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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 became the latest oil major to slash its payout, following in the footsteps of Royal Dutch Shell. It was the first time BP cut its dividend since the Deepwater Horizon disaster in 2010. For the half-year ended June 30, BP swung to a replacement cost loss of USD18.29 billion from a profit of USD3.78 billion a year before. First-half pretax loss amounted to USD26.13 billion versus USD7.93 billion profit. Revenue declined 36% to USD90.73 billion from USD141.15 billion. BP declared a quarterly dividend of 5.25 US cents per share, down 50% from 10.50 cents per share for the previous quarter. Looking to the third quarter of 2020, BP expects higher product demand, but still significantly below last year's levels. The company also expects significant continued pressure on industry refining margins into the third quarter.
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Tanqueray gin distiller and Guinness beer brewer Diageo said it put in a consistent first-half performance but its business was significantly hurt by Covid-19 in the second half of financial 2020. Despite the reversal in fortunes it raised its annual dividend slightly. Pretax profit fell 52% to GBP2.04 billion from GBP4.24 billion in the financial year that ended June 30, as sales slipped 8.3% to GBP17.70 billion from GBP19.29 billion. Net sales were GBP11.75 billion, down 8.7% from GBP12.87 billion the year prior. Organic net sales were down 8.4%. A final dividend of 42.47p was declared, unchanged from a year prior, taking the full year payout to 69.9p, up 1.9%. Looking ahead, Diageo said that due to the continued uncertainty caused by the Covid-19 pandemic, it is unable to provide specific financial guidance.
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AstraZeneca said it priced a three-tranche global bond offering totalling USD3.00 billion, expected to close on Thursday. The proceeds of the bond issue will be used for general corporate purposes which may include the refinancing of existing debts, the pharmaceutical company said. AstraZeneca had net debt of GBP13.7 million at June 30, only slightly up from last year's GBP13.1 million. The bond comes after AstraZeneca last week posted positive revenue growth in the six months ended June 30. The Cambridge-based company saw a 14% revenue increase in the half to USD12.63 billion from USD11.31 billion a year prior. Pretax profit was USD1.89 billion, doubled from USD899 million the year prior. The bond offer is a global one registered with the US Securities Exchange Commission.
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easyJet said that it will expand its flying schedule following improved customer demand and that third-quarter performance was in line with expectations, with a restart to flying during the period following the lifting of Covid-19 related travel restrictions. Total group revenue for the third quarter ended June 30 was GBP7 million, a small fraction of the GBP1.59 billion in the third quarter last year. easyJet swung to a quarterly headline pretax loss of GBP324.5 million from a GBP174.2 million profit recorded a year ago. Total cash burn for the quarter was GBP774 million compared to previous guidance of GBP1 billion. The company's aircraft fleet was fully grounded on March 30 due to the Covid-19 pandemic. Having re-started flying on 15 June, easyJet carried 117,000 passengers with a total capacity of 132,000 seats in the remaining two weeks of the third quarter. Looking ahead, easyJet expects to fly 40% of planned capacity for the fourth quarter ending September 30. The company previously expected to fly 30% of capacity.
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Babcock International Group gave no guidance for its current financial year and skipped its final dividend for the past year, following a weak first-quarter performance as Covid-19 had a "significant impact". For the three months to the end of June, Babcock's underlying operating profit was 40% lower year-on-year, as a result of lower levels of productivity in its core business. This was on underlying revenue that declined by 11%. Although core business revenue increased slightly, Babcock said, there was the absence of revenue from the ended Magnox contract with the UK Nuclear Decommissioning Authority. Also hurting revenue was weakness in Babcock's Land sector, particularly in South Africa. Looking ahead, Babcock said it is unable to give financial guidance due to uncertainty around the duration and extent of the impact of Covid-19 on productivity and pipeline development. In addition, Babcock said has decided to not pay a financial dividend for the year that ended March 31, due to the continued uncertainty.
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US President Donald Trump says he would approve of Microsoft or another major US company buying the social media app TikTok, while continuing to threaten a ban if an acquisition deal is not reached by September 15. Trump told reporters in the White House that, without a sale to a "secure" US company, TikTok "will be out of business in the United States". The president also indicated he wants the deal to lead to a financial windfall for the US Treasury. Commenting Monday on TikTok, which is owned by Beijing-based ByteDance, Trump conceded the "brand is hot" and that it was a "great asset". TikTok allows users to create short videos - often with some basic effects and music - and has become increasingly popular, particularly among a younger demographic. Microsoft confirmed on Sunday it was in talks for TikTok and would aim to conclude them by the middle of next month, following a conversation between its chief executive, Satya Nadella, and Trump.
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MARKETS
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London shares were mixed on a busy day for corporate results dominated by BP and Diageo, which bookended the FTSE 100. easyJet was the best performer in the FTSE 250, up 12%. US stock market futures were pointed to a lower open after a strong close on Monday. Microsoft shares will once again be in focus. They were down 0.7% in pre-market activity in New York on Tuesday, having closed up 5.6% on Monday.
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FTSE 100: flat at 6,032.54
FTSE 250: up 0.2% at 17,210.81
AIM ALL-SHARE: down 0.2% at 890.87
GBP: firm at USD1.3070 (USD1.3041)
EUR: up at USD1.1785 (USD1.1737)
GOLD: upat USD1,976.12 per ounce (USD1,971.10)
OIL (Brent): down at USD43.50 a barrel (USD44.11)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK government has announced more than 300 projects which will share a GBP900 million investment to build homes, infrastructure and create jobs as part of the country's economic recovery from coronavirus, PA reports. The successful projects in England will receive a portion of the GBP900 million Getting Building Fund, announced by the prime minister in June, with the investment expected to deliver up to 45,000 homes, create up to 85,000 jobs and reduce around 65 million kilogrammes of CO2 emissions across the country. Housing Secretary Robert Jenrick said the funding will not only "give a much-needed boost" to the country's economic recovery after the pandemic, but will also "help build the good quality, affordable homes the country needs". Recipients of the funding include GBP23 million for the first phase of the development of a commercial space at Mayfield Park in Greater Manchester, which is expected to create 3,200 jobs.
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The US added 46,321 new coronavirus cases in 24 hours Monday, according to a tally by Johns Hopkins University. The world's largest economy also added 532 deaths, the Baltimore-based institution's tracker showed at 8:30 pm (0030 GMT Tuesday). The US has now recorded 4,711,323 total cases, with 155,366 deaths, making it by far the worst-hit country in the world. Monday was the second day to notch a slightly lower caseload, after a string of five days last week had all recorded more than 60,000 new daily infections. President Donald Trump said during a coronavirus press briefing Monday that the virus was "receding" in parts of the southern and western US, deeming the situation "very encouraging".
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Hurricane Isaias has made landfall hitting the North Carolina coast with sustained winds of 85 miles per hour. The US National Hurricane Centre warned people living on the coast to brace for a storm surge up to 1.5 metres and up to 20 centimetres of rain as the newly strengthened Isaias moved up the coast. Isaias killed two people in the Caribbean and struck the Bahamas but remained at sea as it brushed past Florida over the weekend, providing some welcome relief to emergency managers who had to accommodate mask-wearing evacuees in storm shelters. But the Hurricane Centre has warned the danger has not passed. Daniel Brown, senior hurricane specialist, said: "All those rains could produce flash flooding across portions of the eastern Carolinas and mid-Atlantic, and even in the northeast US."
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Producer prices in the eurozone edged higher in June, helped by an increase in the energy sector. Industrial producer prices rose 0.7% on a month before in both the single currency area and the whole of the European Union. This follows a monthly of 0.6% in May registered in the eurozone and a 0.5% hike in the whole of EU. Annually, industrial producer prices fell 3.7% in the eurozone and by 3.4% in the EU as a whole.
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