13th Jan 2015 11:19
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Wm Morrison Supermarkets said Chief Executive Dalton Philips will step down in March after five years at the helm, as the struggling grocer continues to try to return to growth after once again underperforming its major rivals in the sector over the key Christmas trading period. The supermarket chain revealed a 3.1% fall in like-for-like sales excluding fuel over the six weeks to January 4, a performance that was better than recent quarters. However, it still meant that Morrisons was the weakest of the UK's big-four grocers. Morrisons said it has begun the search for a new CEO, with Philips set to leave once the company reports year-end results in mid-March. Morrisons said it is almost certain the next CEO will be an external candidate.
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The UK's big listed grocers have slowed the rate at which shoppers are defecting to German discounters Aldi and Lidl, latest industry data from Kantar Worldpanel suggested. The big four grocers - Tesco, Wal-Mart Stores Inc-owned Asda, J Sainsbury and Wm Morrison Supermarkets - again saw a decline in till roll over the Christmas period, but the decline was slower than in previous months, while the gains being made by Aldi and Lidl also slowed, the Kantar data showed. Sales at J Sainsbury fell by 0.7% over the 12 weeks to January 4, but in a tough grocery market that was the best performance among the big four supermarkets, Kantar said. Sainsbury's market share fell to 16.9% from 17.1% a year ago.
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Meggitt said its training systems business has won a USD31.7 million contract to provide indoor simulated marksmanship training systems from the US Marine Corps. In a statement, the aerospace, defence and energy market engineer said the five-year indefinite quantity deal covers the design, development, installation and support for some 670 systems and weapon simulators at US Marine Corps facilities in the US and abroad.
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Shares in Greggs rose sharply after the bakery chain upgraded its expectations for its full year results for the second time in as many months on the back of a rise in sales over the full year and a boost from a strong Christmas trading period. Shares in the company rose 6.6% to 798.6 pence, making it the best performing stock in the FTSE 250 in mid-morning trade. It was promoted to the mid-cap index at the last quarterly index review which took effect late last month. Greggs said total sales for the 53 weeks to January 3 are expected to be up 5.5%, with own-shop like-for-like sales expected to increase 4.5%. The rise in sales includes an extra trading week compared with the year before.
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Debenhams reported good sales growth for the key Christmas trading period, and crucially said it had been less reliant on discounting to pull shoppers into its stores, although it warned that margin growth had been capped as sales of low-margin products were particularly strong. However, like peers, the company also warned that its autumn sales had been hit by unseasonably warm weather which stopped consumers heading to stores for winter clothing ranges. This sent the retailer's shares down 8.1% to 68.95 pence, making it the worst performing stock on the FTSE 250, as its like-for-like sales figures missed analyst expectations.
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Online fashion retailer ASOS saw its shares rise after it said sales growth accelerated over the key Christmas trading period, reporting a 15% rise in retail sales for the six-week period as UK sales held up strongly. However, as previously guided, the retailer said its retail gross margin continues to take a hit from price investments, down around 200 basis points on the prior year. In a statement, AIM-listed ASOS said total retail sales in the six weeks ended January 9 were up 15% on the corresponding period last year, without giving specific figures. UK sales rose 27%, while international sales were up only 5%.
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Shares in Michael Page International posted profit growth across its operating regions in the fourth quarter, and said it expects its gross profit for the full year to increase despite a drag from currency fluctuations. For the fourth quarter to December 31, the recruiter said gross profit increased to GBP136.2 million, up 8.9% against the GBP125.1 million reported last year. For the full year, the group expects to post gross profit of GBP532.7 million, up 3.7% from the GBP513.9 million reported last year, when it had posted a 2.5% fall. The full-year profit this year was hit to the tune of GBP33 million by the strength of sterling, with constant currency growth at 10% for the year.
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Pace said it expects its 2014 profits to be above its previous guidance, after revenue growth was particularly strong in the second half of the year thanks partly to new product launches and its acquisition of networks infrastructure company Aurora Networks. The company also said it is confident of making "further progress" in 2015 and beyond.
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Big Yellow Group reported strong growth in revenue during its fiscal third quarter, partly driven by its acquisition of the whole of the Big Yellow Limited Partnership, and said the decline in occupancy in what is traditionally a weaker quarter was lower than in the previous year. In a trading update Tuesday, it said revenue was GBP21.3 million in the three months to December 31 including those stores, up from GBP18.3 million a year earlier. Excluding the partnership stores, revenue for the latest quarter was GBP20.3 million.
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Amec Foster Wheeler said the UK Nuclear Decommissioning Authority has informed the company it will terminate the Nuclear Management Partners Sellafield contract in 2016, which was awarded to a consortium of companies including Amec. Despite the authority stripping the consortium of the contract from the first quarter of 2016, Amec said it does not impact any other work that the company is carrying out at the Sellafield site. Amec said the contract cancellation is "not performance related", and said the progress made since the contract was awarded in 2008 should "not be wasted," it said in a statement.
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Rathbone Brothers reported a rise in funds under management over the course of the fourth quarter, bolstered by its main investment management business and helped by the performance of its unit trusts. The investment manager also said it expects results for 2014 to be in line with expectations. In a statement, the FTSE 250 constituent, which manages the investments and wealth of private clients, charities and trustees, said total funds under management increased to GBP27.2 billion at the end of 2014, up from GBP26.3 billion at the end of September, and GBP22.0 billion at the end of 2013.
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Galliford Try said its Morrison Construction arm has reached financial close on the GBP31.2 million Hub South West Scotland Ltd contract. Morrison will handle the construction of the new Greenfaulds High School on behalf of North Lanarkshire Council, part of its Schools and Centres 21 scheme. Galliford will invest GBP0.7 million in funding for the project.
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Building products group SIG said it expects an improvement in underlying pretax profit and revenue for 2014, despite being held back by currency movements. The FTSE 250-listed company said it expects its underlying pretax profit for the year to December 31 to be marginally ahead of what it cited as the Bloomberg market consensus of GBP96.5 million. That would be an increase on the GBP90 million posted for the year earlier. The company said it expects revenue from continuing operations for the year to be GBP2.6 billion, up 2.5% year-on-year despite adverse foreign currency translation effects which cut sales by 3.1%.
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Spire Healthcare Group upgraded its revenue expectations for the year after strong trading in the fourth quarter and said it expects its earnings for the year to increase on the back of the contribution from the St Anthony's hospital acquisition. Spire said its trading in the fourth quarter was positive, meaning it now expects revenue for 2014 to be between GBP850 million and GBP855 million, an upgrade on the GBP825 million to GBP840 million guidance it gave in its interim statement in November. The group expects its earnings before income, taxation, depreciation and amortisation for the full year to be GBP157 million to GBP160 million. That compares to EBITDA of GBP150 million for 2013.
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MARKETS
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London stocks are trading higher, showing resilience despite lower-than-expected UK inflation figures, further falls in crude oil prices, and renewed concerns about the health of the global economy.
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FTSE 100: up 0.6% at 6,538.53
FTSE 250: up 0.6% at 16,030.40
AIM ALL-SHARE: down 0.2% at 702.58
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Brent crude touched a near six-year low of USD45.20 early Tuesday, down more than 60% from its summer high of USD115. The pound fell to a 4-day low of USD1.5077 against the dollar in early trade, off an early high of USD1.5191 as UK inflation slowed more-than-expected in December.
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GBP-USD: down at USD1.5114
EUR-USD: down at USD1.1802
GOLD: up at USD1239.30 per ounce
OIL (Brent): down at USD45.61 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK inflation slowed more-than-expected to the lowest rate since May 2000 on lower fuel prices, data from the Office for National Statistics showed. Factory gate prices declined at a faster pace in December. Inflation halved to 0.5% in December from 1% in November. This was the lowest annual rate since records began in May 2000. Inflation was expected to ease to 0.7%. Meanwhile, core inflation excluding energy, food, alcoholic beverages and tobacco, rose to 1.3% in December from 1.2% in November.
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House prices growth in the UK slowed by less than expected in November, data from the Office for National Statistics showed. House prices climbed 10% year-on-year in November, more than the 9.8% increase expected by economists. This follows a 10.4% rise in October. Prices across the majority of the UK increased, with prices in London rising the most, by 15.3%.
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Like-for-like retail sales in the UK were down 0.4% on year in December, the British Retail Consortium said. That was well shy of forecasts for an increase of 1.0% on year following the 0.9% gain in November. Non-food sales provided support with a 7.0% online gain. Overall sales gained just 1.0%, slowing from 1.8% in November to mark the slowest December in six years.
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The European Central Bank should act sooner rather than later to lift inflation, Governing Council member Ewald Nowotny said. He noted that there is a long lag in the effect of monetary policy action. Eurozone inflation turned negative for the first time in more than five years in December. The central bank is widely expected to unveil quantitative easing at its next meeting on January 22. Nowotny said discussions on range of options for quantitative easing are continuing at the central bank. He said it is important to have no legal concerns about quantitative easing.
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The US Federal Reserve is on track to raise interest rates by the middle of the year, according to Atlanta Fed President Dennis Lockhart. The US economy is now "hitting on all cylinders," Lockhart told the Rotary Club of Atlanta Monday morning. "The recovery that began in 2009 is well-advanced." Days after the Labor Department said US unemployment dropped to 5.6% in December, Lockhart acknowledged "more improvement in labor markets in 2014 than in any other year of the recovery." Perhaps as important, Lockhart said he expects wages to rise. Stagnant wages were a dark lining on December's otherwise strong jobs report, prompting some Fed officials to urge patience before hiking rates.
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China's trade surplus decreased slightly less than expected in December, figures from the customs office showed . The trade surplus fell to USD49.1 billion in December from USD54.48 billion in November. Economists had expected the trade surplus to decrease to USD49 billion. Exports grew 9.9% year-over-year in December, which was faster than the 6% rise expected by economists. In November, exports had increased 4.7%. Imports declined 2.3%, slower than the 6.2% drop forecast by economists. In November, imports had decreased 6.7%.
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Japan posted a current account surplus of JPY433.0 billion in November, the Ministry of Finance said. That beat expectations for a surplus of JPY139.5 billion following the JPY833.4 billion surplus in October. The trade balance showed a deficit of JPY636.8 billion versus forecasts for a shortfall of JPY734.0 billion following the JPY766.6 billion deficit in the previous month.
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French satirical magazine Charlie Hebdo is publishing Wednesday a cartoon depicting the Prophet Muhammad holding a sign saying "Je suis Charlie," meaning "I am Charlie." The cartoon will appear on the front page of the 14 January edition under the headline "Tout Est Pardonne," or "All is forgiven". The defiant act comes a week after 12 people were killed in a terrorist attack on the office of Charlie Hebdo in Paris on January 7.
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Indonesian divers retrieved the cockpit voice recorder of the crashed AirAsia flight, a news report said. The recorder had been recovered to a navy ship, a Transport Ministry official was quoted as saying by Metro TV. Indonesian search teams earlier Tuesday were deployed to a spot about 20 metres from where the flight data recorder was retrieved on Monday. The voice recorder was stuck underneath a large piece of wreckage, and the divers were sent down with inflatable lifting bags to free it, Air Commodore Suryadi Surpriyadi, the search operation director, was quoted as saying at the start of the operation.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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