20th Nov 2019 11:16
(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Aviva unveiled its new "simplification" strategy, saying it is going to begin operating with five divisions. The five divisions are: Investments, Savings & Retirement; UK Life; General Insurance; Europe Life; and Asia Life. The "simplification" is expected to result in GBP300 million in net savings by 2022, Aviva said, with a GBP1.5 billion reduction of debt. Aviva said the overall strategy will allow it to "excel at fundamentals" and invest in sustainable growth. Over the next three years, Aviva is looking to invest GBP1.3 billion in the company. Additionally, Aviva is to sell its stake in Hong Kong business, called Blue, to co-investor Hillhouse Capital. Turning to medium term financial targets, Aviva is guiding for a solvency II return on equity by 2022 of 12%. From 2019 to 2022, operating capital generation is expected to be GBP7.5 billion, with cash flows between GBP8.5 billion and GBP9.0 billion. For 2019, the insurer's operating profit is expected to be "broadly" in line with management expectations.
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Kingfisher's outlook remains gloomy following a "disappointing" third-quarter performance. Sales for the three months to October fell 3.1% to GBP2.96 billion, with the like-for-like figure declining by 3.7%. This, Kingfisher said, was due to continued disruption in bringing in new product ranges, lower promotional activity, weakness in France, as well as generally softer market conditions in the firm's core markets. In the UK, B&Q UK & Ireland recorded a 3.5% decline in revenue, with like-for-like down 3.4%. Screwfix increased revenue by 7.9%, and 3.7% like-for-like. Kingfisher's French businesses, Castorama and Brico Depot, posted a 5.7% and 6.2% revenue decline respectively. Like-for-like, revenue was down 6.0% for Castorama and 6.1% for Brico Depot.
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United Utilities said increased finance expenses hurt profit in the first half of its current financial year. The water company said its pretax profit declined by a quarter to GBP195.1 million in the six months to the end of September from GBP259.6 million a year prior, due to more than doubled finance expenses to GBP193.9 million from GBP90.7 million. United Utilities explained that the increase in the underlying net finance expense was mainly due to the impact of higher retail price index inflation on its index-linked debt. The FTSE 100-listed company also said profit was hurt by one-off costs of GBP25 million associated with the "extreme hot and dry" weather incurred during the hot summer of 2018. United Utilities declared an interim dividend of 14.20 pence a share, up from 13.76p it paid a year prior.
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Sage reported mixed annual results, with strong recurring revenue growth but a decline in annual profit. The accounting software provider said for the financial year ended September 30, revenue was up 4.9% to GBP1.94 billion from GBP1.82 billion in financial 2018. Organic revenue growth was 5.6% to GBP1.8 billion from GBP1.7 billion, underpinned by software subscription revenue growth. Pretax profit was GBP425.0 million, down 11% from GBP475.0 million in 2018. Underlying pretax profit was down 9% to GBP361.0 million, compared to GBP398.0 million in 2018. Sage increased its full-year dividend by 2.5% to 16.91 pence from 16.50p "in line with the policy of maintaining the dividend in real terms".
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Mitchells & Butlers reported "strong" growth in financial 2019, with an increase in profit driven by a rise in sales. In the 52 weeks to September 28, Mitchells & Butlers recorded GBP177 million in pretax profit, 36% higher than the GBP130 million reported the year before. Revenue grew 4.2% year on year to GBP2.24 billion from GBP2.15 billion, with total sales up 3.9%. Total like-for-like sales grew by 3.5%, with strong performances across all of Mitchells & Butlers brands contributing to "continued, consistent outperformance" of the market, the company added.
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Babcock reported a sharp rise in profit for the first half of its financial year, despite revenue falling on step-downs from big projects reaching the end of their tenure. For the six months to September, the FTSE 250 defence firm's pretax profit was GBP152.5 million, more than doubled from GBP65.1 million the year before. However on an underlying basis the figure dropped by 18% to GBP202.5 million from GBP245.5 million. Revenue meanwhile dropped by 2.7% to GBP2.19 billion from GBP2.25 billion the prior year, with underlying revenue also slipping by 4.7% to GBP2.46 billion from GBP2.58 billion. Babcock declared an interim dividend of 7.2 pence per share, up 1.4% from 7.1p the year before.
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MARKETS
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London shares were lower after US President Donald Trump on Tuesday threatened to raise tariffs on China if a deal is not reached. The pound was lower against the dollar following a heated UK general election date between UK Prime Minister Boris Johnson and Labour's Jeremy Corbyn on Tuesday evening. Wall Street was set for a lower open with major stock indices pointed down 0.4%.
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FTSE 100: down 1.3% at 7,227.63
FTSE 250: down 0.7% at 20,384.42
AIM ALL-SHARE: flat at 896.90
GBP: down at USD1.2904 (USD1.2929)
EUR: down at USD1.1067 (USD1.1080)
GOLD: firm at USD1,475.65 per ounce (USD1,473.28)
OIL (Brent): down at USD60.94 a barrel (USD61.16)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson and Labour leader Jeremy Corbyn were almost inseparable in the eyes of viewers after a series of heated exchanges during the first televised debate of the UK general election. Johnson edged a snap YouGov poll 51-49 although Labour figures were pleased with the showing of their leader in the prime-time ITV slot. The pair clashed over their rival plans for Brexit, with Corbyn describing the PM's pledge to "get Brexit done" by the end of January as "nonsense", while Johnson suggested his rival was "not fit to lead our country". Corbyn also accused the government of entering into secret talks with the US to open the NHS to American pharmaceutical companies in a future trade deal. But Johnson hit back, denouncing the claims as "an absolute invention", insisting there were "no circumstances whatsoever" in which a Conservative government would put the NHS "on the table" in trade talks.
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UK consumers are predicted to spend a record amount on Black Friday despite intensifying political uncertainty in the country, figures suggest. Shoppers are forecast to spend GBP2.53 billion on November 29, 3.4% more than last year, and GBP8.57 billion over the four days including Cyber Monday, according to a report by the Centre for Retail Research for VoucherCodes.co.uk. Spending in the UK is predicted to be the highest in Europe – 29% higher than second-highest Germany and more than Italy, Spain, Belgium and the Netherlands combined.
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The Chinese central bank cut its new benchmark interest rates as expected to drive down lending costs, as the rate-setter appeared to change tack in response to weak data and growth. The People's Bank of China lowered the interest rate for its one-year loan prime rate to 4.15% from 4.20% previously. The five-year LPR was trimmed to 4.80% from 4.85% prior.
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Dozens of protesters were still barricaded inside a Hong Kong university at the centre of a stand-off between protesters and authorities on Wednesday. Around 800 people had left peacefully and cooperated with police as of 2300 HKST on Tuesday, including 300 minors, the Hong Kong government said in a statement. A group of 20 volunteer first-aiders left at around 2200 HKST. They were followed by around 10 "masked rioters" who tried to escape from the main entrance and were intercepted by police around 2300 HKST, the statement added. The South China Morning Post, a Hong Kong daily newspaper, estimated there were still around 60 to 100 protesters on campus.
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Beijing condemned the US Senate's passing of legislation that supports protesters in Hong Kong, a move that came at a sensitive juncture in trade talks between Washington and Beijing. Chinese Foreign Ministry spokesman Geng Shuang blasted the legislation, known as the Hong Kong Human Rights and Democracy Act, as "blatant" interference in China's internal affairs, at a time when protests in Hong Kong are becoming increasingly violent. Although the bill has now been passed by the lower chamber - the House of Representatives - and the upper chamber - the Senate - it is unclear whether US President Donald Trump will sign the bill into law. China will take "strong countermeasures" if the proposal becomes law, Geng said.
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Italy's controversial budgetary plans will be among those in the spotlight as the European Commission gives its verdict on eurozone countries' draft budgets for 2020 on Wednesday. EU commissioners Valdis Dombrovskis and Pierre Moscovici will give their assessment of the 19 eurozone countries' draft budgets at an event in Brussels. Twelve months ago, Italy was in trouble with the EU for budget plans lambasted by Brussels as an "unprecedented" deviation from eurozone budget rules. At the time, Rome's dominant political figure was far-right deputy premier and interior minister Matteo Salvini, a man who relished picking fights with the EU establishment. Salvini is no longer in office, and Italy has a new, pro-EU government. But its budget plans for next year have been widely interpreted as being in continuity with those of previous governments.
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Two White House officials who listened in on Trump's July 25 phone call with the Ukrainian president said on Tuesday they considered Trump's comments during the call "unusual" and "improper". Trump's phone call with President Volodymyr Zelensky is central to an impeachment probe, which Democrats launched in September after a whistleblower reported details of the call. The whistleblower, whose identity continues to be protected, described the call as an apparent attempt to make military aid to Ukraine conditional on whether the country would launch an investigation into Trump's political rival Joe Biden and his son.
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