(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Antivirus software firm Avast posted positive results, as it nears a takeover by larger US peer NortonLifeLock. For the six months that ended June 30, revenue was up 8.8% at USD471.3 million from USD433.1 million the year before, and pretax profit was USD269.3 million, more than double from USD115.3 million. In addition, billings were USD482.7 million, up 2.9% from USD469.1 million the year prior. Avast declared an interim dividend of 4.8 cents per share. Late Tuesday, US cybersecurity firm NortonLifeLock, formerly known as Symantec, said it agreed with Avast on the terms of a merger. The deal is in the form of a cash and share takeover offer by Norton for Avast. Based on Norton's closing share price of USD27.20 on July 13, being the last trading day for NortonLifeLock shares before combination talks were revealed on July 14, the merger values Avast between USD8.1 billion and USD8.6 billion, depending on Avast shareholders' elections. For each Avast share, the offer is USD2.37 in cash, plus 0.1937 of a NortonLifeLock share, making the offer value 31% in cash and 69% in shares and worth 608.40p in total. Avast shares were quoted at 581.00p in London on Wednesday, up 2.2%.
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Insurance company Phoenix Group Holdings said it is on track to deliver at the top end of its full year cash generation target, despite booking a loss in the first half. Phoenix reported a pretax loss of GBP454.0 million in the six months ended June 30, swung from a profit of GBP611.0 million for the same period last year. Interim revenue net of reinsurance dropped by 15% to GBP2.10 billion from GBP2.48 billion last year. As at June 30, Phoenix had GBP304.40 billion assets under administration, a 9.9% drop from GBP337.7 billion at December 31. The life insurer pointed to a negative investment return on hedging positions, as well as increased amortisation charges on intangible assets and higher financing costs.
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Fellow insurer Prudential reported half-year pretax profit of USD1.50 billion, up from USD932 million a year before, despite total revenue net of reinsurance falling to USD11.69 billion from USD15.50 billion. The revenue decline was due to a drop in investment return to USD738 million from USD4.20 billion. Prudential held its interim dividend at 5.37 US cents. It said it continues to consider raising around USD2.5 billion to USD3.0 billion in equity from institutions and retail investors in Hong Kong, as the company shifts its attention to Asia following the demerger of its Jackson business in the US.
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Spirax-Sarco Engineering raised its annual profit outlook and lifted its interim dividend, following a positive performance in the first half. For the six months to June 30, revenue rose 13% to GBP643.7 million from GBP569.7 million last year, and pretax profit increased to GBP150.0 million, up 41% from GBP106.3 million. Growth was attributed to a strong recovery of global industrial production in the period and sales growth from its Watson-Marlow business, with sales up 29% due to "exceptional Covid-19 vaccine related demand". Spirax-Sarco declared an interim dividend of 38.5 pence, up 15% from 33.5p paid last year.
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National Grid and SSE were only partially successful in their appeals against the latest round of energy transmission network price controls, after a provisional ruling from the UK Competition & Markets Authority released. The two power utilities, along with a group of smaller companies, had appealed against aspects of the RIIO-2 price controls created by energy regulator Ofgem. Contentious issues included the so-called 'outperformance wedge', in which Ofgem adjusted pricing because it expects the companies to outperform in the RIIO-2 period, which runs until 2026. The companies also appealed Ofgem's cost of equity calculations, which cut potential returns on investment to the companies. The CMA ruled that the outperformance wedge was wrong, but upheld Ofgem's decision on cost of equity. The energy companies can now respond before the CMA makes its final decision by October 30.
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Asthma treatment firm Vectura noted the decision by Carlyle, which it announced late Tuesday, to not increase its cash offer of 155p per Vectura share. This means the auction against Philip Morris International has been cancelled. PMI has until Thursday afternoon to revise its own takeover offer of 165p, which values Vectura at GBP1.02 billion. At that point, Vectura said it will make a further announcement. The Vectura board hasn't yet accepted PMI's offer, having withdrawn its support for Carlyle's lower offer.
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Deliveroo hailed a strong first half in the wake of its disappointing stock market debut earlier this year. For the six months to June 30, revenue rose 82% to GBP922.5 million from GBP507.4 million in the prior year, and its pretax loss narrowed to GBP104.8 million from GBP128.4 million. During the period, Deliveroo said gross transaction value was up 99% at GBP3.39 billion from GBP1.70 billion, and orders jumped to 148.8 million from 74.5 million. GTV is defined by the company as the total value paid by consumers, excluding any discretionary tips. Looking ahead, Deliveroo raised its annual GTV growth guidance in a range of 50% to 60%, up from 30% to 40%. Deliveroo declared no interim dividend, in line with year before. "As reflected in our guidance, whilst we expect that consumer behaviour may moderate later in the year, we remain excited about the opportunity ahead and our ability to capitalise on it," said CEO & founder Will Shu.
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Commonwealth Bank of Australia unveiled a AUD6 billion share buyback as it reported a jump in full-year profit. Cash net profit after tax was AUD8.65 billion - equivalent to around USD6.35 billion - for the financial year that ended June 30, up 20% on the year before due to improving economic conditions and outlook, which resulted in a lower loan impairment expense and a "strong" operational performance. The Sydney-based bank took a loan impairment expense of AUD554 million for the year, down 78% on AUD2.52 billion the year before. Total operating income rose 2% to AUD24.16 billion, with net interest income edging up 1% to AUD18.84 billion. CBA declared a final dividend of AUD2.00, bringing the year's total to AUD3.50, up 17% on last year, alongside the share buyback plan.
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Struggling Hong Kong carrier Cathay Pacific reported a USD972 million net loss in the first six months of 2021 as the pandemic continues to hammer demand for travel. And while the figure is an improvement on the USD1.3 billion loss suffered in the same period last year, the airline said the outlook remained uncertain owing to ongoing struggles to battle the disease. Chairman Patrick Healy said 2021 continues to be the "toughest period" in the airline's 70-year history, but the progress of global vaccination drives provided some encouragement for the industry. "Covid-19 will continue to have a severe impact on our business until borders progressively open and travel constraints are lifted," he warned. With no domestic market to fall back on, Cathay Pacific has been among the worst hit of the major global airlines.
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MARKETS
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Equities were flat to firm, amid a rising dollar ahead of a reading on US consumer price inflation at 0830 in Washington. Marshall Gittler, head of Investment Research at BDSwiss, said the passage of the US infrastructure spending bill through the Senate has created a risk-on day for equities, while expectations of rising US inflation and the likely eventual tightening by the US Federal Reserve in response was supporting the dollar.
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CAC 40: up 0.3% at 6,837.50
DAX 30: up 0.1% at 15,781.41
FTSE 100: up 0.4% at 7,192.72
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Hang Seng: closed up 0.2% at 26,660.16
Nikkei 225: closed up 0.7% at 28,070.51
S&P/ASX 200: closed up 0.3% at 7,584.30
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DJIA: called flat, up 7.00 points
S&P 500: called down 0.1%
Nasdaq Composite: called down 0.3%
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EUR: down at USD1.1714 (USD1.1724)
GBP: down at USD1.3811 (USD1.3847)
USD: up at JPY110.75 (JPY110.52)
Gold: up at USD1,733.06 per ounce (USD1,726.99)
Oil (Brent): down at USD70.66 a barrel (USD70.92)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The US Senate approved Joe Biden's USD1.2 trillion infrastructure plan on Tuesday, paving the way for a major victory to the president if it wins final passage in the lower chamber of Congress. Some seven weeks after the Democratic leader stood with senators from both parties hailing a preliminary agreement to fix the nation's roads, bridges, ports and internet connections, the deal arrived on the Senate floor needing just a simple majority to pass. In the event, the package received rare bipartisan support among Washington's highly-polarized political elite, passing by 69 votes to 30 after winning the backing of a third of Republicans. The measure now faces a make-or-break vote in the House of Representatives in the coming weeks, where its future is less certain as divisions have sprung up in the Democratic majority.
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The US infrastructure bill counts on getting some of its funding from cracking down on tax evasion by people profiting off cryptocurrency. A hotly-contested provision of the enormous text of the legislation clarifies the US Treasury's authority to tax profits from digital assets just as it does sales of traditional stocks. The crypto industry pushed back strongly, trying to derail or at least modify the clause, claiming it violated the privacy of software and hardware engineers involved in the creation of the digital assets.
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German inflation was confirmed as accelerating to its highest rate in nearly 20 years, data from Destatis showed. The consumer price index for July jumped 3.8% on a year-on-year basis, rocketing from price growth of 2.3% in June and confirming preliminary figures. German inflation was last this strong in December 1993, when the annual rate hit 4.3%. Energy product prices jumped 12% annually in July. Month-on-month, German consumer prices rose 0.9% in July. This was more than double the 0.4% rate of growth posted for June and in line with preliminary forecasts.
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Italy's final reading of consumer price inflation showed prices rose 1.9% on an annual basis in July, accelerating from 1.3% in June and slightly up from the flash estimate of 1.8%. On monthly basis the Italian consumer price index rose 0.5% in July, picking up from 0.1% in June.
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Germany is expected to step up the pressure on those who have not yet been vaccinated against Covid-19 on Tuesday, to help head off the threat of a fourth wave of infections and another lockdown that could overshadow next month's national election. A meeting of Chancellor Angela Merkel and Germany's 16 state premiers is also expected to reward the about 55% of the population who are fully vaccinated, and the 3.7 million who have recovered from the virus, by easing some of the health restrictions they face. The government is expected to lift a large number of restrictions, such as testing requirements, in the coming months.
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Five million people in Australia's second-largest city will remain under stay-at-home orders for at least another week after authorities extended a lockdown Wednesday after failing to curb Melbourne's latest Covid outbreak. The city entered its sixth pandemic lockdown last Thursday after a fresh Delta variant cluster emerged at a Melbourne school and quickly spread. Daniel Andrews, the premier of the state of Victoria, said lockdown rules will be extended until at least August 19, after 20 new cases were detected overnight including several "mystery" cases. "There are too many cases, the origins of which are not clear to us... for us to safely come out of lockdown now," he said. In Sydney, more than five million people are enduring their seventh week under stay-at-home orders, currently scheduled to remain until the end of August.
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Canadians wanting to eat at a restaurant, go to a bar or gym, or attend a festival in Quebec will have to present a vaccine passport starting September 1, officials announced Tuesday. The province will be the first in Canada to require such passes, which are increasingly being used across the world to limit entry to public places to those who have been vaccinated, recovered from Covid-19 or tested negative. They are also hugely controversial in some jurisdictions, leading to mass protests against mandatory inoculations.
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By Tom Waite; thomaslwaite@alliancenews.com
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