6th Dec 2019 11:18
(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Phoenix Group said it has agreed to acquire Swiss Re Group's UK business ReAssure Group for GBP3.25 billion. Back in July, SwissRe suspended plans for a London IPO of life insurance closed-book consolidator ReAssure, citing a poor global economic outlook and worries about a possible non-deal Brexit. At the end of June, ReAssure had set the price range for a July initial public offering at between 280 pence and 330p per share, implying a market capitalisation between GBP2.8 billion and GBP3.3 billion. The IPO was intended to consist of insurance giant Swiss Re selling shares in ReAssure, taking its stake to below 50% from 75% currently. Phoenix said on Friday the new deal will make it Europe's largest life and pensions consolidator - taking the assets under management in the company's Heritage unit to GBP329 billion from 14.1 million policies. Phoenix said the acquisition will generate GBP7.0 billion in additional cash flows "over time", with about GBP2.7 billion expected between 2020 and 2023, with a further GBP4.3 billion onwards.
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Housebuilder Berkeley Group reported a 31% fall in half-year profit but said the profit drop was expected and simply represented profitability returning to normal levels. For the six months to September 30, FTSE 100-listed company posted pretax profit of GBP276.7 million, down from GBP401.2 million in the year-ago period. Revenue fell 44% year-on-year to GBP930.9 million from GBP1.65 billion. The earnings decline was mainly attributed to the completion of a number of major central London projects. The company sold 1,389 homes in the first half, down from 2,027 a year ago. Average selling prices also declined to GBP644,000 from GBP740,000 due to the different mix of properties sold in the two periods. Berkeley said it was a "good" start to its current financial year, and the company remains on track to deliver GBP3.3 billion of pretax profit in the six years to 2025, and to return GBP280 million per year of that to shareholders in the same period.
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Associated British Foods said the company will benefit "materially" from the increase in sugar prices and further cost reduction in its current financial year. Speaking at the company's annual general meeting, Chair Michael McLintok said the company expects another year of strong profit and margin growth in grocery, with Twinings Ovaltine drink in particular benefiting from a more efficient tea supply chain. McLintock said fast fashion retailer Primark has a strong pipeline of new sites, with margin to be reduced by "only a small" amount year-on-year, hurt by a weaker pound for purchases being largely offset by lower costs in both the cost of goods and overheads. McLintok reiterated the outlook that was included in the company's recent annual report.
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MARKETS
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London shares were higher on continued hopes for a US-China trade deal. The pound was lower against the dollar with less than a week to go until the UK general election. Wall Street was pointed to a higher open ahead of the US jobs report for November at 1330 GMT.
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FTSE 100: up 0.7% at 7,189.51
FTSE 250: up 0.4% at 20,790.50
AIM ALL-SHARE: flat at 905.93
GBP: down at USD1.3134 (USD1.3150)
EUR: flat at USD1.1094 (USD1.1096)
GOLD: down at USD1,474.80 per ounce (USD1,477.30)
OIL (Brent): down at USD63.34 a barrel (USD63.72)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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China said it will offer a tariff waiver to "some" imports of US soybean and pork, in the latest sign of easing trade tensions between Beijing and Washington. The two sides are working towards a partial deal that includes a promise to increase the purchase of US farm produce. "The Customs Tariff Commission of the State Council is carrying out the exclusion of some soybeans, pork and other commodities based on applications from enterprises," the finance ministry said in a statement.
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US Treasury Secretary Steven Mnuchin told lawmakers the administration is supportive of transitioning China away from eligibility for cheap loans from the World Bank, citing the country's global economic position and human rights issues. Mnuchin testified Thursday in Congress and said that while the US cannot veto "every single loan," Washington does wield influence over the bank, which is meant to help countries develop by supplying low interest capital. World Bank lending to China - the world's second largest economy - hit USD2.4 billion in 2017 but has come down to about USD1.4 billion in 2019, according to the bank's website. Meanwhile, a key US senator pushed the World Bank to halt USD50 million in funding for a project in western China, citing the mass internment of Muslim-minority groups in the region.
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North Korea has threatened to resume referring to US President Donald Trump as a "dotard", raising the prospect of a return to a war of words with a negotiating deadline approaching. Pyongyang has set Washington an end-of-year time limit to offer it new concessions in deadlocked nuclear negotiations, and has said it will adopt an unspecified "new way" if nothing acceptable is forthcoming. Trump and North Korean leader Kim Jong Un – whose countries and their allies fought each other to a standstill in the 1950-53 Korean War – engaged in mutual insults and threats of devastation in 2017, sending tensions soaring before a diplomatic rapprochement the following year. But denuclearisation negotiations have been at a standstill since a summit in Hanoi broke up in February.
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UK Prime Minister Boris Johnson will face the leader of the opposition, Jeremy Corbyn, in a head-to-head debate later, after he was berated by Andrew Neil for refusing to do an interview on his BBC show. Neil said that if the prime minister is expected to face the likes of Donald Trump and Vladimir Putin then he should be able to sit down for a half-hour interview with him. Johnson has been accused of "running scared" from scrutiny by avoiding in-depth questioning from the veteran broadcaster, even though rival leaders, including Corbyn, have taken part. The prime minister, who has also refused to do an interview on ITV, will debate Corbyn on the BBC on Friday night, with less than a week to polling day.
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UK high street retailers suffered a lacklustre November in the critical build-up to Christmas as shoppers held off on spending ahead of Black Friday, figures show. In-store sales declined by 1.9% year-on-year in November from an already negative base of minus 2.6%, according to BDO's High Street Sales Tracker. Figures across the month suggest that discounting has become increasingly important for driving consumer spending, with retailers experiencing a lacklustre month before a substantial increase in sales the week of Black Friday.
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Fewer people in the UK have been found permanent jobs by recruitment agencies amid continued uncertainty over Brexit and the general election, a new study suggests. Research among 400 recruitment and employment firms indicates companies are delaying or even cancelling plans to hire staff. The uncertain outlook has also affected the number of vacancies and candidates looking for work, the Recruitment & Employment Confederation and KPMG said. Their research found the number of candidates looking for work through recruitment agencies had fallen sharply in recent weeks.
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The pace of Germany's industrial production decline accelerated in October, Destatis reported on Friday, with the reading well short of expectations. October's industrial production was 1.7% lower on the prior month, after a 0.6% month-on-month decline in September. On a yearly basis production was 5.3% lower, from a revised 4.5% decline in September. The September annual figure had previously been reported at a 4.3% decline. According to FXStreet, economists had forecast a 0.1% rise in month-on-month production in October, and a 2.8% yearly decline.
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