LONDON (Alliance News) - Aviva Thursday said its turnaround is ongoing as it reported a fall in net profit for 2014 due to the 2013 sale of its US life and related internal asset management businesses, but operating profit excluding this rose as increases in its life business, general insurance and health helped to offset a fall in fund management operating profit.
In what could be its last annual earnings statement in its current form with the proposed GBP5.6 billion acquisition of life insurance rival Friends Life Group expected to complete in the second quarter of 2015, Aviva said its net profit fell to GBP1.74 billion in 2014, compared with GBP2.15 billion in 2013. Friends Life, meanwhile, swung to a net loss of GBP138 million in 2014, compared with a net profit of GBP235 million in 2013.
However, Aviva's pretax profit from continuing operations rose to GBP2.66 billion from GBP1.47 billion, as revenue from continuing operations rose to GBP43.50 billion from GBP34.65 billion. Operating profit on a continuing basis rose by 6% to GBP2.17 billion.
Aviva Chief Executive Mark Wilson said the integration of Friends Life would be a major focus, but he wouldn't allow it to come at a cost to other parts of the Aviva business. The insurer will continue its efficiency drive in these parts of the business.
"A successful integration of Friends Life is a significant focus and it is important to demonstrate our ability to execute on our plans and achieve our external objectives. This is a bare minimum," Wilson said.
"While the proposed integration of Friends Life is a major exercise, there are large parts of the business that are not involved and we will continue to focus on better capital allocation and efficiency across the entire group, driving digital throughout the organisation and building out our true customer composite model," Wilson said, adding that his turnaround of the business is not yet complete.
Ireland's Transport minister Paschal Donoghue has said that the government's engagement with International Consolidated Airlines Group has been positive and the airline's bid to buy Aer Lingus appears to be "friendly". Representatives from IAG met with Irish government officials on Wednesday to discuss the issue and are due to meet again next week.
However, concerns about jobs and connectivity remain, and IAG still needs to detail and expand its pledges on guaranteeing employment growth and protecting Aer Lingus routes and identity, Donoghue told Ireland's Newstalk radio. More talks between the parties are due to take place.
*The Bank of England has just left interest rates unchanged, as expected.
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Markets: UK shares are trading higher with insurers Aviva and Friends Life as the biggest gainers in the FTSE 100. The euro hit a fresh 11-year low against the dollar ahead of European Central Bank press conference scheduled for 1330 GMT.
Wall Street is also set for a higher start, with stock futures indicating that the DJIA, S&P 500 and Nasdaq 100 will all open up 0.2%.
FTSE 100: up 0.4% at 6,947.37
FTSE 250: up 0.6% at 17,244.05
AIM ALL-SHARE: up 0.2% at 713.45
GBP-USD: down at 1.5246
EUR-USD: down at 1.1051
GOLD: down at USD1,200.40 an ounce
OIL (Brent): up at USD61.16 a barrel
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Other Top Corporate News
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Admiral Group reported a lower profit for 2014, hit by investments it made in a US price comparison site and lower average premiums in its UK car insurance business. The insurer reported a pretax profit excluding minority interests of GBP357 million for 2014, down from GBP371 million in 2013. Pretax profit fell to GBP350.7 million, from GBP370.2 million, as net insurance premium revenue dropped to GBP464.9 million, from GBP483.0 million, partly offset by a fall in net insurance claims to GBP259.1 million from GBP303.0 million. Admiral will pay a final dividend for 2014 of 49.0 pence, comprising a 22.5p normal dividend and 26.5p special dividend. That brings its total dividend for the year to 98.4p, down from 99.5p in 2013.
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Schroders raised its dividend as it reported growth in pretax profit, net inflows from clients and assets under management in 2014. In a statement, the asset manager said it made a GBP517.1 million pretax profit in 2014, compared with GBP447.5 million in the prior year, as net revenue rose by GBP123.6 million to GBP1.53 billion and operating expenses increased by GBP55.3 million to GBP1.03 billion. Schroders upped its dividend for 2014 by 20 pence to 78.0 pence per share.
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London Stock Exchange Group reported higher operating profit for 2014, as strong growth in revenue was partially offset by a rise in costs, and it said it has also received a number of expressions of interest in the Russell Investment Management business it is trying to sell in the US. LSE reported an operating profit of GBP346.0 million for 2014, up from GBP329.4 million in 2013, as revenue jumped by nearly a third to GBP1.28 billion, from GBP974.0 million, as growth in its capital markets division, majority-owned clearing house LCH.Clearnet, and its information services division, more than offset falls in its CC&G and Monte Titoli post trade services businesses and in technology services. Pretax profit excluding non-recurring items, amortisation and impairment of purchased intangibles and good will and any unrealised net investment gains or losses at LCH.Clearnet, rose to GBP491.7 million, from GBP4512.7 million.
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EasyJet and Aer Lingus both reported improvements in key traffic metrics in February, with low-cost airline easyJet reporting increases in both passenger numbers and the measure of how full its planes are. Easyjet said it flew nearly 4.5 million passengers in February, up 6.1% from 4.2 million in February 2013, while its load factor, a measure of how full its planes are, rose to 90.9%, from 90.7%. That means it has flown 65.6 million passengers in the 12 months to the end of February, up 6.5% from 61.6 million in the previous 12 months and its load factor is up to 90.8%, from 89.4%. Traffic at Aer Lingus, measured in revenue passenger kilometres, rose 6.9% in February, while load factor rose 1.9 percentage points to 69.2% as a 0.9% drop in passenger numbers was more than offset by a 3.9% fall in capacity measured in available seat kilometres.
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Aggreko reported a fall in profit in 2014, mainly due to large hit from the strength of sterling on its translated overseas earnings, while revenue was broadly flat as challenging trading in Asia Pacific offset strong growth in the Americas and a good performance in Europe, Middle East and Africa. The temporary power company also said 2015 had got off to an encouraging start, although it warned it may face a hit from the recent sharp fall in oil price later in the year and it's currently expecting its key profit measure to be flat compared with 2014. Aggreko reported a pretax profit of GBP289 million for 2014, down from GBP333 million in 2013. Aggreko said it will pay a final dividend of 17.74 pence, bringing the total for the year to 27.12p, up from 26.30p in 2013. It had already paid a 75 pence special dividend in 2014.
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Rolls-Royce Holdings said its Industria de Turbo Propulsores SA joint venture will supply the British engine maker with turbines for future civil large engines in addition to its existing range of products, under a revised shareholder agreement with joint venture partner Sener Grupo de Ingenieria SA. Rolls-Royce has a 46.9% stake in the joint venture that was created in 1989 and a subsidiary of Sener holds a 53.1% stake. Under the revised shareholder agreement, the stakes will remain the same, but Rolls-Royce said the deal ensures security of supply of turbines and the continued access by Rolls-Royce to relevant Industria de Turbo Propulsores engineering and research and development capabilities.
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The Bank of England’s chief banking supervisor has told British lawmakers that he is holding HSBC Holdings’ top executives’ “feet to the fire” to ensure they simplify the group and improve its risk controls after a tax evasion scandal at its Swiss private bank, the Financial Times reports. The comment from Andrew Bailey, head of the Prudential Regulation Authority, increases the pressure on the biggest British bank to accelerate plans for shedding businesses it judges too risky to manage in an increasingly strict regulatory climate, the paper says.
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Betfair Group revised up its full-year earnings expectations following a strong third quarter, its fourth consecutive quarter of double-digit growth as it continues to attract new customers, and said it expects a strong finish to the year with record levels of political betting in the run up to the UK general election in May. Betfair shares shot straight to the top of the FTSE-250, after it said it is now expecting full-year earnings before interest, taxes, amortisation and depreciation of between GBP113 million and GBP118 million for its financial year to end-April, having said at its half-year results that it was expecting a figure between GBP97 million and GBP103 million.
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Hunting said it has increased its final dividend by 5% despite its pretax profit falling in 2014 due to higher impairment charges, as the company braces itself for a hit from the recent fall in oil prices. It reported a pretax profit of USD108.5 million in 2014, down from USD136.4 million a year earlier, as it recorded a USD103.9 million impairment charge attributable to the Hunting Electronics and Drilling Tools business units alongside a further USD11.3 million charge against its exploration and production assets. This is compared with a total of USD61.1 million in impairment charges in 2013.
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Spirax-Sarco Engineering added its name to the list of UK engineering companies which saw results held back by the strength of sterling in 2014, with the company reporting a small fall in pretax profit, though the company sweetened the pill with a GBP91 million return of capital. Spirax-Sarco said its pretax profit for 2014 edged down to GBP144.8 million from GBP145.7 million last year, as revenue fell to GBP678.3 million from GBP689.4 million. At constant exchange rates, revenue rose by 5%, the company said. Despite the fall in pretax profit, the company said it will increase its final dividend payment to 45 pence per share, from 41 pence last year. In addition to the dividend hike, the company said it would return GBP91 million to shareholders via a special dividend, translating to 120 pence per share.
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Satellite communications company Inmarsat reported stronger profit and revenue in 2014 on the back of growth in its maritime, aviation and LightSquared business, which offset weakness in its government and enterprise divisions. The company said pretax profit for the year was USD342.8 million, up from USD189.1 million last year, boosted in part by higher revenue and also by the non-recurrence of a USD185.2 million impairment charge it booked in 2013. The company said it intends to pay a final dividend of 30.26 cents per share, up from 28.82 cents a year earlier, pushing its total dividend to 48.94 cents, up 5% year-on-year.
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Aerospace and defence manufacturer Cobham reported a big fall in pretax profit for 2014 despite higher revenue, as the company's results were held back by restructuring and acquisition costs. Cobham said its pretax profit for the year was GBP24 million, sharply down from the GBP127 million it posted a year earlier due to costs related to the acquisition of US communications equipment maker Aeroflex and restructuring measures. Despite the fall in profit, the company is recommending a 10% hike to its total dividend for the year to 10.65 pence, up from 9.68 pence a year earlier. That includes a 7.746 pence final dividend, up from 7.04 pence in 2013.
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AIM Movers
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CAP-XX shares are up by nearly a quarter after it reported a narrowed loss for the first half of its financial year, and said it has raised an estimated GBP1.1 million in a share placing and subscription, money it will use to reduce production costs and invest in product development. Aurasian Minerals is also doing well after Chairman Tony Shearer stepped down and was replaced by Bruce Kay. Northern Petroleum is up after it sold an 80% stake in the company's Cascina Alberto permit in Italy to a subsidiary of Royal Dutch Shell. Shell will become the operator of the permit and pay Northern Petroleum a total of USD850,000 for the stake. Botswana Diamonds is up after it said it has recommenced exploration work in Orapa, Botswana with its joint venture partner Alrosa. William Sinclair Holdings shares are down more than 20% after it said its Chief Executive was leaving and it was set to report annual results that will be materially worse than the previous year. The company has appointed a new CEO who is a turnaround specialist and has launched a transformation plan that it will continue to develop over coming weeks.
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Top Economics And General
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UK house prices declined more than expected in February, survey data from Lloyds Banking Group's Halifax division showed. House prices fell 0.3% month-on-month in February after the 1.9% rise in January. Economists had expected house prices to fall 0.2%. This marked the first decline in prices after three successive months of increase.
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China's Premier Li Keqiang lowered the economic growth target for China this year to "approximately 7%". The sobering projection was in his report presented at the opening of the 11-day annual session of its nominal state parliament, the National People's Congress. Li's speech outlined a government work report on the country's key economic policies for this year. He said China faces challenges including sluggish investment growth, falling prices on manufactured products and an "inefficient" growth model, coupled with problems of overcapacity and lack of innovation. The country's economy grew last year by 7.4% - the weakest growth in 24 years - missing the 7.5% target announced at last year's congress.
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The European Central Bank is expected to set the stage for the formal launch this month of its new EUR1.1 trillion asset-buying programme, while leaving interest rates on hold at historic lows. The ECB's 25 head-governing council meeting in the Cypriot capital of Nicosia - one of the Frankfurt-based bank's regular out-of-town meetings - comes six weeks after chief Mario Draghi unveiled bank plans to spend EUR60 billion a day on buying public and private assets as part of a broad-based quantitative easing programme. After so far providing relatively few details about the programme, Draghi is expected to use his press conference to set out technical details of the scheme, which have been eagerly awaited by markets. This includes announcing the date when it will start.
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Brazil's central bank raised its key interest rate to a six-year high in its latest attempt to lower the above target inflation and support weak currency. Policymakers unanimously voted to raise the Selic rate by 50 basis points to 12.75%, the highest since 2009. It lifted the rate after evaluating the marcoeconomic scenario and the outlook for inflation, the bank said in a statement. The bank raised its rate by 25 basis points in October 2014 and by 50 basis point each in December and January.
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The US Senate failed to override President Barack Obama's veto of legislation calling for the construction of the Keystone XL oil pipeline. Sixty-two senators voted to override, five votes short of the two-thirds supermajority needed to block a presidential veto. Obama vetoed the measure last week, following through on a long-standing promise to do so.
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The US ambassador to South Korea was knifed by an activist shouting pro-unification slogans, officials and news reports said. Mark Lippert was hospitalized with injuries to his right cheek and left wrist, as well as cuts to his arm and fingers, Yonhap News Report said, citing unnamed officials. His injuries were not life-threatening, the US State Department said.
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Afternoon Watchlist (all times in GMT)
12:00 UK BoE Interest Rate Decision
12:30 US Challenger Job Cuts
12:45 EU ECB Interest Rate Decision
13:30 EU ECB Monetary policy statement and press conference
13:30 US Jobless Claims
15:00 US Factory Orders
15:00 US FOMC Member Williams speech
15:30 US EIA Natural Gas Storage change
23:50 Japan JP Foreign Reserves
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Friday's Key UK Corporate Events
AGA Rangemaster Group - Full Year Results
Industrial Multi Property Trust - Full Year Results
Marshalls - Full Year Results
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Friday's Key Economic Events (all times in GMT)
07:00 Germany Industrial Production
07:45 France Budget
07:45 France Trade Balance
08:00 UK Halifax House Prices
09:00 Italy Producer Price Index
09:30 UK Consumer Inflation Expectations
10:00 EU Gross Domestic Product
13:30 US Nonfarm Payrolls
13:30 US Unemployment Rate
13:30 US Trade Balance
20:00 US Consumer Credit Change
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18 Jul 2016 15:07
