11th Jun 2014 10:31
LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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J Sainsbury PLC reported another drop in like-for-like sales, its second consecutive quarterly decline, after nine years of unbroken sales growth. The UK's third-largest supermarket chain by market share posted a 1.1% decline in like-for-like retail sales including VAT but excluding fuel for the 12 weeks to June 7 from the same period a year earlier. Including fuel, like-for-like retail sales fell 2.4%. In his final call with journalists before stepping down next month, Chief Executive Justin King said the company expects customer spending to remain cautious, and as a result Sainsbury's will continue to invest in keeping its offering competitive and being "toe-to-toe" with its rivals. "We are playing our part in this pricing skirmish. We are toe to toe with our competitors, and we have never been more competitive than we are today," King said, adding: "Our brand match is also making sure we stay competitive on brands."
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Rolls-Royce Holdings PLC said a decision by the Emirates airline to cancel an order for 70 Airbus A350 aircraft has knocked about 3.5%, or GBP2.6 billion, off its order book. The aircraft engine maker was due to provide its Trent XWB engines for the aircraft. In a statement, Rolls-Royce said it was disappointed with Emirates' decision, but was confident that the A350 delivery slots vacated by the Dubai-based airline would be taken up by other airlines.
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UK Energy regulator Ofgem has said the big energy suppliers in the UK must engage with customers over the impact of falling wholesale costs on energy prices or risk further undermining public confidence. In recent months, wholesale gas and electricity prices have dropped noticeably, with spot gas prices down 38% in early June compared with the previous year and forward prices for the coming winter down 16% for gas and 9% for electricity, according to Ofgem. Wholesale costs make up nearly half of a household energy bill and Ofgem said in a statement on Tuesday that "suppliers are yet to reduce their prices for existing customers to reflect the wholesale cost changes". The Big Six energy firms in the UK are British Gas, a subsidiary of Centrica PLC, E.ON, EDF, Npower, ScottishPower and SSE PLC.
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Pharmaceuticals company AstraZeneca PLC said 43 abstracts reporting results of the company's research and development in diabetes have been accepted for presentation at the 74th Scientific Sessions of the American Diabetes Association in San Francisco next week. In a statement, the company said it will present clinical data from studies evaluating several approved products, including Forxiga, Bydureon, Onglyza, as well as investigational combination of saxagliptin and dapagliflozin. The sessions take place between June 13 and June 17.
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Media buying giant WPP PLC said its marketing communications agency JWT has bought a majority stake in South African creative agency The Hardy Boys, a further move to increase revenue from digital media. It didn't give any financial details of the deal. The Hardy Boys' revenues for the year ended February 28, 2014 were approximately ZAR55 million, it said. The South African agency's clients include Unilever, Diageo, SA Home Loans, ADvTECH and RCL Foods, amongst others.
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Online betting company Betfair Group PLC reported higher profits and revenues in its last financial year, prompting the company to raise its dividend by 54%. For the year ended April 30, the company reported a pretax profit of GBP61.1 million, compared with a GBP49.4 million pretax loss the prior year, when it booked GBP104.5 million in exceptional expenses and charges. On a underlying basis, which strips out exceptional costs, earnings before interest, taxes, amortisation and depreciation were GBP91.1 million, up 24% from GBP73.3 million the prior year. Betfair said the underlying EBITDA growth was driven primarily by cost savings. The group declared a full-year dividend of 20.0 pence per share, a 54% increase on the 13.0 pence dividend it paid out a year earlier.
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Exhibitions company ITE Group PLC said it has agreed a binding contract to buy a 50% stake in Indonesian exhibitions company PT Debindo Unggul Buana Makmur from that company's founders. It didn't give any financial details for the buy, but said it expects the acquisition to boost earnings in the first full year of ownership. It added that it will finance the deal out of its existing balance sheet. ITE said the three founders will retain the other half of the business and will continue to manage it. PT Debindo Unggul Buana Makmur owns the Indobuildtech exhibitions aimed at the building and construction industries in Indonesia and the surrounding region.
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German airline Lufthansa reduced its forecast for operating profits this year and next because of unfilled seats on European and US flights and a pilots strike earlier this year. It lowered its 2014 operating profit forecast to EUR1 billion from an earlier estimate of between EUR1.3 billion and EUR1.5 billion. Its 2015 forecast was pulled back to EUR2 billion from EUR2.65 billion. The primary reason for the lowered expectations was the problem of a shortage of passengers and cargo coupled with an overabundance of seats and space on its planes in its European and US business. That has led to a drop in prices on those routes, the airline said.
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MARKETS
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Major stock markets are lower across the UK, led by falls in airline stocks after Germany's Lufthansa issued a profit warning that has hurt the whole sector, and as trading volumes remain well below average.
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FTSE 100: down 0.5% at 6836.37
FTSE 250: down 1.0% at 16050.57
AIM ALL-SHARE: down 0.7% at 797.65
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The pound advanced against the dollar in morning trade, as data showed that UK unemployment rate fell for the three months through April and jobless claims dropped by more than forecast.
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GBP-USD: up at USD1.6786
EUR-USD: down at USD1.3531
GOLD: up at USD1262.45 per ounce
OIL (Brent): up at USD110.02 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The UK jobless rate declined below expectations during February to April period and employment increased notably, data from the Office for National Statistics revealed. The ILO unemployment rate came in at 6.6% compared to 7.2% during November to January and 7.8% during the same period of last year. The expected rate was 6.7%. Pay including bonuses increased 0.7% from last year and that excluding bonuses gained 0.9% in three months to April, well short of the UK's April consumer price inflation rate of 1.8%. There were 1.09 million people claiming Jobseeker's Allowance in May, down 27,400 from April. Economists had forecast a decrease of 25,000.
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The UK economy has surpassed the pre-recession peak it reached in January 2008, the National Institute of Economic and Social Research said in a report on Tuesday. For the three months ending May, the think tank forecasts 0.9% growth after estimating 1.1% expansion in three months through April. The latest estimate is approximately 0.2% above where it was in January 2008. The NIESR earlier projected 2.9% annual growth in 2014 and 2.4% in 2015. According to official estimate, the British economy expanded 0.8% in the first quarter of 2014 after growing 0.7% in the previous quarter.
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Global economic growth in 2014 is likely to be weaker than expected, with the poor weather in the US, financial market turbulence and the Ukrainian issue serving as drags, the World Bank said in its latest World Economic Prospects report released late Tuesday. The bank lowered its global economic growth forecast for 2014 to 2.8% from the 3.2% it estimated earlier. At the same time, the World Bank left its forecast for 2015 and 2016 broadly unchanged at 3.4% and 3.5%, respectively.
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Oil ministers of the Organization of the Petroleum Exporting Countries signalled in Vienna that they would not raise the cartel's production ceiling, despite calls to respond to growing oil demand. "Supply is in order, and demand is in order," Saudi Arabian Petroleum Minister Ali Naimi said shortly before the start of OPEC's summer ministerial meeting. "We think that maybe we would continue with the present situation," his Algerian counterpart, Youcef Yousfi, said. The International Energy Agency (IEA), which is financed by industrialized countries, said in May that growing seasonal demand would require OPEC to pump an average 900,000 barrels per day (bpd) more during the third quarter than the 29.9 million bpd it had produced in April.
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Ukraine's prime minister rejected a Russian proposal to sell Ukraine gas at a discount, insisting that the contractual price be lowered. Arseniy Yatsenyuk said at a cabinet meeting in Kiev that Moscow's offer of a 100-dollar discount on its price of 485 dollars per 1,000 cubic metres of gas was a trap, the Interfax Ukraine news agency reported. "Our position remains the same: Rewrite the contract and establish market price for gas," Yatsenyuk was quoted as saying. The prime minister was speaking as another round of EU-mediated gas talks between Russia and Ukraine got under way in Brussels after the Russian energy giant Gazprom said that it had extended into next week its payment deadline for Ukraine.
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Cyprus' government said it is preparing the ground to return to international markets at least a year earlier than anticipated under its bailout programme. The Finance Ministry announced in a press release that it has appointed five international banks, among them Deutsche Bank, Goldman Sachs International, HSBC, UBS Investment Bank and VTB Capital to arrange meetings with bond investors in Europe. Finance Minister Harris Georgiades said the government will deliberate in the coming weeks on Cyprus' early return to international markets. Based on the island's adjustment programme, it had been set to return to the markets in late 2015 or early 2016.
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The EU is investigating whether US giants Apple and Starbucks were inappropriately granted tax benefits in Ireland and the Netherlands, the bloc's executive said. "In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," EU Competition Commissioner Joaquin Almunia said in a statement. The European Commission said it has concerns that the corporate income tax calculations used by Irish and Dutch authorities "could underestimate the taxable profit, and thereby grant an advantage to the respective companies by allowing them to pay less tax." The financing arm of Italian car manufacturer Fiat has also landed under the microscope, with the commission probing the tax calculation used by Luxembourg for Fiat Finance and Trade.
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