4th Mar 2015 12:10
LONDON (Alliance News) - Standard Chartered Wednesday reiterated that it has no plans to turn to the market to bolster its capital position, instead setting out plans to cut capital-intensive risk assets and to sell and exit under-performing businesses, as the emerging markets bank maintained its dividend despite a 30% drop in pretax profit in 2014.
Standard Chartered said pretax profit fell to USD4.24 billion in 2014 from USD6.06 billion in 2013, hit by lower operating income, higher operating expenses, and an increase in impairment losses on bad loans.
"We have made very clear we are comfortable with our capital position. We're going to pull the levers within our control," outgoing CEO Peter Sands told reporters. "We have no plans to raise capital. We have maintained the dividend."
"We faced a perfect storm: negative sentiment towards emerging markets, a sharp drop in commodity prices, persistent low interest rates and surplus liquidity, low volatility, and a welter of regulatory challenges. As a result, we saw intense pressure on margins and volumes, a significant uptick in impairment and a sharp increase in regulatory related cost," Sands said in a statement.
However, Sands admitted that some of the bank's past decisions also played their part in the profit slump, mentioning difficulties in its Korean business and shortcomings that have led to fines from US authorities over anti-money laundering weaknesses in its systems.
Still Standard Chartered's shares are up 4% midday Wednesday, continuing a rally that started last week.
The results were preceded by last week's announcement that Standard Chartered had chosen former JPMorgan Chase executive Bill Winters to succeed Peter Sands as chief executive this summer, while Chairman John Peace is to depart next year. The departures, which were announced as part of a broader board shake-up, came as the feeling that a fresh perspective at the top could help the emerging markets bank to recover following a string of profit warnings and regulatory scuffles in the US.
Broadcaster and programme maker ITV is the best-performing stock in the FTSE 100, after it proposed a GBP250 million special dividend at 6.25 pence per share and raised its total ordinary dividend, as it posted a rise in pretax profit for 2014 that beat analysts' expectations.
The company proposed a final dividend of 3.3 pence, taking its total dividend for the year up to 4.7 pence from 3.5 pence. The company has committed to grow its full-year ordinary dividends by at least 20% per year over the three years to 2016.
ITV posted a pretax profit of GBP605 million, up from GBP435 million, as revenue rose to GBP2.96 billion from GBP2.75 billion, as net advertising revenue rose 6% despite its family of channels continuing to lose market share. Online, Pay and Interactive revenue rose 30%, while ITV studios revenue rose 9%, bolstered by acquisitions.
"As we look ahead to 2015, we remain focused on improving share of viewing. While still drawing strong audiences, some of our most successful shows are maturing. We will therefore continue to rejuvenate our schedule, creatively and commercially, increasing our investment in high quality content and seeking new ways to maximise the value of our airtime," ITV said.
Stripping out exceptional costs including acquisition, impairment, amortisation, net financing costs, restructuring and other tax adjustments, ITV posted a pretax profit of GBP712 million, up from GBP581 million, beating analysts' expectations for a GBP669.40 million profit.
ITV said it expects to deliver "another strong performance in 2015 with continued revenue growth across all parts of the business." It expects its ITV Family net advertising revenues to be up 11% in the first quarter of 2015, and up by between 4% and 7% in April.
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Markets: The FTSE 100 and FTSE 250 are trading lower after worse-than-expected services Purchasing Managers' Index readings from the eurozone and the UK. The euro is down against the dollar as service sector activities across the euro region slowed more than initially estimated in February.
Wall Street is also set for a lower start, with stock futures indicating that the DJIA and S&P 500 will open down 0.3% and Nasdaq 100 down 0.8%.
FTSE 100: down 0.4% at 6,864.61
FTSE 250: down 0.4% at 17,076.46
AIM ALL-SHARE: up 0.1% at 709.96
GBP-USD: down at 1.5348
EUR-USD: down at 1.1127
GOLD: up at USD1,205.21 an ounce
OIL (Brent): down at USD60.55 a barrel
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Other Top Corporate News
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Legal & General Group reported an 8% increase in annual pretax profit, bolstered by double-digit operating profit growth in its retirement, capital and investment management divisions. The life insurance and investments group said it made a GBP1.24 billion pretax profit in 2014, up 8.8% from GBP1.14 billion in 2013. According to consensus estimates published by the company, analysts had been forecasting a pretax profit of GBP1.29 billion. Legal & General increased its dividend for the year to 11.25 pence per share from 9.30p in the prior year, slightly ahead of the 11.23p forecast by analysts.
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Fresnillo reported a steep drop in profits in 2014, as it was hit by a drop in gold production, falling precious metals prices, higher production costs, and the strengthening of the US dollar against the Mexican peso. The gold and silver miner forecast that its production would improve in 2015 and pledged to continue investing in growth products, even though its focus this year will be on improving efficiency and productivity and maintaining its cost position and margins. Fresnillo reported a pretax profit of USD251.1 million for 2014, down 40% from USD418.7 million in 2013.
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UK energy markets regulator Ofgem said two electricity distributors have sought permission from the Competition and Markets Authority to appeal the price controls the watchdog finalised in November last year. Northern Powergrid (Northeast) Ltd, a unit of Berkshire Hathaway Energy, and British Gas Trading Ltd, a unit of FTSE 100 constituent Centrica, have sought to appeal the price controls.
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Melrose Industries reported a drop in pretax profit in 2014 due to higher restructuring costs and a drop in revenue that was exacerbated by the strength of sterling. The company's closely-watched pretax profit before exceptional costs and income and intangible asset amortisation, rose 11% to GBP213 million however, and would have been up 21% if exchange rates had remained constant. This measure of profit was up in all three Elster divisions, as the restructuring paid off and operating margins improved substantially. Its Brush arm continued to struggle. Melrose has proposed a final dividend of 5.3 pence per share, up from 5 pence last year, bringing its total dividend for the year to 8.1 pence per share, up from 7.75 pence.
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Bakery chain Greggs reported a higher profit for its last financial year, buoyed by revenue growth following its successful push into the food-to-go market and better market conditions, alongside strong returns on its shop refurbishments and cost control. The company's turnaround plans seem to be paying off, as its pretax profit for the financial year to January 3 increased to GBP49.7 million, up from 2013's profit of GBP33.2 million, driven by a 5.5% rise in revenue to GBP804.0 million from GBP762.4 million. Signalling its confidence, Greggs increased its total dividend for 2014 by 13% to 22.0 pence.
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Dignity said it swung to a pretax loss in 2014 due to costs related to its refinancing during the year, though profit increased excluding those costs on the back of higher revenue and the company raised its final dividend by 10%. The funeral services company said its pretax loss for the year was GBP67.7 million, attributable entirely to a GBP154.8 million financing cost related to refinancing its debt, which allowed it to return GBP64.4 million to shareholders.
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Carillion reported higher pretax profit for 2014 after 2013 was hit by big one-off items, but revenue was flat due to the strength of sterling and its profit excluding one-off items fell slightly due to its planned reduction in the sale of equity investments in Public Private Partnership projects. Carillion reported a pretax profit of GBP142.6 million for 2014, up from GBP110.6 million in 2013 when it had booked a GBP42.9 million charge for restructuring its energy services business.
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BBA Aviation reported higher pretax profit for 2014, as strong earnings growth in its flight support business offset a weaker-than-expected performance in its aftermarket services business, and said it expects further "good growth" in 2015. The company reported a pretax profit of USD152.4 million for 2014, up from USD245.2 million in 2013, as revenue rose to USD2.29 billion, from USD2.22 billion. Organic revenue rose 8% in its flight support business, while the operating profit excluding exceptional items rose 14%. This offset a 4% organic revenue decline and 12% underlying oeprating profit decline in its aftermarket services business.
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Commercial property company CLS Holdings reported a big jump in pretax profit in 2014 on the back of a massive rise in the valuation of its property portfolio. CLS said its pretax profit for the year was GBP236.8 million, compared with GBP71.4 million in 2013, as it registered a GBP186 million gain in the valuation of its property portfolio, compared with a GBP0.2 million decline in 2013. Revenue for 2014 was GBP99.6 million, up from GBP91.2 million, as its net rental income rose to GBP82.2 million from GBP73.1 million.
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Ryanair Holdings said its customer numbers and load factor both improved significantly year-on-year in February. The Irish low-cost carrier said it carried 5.8 million customers in February, up 29% from the 4.5 million it carried a year earlier. It added its load factor improved significantly up 11 percentage points to 89% from 78% in February last year. It also said it has bought three more Boeing 737-800 aircraft for delivery in early 2016, meaning it now has orders in for 183 737s and 200 Boeing 737 Max 200 aircraft as it replaces ageing aircraft and expands its fleet.
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AIM Movers
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Belgravium Technologies shares are up after it posted a rise in pretax profit for 2014, said it believes it will achieve further progress in 2015, and opted not to pay a final dividend in order to conserve its cash for a potential acquisition it said it has identified. It said that talks are at an early stage, but currently expects to finance the acquisition through its existing cash resources and bank debt if it goes through. Richland Resources shares are up after it completed the sale of its tanzanite mining, beneficiation and tsavorite licence interests in Tanzania to Sky Associates Group. Sky is buying the assets for USD5.1 million, with USD4.1 million paid to Richland on closing.
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Top Economics And General
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The UK service sector expansion slowed unexpectedly in February, survey data from Markit showed. The Markit/Chartered Institute of Purchasing and Supply Purchasing Managers' Index for the service sector decreased to 56.7 in February from 57.2 in January. The score was forecast to rise to 57.5. This marked the twenty-sixth month of expansion. An index above 50 indicates expansion in activity.
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Shop prices in the UK declined at a faster rate in February, defying expectations for a slower drop, the British Retail Consortium said. Shop prices fell 1.7% year-over-year after the 1.3% drop in January. Economists expected a 1.2% drop. This was the twenty second successive month of fall in prices. Food prices decreased 0.4% and non-food prices fell 2.5%.
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The Eurozone private sector expanded in February albeit at a slower than initially estimated pace, survey data from Markit Economics showed. The composite output index rose to 53.3 in February from 52.6 in January. The reading was slightly below the flash score of 53.5. Nonetheless, it signaled an expansion for the twentieth month in a row and the growth rate of economic output accelerated for the third straight month, rising to its highest since last July.
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The UK government said it has reached a deal to sell the state's remaining stake in cross-channel rail service Eurostar International Ltd for GBP757.1 million. Chancellor George Osborne and Chief Secretary to the Treasury Danny Alexander said a consortium comprising Canadian institutional investor Caisse de dépôt et placement du Québec and Hermes Infrastructure, a unit of UK-based investment manager Hermes Investment Management, has agreed to buy the government's 40% stake in the high-speed rail operator at a price higher than the expectations which had been set out when offers were invited in October. In addition, Eurostar has agreed to redeem the government's preference shares, raising a further GBP172 million for the exchequer.
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Cigarettes and tobacco products could only be sold in plain packaging under legislation approved by the Irish legislature. If signed into law by the country's president, the measure would make Ireland the first European country to take the step, designed to make it harder for tobacco products to make themselves stand out from competitors. That would, in turn, theoretically reduce demand. The bill's text requires tobacco products to be sold in dark packaging with large-print warnings and graphic images of the health effects of tobacco use.
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India's central bank reduced its key interest rates unexpectedly by a quarter point. The Reserve Bank of India decided to cut its repo rate by 25 basis points to 7.50% with immediate effect. Consequently, the reverse repo rate was adjusted to 6.50%. The bank last reduced its key rates by 25 basis points in January.
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China's service sector expansion accelerated slightly in February, led by solid rise in new work, the results of a survey by Markit Economics and HSBC showed. The services business activity index rose slightly to 52.0 in February from January's six-month low of 51.8. Any reading above 50 indicates expansion in the sector. The composite index, a measure of manufacturing and service sector activity, climbed to a five-month high of 51.8 in February from 51.0 in the prior month.
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US Federal Reserve Chair Janet Yellen raised questions about ethics in the financial industry in a speech on Wednesday. "It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner. Too often in recent years, bankers at large institutions have not done so, sometimes brazenly, " Yellen said in her speech. "The risk of regulatory capture is something the Federal Reserve takes very seriously and works very hard to prevent," she added.
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Fresh accusations of duplicity cast new doubts about the chances of a ceasefire taking hold in eastern Ukraine, with the government accusing pro-Russian separatists of taking up front-line positions after only a brief withdrawal. Both sides agreed to pull heavy weapons back from the front in an agreement penned last month in Minsk. But there has been much doubt about whether the agreement was holding - doubts that are only growing after Tuesday's charges. The accusations, leveled by the Security Council in Kiev, came hours after the leaders of France, Germany, Russia and Ukraine agreed in a phone call to push for the implementation of the ceasefire plan.
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Afternoon Watchlist (all times in GMT)
13:15 US ADP Employment Change
14:00 US Fed's Evans Speech
14:45 US Markit Services/Composite PMI
15:00 US ISM Non-Manufacturing PMI
15:30 US EIA Crude Oil Stocks change
18:00 US Fed's George Speech
19:00 US Fed's Beige Book
22:00 US Fed's Richard Fisher's speech
23:50 Japan Foreign bond/stock investment
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Thursday's Key UK Corporate Events
CSR - Full Year Results
H&T Group - Full Year Results
Cobham - Full Year Results
Admiral Group - Full Year Results
Aggreko - Full Year Results
Aviva - Full Year Results
Betfair Group - Interim Management Statement
EasyJet - February Traffic Statistics
London Stock Exchange Group - Full Year Results
32Red - Full Year Results
Spirax-Sarco - Full Year Results
Arrow Global Group - Full Year Results
Communisis - Full Year Results
Genel Energy - Full Year Results
Hunting - Full Year Results
Inmarsat - Full Year Results
Irish Continental Group - Full Year Results
LSL Property Services - Full Year Results
Schroders - Full Year Results
Nichols - Full Year Results
Friends Life - Full Year Results
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Thursday's Key Economic Events (all times in GMT)
06:30 France ILO Unemployment
07:00 Germany Factory Orders
09:00 Italy Gross Domestic Product
12:00 UK BoE Interest Rate Decision
12:30 US Challenger Job Cuts
12:45 EU ECB Interest Rate Decision
13:30 EU ECB Monetary policy statement and press conference
13:30 US Jobless Claims
15:00 US Factory Orders
15:00 US FOMC Member Williams speech
15:30 US EIA Natural Gas Storage change
23:50 Japan JP Foreign Reserves
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