27th Feb 2020 11:28
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Reckitt Benckiser posted an annual loss after a huge impairment charge of more than GBP5 billion. The impairment, worth GBP5.04 billion, has been made on goodwill related to its acquisition of Mead Johnson Nutrition. MJN, a US baby formula maker, was bought for USD18 billion in the summer of 2017. Reckitt as a result posted a pretax loss for 2019 of GBP2.11 billion, swung from a pretax profit of GBP2.72 billion the year prior. Net revenue rose 2.0% at actual exchange rates to GBP12.85 billion, and was 0.8% higher at constant rates. This compares to company-compiled consensus of GBP12.83 billion of net revenue. Like-for-like revenue growth at actual rates was 0.3%, and at constant rates, 0.8%. Reckitt has declared a final dividend of 101.6 pence per share for the year, taking the year's total to 174.6p. This is 2.3% higher than the dividend of 170.7p in 2018.
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WPP posted a double-digit profit slump but said it has made "good progress" in its restructuring plan which it is now in its second year. From continuing operations, revenue for 2019 was up 1.4% to GBP13.23 billion from GBP13.05 billion, but pretax profit slumped 22% to GBP982 million from GBP1.26 billion. The profit hit was largely due to it booking a GBP68.4 million hit from the revaluation of financial instruments, compared to a GBP169.4 million gain in 2018. Billings meanwhile, slipped 0.3% to GBP53.06 billion GBP53.22 billion. Like-for-like billings were down 1.0% in 2019. The company held its dividend at 60.0 pence per share. For 2020, the company expects revenue less pass-through costs to be flat year-on-year, although WPP said this guidance was made prior to any impact from the coronavirus outbreak.
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British American Tobacco reported a drop in annual profit due to litigation charges and restructuring costs. In 2019, the tobacco major posted a GBP7.91 billion pretax profit, down 5.2% from 2018. While revenue rose 5.7% to GBP25.88 billion, depreciation, amortisation and impairment costs climbed 45% to GBP1.51 billion. Adjusted operating profit growth of 7.6% and constant currency revenue growth of 6.6% both beat guidance. BAT raised its dividend by 3.6% to 210.4 pence per share. In 2020, BAT expects adjusted revenue growth in the 3% to 5% range at constant currency, plus "continued operating margin improvement". Revenue is likely to be second-half weighted, especially in New Categories, and earnings per share growth of a high single figure is expected at constant currency.
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Standard Chartered reported double-digit profit growth in 2019, but said it no longer expects to achieve its medium-term target next year amid slowing economic growth. The London-headquartered banking firm said pretax profit for 2019 increased by 46% to USD3.71 billion, as operating income grew by 4% to USD15.42 billion. StanChart declared a final dividend of 20 cents per share, resulting in a full-year dividend of 27 cents per share, up 29% on 2018's payout. StanChart said "external challenges" are expected to hurt income growth in 2020, which is now likely to be lower than the 5% to 7% medium-term range previously guided by the bank.
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Russian steelmaker Evraz reported a sharp full-year profit slide with trading hurt by less "favourable" global steel and commodity markets. In 2019, revenue slipped 7.3% to USD11.91 billion. Pretax profit tumbled 72% to USD902 million. Chief Executive Alexander Frolov said: "In 2019, global steel and commodity markets were not as favourable as they were in 2018. Steel prices have fallen as a result of excess supply in an environment of limited end-use demand. Global coal and vanadium markets returned to supply-demand equilibrium." During the period, Evraz made USD0.75 in payouts, down 6.3% from USD0.80 in 2018. The company on Thursday declared a USD0.40 interim dividend, flat year-on-year, "reflecting the board's confidence".
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Rentokil upped its dividend by 15% following a "strong" annual performance in which it beat revenue growth targets. The pest control company said Chief Financial Officer Jeremy Townsend is to retire in the second half of 2020. Rentokil's North America finance chief Stuart Ingall-Tombs will become group CFO. Camberley, Surrey-based Rentokil has declared a final dividend of 3.64 pence per share, taking the total to 5.15p, just over 15% higher than the payout in 2018. The company has also swung to a pretax profit of GBP338.5 million, after a loss of GBP114.1 million in 2018. Rentokil's figure last year had been hit by a pension settlement worth nearly GBP350 million. Looking ahead, Rentokil said it has made a "good" start to 2020, and it has maintained medium-term growth targets.
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Mondi reported flat 2019 profit as lower expenses and impairments made up for a more lacklustre revenue performance. The paper and plastic packaging company posted a EUR1.10 billion annual profit, a hair below 2018's figure of EUR1.11 billion. Revenue was 2.8% lower at EUR7.27 billion. Mondi has recommended a 9.2% full year dividend rise to 83.0 euro cents per share from 76.0 cents in 2018, beating consensus of 77 cents.
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St James's Place reported a sharp rise in assets under management over the course of 2019, despite a "challenging" year for UK wealth managers. All three of the company's fund classes saw growth in 2019. SJP's assets under management ended 2019 at GBP116.99 billion, up 22% from GBP95.55 billion a year ago, which represents a record for the company. Investment funds grew 13% to GBP31.22 billion whilst Unit Trust/ISA & Discretionary Fund Management added 21% to GBP32.93 billion. Pension funds increased 30% to GBP52.84 billion. The wealth manager's pretax profit slipped 16% year on year to GBP146.6 million from GBP173.5 million. St James's Place declared a 31.22 pence final dividend, up 5.0% on the year before, giving a total dividend of 49.71p - up 3.1% on the year before and ahead of the 48.3p market consensus.
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Persimmon said annual profit missed market expectations, with revenue and new home sales declining as the group prioritised the quality of sales over quantity. The housebuilder also announced that Chief Executive David Jenkinson will step down in due course, staying "for as long as the business requires". For 2019, Persimmon reported pretax profit of GBP1.04 billion, down 4.6% from the year before, on revenue that declined by 2.4% to GBP3.65 billion. Persimmon said back in January it expected pretax profit for 2019 to be "modestly ahead of market consensus", which stood at GBP1.04 billion, according to a Bloomberg survey cited by a company spokesperson. During the year, Persimmon delivered 15,885 new homes to customers, down 4% from 16,449 the prior year, but at an average selling price of GBP215,709, up marginally year-on-year. Persimmon will pay a final dividend of 110 pence per share, bringing the total payout to 235p, in-line with the year earlier.
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Flutter Entertainment stressed the opportunity facing bookmakers as the US opens up to online betting, though profit in 2019 has slipped. Flutter's pretax profit fell 38% to GBP135.7 million in 2019, with the company - formerly known as Paddy Power Betfair - saying this was due to ongoing US investment as well as tax and regulatory changes. These charges hit profit by GBP107 million, Flutter continued. Flutter's revenue increased 14% year-on-year to GBP2.14 billion. It has kept the dividend unchanged on the year before at 200 pence per share. Flutter's revenue increased 14% year-on-year to GBP2.14 billion. It has kept the dividend unchanged on the year before at 200 pence per share. In the US, revenue was nearly double, at GBP376 million. Flutter merged with FanDuel during the year, and the US market is rapidly growing as more US states legalise online betting.
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RSA Insurance reported a mixed 2019 performance, with profit coming in above market expectations, despite a fall in net written premiums. The general insurer's net written premiums for 2019 declined by 1.1% to GBP6.40 billion from GBP6.47 billion, coming in below the analyst consensus forecast of GBP6.46 billion. RSA Insurance's net written premiums were up 1% in Scandinavia and 3% in Canada, however the UK & International unit reported a 7% drop due to underwriting and rating actions taking effect. Pretax profit for the year increased by 15% to GBP551 million from GBP480 million, and well above consensus forecasts of GBP506 million. RSA declared a final dividend of 15.6 pence per share, brining the total dividend for 2019 to 23.1p, up 10% from 21.0p the year before.
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MARKETS
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London shares were sharply lower as the global stock market sell off continued, with many more companies warning over the coronavirus on earnings. WPP was the worst blue chip performer, down 15%. The pound was down against the dollar amid fears the UK-EU's trade negotiations will not run smoothly. Gold rose with demand for the safe haven asset increasing as coronavirus fears intensified. US futures point to a lower open for stocks on Wednesday.
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FTSE 100: down 1.6% at 6,929.30
FTSE 250: down 2.4% at 20,139.76
AIM ALL-SHARE: down 2.0% at 893.23
GBP: down at USD1.2875 (USD1.2920)
EUR: up at USD1.0945 (USD1.0866)
GOLD: up at USD1,646.84 per ounce (USD1,637.00)
OIL (Brent): down at USD52.35 a barrel (USD54.45)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson could walk away from trade talks with the EU in June unless there is the "broad outline" of a deal. The UK's guidelines for the negotiations, which cover trade and other aspects of the future relationship with Brussels, sets the deadline for progress against a backdrop of deep divisions between the two sides over issues including fish, state subsidies and standards. The government has set out its plans for the talks ahead of the first round of negotiations on Monday, making clear that it "will not negotiate any arrangements in which the UK does not have control of its own laws and political life". It clearly states the UK's intention to rely on World Trade Organisation terms under an arrangement with the EU similar to Australia's if progress on a comprehensive deal cannot be made. A high-level meeting to take stock of progress is scheduled for June, by which time it should be clear whether the Canada-style comprehensive free trade agreement sought by Johnson is possible by the end of the year.
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China reported 29 more deaths from the new coronavirus epidemic, the lowest daily figure in almost a month, and the number of fresh infections rose slightly. The death toll now stands at 2,744 in mainland China, according to the National Health Commission. The daily tally of fatalities has fallen for three straight days now, hitting the lowest mark since January 29, when 26 new deaths were reported. The commission reported 433 new cases, with all but 24 in central Hubei province, the epicentre of the outbreak that first emerged in December in its capital, Wuhan. There are now nearly 78,500 cases in total.
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Romania reported its first confirmed case of the novel coronavirus on Wednesday - a man who was in contact with an Italian who visited the country last week. Meanwhile, Italy has sought to rally international support for its coronavirus containment efforts as the number of cases reached 400 and the UN's health agency urged an increased response. Italian premier Giuseppe Conte's government appealed to European neighbours for cooperation, not isolation and discrimination. Italy has been struggling to contain the rapidly spreading outbreak that made it the country with more coronavirus cases outside Asia than anywhere else. China reported 29 more deaths on Thursday from the new coronavirus epidemic, the lowest daily figure in almost a month, and the number of fresh infections rose slightly. The death toll now stands at 2,744 in mainland China, according to the National Health Commission.
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Campaigners trying to block Heathrow expansion have won a Court of Appeal challenge against controversial plans for a third runway. A group of councils in London affected by the expansion, environmental charities including Greenpeace, Friends Of The Earth and Plan B, and London Mayor Sadiq Khan, brought legal action over the government's approval of the plans. Giving their ruling on Thursday, Lords Justice Lindblom, Singh and Haddon-Cave said the government failed to take account of its commitment to the Paris Agreement on climate change when setting out its support for the airport expansion in its National Policy Statement (NPS). The UN's Paris Agreement, which came into force in November 2016, commits signatories to tackling climate change by taking measures to limit global warming to well below 2C.
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