HSBC Holdings Share News (HSBA)

LONDON (Alliance News) - Oil and gas services company Petrofac Friday issued a profit warning after it said the planned development of the Greater Stella Area oil field in the North Sea would be delayed until next spring, it was hit by low output at a Romanian oil field, and won fewer new energy services contracts than it had expected.

The company said the addition of a topsides processing plant at the FPF1 floating production facility on the Greater Stella area would not now happen before winter sets in. It has therefore moved back the transfer of the completed plant to the facility until spring 2015.

Petrofac added that production from its Ticleni oil field in Romania remains below expectations. It spent the latter half of 2013 completing additional studies to improve its understanding of the field and drilling at the area is expected to resume once a revised field development plan has been completed.

It warned that it now expects net profit to fall in 2014. In February, the company had predicted that profit would be flat or moderately higher.

International Consolidated Airlines Group, meanwhile, predicted that its operating profit will rise in 2014, after its operating loss almost halved in the first quarter as the continued restructuring of Iberia drove down losses at the Spanish airline.

The parent of British Airways and Spanish airlines Iberia and Vueling said it now expects its 2014 operating profit to be at least EUR500 million above the EUR770 million it booked in 2013. It reiterated that it expects revenue to remain relatively flat, but cost cutting will push up its profit margin.

The group's operating loss before exceptional items narrowed to EUR150 million in the first quarter of 2014, compared with a loss of EUR278 million a year earlier, as the loss at Iberia narrowed to EUR111 million, from a loss of EUR202 million.

The operating loss at British Airways narrowed to EUR5 million, from a loss of EUR72 million in the first quarter of 2013. IAG cited cost cutting and the addition of more fuel efficient Airbus A380 and Boeing 787 planes to BA's fleet.

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FTSE 100: down 0.4% at 6,811.06
FTSE 250: down 0.4% at 15,898.00
AIM ALL-SHARE: down 0.6% at 806.20
GBP-USD: down at 1.6871
EUR-USD: down at 1.3786
GOLD: up at USD1,293.77 an ounce
OIL (Brent): up at USD108.58 a barrel
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Key UK Corporate News

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FTSE 100: HSBC Holdings has agreed to sell its banking business in Pakistan to Meezan Bank Ltd, as the global banking giant continues to scale back in areas it considers to be non-core. It didn't give any financial details. Diageo has appointed Marks and Spencer Chief Financial Officer Alan Stewart to its board as a non-executive director. Friends Life Group said it won't be able to meet its value of new business growth target in 2014, as a result of changes made to the annuities market in the UK's 2014 government budget. British Sky Broadcasting will take a GBP2.3 million stake in Johnston Press after agreeing to take part in the regional publisher's GBP360 million capital restructuring. The two companies have also signed a deal for Sky to provide some Johnston Press sales teams with its AdSmart local product. British medical research foundation the Wellcome Trust said in a letter to Chancellor of the Exchequer George Osborne that it had "major concerns" over Pfizer's proposed takeover of AstraZeneca.

FTSE 250: Grafton Group said it is continuing to see a recovery in its markets, with revenue up 14% in the first four months of 2014. Tullett Prebon said it will take a charge in its accounts for further cost cuts, as it reported a decline in revenue due to subdued financial markets while also announcing a deal worth up to USD160.0 million to acquire oil-futures broker PVM Oil Associated Ltd. Drax Group has warned that it is now expecting earnings to be below current market forecasts after power prices fell by more than expected due to mild weather curbing demand, and renewables obligation certificates prices also fell. The company also confirmed it is moving ahead with its legal action against the UK government in relation to its contracts-for-difference dispute. Man Group said its funds under management increased over the first-quarter, boosted by net inflows, but Chief Executive Manny Roman said it remains cautious with regards to the remainder of the year. Bank of Georgia Holdings reported an increase in first-quarter pretax profit, driven by higher net interest income and a doubling in net healthcare revenue. It hasn't yet fully accounted for recent healthcare acquisitions. Vedanta Resources has said that it will not mine bauxite from the Niyamgiri hills in India to feed its Lanjigarh alumina refinery in Odisha without approval from the local community. Morgan Advanced Materials maintained its expectations for the full year after trading in the first four months met its expectations, although it warned that the strength of sterling was weighing on revenue. 3i Infrastructure said net asset value per share increased for its last full year, but its total return dipped slightly as its India Fund was hit by a number of problems.

AIM All-Share: Wessex Exploration has risen by almost a third after it confirmed that it was still in advanced talks regarding a potential acquisition of a prospective offshore asset in the Far East. It said that the proposed acquisition would not be classified as a reverse takeover under AIM rules. 21st Century Technology is a big faller after it said it swung to a loss in 2013 and suspended payment of its dividend. It plans to re-focus its business after it lost a significant contract with Go-Ahead Group. Metminco is another big decliner after it said it didn't know why its shares had jumped and trading volumes increased recently. San Leon Energy is down after it said it was continuing talks with TransAtlantic Petroleum PLC about the details of a proposed work programme on sites in Poland that the US-based company is farming in to, after TransAtlantic said Thursday that it had decided not to proceed with the full acquisition. Ithaca Energy is another faller after it was hit by delays at the Greater Stella Area development in the North Sea, moving back production until mid 2015. Ducat Ventures shares have been suspended at the request of the company after it confirmed that it was in talks about a possible deal that would constitute a reverse takeover under AIM listing rules. The stock had already risen by a third to 0.06 pence when trading was halted.
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Top Economics And General
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The UK's visible trade deficit narrowed on higher exports in March, the Office for National Statistics showed. The visible trade gap came in at GBP8.5 billion in March compared to GBP8.7 billion in February. The deficit on trade in goods was expected to widen to GBP9 billion. At the same time, the surplus on trade in services increased to GBP7.2 billion from GBP7 billion in the prior month. As a result, the combined trade balance showed a shortfall of GBP1.3 billion, smaller than February's GBP1.7 billion deficit.
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UK industrial production dropped slightly in March largely due to a fall in oil and gas extraction, data from the Office for National Statistics showed. Industrial production fell 0.1% from February, when output rose 0.8%. Production was forecast to decrease 0.2%. Meanwhile, manufacturing output gained 0.5% in March and exceeded the 0.3% rise forecast by economists. Nonetheless, the rate halved from 1% seen in February.
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China's consumer price inflation slowed to 1.8% year-on-year in April, down from 2.4% in March, the government said. The fall was mainly driven by slower growth in food prices, which climbed 2.3% year-on-year last month, compared with 4.1% in March, the National Bureau of Statistics reported. Food prices account for nearly one-third of China's consumer price index. The index rose 2.2% year-on-year in the first four months of this year, the bureau said, well within the government's target of keeping annual inflation to a maximum of 3.5%.
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German exports declined for the second straight month in March, data from Destatis showed. Defying expectations, exports fell 1.8% month-on-month in March, sharper than the 1.3% fall seen in February. Shipments were expected to rise by 1.3%. At the same time, imports declined 0.9%, reversing a 0.4% rise in February. Economists had forecast 0.6% increase for March. As a result, the trade surplus declined to seasonally adjusted EUR 14.8 billion from 15.8 billion in February. The surplus was forecast to rise to EUR 17.4 billion.
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Russia was marking the Soviet victory over Nazi Germany in World War II with a parade featuring military hardware, one day after missile-testing drills showcasing its might raised tensions with Ukraine. President Vladimir Putin, who is overseeing the parade on Red Square, might also visit Crimea, the Black Sea peninsula that Russia annexed from Ukraine in March.
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Regional Ukrainian officials are now admitting they cannot prevent pro-Russia separatists from holding a referendum on secession on Sunday. The mayor's office in Donetsk, the region's biggest city, said in a statement there were not enough police available to do so. For the sake of public safety there would be no effort to stop the separatists setting up voting stations in sites such as schools.
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Heavy clashes are being reported between government security forces and pro-Russian groups in the city of Mariupol, in south-eastern Ukraine, after celebrations marking the Soviet victory over Nazi Germany in World War II. Shots were being fired in the centre of the city close to the Russian border, which has a population of more than 450,000, local media reported. A leader of a self-proclaimed pro-Russian self-defence group said several activists had been injured.
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Russian Energy Minister Alexander Novak says that crisis-stricken Ukraine will have to pay in advance for its gas needs because of billions of dollars in outstanding debt. The minister said in a statement late Thursday that Ukraine has missed its May 7 deadline to repay approximately USD3.5 billion owed, and that the pre-payment regime is set to take effect in June.
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South Africa's ruling African National Congress has won a resounding victory, despite a slight loss of support, in this week's elections, preliminary results showed with votes counted in more than 94% of voting districts Friday. The ANC had 62.5% of the vote, down from 65.9% in the 2009 elections.
The main opposition Democratic Alliance (DA) made strong gains in Wednesday's voting, raising its share of the vote to about 22% from 16.7%.
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South Sudanese President Salva Kiir and rebel leader Riek Machar were due to hold their first direct talks since the outbreak of an armed conflict that has led to widespread human rights violations. The talks in Addis Ababa have been brokered by United Nations Secretary-General Ban Ki-moon and US Secretary of State John Kerry. Machar arrived Thursday in the Ethiopian capital, while Kiir was expected on Friday. The sides recently agreed on a month-long ceasefire to allow farmers to plant, but fighting has nevertheless continued.
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At least 30 people were killed when suspected members of Islamist extremist sect Boko Haram bombed a bridge linking Nigeria to Cameroon, newspaper Punch reported. The bomb went off Thursday evening on the outskirts of the village of Gamboru Ngala, where more than 200 people were killed and 11 girls kidnapped by Boko Haram this week.
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Police fired tear gas at anti-government protesters outside government buildings in Bangkok Friday, injuring four people amid a day of protests around the city.
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Afternoon Watchlist (all times British Summer Time)

15:00 UK NIESR GDP Estimate
15:00 US Wholesale Inventories
23:00 US Fed Minneapolis's Narayana Kocherlakota speech

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Monday's Key UK Corporate Events

Diploma Full Year Results
Lonmin Q2 Production Report
Just Retirement Interim Management Statement
eTherapeutics Full Year Results
Planet Payments Q1 Results

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

00:50 Japan Bank lending
00:50 Japan Trade Balance - BOP Basis
06:00 Japan Eco Watchers Survey
07:00 Japan Machine Tool Orders
19:00 US Monthly Budget Statement

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