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(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Barclays reported a drop in first-quarter profit as the bank started to rebuild credit impairments and felt the hit from over-selling certain securities to US investors. Income was on the rise, however, as the company's investment bank continues to offer the lender a reprieve. Chief Executive CS Venkatakrishnan said Barclays put forward a "strong" performance in the first quarter. In the three months to March 31, Barclays recorded pretax profit of GBP2.23 billion, slipping from GBP2.40 billion in the same period the year prior. The bank set aside GBP141 million in credit impairment charges, up sharply from GBP55 million the year before. Total group operating costs increased to GBP3.59 billion from GBP3.55 billion, with the bank including about GBP540 million of conduct charges following the over-issuance of securities by Barclays Bank PLC in the US. "Barclays has commissioned a review by external counsel of the facts and circumstances relating to the matter and is assisting regulators with their inquiries and requests for information," Barclays explained.
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Standard Chartered upped its annual income growth outlook, as the bank enjoyed a stellar first quarter from its Financial Markets business and improving margins. In the three months to March 31, Asia-focused StanChart recorded pretax profit of USD1.49 billion, up 6% from USD1.41 billion reported in the same period the year prior. The bank started to build credit reserves once again, booking USD197 million in credit impairments in the first quarter, sharply higher from USD17 million the year before. Operating income rose 9% to USD4.29 billion from USD3.94 billion. Net interest income rose 8% to USD1.79 billion from USD1.66 billion, while 'other' income was 10% higher at USD2.50 billion from USD2.28 billion. "A record Financial Markets performance and an expansion in the net interest margin was partly offset by lower Wealth Management income," StanChart explained.
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Mitsubishi Electric reported strong growth in financial 2022, backed up by its Industrial Automation Systems, Home Appliances and Electronic Device units, and has guided for further growth next year. In the year ended March 31, the Tokyo-based electronics and electrical equipment maker recorded pretax profit of JPY279.6 billion, about USD2.15 billion, rising 7.7% from JPY259.7 billion the year before. Net attributable profit rose 5.3% to JPY203.4 billion from JPY193.1 billion. Earnings per share increased to JPY95.41 from JPY90.03. Revenue advanced 6.8% to JPY4.477 trillion from JPY4.191 trillion.
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Glencore said its first-quarter production was in line with its expectations, but noted that this performance mirrored a number of "temporary impacts", including geotechnical challenges and Covid-19 absenteeism. The Baar, Switzerland-based commodity trader and miner reported that copper production dropped by 14% to 257,800 tonnes in the first quarter, from 301,200 tonnes in the same quarter last year, weighed by temporary geotechnical constraints at Katanga, the sale of Ernest Henry Mining in January and lower copper units produced within Glencore's zinc business. Glencore made some changes to its full-year guidance, reducing its forecast for copper to 1.11 million tonnes from 1.15 million tonnes in the previous guidance, compared to 1.19 million tonnes in 2021.
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Unilever warned on annual margins, as it predicts costs will be chunkier than expected in the second half of 2022, with the consumer goods firm facing inflationary pressure. For the first-quarter of 2022, Unilever's revenue increased 12% year-on-year to EUR13.78 billion from EUR12.33 billion. Underlying sales growth was 7.3%, with prices rising 8.3% but volumes falling 1.0%. "We are executing well in a very challenging input cost environment," Chief Executive Alan Jope commented. Unilever on Thursday said second-half costs will be higher than initially expected, at around EUR2.7 billion. "We now expect underlying sales growth in 2022 to be towards the top end of the previously guided range of 4.5% to 6.5%," Unilever predicted. It is less bullish on margins, however. It expects full year underlying operating margin to be at the bottom end of a 16% to 17% range.
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J Sainsbury said it swung to profit, but the grocer warned of a weaker bottom line going forward due to accelerating inflation and costing of living pressures impacting disposable income. The London-based supermarket chain swung to a pretax profit of GBP854 million in the year ended March 5. The previous year, Sainsbury's posted a pretax loss of GBP164 million. The grocer reported underlying pretax profit of GBP730 million, more than doubled from GBP357 million in financial 2021 and up 25% from GBP586 million in financial 2020. The underlying profit figure topped company-compiled consensus of GBP727 million, as well as the company's own guidance of GBP720 million. This was driven by continued elevated sales, lower Covid-19 costs and falling finance costs, it explained. Sainsbury's expects underlying pretax profit to fall as much as 14% in the new financial year. It forecasts underlying pretax profit between GBP630 million and GBP690 million.
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TotalEnergies said it has taken a USD4.1 billion impairment charge on its Arctic LNG 2 gas project under construction in northern Russia. On the eve of reporting its first-quarter results, the firm said additional sanctions adopted by European authorities, "notably prohibiting export from EU countries of goods and technology for use in the liquefaction of natural gas benefitting a Russian company... constitute additional risks" on the project's execution. Therefore, it said it had decided to record the USD4.1 billion impairment charge as of March 31 in its first-quarter results. A spokesman said this signalled the "beginning of a retreat" from the project. On Thursday, TotalEnergies reported consolidated net income of USD5.05 billion, up from USD3.41 billion year-on-year.
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Meta Platforms reported a fall in first-quarter earnings as the social media company faces increasing competition from rivals. For the three months to March 31, revenue was up 7% at USD27.91 billion from USD26.17 billion in the same period a year prior. Meta posted first-quarter net income of USD7.47 billion, or USD2.72 per diluted share, down from USD9.50 billion, or USD3.30 diluted EPS, the year before. For its Facebook platform, daily active users were 1.96 billion on average for March, an increase of 4% year-on-year and also up slightly from the prior quarter's 1.93 billion. Looking ahead, the Menlo Park, California-based firm expects second quarter 2022 total revenue to be in the range of USD28 billion to USD30 billion. Meta posted revenue of USD28.5 billion in the second quarter last year.
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Amgen posted a drop in profit for the first quarter of 2022, with the pharmaceutical giant attributing the profit drop to net losses recognised on strategic equity investments. For the three months ended March 31, net income dropped 10% to USD1.48 billion from USD1.65 billion the same period a year before, driven mainly by a USD530 million charge on other expenses, compared to a USD13 million gain a year prior. Diluted earnings per share decreased 5% to USD2.68 from USD2.83, on revenue which grew 6% to USD6.24 billion from USD5.90 billion, due to 2% growth in global product sales, mainly Prolia, Evenity and Amgevita. The Thousand Oaks, California-based firm also took revenue from its Covid-19 manufacturing collaboration.
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PayPal posted a more than halved profit for the first quarter of 2022, driven mainly by higher costs across the board in spite of revenue growth. For the three months ended March 31, the San Jose, California-based payments processor reported net income at USD509 million, down 54% from USD1.10 billion the same period a year prior, driven mainly by operating expenses rising to USD5.77 billion from USD5.00 billion, with rising transaction, administrative and technology costs. Diluted earnings per share fell 53% to USD0.43 from USD0.92, in spite of net revenue growing 7% at USD6.48 billion from USD6.03 billion, as total payment volumes increase 13% year-on-year to USD322.98 billion.
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MARKETS
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Stock market investors were in a buoyant mood on Thursday, as they responded to a bonanza of earnings and business updates from global blue-chip companies, led by the owner of Facebook. Meta Platforms was up a whopping 17% in the New York pre-market. Meanwhile, in London, Barclays was up 2.9%, but J Sainsbury was down 3.0%. Unilever was marginally higher.
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CAC 40: up 1.7% at 6,553.06
DAX 40: up 1.8% at 14,042.33
FTSE 100: up 0.9% at 7,494.98
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Hang Seng: closed up 1.7% at 20,276.17
Nikkei 225: closed up 1.8% at 26,847.90
S&P/ASX 200: closed up 1.3% at 7,356.90
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DJIA: called up 0.9%
S&P 500: called up 1.5%
Nasdaq Composite: called up 2.1%
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EUR: flat at USD1.0521 (USD1.0525)
GBP: flat at USD1.2512 (USD1.2509)
USD: up at JPY130.47 (JPY128.45)
Gold: up at USD1,888.17 per ounce (USD1,885.50)
Oil (Brent): firm at USD105.65 a barrel (USD105.34)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The Bank of Japan kept interest rates unchanged and believes the Japanese economy is on the mend, but warned of "downward pressure" stemming from Russia's invasion of Ukraine. At the April meeting, the BoJ decided by an 8-1 majority vote to keep a negative interest rate of 0.1% - recording the same result from its March meeting - with the lone dissenter being Kataoka Goushi. "Japan's economy is likely to recover, with the impact of the novel coronavirus and supply-side constraints waning and with support from an increase in external demand, accommodative financial conditions, and the government's economic measures, although it is expected to be under downward pressure stemming from a rise in commodity prices due to factors such as the situation surrounding Ukraine," the central bank said.
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European leaders reacted to the suspension of Russian gas supplies to Poland and Bulgaria with a mixture of defiance and concern on Wednesday, as the Kremlin threatened to turn off flows to more countries. EU Commission President Ursula von der Leyen called the cuts "unjustified and unacceptable" and said it was "yet another attempt by Russia to use gas as an instrument of blackmail" over the conflict in Ukraine. "We are prepared for this scenario," she said, adding that contingency plans have been put in place and that the EU response would be "immediate, united and coordinated." The EU was now working to protect European consumers from the consequences of Russia's gas supply freeze, which is Moscow's toughest response yet to the Western sanctions inflicting pain on the Russian economy. "Poland and Bulgaria are now receiving gas from their EU neighbours," she added.
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The European Commission has proposed suspending import duties on all Ukrainian exports to the EU for one year. The proposal, which the commission termed "an unprecedented gesture of support for a country at war," would also see the suspension for one year of all EU anti-dumping and safeguard measures in place on Ukrainian steel exports. It is designed to help boost Ukraine's exports to the EU and help alleviate the difficult situation of Ukrainian producers and exporters in the face of Russia's military invasion. "The EU has never before delivered such trade liberalisation measures, which are unprecedented in their scale: granting Ukraine zero tariff, zero quota access to the EU market," EU Trade Commissioner Valdis Dombrovskis said on Wednesday.
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Germany slashed its economic growth forecast for 2022, weighed down by Russia's invasion of Ukraine, which has sparked leaps in consumer prices not seen in decades. The gross domestic product of Europe's biggest economy is now expected to expand by 2.2% rather than 3.6% projected in January, the economy ministry said. Inflation was meanwhile expected to jump to 6.1% for the year, "a rate seen only at times of the oil crisis or shortly after German reunification" in 1990. Germany is "paying a price" for its backing of Ukraine against Russia's unprovoked aggression, said Economy Minister Robert Habeck. "We must also be ready to pay this price," said the minister, noting that Germany was "paying through higher energy prices, through higher inflation and slower growth".
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UK Chancellor of the Exchequer Rishi Sunak has hinted there could be further help for families struggling with soaring energy bills in the autumn. In a wide-ranging interview with Mumsnet founder Justine Roberts, in which she put questions from the site's users, Sunak acknowledged people's concerns over the expected energy price cap rise in October. "We'll see what happens with the price cap in the autumn, I know people are anxious about this and wondering if they're going to go up even more," he said. "Depending on what happens to bills then, of course, if we need to act and provide support for people we will, I've always said that. But it would be silly to do that now." The latest hike – which saw the cap on energy bills rise to GBP1,971 at the beginning of April – is just starting to take effect and is expected to push millions of households into fuel poverty.
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Spain's unemployment rate ticked up in the first quarter of 2022, figures on Thursday showed, while separate numbers suggested inflationary pressures have ebbed slightly. According to INE, Spain's annual inflation rate eased to 8.4% in April, from 9.8% in March. The figure was below FXStreet-cited forecasts of 9%. On a monthly basis, consumer prices declined 0.1% in April, following a 3% rise in March. April's monthly figure fell well short of FXStreet-cited forecasts, which predicted 3.3% monthly growth. NE also released unemployment figures. The unemployment rate ticked up to just under 14% in the first quarter of 2022, from just over 13% in the final quarter of 2021. Employment numbers fell by 100,200, or 0.5%.
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By Lucy Heming; lucyheming@alliancenews.com; and Tom Waite; thomaslwaite@alliancenews.com
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