BT Share News (BT.A)

LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Dutch Shell reported a USD1.7 billion drop in earnings in the second quarter of 2015, as its upstream division continued to be hampered by lower oil prices, compounded by a fall in production. The oil and gas company also reaffirmed its commitment to its dividend alongside a share buyback as its merger with BG Group continues as planned. Shell has also sold a significant stake in an downstream business in Japan. Shell reported current cost of supply earnings of USD3.4 billion in the second quarter of 2015, down from USD5.1 billion a year before, as revenue fell to USD73.95 billion from USD115.27 billion after being hit by lower oil prices. Shell said it is planning for a "prolonged downturn" in the market caused by lower oil prices and said its operating costs will fall by around USD4.0 billion in 2015, which will be a reduction of about 10%, which includes 6,500 job cuts.
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Shell also said it has sold a 33.24% stake in Showa Shell Sekiyu KK for around USD1.40 billion to Idemitsu. Shell said the sale is consistent with its strategy to concentrate its downstream footprint and to reduce the number of assets it holds. Shell will retain a 1.8% stake in the company and the deal is the latest divestment in the downstream sector following the sale of downstream businesses in Italy, Australia, the UK, Denmark, Norway and France. The deal is expected to be completed in 2016.
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Centrica said it has completed its strategic review of the business which will see a shift in investment away from its upstream segment and toward its British Gas business as it reported a rise in pretax profit but a slight fall in earnings in the first half of 2015. The electricity and gas provider reported a GBP1.20 billion pretax profit in the first half of 2015, up from a GBP890 million profit a year earlier despite revenue experiencing a slight 2% drop to GBP15.45 billion from GBP15.74 billion. Centrica slashed its interim dividend by 30% to 3.57 pence from 5.10 pence following the decision earlier in the year to rebase the dividend.
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Diageo reported a rise in profit in its recently-ended financial year as sales grew and it increased its dividend for the year saying it believes it will continue to deliver a strong and sustained performance. The drinks giant reported a pretax profit in the year ended June 30 of GBP2.93 billion, up from the GBP2.71 billion it reported the year before, as revenue grew to GBP16 billion from GBP14 billion. Diageo will pay a total dividend of 56.4 pence for the year, an increase of 9% on the 51.7p it paid the year before.
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BT Group said it is on track to achieve its outlook for the full year, as it posted a rise in pretax profit for its first quarter. For the quarter to end-June, BT posted a pretax profit of GBP632 million, up from GBP546 million, as revenue was flat at GBP4.36 billion, compared to GBP4.35 billion.
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Royal Bank of Scotland Group said it doesn't expect to be able to return capital to shareholders until at least the opening quarter of 2017, as the bank reported an improvement in its capital position and 27% increase in second-quarter net profit. RBS said it wants to make progress in a number of areas before returning capital. "This is dependent on the achievement of certain strategic objectives, including sustained profitability, improved stress test results and resolving our major conduct and litigation issues," the bank said in a statement. RBS said it made a GBP293 million net profit in the three months to the end of June, compared with GBP230 million in the corresponding quarter the prior year. Its common equity tier one ratio, a key measure of financial strength, increased to 12.3% from 11.5% during the quarter.
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Lloyds Banking Group said it has agreed to sell a portfolio of Irish commercial loans to a trio of investors for about GBP827 million, with the group's remaining exposure to commercial assets in Ireland to be minimal following the deal. The consortium of investors buying the loans consists of US-based alternative investment manager CarVal Investors, Wall Street giant Goldman Sachs, and Bank of Ireland. "The sale is in line with the group's strategy of deleveraging its balance sheet by reducing run off assets and creating a low-risk, UK-focused bank," Lloyds said in a statement.
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Schroders said it is preparing for high levels of volatility in the financial markets in the near term, as the asset manager reported increases in pretax profit and funds under management in the first half. The company said it made a GBP290.3 million pretax profit in the six months to the end of June, compared with GBP233.9 million in the corresponding period the prior year. It increased its interim dividend by 21% to 29.0 pence per share. Schroders generated GBP8.8 billion in net inflows, taking assets under management up by 14% to GBP309.9 billion in the six months.
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InterContinental Hotels Group reported growth in profit in the first half of 2015 as it achieved growth in revenue per available room in all of the regions in which it operates and said it remains confident in the outlook for the rest of the year. The hotel operator reported a 21.5% rise in pretax profit in the six months ended June 30 to USD458 million from USD377 million, as total revenue grew 0.8% to USD915 million from USD908 million. IHG will pay an interim dividend of 27.5 cents, a 10% increase on the 25.0 cents it paid in the first half of 2014.
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Support services company Babcock International Group said it is trading in line with its first-half and full-year expectations so far in its 2015 financial year. Babcock said it has seen strong demand for its services in the first half, both in its existing contract book and in new business wins. Since its full-year results were published in May, Babcock's order book has remained stable at GBP20 billion and continues to provide strong visibility, with 84% of its revenue for the 2016 financial year secured and 60% of its 2017 revenue in place.
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Aerospace and engineering group Rolls-Royce Holdings posted a sharp fall in first half profit on Thursday, hit by weakness in its offshore marine markets due to the slowdown in the oil and gas industry. Rolls-Royce said its pretax profit in the six months to the end of June fell to GBP310 million, down 57% from the GBP713 million it posted a year earlier. Revenue rose to GBP6.37 billion from GBP6.25 billion, but profitability is taking a heavy hit from the slowdown in the oil and gas industry, which has hit revenue in Rolls-Royce's offshore marine business, and by a margin squeeze related to the transition to new jet engine programmes. The company said it will pay a 9.27 pence interim dividend, up 3% from a year earlier.
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Defence contractor BAE Systems said its pretax profit fell in the first half of 2015 despite revenue increasing and said its order backlog has weakened since the end of 2014. FTSE 100-listed BAE said its pretax profit fell to GBP508 million from GBP541 million in the half to the end of June, thanks primarily to higher financing costs. Revenue increased to GBP8.47 billion from GBP7.61 billion. But BAE said its order backlog has weakened since the start of the year, falling to GBP37.3 billion at the end of June, from GBP39.7 billion at the end of December 2014. BAE said it will pay an interim dividend of 8.4 pence per share, up 2% from the 8.2 pence per share it paid a year earlier.
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Smith & Nephew reiterated its expectations for its full year and lifted its interim dividend, as it posted a rise in pretax profit for its first half. The medical devices maker posted a pretax profit of USD411 million for the half year to June 27, up from USD349 million a year before, on revenue of US2.27 billion, up from USD2.22 billion. In its second quarter, revenue rose 2%, hit by around 9% from the strength of sterling, which was offset by a 6% boost from acquisitions. Smith & Nephew proposed a dividend of 11.8 cents per share, up from 11.0 cents a year before.
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Merlin Entertainments said the first half of 2015 was over-shadowed by the serious accident at Alton Towers as the company reported a small fall in profit despite revenue experiencing a small rise. The theme park operator reported a pretax profit of GBP36 million in the first half of 2015, down from GBP40 million a year earlier despite revenue rising to GBP544 million from GBP513 million as visitors rose to 27.7 million from 27.5 million. Earnings before finance income and costs, taxation, depreciation and amortisation came in at GBP123 million, which was up from GBP120 million.
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Inchcape said its pretax profit fell in the first half of 2015, thanks to adverse currency movements and higher costs, but shares in the group were trading higher as it said its underlying like-for-like revenue growth was robust in the period. Inchcape said its pretax profit in the first half fell to GBP153 million from GBP162.1 million a year earlier, despite revenue rising to GBP3.4 billion from GBP3.3 billion on a reported basis. Like-for-like revenue at constant currencies, however, rose by 7.8% in the half and the group's underlying operating profit was up by 5.6%, compared to a 5.2% decline on a reported basis. It said it will pay an interim dividend of 6.8 pence per share, up from 6.3 pence per share a year earlier.
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Hellermantyton said it has agreed to be taken over by Delphi Automotive, the UK-based automotive parts manufacturer. HellermannTyton, which makes wires and cables, said it has agreed to be acquired by Delphi for 480 pence per share, valuing the company at around GBP1.07 billion. The price is at at 45% premium to HellermannTyton's closing price on Wednesday and at a 43% premium to its one-month volume weighted average price prior to the offer.
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MARKETS
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London stock indices are posting broad gains mid-morning amid a whirlwind of UK corporate news which sees Royal Dutch Shell lead the gainers in the FTSE 100 and Babcock International Group fall to the bottom.
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FTSE 100: up 0.8% at 6,680.50
FTSE 250: up 0.2% at 17,542.11
AIM ALL-SHARE: up 0.1% at 750.03
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GBP: up at USD1.5612
EUR: down at USD1.0970

GOLD: down at USD1056.20 per ounce
OIL (Brent): up at USD54.11 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Prime Minister David Cameron promised to deport more migrants who enter Britain illegally, as hundreds of migrants stranded in the French port of Calais continued efforts to reach the Channel Tunnel linking the two nations. Despite a "very testing" situation, with several thousand migrants hoping to reach Britain from Calais, the country will not become a "safe haven," Cameron told reporters during a visit to Vietnam. Britain and other European nations faced a "swarm of people coming across the Mediterranean, seeking a better life," the BBC quoted him as saying.
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The Federal Reserve noted the strengthening US economy while leaving its benchmark interest rate unchanged, setting the stage for a possible tightening of monetary policy in late 2015. "The labour market continued to improve with solid job gains and declining unemployment," the US central bank said after a two-day meeting of its monetary policy committee. The Fed left its benchmark interest rate at the unprecedented near-zero range in place since December 2008. Most Wall Street economists expect the Fed to begin tightening monetary policy at one of its next meetings - on September 17 or October 28. The Fed on Wednesday said it "anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its 2% objective over the medium term," repeating its past statements nearly word-for-word.
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German unemployment increased unexpectedly in July, reports said citing data from the Federal Labor Agency. The number of unemployed rose 9,000 in July from June, confounding expectations for a decline of 5,000. The jobless rate remained unchanged at a seasonally adjusted 6.4% in July. The rate came in line with expectations.
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Brazil's central bank lifted its key interest rate by 50 basis points despite seeing signs of recession in the economy. The Selic rate was raised to 14.25% from 13.75%.
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Malaysia Airlines said it was too early to tell whether a piece of plane debris found on an island off the eastern coast of Africa came from missing flight MH370. Beijing-bound flight MH370, with 239 people aboard, disappeared on March 8, 2014, about an hour after it took off from Kuala Lumpur International Airport. "With regards to the reports of the discovery of an aircraft flaperon at Reunion Island, Malaysia Airlines is working with the relevant authorities to confirm the matter," Malaysia Airlines said in a statement. The wreckage was washed up in Reunion Island, a French territory east of Madagascar.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun

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