LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Meggitt said it has won a sole-source contract from the US Defense Logistics Agency to replace fuel cells in Hornet jets in a deal worth up to USD39.8 million. The aerospace and engineering company said the three-year deal, which will end in late 2018, will see it make deliveries from its polymers and composites facility in Rockmart in Georgia in the last quarter of the year.
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Phoenix Group Holdings said it is on track to meet its financial targets, as the life insurance company reported lower cash generation and operating profit in the first half. The company also named Henry Staunton as its new chairman, the successor to Howard Davies, who is stepping down at the end of August to join Royal Bank of Scotland Group in the same role. Staunton also is the chairman of retail group WH Smith, and performs the same role at rent-to-own company BrightHouse Group. Phoenix, which manages life funds that are closed to new business, said it generated GBP110 million in cash in the six months to the end of June, down from GBP332 million in the corresponding half the prior year. Phoenix said its performance in the half puts it on track to meet its targets of generating between GBP200 million and GBP250 million in cash in 2015 and GBP2.8 billion from 2014 to 2019. Phoenix maintained its interim dividend at 26.7 pence per share.
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WH Smith said it expects its full-year results to be slightly ahead of analyst expectations after its Travel business performed well and its High Street business met expectations in the second half of the year. The books and stationery retailer said that its Travel business continued to deliver a strong performance with good sales across all of its core channels in the second half of the year, which ends on August 31. It said this was due to investments in its "key business initiatives" and growth in passenger numbers, adding that the new store opening programme both in the UK and overseas is on track.
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Kaz Minerals said it swung to a tiny pretax profit in the first half of the year, despite the company's revenue being hampered by lower commodity prices but its stock jumped following news that Kazakhstan will allow its currency to float freely. The miner also said the Bozshakol mine will not be commissioned on schedule before the end of the year due to the recent fire at the site, and said this has been pushed back until early 2016. The FTSE 250 miner reported a small USD2.0 million pretax profit in the first half of 2015, swinging from a USD104 million loss a year earlier despite revenue dropping to USD341.0 million from USD425.0 million.
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The Rank Group reported growth in profit in its recently-ended financial year, boosted by strong sales in its venues and digital businesses, and said that trading since the year-end has been in line with management expectations. The bingo club and casino operator said pretax profit multiplied in the year ended June 30 to GBP74.5 million from GBP14.4 million the year before, as its revenue grew 4.3% to GBP738.3 million from GBP707.7 million, comprising 2% growth in venues revenue and 21% growth in digital. Like-for-like sales rose 5%. Rank Group will pay a dividend of 5.60p for the full year, an increase of 24% on the 4.50p it paid the prior year.
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Premier Oil said it swung to a substantial pretax loss in the first half of 2015 on the back of impairment charges, a drop in production and lower oil prices, but analysts are overall satisfied with the results. The company also said it had agreed to amend its financial covenants out to mid-2017 to give it sufficient debt headroom whilst its continues developing its assets, alleviating short-term balance sheet concerns. The company swung to a USD214.7 million pretax loss in the first half of 2015 from a USD50.4 million profit a year earlier, as revenue dropped to USD577.0 million from USD884.7 million.
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Bank of Georgia Holdings, the London-listed holding company of Georgia’s leading bank JSC Bank of Georgia and its subsidiaries, reported higher pretax profit in the second quarter, driven by its banking and investment businesses. In a statement, the company said it made a GEL83.7 million pretax profit in the three months to the end of June, compared with GEL59.0 million in the corresponding quarter the prior year. The group's performance in the second quarter helped the company's pretax profit in the first half of 2015 to increase to GEL156.9 million from GEL122.8 million in the corresponding half the prior year.
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Ladbrokes said Gala Coral Group, with which Ladbrokes has agreed to merge, achieved a mixed performance in the third quarter of its financial year, as it faced a tough comparable period which benefited from the World Cup, but its online business performed well. The bookmaker said that earnings before interest, tax, depreciation and amortisation in Coral Retail in the 12 weeks ended July 4 was 2% lower than the same period last year at GBP34.9 million, while over-the-counter revenue fell 1% but machines net revenue grew 2%.
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GVC Holdings is prepared to hike its offer for Bwin.Party Digital Entertainment to at least 130 pence per share, valuing Bwin.Party at around GBP1.1 billion, in a final push to try to gain control of the online gambling company, The Times reported. The newspaper said GVC is ready to raise its bid for Bwin.Party for the third time in order to trump 888 Holdings, which had a bid for Bwin.Party accepted last month. Bwin.Party had rejected GVC's rival, higher offer due to the execution risks that would be involved in GVC's bid, given it is a much smaller company than Bwin.Party is.
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MARKETS
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UK stocks continue their recent run of declines following a heavy fall in Chinese stock market and as investors pick apart the minutes from the US Federal Reserve from Wednesday.
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FTSE 100: down 0.3% at 6,387.56
FTSE 250: down 0.6% at 17,300.12
AIM ALL-SHARE: down 0.4% at 744.75
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The pound is down against the dollar after UK retail sales were lower than expected. Brent oil is also remains under pressure, hitting its lowest level since mid-January at USD46.33 a barrel.
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GBP: down at USD1.5612
EUR: down at USD1.1156
GOLD: up at USD1138.25 per ounce
OIL (Brent): down at USD46.38 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK retail sales grew only marginally in July, data from the Office for National Statistics showed. Retail sales including auto fuel gained 0.1% month-on-month in July, but reversed a 0.1% drop in June. It was slower than the expected growth of 0.4%. Food store sales dropped 0.2%, while non-food store sales advanced 0.7% in July. Excluding fuel, retail sales increased 0.4% following a 0.3% drop seen a month ago. The rate of growth came in line with expectations.
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An increase in interest rates can lower real house prices, but such a reduction could lead to a marked decline in real gross domestic product and inflation, a top US Federal Reserve official warned on Thursday. "Monetary policy actions have sizable and significant effects on house prices in advanced economies. That is, an increase in interest rates tends to lower real (inflation-adjusted) house prices," San Francisco Fed President John Williams said in a speech in Jakarta, Indonesia.
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US central bankers are awaiting further improvement in the economy before hiking rates from the current all-time lows, according to notes released from last month's meeting of the Federal Reserve monetary policy body. The rate-setting Federal Open Market Committee, led by Fed Chair Janet Yellen, left the unprecedented near-zero range on its benchmark interest rate unchanged, in a July 29 statement. Notes from the meeting said that one member of the committee "indicated a readiness to take that step at this meeting but was willing to wait for additional data to confirm a judgement to raise the target range." Overall, the panel "concluded that, although it had seen further progress, the economic conditions warranting an increase in the target range for the federal funds rate had not yet been met."
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An initial payment of EUR13 billion has been transferred to the Greek government by the European Stability Mechanism, the agency reported. The payment was part of an initial EUR26 billion tranche approved by the ESM and is to be used for further financing needs. The remaining money will be distributed at a later point, also for financing needs, as well as to help with bank recapitalization.
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Eurozone finance ministers approved the first tranche of Greece's new EUR86 billion bailout, EU diplomats said, enabling the cash-strapped country to meet a loan repayment deadline the following day. The decision brings some respite after Greece teetered on the brink of bankruptcy during months of fraught bailout negotiations, which took their toll on the country's embattled economy and strained relations in the 19-member currency bloc. Earlier Wednesday, the final hurdles were cleared as the German and Dutch Parliaments approved Greece's third bailout programme in five years. The finance ministers later held a conference call, rubber-stamping the deal and clearing the way for the first bailout tranche of EUR26 billion.
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Germany's producer prices dropped at a slightly slower pace as expected in July, data from Destatis revealed. Producer prices decreased 1.3% year-on-year in July, following a 1.4% drop in June. The annual pace of decline matched expectations. Producer prices have been falling since August 2013. Excluding energy, producer prices decreased 0.3% from last year.
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China's yuan will not be added to the International Monetary Fund's basket of reserve currencies until at least October 2016. The IMF said it would not make changes to its reserve currencies until then and would decide by the end of the year whether to add the Chinese currency to the mix. Any decision would only go into effect late next year. China has been pushing for years for the yuan to be considered alongside the dollar as one of the world's most important reserve currencies, but Beijing's strict regulation of the currency had prohibited the IMF from taking the move.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
Copyright 2015 Alliance News Limited. All Rights Reserved.
17 Mar 2016 16:17
