6th Feb 2020 11:17
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Mail retained its profit forecast for the current financial year after a "busy" Christmas period but said it will miss its productivity target, and warned its core UKPIL business could be loss making in the up-coming 2021 financial year. Revenue was up 3.7% for the nine months to December 29, and 4.5% higher when working day-adjusted. In Royal Mail's UK parcels, international & letters unit, UKPIL, revenue was up 1.0%, led by parcels which saw revenue growth of 3.7% and volume growth of 3.0%. Letter volumes, meanwhile, sank 9% - excluding election-related material - and revenue fell 1.5%. Further, the "ongoing industrial relations environment" and economic uncertainty "increases the likelihood" that UKPIL will be loss-making in the upcoming 2021 financial year. On strike action, Royal Mail said it was "disappointed" the Communication Workers Union has said it is preparing another ballot of its members for industrial action. Royal Mail Chief Executive Rico Back said the company cannot wait "any longer" to move ahead with its overhaul despite facing the threat of strikes.
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Compass Group delivered first-quarter revenue growth helped by progress in North America. Ahead of its annual general meeting on Thursday, Compass reported that organic revenue climbed 5.3% in the three months to December 31. In North America, where the company reported "strong levels of new business wins and good retention rates", organic revenue was 7.5% higher. In Europe, organic revenue was flat year-on-year, as anticipated. Compass said volumes softened during the quarter in the Business & Industry unit. It also cited a "less favourable" events calendar in Sports & Leisure. Compass held its guidance of organic growth in the mid-point of its 4% and 6% range, following an "encouraging" start to its financial year. Compass however warned that revenue and operating profit in financial 2020 could take hits of GBP745 million and GBP61 million, respectively, if current currency rates continue, based on the effect those rates would have had on 2019 results.
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Beazley more than doubled its annual profit on a sharp rise in investment income and growth in premiums written. In 2019, pretax profit surged to USD267.7 million from USD76.4 million. Gross premiums were 15% higher at USD3.00 billion from USD2.62 billion, with net premiums rising 11% to USD2.50 billion. Revenue, which predominately includes net earned premiums and investment income, was 22% higher year-on-year at USD2.64 billion from USD2.16 billion. Beazley upped its full-year payout by 5.1% to 12.3 pence per share from 11.7p, in line with its target of annual dividend growth between 5% and 10%.
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French oil major Total reported a fall in sales in the fourth quarter on lower oil and gas prices. In the three months to December 31, Total recorded net income of USD2.65 billion, more than double the USD1.18 billion seen in the same period the year before. Diluted earnings per share rose to USD0.97 from USD0.40. Total's income tax fell to USD852 million from USD1.54 billion as its effective tax rate slipped to 31.8% from 38.1%. Looking ahead, Total said: "The environment remains volatile, given the uncertainty about hydrocarbon demand related to the outlook for global economic growth and a context of geopolitical instability."
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MARKETS
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London shares were higher after China pledged to halve the tariffs it imposes on US imports. In the FTSE 250, Royal Mail was the worst performer, down 8.5% as its shares fell to an all-time low. Wall Street was pointed to a higher open with hail riding company Uber Technologies and social media platform Twitter set to report earnings after the market close in New York on Thursday.
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FTSE 100: up 0.3% at 7,502.18
FTSE 250: up 0.2% at 21,552.30
AIM ALL-SHARE: flat at 961.16
GBP: down at USD1.2970 (USD1.2990)
EUR: flat at USD1.1003 (USD1.1002)
GOLD: up at USD1,565.04 per ounce (USD1,557.60))
OIL (Brent): down at USD55.44 a barrel (USD55.86)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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President Donald Trump was acquitted by the US Senate on Wednesday following a historic impeachment trial that shone a harsh light on America's divisions, without ever shaking the loyalty of his voter base. In a political triumph for the US leader, Trump drew on staunch Republican support to easily defeat a Democratic effort to expel him from office for pressuring Ukraine to help bolster his re-election effort. The president immediately claimed "victory" while the White House declared it a full "exoneration" - and Democrats rejected the acquittal as the "valueless" outcome of an unfair trial. But the vote in the Senate showed just how solid a grip the former real estate mogul holds over the Republican Party - an asset nine months before he seeks a second four-year-term. Even though several conceded Trump's behaviour was wrong, Republicans ultimately stayed loyal in voting to clear the president of charges of abuse of power, by 52 to 48, and of obstruction of Congress, by 53 to 47 - far from the two-thirds supermajority required for conviction.
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China said on Thursday it will halve punitive tariffs on USD75 billion in US imports from February 14, a month after Beijing and Washington signed a truce in their long-running trade war. The reduction will apply to levies of five percent and 10% that were imposed on more than 1,700 items in September, according to the State Council Tariff Commission. Products that had been hit by the 10% tariffs included fresh seafood, poultry and soybeans. The tariffs also applied to items such as tungsten lamps for scientific and medical purposes, as well as some types of aircraft. The move is aimed at "promoting the healthy and stable development of China-US economic and trade relations", the Commission said in a statement.
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The eurozone's construction sector entered 2020 on stronger footing, the latest data from IHS Markit showed. The IHS Markit eurozone construction purchasing managers' index rose to 51.9 in January from 51.3 in December, the strongest rate of growth since April 2019. Any reading above 50 indicates expansion in the sector, and one below contraction. Growth in residential and commercial work accelerated to nine- and four-month highs respectively, but civil engineering activity declined further. Germany was the best performer in the bloc, with a construction index reading of 54.9 in January, up from 53.8 in December. This was led by home construction, while commercial activity also contributed to the boost in conditions. Milder-than-usual weather also played a part in the higher levels of activity. France's construction PMI fell to 50.4 in January from 50.9 in December, indicating near-stagnation in the country's building industry. Italy's PMI rose to 49.0 in January from 47.7 in December, though this still indicates shrinkage in the sector.
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German factory orders slumped in December, data from Destatis showed. Month-on-month, orders were down 2.1%, sharper than the 0.8% decline posted for November. On a year earlier, orders sank 8.7%, again steeper than the 6.0% fall seen in November. Consensus, according to FXStreet, was for a monthly rise of 0.6%, and a year-on-year fall of 6.0%. Domestic orders increased by 1.4% and foreign orders fell by 4.5% month-on-month, with new orders from the euro area slumping 14%. Manufacturers of intermediate goods saw new orders increase by 1.4% on November, while capital goods orders were down 3.9% and consumer goods 3.8% lower.
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