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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's quarterly profit soared on improved oil prices as the oil major said it plans a fresh USD1.25 billion share buyback. Underlying replacement cost profit for the third quarter of 2021 rose to USD3.32 billion from just USD86 million year-on-year. "This has been another good quarter for BP - our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations. Rising commodity prices certainly helped," said Chief Executive Bernard Looney. BP's reported loss for the quarter was USD2.54 billion, widening from USD450 million a year ago. This was due to "significant adverse fair value accounting effects of USD6.1 billion pre-tax, primarily due to the exceptional increase in forward gas prices towards the end of the quarter." Nonetheless, BP plans a further share buyback worth USD1.25 billion. It expects to complete this before announcing its fourth-quarter results, and will outline plans for the final tranche of buybacks for 2021 surplus cash flow when releasing the results.
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Kao said the coronavirus pandemic continued to hurt its performance in the first nine months of 2021. The Tokyo-based chemical and cosmetics company reported net sales growth in the nine months to September 30 to JPY1.020 trillion, about USD8.98 billion, up 1.6% from JPY1.005 trillion posted a year earlier. On a like-for-like basis, net sales decreased by 0.4%. Pretax income, however, slipped to JPY113.51 billion from JPY119.15 billion, a 4.7% decline year-on-year. Kao said that, during the first nine months of 2021, the household, personal care and cosmetics products market in Japan began to show signs of recovery but still shrank due to repeated resurgences of Covid infections. Looking ahead, Kao said it expects to generate net sales of JPY1.430 trillion for 2021, up 3.5% on the prior year. Pretax income is seen up 1.7% to JPY177.00 billion.
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Standard Chartered reported a jump in third-quarter profit amid "further progress" for the emerging-markets focused bank. Operating income rose to USD3.77 billion in the third quarter, up 7% year-on-year. Pretax profit jumped 44% to USD1.08 billion, helped as StanChart's credit impairment charge was reduced to USD107 million from USD353 million. "We delivered a return to top-line growth in the third quarter and achieved further progress against our strategic priorities, with strong performance in our Financial Markets and Trade businesses and ongoing positive momentum in Wealth Management," said Chief Executive Bill Winters. StanChart said it continues to expect full-year income "similar" to that achieved in 2020 on a constant currency basis. It expects credit impairment to remain at low levels in the fourth quarter. Its CET1 ratio at the full-year is seen around the top of the 13% to 14% range. This compares with 14.6% as at September 30.
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TP ICAP Group said trading conditions improved in the third quarter, with the interdealer broker's revenue growth driven by a strong performance from its Energy & Commodities business. In the three months to September 30, TP ICAP recorded total revenue of GBP447 million, up 15% from GBP388 million a year earlier. Total Global Broking revenue on the third quarter rose 2.4% to GBP252 million from GBP246 million, while Energy & Commodities revenue surged 16% to GBP92 million from GBP79 million.
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Flutter Entertainment lowered its full-year earnings guidance range after a string of punter-friendly sports results in October. Total revenue for the third quarter of the year was GBP1.44 billion, up 9% on GBP1.33 billion a year ago. Online revenue growth of 13% at constant currency was driven by Australia, up 20%, and the US, up 85%. However, the betting operator noted that it has seen unfavourable sports results in first 24 days of October. This has hit earnings before interest, tax, depreciation and amortisation by around GBP60 million. Combined with an expected GBP10 million hit from a temporary Netherlands exit, it now expects adjusted Ebitda for 2021, for its operations excluding the US, in a range of GBP1.24 billion to GBP1.28 billion, versus prior guidance of GBP1.27 billion to GBP1.37 billion. In the US, net revenue guidance was unchanged but Flutter now expects an adjusted Ebitda loss of between GBP250 million and GBP275 million, versus a prior range of GBP225 million to GBP275 million. This includes a GBP15 million hit from adverse sports results in October.
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Fresenius and Fresenius Medical Care reported mixed results in third-quarter trading as the pandemic's continued impact on healthcare treatments affected the companies' guidance. Fresenius is a healthcare company specialising in dialysis treatments, based in Bad Homburg vor der Hohe, Germany. It reported revenue of EUR9.32 billion the third quarter of 2021, up 5% year-on-year from EUR8.92 billion. Net income rose 2% to EUR435 million from EUR427 million. The company raised its guidance for constant currency sales to grow in a mid single-digit range. Previously, Fresenius projected sales growth in a low-to-mid single-digit percentage range. Earnings growth is now expected to be at the top-end of previously announced guidance in the low single-digit percentage range. Fresenius Medical Care, a separately listed company partly owned a Fresenius, reported a 1.0% year-on-year rise in revenue to EUR4.44 billion from EUR4.41 billion. However, net income plummeted 22% in the period to EUR277 million from EUR354 million.
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Rivian Automotive, an Amazon-backed electric vehicle startup, said it is targeting a valuation of more than USD50 billion. The California-based company will price shares between USD57 and USD62, raising up to USD9.1 billion at the midpoint price and all company stock at about USD52.5 billion, according to a securities filing. US business media said Rivian could go public on Wall Street as soon as next week. Rivian has raised more than USD10 billion in funding since its founding in 2009, including from Amazon, which has pledged to purchase 100,000 electric delivery vans from the startup. Amazon disclosed last week a stake of USD3.8 billion in preferable stock of Rivian, according to a securities filing. In addition to the Amazon delivery vehicles, Rivian is producing electric trucks and sport utility vehicles for consumers with prices starting from around USD70,000.
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Whistleblower Frances Haugen issued a stinging rebuke of Facebook's 'Meta' rebrand, accusing the company of yet again prioritising expansion over people's safety. The former Facebook engineer, who leaked a trove of internal documents that have sparked weeks of criticism of the social media giant, also called on Chair & Chief Executive Mark Zuckerberg to step down. Speaking at the Web Summit tech conference in Lisbon, Haugen said it was "unconscionable" that Facebook was trumpeting its ambitions to develop the 'metaverse' – a virtual reality version of the internet – rather than focusing on fixing existing problems. The company last week announced it was changing the name of Facebook's parent company to 'Meta' to signal the change in focus. Critics have derided the rebrand as an attempted distraction from the avalanche of damaging revelations from Haugen's leaked documents.
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MARKETS
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Paris and Frankfurt stock markets were outperforming after a negative Asian trading day on Tuesday, but the FTSE 100 index in London and US index futures were in the red. The FTSE 100 was being dragged by Standard Chartered and Flutter Entertainment, down 7.0% and 6.7%, respectively. Chris Beauchamp, chief market analyst at IG, said StanChart results beat expectations, but a cautious outlook meant profit-taking was the order of the day after a more than 20% rise by the stock since late September. The two-day US Federal Reserve policy meeting gets underway on Tuesday.
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CAC 40: up 0.2% at 6,909.24
DAX 40: up 0.4% at 15,864.94
FTSE 100: down 0.5% at 7,249.20
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Hang Seng: closed down 0.2% at 25,099.67
Nikkei 225: closed down 0.4% at 29,520.90
S&P/ASX 200: closed down 0.6% at 7,324.30
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DJIA: called down 0.1%
S&P 500: called down 0.1%
Nasdaq Composite: called down 0.2%
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EUR: firm at USD1.1598 (USD1.1589)
GBP: down at USD1.3643 (USD1.3675)
USD: down at JPY113.51 (JPY114.17)
Gold: up at USD1,794.70 per ounce (USD1,790.75)
Oil (Brent): up at USD84.87 a barrel (USD84.65)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Australia's central bank said an interest rate hike could occur in 2023, as it also dropped the yield target for a security which matures in 2024, following a recent spike. In the first of a trio of major central banks to release monetary policy decision this week, the Reserve Bank of Australia left its cash rate at 0.1%, as expected. The US Federal Reserve and Bank of England follow. The RBA had previously not expected an interest rate lift-off before 2024. However, Governor Philip Lowe said it may now happen sooner. "Given our forecasts, it is still entirely plausible that the first increase in the cash rate will not be before the maturity of the current target bond – that is, the bond with a maturity date of April 2024. But it is now also plausible that a lift in the cash rate could be appropriate in 2023," Lowe explained.
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Members of the Bank of Japan's monetary policy expect the nation's economy to pick up as Covid-19's impact wanes, though the recovery in the services sector could be more protracted, minutes from the central bank's September meeting showed. At the meeting, the Bank of Japan decided by an 8-1 majority vote to keep a negative interest rate of 0.1%. Then at its October meeting, the Bank of Japan again announced it would maintain the negative interest rate. Minutes from the September meeting showed BoJ members were largely bullish about Japan's prospects once the pandemic's effects subside.
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The eurozone manufacturing sector grew at a slightly slower pace than first expected last month, survey results from IHS Markit showed, as the sector held back by supply chain disruption and cost headwinds. The eurozone manufacturing purchasing managers' index eased to 58.3 points in October from 58.6 in September. The final October reading also slipped from the flash figure of 58.5. While the reading remained above the no-change mark of 50.0, it signalled that the eurozone's manufacturing rebound lost some momentum in October. Industrial powerhouse German saw its manufacturing PMI hit a nine-month low of 57.8, undershooting October's flash figure of 58.2 and below September's reading of 58.4. The Netherlands clocked the highest PMI in October among countries surveyed, at 62.5 - though even this was a two-month low - while France was at the bottom with a figure of 53.6, slightly improved from the flash reading of 53.5 but still the lowest reading in nine months.
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More than 100 world leaders will sign up to a landmark agreement to protect and restore the Earth's forests, the UK government has said. On the second day of the COP26 climate change summit in Glasgow on Tuesday, leaders covering 85% of the world's forests will commit to halt and reverse deforestation and land degradation by 2030. Downing Street said the pledges were backed by GBP8.75 billion of public funding with a further GBP5.3 billion in private investment. The commitment, to be formally announced at an event convened by UK Prime Minister Boris Johnson, has been welcomed by campaigners and experts, in particular the recognition of the role of indigenous people in protecting forests. But there were warnings that commitments needed to be delivered on, and standing forests must be protected, as well as there being a focus on restoring forests.
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India's economy will become carbon neutral by the year 2070, the country's prime minister announced Monday at the COP26 climate summit in Glasgow. "By 2070, India will achieve the target of net-zero emissions," Narendra Modi told more than 120 leaders at the critical talks. India is the last of the world's major carbon polluters to announce a net-zero target, with China saying it would reach that goal in 2060, and the US and the EU aiming for 2050. Modi also said India would increase its 2030 target for installed capacity of "non-fossil energy" – mostly solar – from 450 to 500 gigawatts. In addition, 50% of the country's energy requirements will come from renewable sources by the same date.
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China said it has increased daily coal production by over one million tonnes, easing its energy shortage as world leaders gather in Britain for climate talks billed as one of the last chances to avert catastrophic global warming. The world's biggest coal importer has battled widespread power cuts in recent months that have disrupted supply chains, due to strict emissions targets and record prices for the fossil fuel. But the crisis is now winding down thanks to a boost in domestic coal output, according to a statement from China's top economic planning body late Sunday. The National Development & Reform Commission said average daily coal production has risen to above 11.5 million tonnes since the middle of October, up by 1.1 million tonnes compared with the end of September. In recent months, several Chinese factories were forced to halt operations due to power outages, raising concern about global supply chains.
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By Tom Waite; thomaslwaite@alliancenews.com
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