footage posted on espreso.tv showed on. The video shows the formation - which includes at least 10 armoured tanks - driving through the city bearing Russian flags. "Now the Donetsk People's Republic has its own army, has its own paratroopers," said Miroslav Rudenko, a leader within the pro-Russian movement. Russian state television reported several similar incidents in the neighbouring city of Slavyansk. The broadcaster said that forces had been deployed as a part of an "anti-terror operation" to contain separatist efforts had switched sides.
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Four people were killed in clashes between Ukraine's military and pro-Russian armed separatists in the eastern Ukrainian region of Donetsk, Russian state television reported. Tensions between Russia and Ukraine entered a potentially dangerous new phase, with authorities in Kiev launching an "anti-terror" operation to root out the separatists. The deaths occurred as the military was retaking control of a small airport near the town of Kramatorsk, acting Ukrainian President Oleksandr Turchynov told parliament.
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Two people have died and more than 290 people are officially missing in the sinking of a South Korean passenger ferry, national media reported. Dozens of ships and aircraft were involved in rescue efforts for the 477 people who were aboard the Sewol ferry, which sank off the country's southern coast, South Korea's Yonhap News Agency reported. The ship completely sank two hours after first experiencing problems, the report said. The two dead were reportedly a 27-year-old female crew member and a high school student.
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