Last checked at LONDON (Alliance News) - Shares in Sky have hit a 14-year high and shares in ARM Holdings have hit an all-time high Tuesday, after both companies posted higher profits and gave confident outlooks amid strong demand for Sky's television and broadband packages and demand for ARM's chip designs in 4G smartphone devices.
Sky posted an operating profit of GBP1.03 billion for the first nine months of its financial year, up from GBP854 million a year earlier, boosted by strong customer growth across its businesses and strong revenue performances from the UK, Ireland and Germany.
Its revenue grew to GBP8.45 billion, from GBP8.05 billion a year earlier, as 6% growth in the UK and Ireland and 9% growth in Germany offset a slight decline in Italy.
Sky said it had added 242,000 net new customers in its third quarter, taking its total customer base to 20.8 million. Across all three segments of the business, Sky also saw a reduction in customer churn on a twelve month rolling basis. However, average revenue per user was flat at GBP47 in the third quarter compared to the previous quarter,
ARM, meanwhile, reiterated that it will "at least" meet current market expectations for dollar revenue in 2015, and it posted a rise in pretax profit in the first quarter of the year as royalty revenue continued to grow on strong demand for its customers' mobile devices, particularly 4G smartphone handsets.
The chip designer, whose chip designs are used by consumer technology giants like Apple Inc and Samsung Electronics and which competes with the likes of Intel Corp, posted a pretax profit of GBP103.4 million, up from GBP78.0 million in the first quarter of 2014, as revenue grew to GBP227.5 million from GBP186.7 million.
Within this, dollar licence revenue was up 3%, as growth in physical IP licenses offset a 2% decline in processor licenses. It signed thirty processor licences during the first quarter, including four licences for processors based on its higher royalty ARMv8-A architecture. Dollar royalty revenue continued to improve, rising 28%, whilst shipments of ARM processor-based chips rose 31%, as it saw an increase in the number of chips going into mobile devices, and a strong comparator due to inventory correction in the first half of 2014. The number of ARM-based chips shipped into embedded applications, such as micro-controllers and smartcards, were up 40% compared with the previous year.
ARM said it expects to benefit from higher royalty percentage per chip from handset manufacturers launching smartphones and tablets using its ARMv8-A and Mali graphics processors compared with previous generations of devices. Production of these smartphones and tablets will ramp up in the second half of the year.
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Markets: UK stock indices are mixed as earnings from Sky, ARM Holdings and Associated British Foods take centre stage with little in the way of economic data..
US stock futures point to a higher open on Wall Street. The DJIA is currently set to open up 0.3% and the S&P 500 and Nasdaq 100 up 0.4%.
FTSE 100: down 0.1% at 7,042.65
FTSE 250: up 0.3% at 17,647.32
AIM ALL-SHARE: up 0.2% at 750.17
GBP: down at USD1.4877
EUR: down at USD1.0681
GOLD: up at USD1,198.89 an ounce
OIL (Brent): down at USD63.06 a barrel
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Other Top Corporate News
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Rio Tinto said iron ore production and shipments increased in the first quarter of 2015 year-on-year but fell from the preceding quarter, yet the company reiterated its full-year production targets across all of its segments. The world's second-largest iron-ore producer said global iron ore production for the first quarter increased 12% on a 100% basis from last year to 74.7 million tonnes, reflecting the expansion of its mining operations in the Pilbara region with Rio Tinto's share rising 14% to 59.4 million tonnes. But the company's iron-ore production declined 6% from the preceding quarter. Iron ore sales account for roughly 90% of the company's profit, which has been hit by the fall in iron ore prices, which have slumped from about USD130 per tonne at the start of 2014 to about USD50 per tonne recently.
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Associated British Foods reported a drop in profit in the first half of its financial year as its food business, particularly struggling AB Sugar, made lower sales due to food price deflation and the strength of sterling. The group reported a 51% drop in pretax profit in the 24 weeks to February 28 to GBP213 million from GBP434 million the year before, but a revenue increase of 1% to GBP6.2 billion. AB Foods said that while it made "significant progress" in operating profit for Primark, Agriculture and Ingredients and further improvement in the Grocery division's margin, profitability at AB Sugar was substantially lower as a result of much weaker EU sugar prices.
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UK consumer body Which? has asked the UK competition regulator to act over "misleading and confusing" supermarket pricing tactics, launching a so-called "super-complaint" that means the Competition and Markets Authority must respond within 90 days. Which? said it had found that the supermarket retailers are confusing consumers "with tactics that exaggerate discounts and manipulate shoppers", using promotions like multi-buys, seasonal offers, and marking large packs as value when buying more of the smaller packs would actually be cheaper.
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Vodafone said it has signed a collaboration deal with MTN Group that will allow the companies' customers to transfer money to each other using their mobile wallets. The deal covers Vodafone M-Pesa customers in Kenya, Tanzania, Democratic Republic of Congo and Mozambique, and MTN Mobile Money customers in Uganda, Rwanda and Zambia.
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Consumer credit company International Personal Finance said Polish authorities have concluded an investigation into the calculation of fees for loan products and it will not face a fine following the probe. IPF said the Polish Office of Consumer Protection and Competition has concluded that Provident Polska, IPF's Polish business, has made the required commitment to replace variable administrative and home service fees on loans with fixed rates by the implementation deadline of August 1 set by the regulator.
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Informa said it is maintaining its full year guidance after a solid trading performance in the first quarter. The FTSE 250-listed company said underlying growth in the first quarter to the end of March was solid, though including one-off non-annual events and the planned movement of events between quarters, revenue fell 0.5%. The group said the underlying trends in its academic publishing business remain robust, with the integration of the Medical Journals business on track. It added the performance of its business intelligence unit has stabilised amid a focus on customer and subscription management in the division under Informa's 2014-2017 Growth Acceleration Plan.
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Tate & Lyle reported its exit from the substantial part of its European Bulk Ingredients business and the re-structuring of its SPLENDA Sucralose business to further focus on and strengthen Speciality Food Ingredients. The company has signed an agreement with Archer Daniels Midland to re-align their Eaststarch corn wet milling joint venture in Europe. Eaststarch CV is ADM's 50-50 joint venture with Tate & Lyle. ADM will take full ownership of corn wet mills in Bulgaria and Turkey, and will own a 50% stake in a wet mill in Hungary. Tate & Lyle will receive a cash consideration of EUR240 million. Tate & Lyle will acquire full ownership of the more speciality-focused plant in Slovakia.
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Pets at Home Group reported growth in revenue for its recently completed financial year as it saw sales rise in all areas of its business, and said its full year underlying earnings before interest, tax, depreciation and amortisation are expected to be in line with market consensus. In a trading statement, the pet products and services company reported sales growth of 9.6% for the year ended March 26 to GBP729.1 million, and like-for-like sales growth of 4.2%, driven by strength in advanced nutrition, health and hygiene, VIP club, services and omnichannel.
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AIM Movers
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CDialogues shares are up by a fifth after it reported an 89% increase in pretax profit in 2014 as revenue doubled on the back of strong growth in client numbers and geographical expansion, and the company said strong cash generation meant it could pay a maiden dividend. Clean Air Power is up after it received a new order worth about USD374,000 over 12 months from June for high pressure coalescing filters from an unnamed compressed natural gas storage systems supplier in the US. ANGLE is also up after it said the Medical University of Vienna has published test results in support of the use of the company's Parsotix cell separation system in detecting ovarian cancer. International Greetings is another gainer after it said it expects its results in the financial year that just ended to come in ahead of expectations, and confirmed it plans to start paying a dividend again on the back of its strong trading performance. Clear Leisure is up after it confirmed the winding up petition filed against the company by Westhouse Securities has now been dismissed. Shoe Zone has lost a quarter of its value after it issued a profit warning, saying the warm weather conditions during the autumn/winter trading period had a material impact on its first half revenue and it had been selling more lower-priced shoes. Kea Petroleum is another big faller after it urged shareholders to approve the issue of shares to allow it to raise funds to drill the Shannon prospect in New Zealand, warning that its future remains "precarious" due to its cash constraints.
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Top Economics And General
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The British Chambers of Commerce waded into the election debate, calling on parties to put the long-term economic health of the country before chasing positive headlines, as former Tory prime minister John Major claimed the Scottish National Party will cripple the UK with "blackmail" following the launch of the Scottish nationalists' manifesto. John Longworth, director-general of the British Chambers of Commerce, published an open letter to the leaders of the UK's political parties on Tuesday, voicing frustration over what he considers broken promises to the business community.
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The Conservatives pushed into the lead in one poll and retained top spot in another on Tuesday, as two polls of polls now have the party in a marginal lead ahead of the UK General Election next month. Both the BBC and Sky News polls of polls have the Tories at 34% to Labour's 33%.
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The UK government's Department of Energy and Climate Change said it will force LetterOne, the investment vehicle controlled by Russian billionaire Mikhail Fridman, to sell a dozen North Sea oil field stakes. LetterOne will be given three months to comply with the order or lose the operating rights for the fields. LetterOne acquired the fields in March as part of a EUR5.1 billion acquisition of the oil and gas arm of German utility RWE.
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EU foreign and interior ministers gave their political backing to a 10-point action plan to counter deadly migration flows in the Mediterranean Sea, drawing lessons from what could prove to have been the most deadly shipwreck in recent years. Their meeting came less than 48 hours after the capsizing of a vessel off the coast of Libya, in which more than 900 migrants are feared to have died. Previous tragedies in the Mediterranean have prompted pledges but little action to tackle migration, which is a touchy subject in the 28-member EU.
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Greece significantly shrunk its deficit in 2014 but stopped short of expectations, according to data released, as the crisis-battered country is locked in bailout negotiations with its international creditors. Athens is trying to pull together a list of credible reforms and cost-cutting measures in return for urgently needed bailout funding, with loan repayment deadlines looming. Eurozone finance ministers are due to review progress at talks in Riga later this week. Relations between Greece and its creditors have been difficult since a leftist-led government took over in January, vowing to end bailout-related austerity.
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Greek Prime Minister Alexis Tsipras is scheduled to conduct talks with the head of Russian gas company Gazprom on Tuesday in an effort to finalize a multibillion dollar pipeline deal. Gazprom chief Alexei Miller will also talk with Greek Energy Minister Panagiotis Lafazanis. The visit comes just weeks after Tsipras was in talks with Russian President Vladimir Putin in Moscow to express his country's interest in taking part in the Turkish Stream gas pipeline project. The pipeline is due to transport Russian gas though Turkey and then in to Europe by 2017.
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Afternoon Watchlist (all times in BST)
13:55 US Redbook index
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Wednesday's UK Corporate Events
Hochschild Mining - Q1 Interim Management Statement
Punch Taverns - Half Year Results
Tesco - Full Year Results
Fenner - Half Year Results
Reed Elsevier - Interim Management Statement
Connect Group - Half Year Results
Ladbrokes - Q1 Interim Management Statement
Croda - Q1 Interim Management Statement
Elementis - Interim Management Statement
Travis Perkins - Q1 Interim Management Statement
Telford Homes - Trading Statement
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Wednesday's Key Economic Events (all times in BST)
00:50 Japan Merchandise Trade Balance Total
09:00 Italy Industrial Orders
09:30 UK BOE MPC Meeting Minutes
10:00 Italy Retail Sales
12:00 US MBA Mortgage Applications
14:00 US Housing Price Index
15:00 EU Consumer Confidence Preliminar
15:00 US Existing Home Sales
15:30 US EIA Crude Oil Stocks change
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21 Apr 2015 07:20
