Barclays Share News (BARC)

LONDON (Alliance News) - British gas parent Centrica has issued a profit warning Thursday, blaming the extreme winter weather in the US but mild conditions in the UK, as well as the intense pressure that's been put on energy providers in the UK in recent months by politicians and consumer groups.

The company said the harsh winter weather in the US had resulted in additional costs for its business there, while mild weather had reduced demand in the UK. It also said the "unprecedented focus" on energy companies in the UK had resulted in intense competition between suppliers, weighing on its results.

The company said it is now expecting adjusted earnings per share to be between 22 pence and 23 pence a share in 2014, down from 26.6 pence in 2013. It had previously just said it expected the figure to be lower, without giving a range.

It again warned that the pressure on the UK energy suppliers would affect investment in the industry.

It is predicting that the pressure in the UK will cut its residential energy supply revenue by about 10% this year, and to cut its post-tax margin to about 4%, below the 4.5% to 5% it believes is necessary to underpin investment in the business.

Still, the company predicted it would return to earnings growth in 2015.

Barclays has put out its highly-anticipated strategy update, saying it plans to shrink its investment bank with a new round of job cuts, while shifting billions of pounds' worth of risk-weighted assets into a "non-core unit" or so-called bad bank.

Barclays will address the plunging profitability of its investment bank by putting about GBP115 billion of risk-weighted non-core assets, about 26% of the group's total assets, in an internal unit, in a very similar move to that made by Royal Bank of Scotland Group. Barclays management expects to run them down to about GBP50 billion by the end of 2016.

Barclays also announced that its investment banking shake-up will result in about 7,000 extra job losses within the unit by 2016, 2,000 of which will come this year.

Standard Chartered said its first-quarter operating profit fell by a high single-digit percentage due to difficult market conditions, a weak performance in Korea as the business there is scaled down, and the weakness of emerging market currencies including the Indian rupee and the Indonesian rupiah.

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FTSE 100: up 0.3% at 6,819.22
FTSE 250: up 0.2% at 15,920.38
AIM ALL-SHARE: down 0.2% at 809.23
GBP-USD: down at 1.6948
EUR-USD: down at 1.3884
GOLD: down at USD1,288.50 an ounce
OIL (Brent): down at USD107.43 a barrel
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Key UK Corporate News

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FTSE 100: Prudential has reported a 29% increase in first-quarter new business profit, with the highest growth coming from the US and UK. The group's fund management arm, M&G Investments, benefited from more than GBP1.4 billion in net inflows over the quarter, while the institutional business saw GBP100.0 million in net inflows. Barratt Developments said net private reservations and sales are higher so far in 2014, signalling a further recovery in the UK housing market. Glencore Xstrata has appointed former BP Chief Executive Tony Hayward as permanent chairman with immediate effect. Sage Group has raised its interim dividend after it swung back to a pretax profit in its first half, but its shares are down after it said 63 year old Chief Executive Guy Berruyer will retire after 17 years with the company including four years as CEO. Randgold Resources said pretax profit rose on the year in the first quarter, as production increased at its Kibali mine, but fell compared with the previous quarter due to higher costs. RSA Insurance Group has reported a decrease in first-quarter net written premiums on both an underlying and headline level, as the insurer undertook a more disciplined underwriting approach across its regions and continued to work on turning around its fortunes. Wm Morrison Supermarkets has warned that declining sales and market share will continue for some time, as it continues to pump money into its new online business and convenience stores. AstraZeneca has initiated a Phase III immunotherapy study for the compound MEDI4736 for the treatment of non-small cell lung cancer. BT Group raised its total dividend for the year to end-March, after it beat expectations for pretax profit and revenue, and promised further dividend growth over the next two years. IMI said it is on track to deliver "modest" organic revenue growth in the first half, although margins will be slightly down. However, it expects an improved overall performance in the full year as its severe service unit picks up.

FTSE 250: Perform Group's revenue rose 32% on the year in the first quarter to end-March, driven by new contract wins in content distribution unit Watch & Bet and the addition of Opta Sports Data, which it bought last year. It also snagged WPP's Ashley Milton as its new chief financial officer. SuperGroup missed sales targets in the last quarter, and said it now expects its pretax profit for the full year to be at the lower end of expectations, hit by heavy promotions in the UK retailer sector. Unite Group is down after Schroder Real Estate Investment Trust said it has moved a step closer to selling its development scheme in Wembley to Unite, after the latter was granted planning consent for a 699-room student hall of residence at the site. Beazley said first-quarter gross written premiums decreased by USD2.0 million to USD516.0 million, while overall premium rates on renewal business were unchanged. Provident Financial says it has made a "very good" start to 2014, with customer numbers and margins up at credit card business Vanquis Bank and restructuring progressing at its home credit business. Derwent London is continuing to see "deep demand" for its properties, with lettings signed above estimated rental values and low occupancy rates across the portfolio. Intu Properties also says 2014 has started well with high occupancy, two new acquisitions, and a number of long-term leases signed.

AIM All-Share: New World Oil And Gas is a big gainer after it moved a step closer to completing its deal with Niel Petroleum SA under which Niel Petroleum plans to invest USD25 million in New World for a 75% stake. SerVision is up after it signed a new distribution agreement with Live Video USA Inc for the distribution of SerVision's video gateway products in the US and Canada. Nature Group is doing well after it said full-year revenue rose 52% and underlying pretax profit more than doubled, despite facing changes in legislation and delays in bringing its Gibraltar operations back online. Max Petroleum is another gainer after it announced further successful drilling results from its East Kyzylzhar I Field, finding two high quality reservoirs in its KZIE-4 appraisal well. Conroy Gold & Natural Resources is up after it said a follow up trenching programme showed wide mineralised zones at its Clay Lake gold project in County Armagh, Northern Ireland. E-Therapeutics is up after it said it has been cleared by the US Food and Drug administration to resume recruiting patients for its Phase Ia study of compound ETS2101, a potential treatment for brain cancer. The company had previously paused recruitment for the trial due to a drug storage issue, which it has since resolved.
Idox is doing well after it re-iterated its confidence in meeting market expectations for its full-year results, as revenue rose in the first half to end-April. Hume Capital Securities is a big faller after it announced the resignation of Chief Executive Nitin Parekh amid a board review of its financial resources. Ferrum Crescent is down after it said it hasn't received a second payment from Anvwar Asian Investment as part of a deal to sell a 35% interest in its subsidiary that holds its Moonlight iron ore assets in South Africa for USD10 million. Anvwar has requested a delay in making the USD500,000 payment until May 26, and Ferrum is taking advice on how to move forward. Stellar Diamonds is down after placed 148.2 million new shares at 1.25 pence per share, raising about GBP1.85 million before expenses that it will use to accelerate its plans to advance its Baoulé kimberlite project in Guinea towards trial mining and for continuing bulk sampling at Tongo Dyke-1 in Sierra Leone.
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Top Economics And General
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The Bank of England maintained its loose monetary policy yet again, as the UK economy enjoys bright growth prospects amid low inflation. The nine-member Monetary Policy Committee led by Mark Carney voted to keep the key bank rate unchanged at 0.50%. The rate has been at the record low level since March 2009. The panel also decided to maintain the asset purchase programme at GBP 375 billion. The previous change in asset purchases was in July 2012, when it was raised by GBP 50 billion.
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The European Central Bank will "act swiftly" to head off the threat posed by low inflation, its chief, Mario Draghi, says. Consumer prices in the 18-member eurozone will remain low for a protracted period and will pick up only gradually amid "broad-based weakness" in the region's economy, he predicts. The bank's governing council was unanimous in backing "unconventional measures," such as a quantitive easing programme, to pump money into the eurozone financial system by buying bonds, Draghi says. The European Central Bank kept its key interest rates unchanged for the sixth consecutive month on Thursday, despite immense pressure on to act amid deflation risks.
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The average asking price for a house in the UK was down in April, the latest survey from the Royal Institution of Chartered Surveyors revealed. The RICS house price balance came in with a score of 54 in April - missing forecasts for 56 and down from 57 in March. By region, house prices moved higher in the South East and in East Anglia, while they were down in the London area.
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Defying expectations for a decline, China's exports as well as imports increased in April, vindicating the government's resistance to introduce more stimulus to cushion the recovery. Exports gained 0.9% in April from last year, data published by the General Administration of Customs showed. Shipments were forecast to fall 2% after declining 6.6% in March. Likewise, imports rose 0.8%, confounding expectations for a 2.1% drop. The increase reversed some of the 11.3% fall in March.
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Russia is prepared to accept the outcome of Ukraine's presidential election if Kiev ends military operations against separatist groups in the country's east beforehand, a Kremlin spokesman says. Dmitry Peskov, spokesman for President Vladimir Putin, tells the Interfax news agency that the May 25 election is a "move in the right direction." Another condition for Russian recognition is for the pro-Western government in Kiev to engage in a dialogue with the separatists, he says.
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Pro-Russian separatists in Ukraine are to decide if they want to hold off on a secession referendum planned for the weekend after Russian President Vladimir Putin called for it to be delayed. The considerations come as the separatists and the Ukrainian government seemed to be inching towards possible talks to end fighting in the east, a possibility that had been ruled out by both sides as recently as Wednesday. The secession referendum, set for Sunday, would let residents in the provinces of Luhansk and Donetsk vote on whether they want to stay part of Ukraine. Ukrainians opposed to a split see it as a precursor to an eventual merger with Russia as happened with Crimea in March.
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EU ministers were set to assess Japan's progress in opening up its markets to European products, amid hopes that the two sides can move forward on a free trade deal. An ambitious agreement could boost both sides' economy and exports. Growth and job creation are key priorities in the EU, which is emerging from a deep economic crisis. "Continued trade liberalization is crucial for keeping our economic recovery on track," EU President Herman Van Rompuy said Wednesday, during a visit to Brussels by Japanese Prime Minister Shinzo Abe. The two sides agreed to accelerate negotiations on the free trade agreement, with the aim of reaching a basic deal in 2015.
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Afternoon Watchlist (all times British Summer Time)

14:30 US Fed's Yellen Speech
15:30 US EIA Natural Gas Storage change
19:00 US Fed's Bullard speech

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Friday's Key UK Corporate Events

Drax Group Interim Management Statement
Man Group Interim Management Statement
Tullett Prebon Interim Management Statement

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Friday's Key Economic Events (all times British Summer Time)

02:30 China Consumer Price Index
02:30 China Producer Price Index
07:00 Germany Trade Balance
07:45 France Budget
09:00 Italy Industrial Output
09:30 UK Industrial Production
09:30 UK Manufacturing Production
09:30 UK Total Trade Balance
15:00 UK NIESR GDP Estimate
15:00 US Wholesale Inventories
23:00 US Fed Minneapolis's Narayana Kocherlakota speech

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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

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