30th Sep 2014 10:11
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Royal Bank of Scotland Group said it expects to "significantly outperform" its previous impairment guidance for the full year, supported by an improvement in economic conditions and asset prices in its key markets, including Ireland, though it issued a warning on third-quarter corporate and institutional banking revenue. RBS had previously guided about GBP1.0 billion in total impairments for the full year, but gave no specific new guidance.
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Next said the unseasonably warm weather in the autumn is having a detrimental impact on its performance and said, if the weather conditions continue, it will have to downgrade its profit guidance for the year. Next said the cooler weather in August resulted in some strong weeks, but said the warmer weather conditions since have had the opposite effect. It said its third quarter sales to date are up 6% year-on-year, below its previous guidance of 10% growth. The company said its profit guidance for the full year remains within its previous forecasts at present and said traditionally these lost sales are regained once the weather turns. But it said that if the unusually warm weather seen in the UK continues throughout October, the group will have to lower its full-year profit guidance to GBP775 million to GBP815 million.
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Intertek Group said it has appointed André Lacroix as Chief Executive with effect from May 16, 2015. At this time he will also join the FTSE 100-listed company's board. He succeeds Wolfhart Hauser who will step down from the board and retire on May 15, after ten years as CEO.
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British Land Co said it has signed an agreement with Plymouth City Council to develop Drake Circus Leisure, a 100,000 square foot leisure scheme next to its 570,000 square foot Drake Circus Shopping Centre in the city centre of Plymouth. The real estate company said the GBP40 million development will include a 12 screen cinema operated by Cineworld Group PLC, 13 restaurant units and 450 car park spaces.
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Tesco is understood to have lined up a GBP2.5 billion financing package to safeguard the company against potential ratings downgrades as it works to resolve a GBP250 million black hole in its profit guidance, Sky News reported on Monday. The supermarket has signed up a group of banks to provide a credit facility designed to provide what one banker described as an "insurance policy" as the group contends with the accounting problem, Sky News said.
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Wolseley hiked its total dividend for the year to end-July by 25% and announced a GBP250 million share buyback programme, as a strong performance in the US and lower exceptional costs helped boost profit. The plumbing and heating products distributor proposed a final dividend of 55.0 pence, taking its total dividend to 82.5 pence, up 25% from 66.0 pence the previous year. The company said it had seen a good overall result as market conditions in the US improved, although demand remained weak in Europe and Canada. Residential new construction markets were good in the US, and weak in Continental Europe.
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British Sky Broadcasting Group said it has made a USD5 million investment in San Francisco, California based Sharethrough Inc. Sharethrough provides native advertising services to match online advertising campaigns to the web pages they are hosted on. Native advertising is used to provide content within a web page in a way that is less intrusive, such as promoted tweets on Twitter.
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Melrose Industries said that its Elster Gas business has signed a conditional agreement for the acquisition of Eclipse Inc in a deal worth USD158 million. The company recorded sales of USD126 million for the fiscal year to March 31, 2014. Melrose Industries said that the USD158 million is payable in cash on completion and that the transaction is on a debt and cash free basis, set to be funded within the existing debt facilities of the Melrose Group. Completion of the acquisition is expected to take place in November this year.
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Meggitt said it has secured a USD900 million, five-year refinancing facility. The new revolving credit facility, provided by 13 banks, replaces existing facilities of USD700 million and USD400 million due to expire in 2016 and 2017. The new facility also includes one-year extension options at the end of the first and second years, Meggitt said.
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AO World was the best-performing stock on the FTSE 250 in early trading after the UK online electrical appliance retailer confirmed the next step in its European expansion with the launch of ao.de in Germany. The new site will focus only on major domestic appliances initially, but otherwise will largely mirror that of the UK operation, providing customers with market leading availability, price and speed of delivery for a significant range of products supported by major brands, said AO World in a statement.
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Saga said its first-half pretax profit fell by almost two-thirds, hit by the costs of its initial public offering and new debt. In a statement, Saga said it made a GBP32.8 million pretax profit in the six months ended July 31, compared with GBP92.1 million in the corresponding period last year. Revenue fell to GBP583.5 million from GBP632.0 million, while administrative and selling expenses rose to GBP190.6 million from GBP147.0 million. On a like-for-like basis, pretax profit increased to GBP106.5 million from GBP92.7 million.
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RPC Group said that it expects revenue to come in significantly ahead of last year due to the contribution from recent acquisitions as well as good growth in the USA, coffee capsules and UK DIY markets. In a pre-close trading statement for the period April 1 to September 30, the rigid plastic packaging supplier said that it is in a strong financial position with cash flow performance in the first-half year expected to be satisfactory.
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MARKETS
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UK indices trade fractionally lower as the last trading day of the third quarter brings a raft of UK corporate updates. Within the equity sectors, the banks are buoyed by the unexpected and positive update from Royal Bank of Scotland, while clothing retailers are underperforming following the profit warning from Next.
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FTSE 100: down 0.1% at 6,639.12
FTSE 250: down 0.1% at 15,382.96
AIM ALL-SHARE: down 0.1% at 748.54
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The euro fell to to a fresh two-year low against the dollar and the pound after the latest eurozone inflation data put extra pressure on the European Central Bank to take further monetary easing action at its policy meeting on Thursday.
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GBP-USD: down at USD1.6202
EUR-USD: down at USD1.2598
GOLD: down at USD1209.68 per ounce
OIL (Brent): up at USD97.53 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The UK economy grew more than estimated in the second quarter, the Office for National Statistics said. Gross domestic product grew 0.9% sequentially, up from the prior estimate of 0.8%. The annual growth was confirmed at 3.2%. The peak to trough fall of the economic downturn in 2008/2009 was estimated to be 6%. Previously this was estimated to be 7.2%.
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UK house prices unexpectedly declined in September after rising for sixteen straight months amid signs that demand may be starting to ease, the results of a survey by the Nationwide Building Society showed. The house price index dropped 0.2% from August, when it climbed 0.8%. Economists were looking for a 0.5% increase. Year-on-year, house prices rose 9.4% after an 11% gain in the previous month. Economists had forecast a 10.4% increase. On a quarterly basis, all 13 UK regions showed annual price gains, though there was significant regional variation. UK house prices rose 1.5% in the three months to September.
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An index measuring UK consumer confidence slid into negative territory in September, the latest survey from GfK revealed on Tuesday with a score of -1. That missed forecasts for a reading of 0, and it was down from +1 in August. The index has fluctuated between +1 and -2 through the last five months; in September 2013, the index came in at -10.
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Eurozone inflation slowed marginally in September as expected, flash data from Eurostat showed. Inflation came in at 0.3%, down from 0.4% in August. It continues to stay below the European Central Bank's target of 'below but close to 2%'. Core inflation that excludes energy, food, alcohol and tobacco, eased to 0.7% in September, while it was forecast to remain unchanged at 0.9%. Cost of food, alcohol and tobacco gained 0.2% and services cost advanced 1.1%. Meanwhile, energy prices declined 2.4%. Non-energy industrial goods prices edged up only 0.1%.
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China's manufacturing sector continued to expand in September, if barely, the latest survey from HSBC revealed with a PMI reading of 50.2. That was unchanged from the August reading, although it was down from the flash estimate of 50.5 earlier this month. A reading above 50 means expansion in a sector, while a score below signals contraction.
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Tens of thousands of Hong Kongers calling for more democracy continued their street protests and blocked main transport routes Tuesday, after a peaceful night of demonstrations in the Chinese territory. Student leaders threatened to step up the protests if their demands were not met by Wednesday, including the resignation of the head of Hong Kong's government, Chief Executive Leung Chun-ying, and the withdrawal of an electoral reform plan announced by Beijing.
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The US-led coalition against Islamic State militants launched overnight airstrikes against the jihadist group's positions near a besieged Kurdish town, a monitoring group said. The strikes hit areas to the east and west of the town of Kobane, on Syria's border with Turkey, the Britain-based Syrian Observatory for Human Rights reported. The strikes took place as Kurdish fighters fought pitched battles with Islamic State forces 4 kilometers from Kobane, the smallest of three Kurdish-controlled areas in conflict-racked Syria.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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