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(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Credit Suisse Group said it has made progress on the wind-down of four supply chain finance funds that were suspended at the start of March following the collapse of Greensill Capital. The bank said it has collected USD2.0 billion from receivables redeemed since March 1. This results in cash and cash equivalent levels currently in the supply chain finance funds amounting to USD2.3 billion. The total cash position, including the USD3.1 billion that already has been distributed to investors, therefore amounts to USD5.4 billion, or more than half of the total assets under management of the four funds at the time of their suspension. As a result, Credit Suisse announced a second cash distribution to investors, amounting to USD1.7 billion, commencing Tuesday. This takes the total distribution so far to USD4.8 billion.
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Defence contractor Babcock International said it will not pay a dividend for financial 2021 or 2022 - but nor will it come to the market for more money - as it embarks on a thorough restructuring of the business. Babcock said its financial 2021 results will include GBP1.7 billion in impairments and charges following a contract profitability and balance sheet review. Babcock expects financial 2021 underlying revenue of GBP4.69 billion, down from GBP4.87 billion in financial 2020 and underlying operating profit of GBP307 million, down from GBP524 million. Babcock said that, as part of its focus on building a strong balance sheet, the board will not be recommending a dividend for financial 2021 or 2022. The company added that the aims to "return Babcock to strength without the need for an equity issue". Among actions it intends to take instead, Babcock said it expects to raise GBP400 million from disposals over the next 12 months. Additionally, its restructuring plan is expected to save GBP40 million per year from a one-off expense of GBP40 million.
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JD Sports Fashion said it delivered a resilient performance despite its high-street stores being closed for a majority of the year under lockdown restrictions. For the financial year ended January 30, revenue was GBP6.17 billion, up 0.9% from GBP6.11 billion in financial 2020. JD posted pretax profit of GBP324.0 million, down 7.0% from GBP348.5 million. On a headline basis, meaning before exceptional items, pretax profit was GBP421.3 million, down 4.0% from GBP438.8 million the year before. In January, JD Sports had said it expected to report headline pretax profit of at least GBP400 million. It declared a final and full-year dividend of 1.44 pence, up from 0.28p. Looking ahead, JD said it expects headline pretax profit for financial 2022 to be in the range of GBP475 million to GBP500 million.
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Just Eat Takeaway.com said an improved performance in the first quarter of its current financial year was driven by strong growth in the UK and by its investment programme. The food delivery services provider said total orders in the first quarter grew by 79% year-on-year to 200.0 million, while delivery orders surged to 69.4 million from 23.3 million. Delivery orders mean Just Eat Takeaway delivers food to customers on behalf of restaurants, putting it in direct competition with recent London listing Deliveroo. Operations in the UK and Canada boosted growth, Just Eat Takeaway explained, with total orders up 96% on the prior year in both regions. In Canada, delivery orders were up 88% to 26.5 million year-on-year. Delivery orders in the UK multiplied to 22.9 million in the first quarter of 2021 from 2.9 million a year earlier.
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Woodside Petroleum said Chief Executive Peter Coleman will retire on June 3. Coleman will step down from the board on Monday next week and will continue to work with Woodside until his retirement. Meg O'Neill, executive vice president of Development & Marketing, will be appointed acting CEO. O'Neill joined Woodside as chief operations officer in May 2018, from Exxon Mobil where she held a variety of senior leadership roles in operations and developments, and country leadership in Norway and Canada. The Perth, Australia-based exploration & production company said internal and external search for its next CEO is progressing.
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The Canadian government and Air Canada announced they have agreed a financial aid plan in the form of loans to help the country's largest airline recover from the coronavirus pandemic. The agreement calls for Air Canada to have access to about CAD5.9 billion, about USD4.7 billion. "We have reached a significant and historic agreement with Air Canada," Canadian transport minister Omar Alghabra told a press conference. In order to benefit from the financial aid, Air Canada has agreed to abide by several conditions, particularly reimbursing customers whose tickets were cancelled by the carrier due to the pandemic.
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US President Joe Biden met virtually Monday with leading chief executives for a summit on the semiconductor shortage as he works to build support for his infrastructure bill. Biden, in brief remarks to a group that included the leaders of General Motors, Alphabet, and US semiconductor powerhouse Intel, said the US must build up its own infrastructure to prevent future supply crises. "We led the world in the middle of the 20th century," Biden said. "We led the world toward the end of the century, we're going to lead the world again." "I've been saying for some time now, China and the rest of the world is not waiting. And there's no reason why Americans should wait," the president said. "We're investing aggressively in areas like semiconductors and batteries, that's what they're doing and others, so must we."
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MARKETS
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London large-cap stocks were underperforming similar listings in Paris and Frankfurt amid a firm pound, with Wall Street called for a narrowly mixed open on Tuesday. Credit Suisse shares were up 0.4% in Zurich, while Babcock shares jumped 33% in London.
"After Monday's indecision, indices are in better form, although the FTSE 100 is still struggling to break higher," commented Chris Beauchamp, chief market analyst at IG. "A slightly weaker UK GDP reading this morning has not stopped sterling from making some headway against the US dollar, but with US CPI on the calendar for the afternoon these gains might be fleeting."
The US consumer price index reading for March is due at 1230 GMT.
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CAC 40: up 0.3% at 6,178.29
DAX 30: up 0.3% at 15,254.74
FTSE 100: down 0.1% at 6,884.68
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Hang Seng: closed up 0.2% at 28,497.25
Nikkei 225: closed up 0.7% at 29,751.61
S&P/ASX 200: closed up 2.90 points at 6,976.90
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DJIA: called up 0.1%
S&P 500: called flat
Nasdaq Composite: called down 0.1%
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EUR: down at USD1.1895 (USD1.1911)
GBP: firm at USD1.3755 (USD1.3746)
USD: soft at JPY109.33 (JPY109.40)
Gold: down at USD1,728.10 per ounce (USD1,734.45)
Oil (Brent): soft at USD63.48 a barrel (USD63.58)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK economy registered growth in February as the country adapted to life in lockdown conditions, according to the latest figures from the Office for National Statistics. The UK economy grew 0.4% month-on-month in February, rebounding from 2.2% contraction in January, as UK government restrictions affecting economic activity remained broadly unchanged. The latest reading missed the the market forecast, cited by FXStreet, for 0.6% growth. UK gross domestic product shrank 1.6% sequentially in the three months to February, following 1.4% contraction in the three months to January. Separately, the ONS said UK industrial production fell 3.5% year-on-year in February, slowing from a decline of 4.3% in in January.
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UK retail sales grew in March prior to large swathes of high street businesses reopening in England, though the British Retail Consortium said fashion and beauty remains in the doldrums. Total UK retail sales rose 8.3% in March, compared to the same month in 2019, the BRC-KPMG monitor showed. The BRC noted its figures are now compared to 2019, given how fraught 2020 was for the retail sector.
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Eurozone retail sales demonstrated a recovery in February on a monthly basis, beating market estimates, the latest figures from Eurostat showed. On an annual basis, retail sales in the eurozone shrank 2.9% in February, easing from a 5.2% decline in January. The latest print beat the market forecast, cited by FXStreet, for a 5.4% fall. Retail sales grew 3.0% month-on-month in February, rebounding from a 5.2% slump in January. The reading beat market expectations for 1.5% growth.
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China's imports and exports boomed again in March, reaffirming the recovery in the world's number-two economy continues apace and demand picks up in key overseas markets as they emerge from last year's health crisis. Imports soared a forecast-busting 38% on-year as the country's army of consumers increasingly return to some form of normality. The figure was a huge increase from the 22% rise seen in January and February and is the biggest hike since February 2017. Exports rose 31%, well off the 38% increase tipped in a Bloomberg forecast but still among the highest readings since early 2018. Overseas shipments jumped more than 60% in January-February.
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The US government posted a record deficit in the six months ended in March, a surge over 100% reflecting the impact of pandemic stimulus spending, the Treasury Department said Monday. Spending spiked by just over USD1 billion from October 2020 to March 2021 compared to the comparable period of the prior fiscal year, which concluded before the Covid-19 shutdowns took hold and before any major rescue packages were implemented. The fiscal year-to-date deficit at the end of March totalled USD1.7 trillion, compared to USD743 billion at the end of March 2020, according to the monthly Treasury report.
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By Tom Waite; thomaslwaite@alliancenews.com
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