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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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BP said it continued to "perform while transforming" as second quarter profit jumped on stronger refining margins, though a hit from exiting Russia ensured a weaker first-half bottom line. Alongside the results, the energy major declared a USD3.5 billion share buyback and 10% dividend hike, as net debt dropped to USD22.82 billion at the end of June from USD32.71 billion a year before. By its preferred metric, BP's replacement cost more than trebled to USD7.65 billion in the second quarter of 2022, from USD2.38 billion a year earlier. On an underlying basis, RC profit was USD8.45 billion, up from USD2.80 billion. Pretax profit surged to USD14.06 billion from USD5.14 billion. Total second-quarter revenue improved 85% to USD69.51 billion from USD37.60 billion. BP swung to a first half loss, however. It posted a replacement cost loss of USD15.40 billion, swinging from a profit of USD5.71 billion a year earlier. Profit was wiped out by a first quarter USD24.4 billion post-tax charge related to BP's exit from its near 20% stake in Russian business Rosneft, following the invasion of Ukraine. BP lifted its quarterly dividend by 10% to 6.006 cents per share from 5.460 cents a year prior. The first-half payout is up 7.1% to 11.466 cents. It said it expects to be able to increase the dividend by 4% annually through 2025.
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Fresnillo scaled back its own dividend for the recent half-year, as profit more than halved during the period and gold production fell by nearly 30%. In the first half of 2022, the Mexico City-based silver and gold miner said pretax profit from continuing operations plummeted by 65% year-on-year to USD155.2 million from USD445.4 million. Exploration expenses jumped 28% to USD77.7 million, as expected. The firm recorded a net Silverstream effect loss of USD36.3 million, widened from USD4.0 million the year before. Total revenue fell 14% to USD1.26 billion from USD1.47 billion a year prior. The firm declared an interim dividend of 3.40 cents, sharply down from 9.90 cents a year before.
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Activision Blizzard reported a sharp drop in second-quarter earnings amid a slowdown in sales across the industry, as the video game publisher readies for a strong slate heading into the second half. For the three months to June 30, net revenue was down to USD1.64 billion from USD2.30 billion in the second quarter last year. Second quarter net income sank to USD280 million, or USD0.36 per diluted share, from USD876 million, or USD1.12 diluted EPS, last year. The Santa Monica, California-based company said releases planned for the second half of the year include: 'Call of Duty: Modern Warfare II', 'World of Warcraft: Wrath of the Lich King Classic', 'World of Warcraft: Dragonflight', and 'Overwatch 2', with 'Diablo IV' planned for release in 2023.
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Carmaker Fiat Chrysler will pay around USD300 million over manipulated emissions data, according to a sentencing by a federal US court in Detroit, in the US state of Michigan, on Monday. The manufacturer, which is now part of the Stellantis international car company, pleaded guilty in June and agreed to a settlement with the US Department of Justice. The settlement included a fine of USD96.1 million and the forfeiture of USD203.6 million in gains. Stellantis said the amount could be covered with previous accruals. Monday's sentencing marked the court's approval of that agreement. US authorities had accused the car manufacturer of making false statements about the exhaust emissions of more than 100,000 vehicles. The DoJ brought charges in 2017.
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Shares of Boeing jumped 6.1% in New York on Monday as the plane maker moved closer to final regulatory approval to resume deliveries of the 787 jet. The US Federal Aviation Administration signed off on Boeing's certification plan for the top-selling widebody plane, a person familiar with the situation told AFP. "Deliveries aren't imminent and there are additional steps in the process that we will follow," this person said. Deliveries have been halted since spring 2021 while officials from the company and FAA have worked to hash out an inspection and repair system following manufacturing defects uncovered on the plane. The FAA referred questions to Boeing, saying "we don't comment on ongoing certifications." A Boeing spokesman said, "we will continue to work transparently with the FAA and our customers towards resuming 787 deliveries."
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International Consolidated Airline Group's British Airways has reportedly suspended selling short-haul flights from Heathrow for at least a week. Tens of thousands of flights have already been cancelled this summer as the industry struggles to cope with the demand for air travel amid staffing shortages. The Times reported BA suspended ticket sales for domestic and European services until and including Monday to comply with Heathrow's cap on passenger numbers, with the airport announcing last month no more than 100,000 daily departing passengers are permitted until September 11. The company earlier responded to Heathrow's cap on passenger numbers by announcing it would cancel 10,300 flights until October, with one million passengers affected. Many passengers flying to and from the UK's busiest airport have suffered severe disruption in recent months, with long security queues and baggage system breakdowns.
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Mitsui & Co's first quarter profit improved, but it expects annual profit to fall. In the three months to June 30, the Tokyo-based conglomerate recorded pretax profit of JPY347.96 billion, about USD2.66 billion, rising from JPY256.19 billion a year prior. Attributable profit surged to JPY275.00 billion from JPY191.26 billion. Diluted earnings per share improved to JPY172.37 from JPY115.68. Revenue was up to JPY3.721 trillion from JPY2.658 trillion. Looking ahead, Mitsui guides for annual attributable profit, for the year ending March 31, 2023, at JPY800.00 billion, with diluted EPS at JPY503.79. In financial 2022, it recorded attributable profit of JPY914.72 billion.
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Mitsubishi UFJ Financial Group reported a jump in first-quarter net interest income in the wake of interest rate hikes in the US. Net interest income rose to JPY986.8 billion - around USD7.54 billion - in the quarter ended June 30 from JPY596.9 billion. "Net interest income increased due to improvement of lending spread as well as an increase of overseas interest income of lending and deposit during the period when interest rates in US rose," it explained. However, profit attributable to owners of parent fell to JPY113.6 billion from JPY383.0 billion. This was due to non-recurring losses of JPY230.3 billion, widened from JPY3.5 billion a year before, associated with its accounting treatment of the decision to sell MUFG Union Bank. Tokyo-headquartered financial services firm Mitsubishi UFJ in September unveiled an agreement to sell MUFG Union Bank to US Bancorp in a deal worth USD8 billion.
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The Swiss Re Institute said it estimates global natural catastrophe losses have topped USD70 billion in the first half of 2022, amid floods in South Africa and Australia, heavy rain in France and forest fires across Europe. The Swiss Re Institute said it estimates economic losses of USD75 billion in the first half of 2022 globally due to natural and man-made catastrophes, with natural disasters making up the vast majority at USD72 billion. It did note, however, that this USD75 billion is below the average of the past ten years, of USD80 billion. But natural catastrophe insured losses are estimated at USD35 billion, 22% above the 10-year average, with USD3 billion for man-made catastrophes. "The effects of climate change are evident in increasingly extreme weather events, such as the unprecedented floods in Australia and South Africa. This confirms the trend we have observed over the last five years, that secondary perils are driving insured losses in every corner of the world," said Martin Bertogg, head of Catastrophe Perils at Swiss Re.
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JD Sports named Regis Schultz as its new CEO, after an "extensive executive global search process". Schultz will join JD in September. There will be a brief handover process alongside interim CEO Kath Smith. Smith will then resume her former role of senior independent director. Schultz joins from Dubai-based Al-Futtaim Group, which partners with blue-chips in the fields of retail, financial services, real estate and health. Schultz has been Al-Futtaim's president of retail since 2019. In May, former JD executive chair Peter Cowgill left the role with immediate effect. Back in July of last year, the company bowed to shareholder pressure over its corporate governance, agreeing to eventually split its chair and CEO roles. Last month, it named Andy Higginson as its new chair.
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Accounting software firm Sage said it expects organic recurring revenue growth to be toward the top end of its guidance range of 8% to 9% in the financial year that ended September 30. In first nine months of the year, revenue by this measure was GBP1.33 billion, up 9% from GBP1.22 billion a year before. Sage cited sales of its Business Cloud solutions.
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MARKETS
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Stock prices declined in Asia and Europe on Tuesday and the US equity market was called to open lower, amid investor risk aversion. An expected visit to Taiwan by a senior US politician is raising tensions between the US and China. The risk-off mood also was reflected in gains for the dollar and yen. Meanwhile, Brent oil slipped below USD100 a barrel, after data on Monday confirmed widespread economic weakness last month. Despite the lower oil price, BP shares were up 3.2% in London, after it unveiled a 10% dividend hike and a new share buyback.
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CAC 40: down 0.5% at 6,401.90
DAX 40: down 0.7% at 13,383.67
FTSE 100: down 0.1% at 7,408.61
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Hang Seng: closed down 2.4% at 19,689.21
Nikkei 225: closed down 1.4% at 27,594.73
S&P/ASX 200: closed up 0.1% at 6,998.10
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DJIA: called down 0.5%
S&P 500: called down 0.6%
Nasdaq Composite: called down 0.8%
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EUR: down at USD1.0237 (USD1.0270)
GBP: down at USD1.2209 (USD1.2270)
USD: down at JPY130.95 (JPY131.85)
GOLD: up at USD1,773.26 per ounce (USD1,766.01)
OIL (Brent): down at USD99.64 a barrel (USD100.70)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The Reserve Bank of Australia lifted interest rates by another 50 basis points as it tackles high inflation, and said further tightening is likely. The RBA raised the cash rate by half a percentage point to 1.85%, as expected by markets, and also increased the interest rate on exchange settlement balances by 50 basis points to 1.75%. August's move followed similar 50 basis point hikes in both July and June. "The board places a high priority on the return of inflation to the 2% to 3% range over time, while keeping the economy on an even keel," the central bank said, flagging that domestic inflation is running at its highest levels since the early 1960s.
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The White House warned China against overreacting to a trip by US House Speaker Nancy Pelosi to Taiwan, saying she would have every right to visit the self-ruled island despite Beijing viewing it as a highly provocative challenge. China need not turn any visit by Pelosi into a "crisis," White House National Security Council spokesman John Kirby told reporters, even as he warned that Beijing may be "positioning" itself for a show of military strength around the island. Media reports have said that Pelosi, currently on an official Asia tour, will stop off in Taiwan and meet President Tsai Ing-wen on Wednesday – if so, the highest-level US visit to Taipei in decades. Beijing, which views Taiwan as its territory, has reacted furiously to the idea, warning President Joe Biden that his administration was playing "with fire" and announcing a series of live-fire military drills in the Taiwan Straits. While the White House and State Department are both understood to be opposed to Pelosi's trip, Kirby made it clear that the speaker – who is second in line to the US presidency – was entitled to go where she pleased.
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Biden announced the US has killed Al-Qaeda chief Ayman al-Zawahiri, one of the world's most wanted terrorists and a mastermind of the September 11, 2001 attacks, in a drone strike in Kabul. In a somber televised address, Biden said he gave the final go-ahead for the high-precision strike that successfully targeted Zawahiri in the Afghan capital over the weekend. "Justice has been delivered and this terrorist leader is no more," Biden said, adding that he hoped Zawahiri's death would bring "closure" to families of the 3,000 people killed in the US on 9/11. A senior administration official said Zawahiri was on the balcony of a house in Kabul when he was targeted with two Hellfire missiles, an hour after sunrise on July 31, and that there had been no US boots on the ground in Afghanistan.
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California's governor has declared a state of emergency to speed efforts to combat the monkeypox outbreak, becoming the second US state in three days to take the step. Governor Gavin Newsom said the declaration will help the state coordinate a government-wide response, seek more vaccines and lead outreach and education efforts on where people can get treatment and vaccines. "We'll continue to work with the federal government to secure more vaccines, raise awareness about reducing risk, and stand with the LGBTQ community fighting stigmatisation," Mr Newsom said in a statement announcing his declaration. The declaration in California came after a similar one in New York state on Saturday, and in San Francisco on Thursday.
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The Swiss manufacturing sector suffered a "further slowdown in momentum" in July, the latest procure.ch-Credit Suisse survey showed. The Swiss manufacturing purchasing managers' index weakened to 58.0 points in July, from 59.1 in June. The index remains above the neutral 50.0-point mark, but the PMI has now fallen for the fourth month in-a-row. "Inventories are continuing to pile up and businesses' purchase volumes are falling, which suggests that output is set to decline over the coming months," procure.ch said.
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Separately, figures from the State Secretariat for Economic Affairs, or SECO, showed consumer confidence in Switzerland declined again. Consumer sentiment dropped to minus 41.7 points in July, from minus 27.4 points in the last survey in April. The tracker now sits below the minus 39 points mark it sunk to in April 2020, following the onset of Covid-19.
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Annual house price growth in the UK accelerated slightly in July on an annual basis, while on a monthly basis, the measure rose by the 12th month in succession, though at a slower pace than in June. Mortgage lender Nationwide's latest tracker showed house prices surged 11% year-on-year in July, quickening slightly from a 10.7% hike in June. The monthly rise came in at a more modest 0.1% in July. House prices had risen 0.2% in June from May. Growth fell short of FXStreet cited consensus, however. Annual growth had been forecast to quicken to 11.5% and monthly growth of 0.3% was expected.
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Ireland's manufacturers saw a "challenging" month in July, survey results from S&P Global and AIB showed, with output struggling to keep up as new orders slump. The headline AIB Ireland manufacturing PMI slid to 51.8 in July versus 53.1 in June. "Although still above the neutral level of 50.0, the latest figure was indicative of the slowest improvement in the health of the sector since January 2021," AIB explained.
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By Tom Waite; thomaslwaite@alliancenews.com
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