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LONDON (Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Burberry Group reported a rise in revenue in the first quarter of its financial year and said profit for the year will be GBP20 million higher than the prior year if exchange rates remain at current levels, although it warned that the increase would be offset by "a more adverse geographic mix". The fashion retailer said that retail revenue grew 10% to GBP407 million in the three months to June 30, as it experienced double-digit growth in Europe, the Middle East, India and Africa, high single-digit growth in the Americas, but a low single-digit decline in Asia Pacific, hit by a challenging market in Hong Kong.
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Mining giant BHP Billiton said it expects to write down the value of its onshore US assets by about USD2 billion post-tax in its financial results for fiscal 2015. BHP Billiton noted that the gas-focused Hawkville field accounted for the majority of this impairment charge. The remainder of the charge relates to the impairment of goodwill associated with the Petrohawk acquisition. After the writedown, BHP Billiton's onshore US business will have net operating assets of about USD24 billion.
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Severn Trent said there has been no material change to the business since its last report in May, except it expects its interest charge for the full year to be lower year-on-year. The UK water and waste-water company reiterated its full-year cost guidance and dividend expectations, and said it continues making progress on making efficiency savings across the water division.
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International Consolidated Airlines Group cleared the final hurdle in its EUR1.4 billion takeover bid for Irish flag carrier Aer Lingus Group late on Tuesday, after the European Union gave its approval to the takeover with a concession made on the number of Gatwick slots the combined business will have. IAG, which owns British Airways and Iberia, said it has had to give up five slots at Gatwick airport for flights to Dublin and Belfast in order to secure European Commission approval. Two of the five must be operated between Gatwick and Dublin and one must be operated to Belfast, under the concessions. Other airlines will be able to apply for seats on the Aer Lingus short-haul network for their transfer passengers on normal commercial terms, IAG said.
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Mike Rake is set to leave his position as the deputy chairman of Barclays to become chairman of payments processing company Worldpay, Sky News reported. Rake will join Worldpay ahead of its planned flotation on the London Stock Exchange. The Times had reported earlier that Rake was to leave the bank, though it did not name the company of which he was intending to take the chairmanship. He will retain his role as BT Group PLC's chairman, Sky said. Rake is understood to have been instrumental in ousting Antony Jenkins as Barclays chief executive last week.
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Centrica said British Gas intends to reduce household gas prices by 5%, cutting annual energy bills on average by 35 pounds, effective August 27. The price cut will benefit 6.9 million British Gas customers on Standard and Fix & Fall tariffs. This is the second gas price reduction in six months, and will bring the average total saving to 72 pounds for British Gas customers. Electricity prices remain unchanged, despite several elements making up the bill rising steadily.
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Wizard Parent sold a GBP270 million stake in software company Micro Focus International via a share placing. Wizard sold 20 million Micro Focus shares for 1,350 pence per share. Following the deal, Wizard will own 66.6 million shares in the company, or a 30.7% stake. Micro Focus shares closed Tuesday at 1,434.00p.
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Marwyn Value Investors has sold a portion of its stake in media company Entertainment One for GBP87 million via a share placing. Marwyn has sold 26.5 million shares in the company at 330 pence per share. Entertainment One shares closed at 362.9 pence on Tuesday. Following the sale, Marwyn's stake in Entertainment One has been reduced to 52.9 million shares, or 17.9% of the company's issued share capital.
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Intermediate Capital Group said the business may be hurt by "economic volatility" and uncertainty as Greece tries to stay in the Eurozone. Weakness in the euro against other major currencies isn't expected to have anything more than a "limited impact" on fund management fee income, which the company said is hedged. Interest income, however, is unhedged, meaning there is a "more immediate impact" from the current exchange rates, Intermediate Capital said.
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Halfords Group reported a rise in revenue in the first quarter of its financial year, driven by a strong performance in its cycling and car maintenance divisions. The car parts and bicycle retailer said that total revenue grew 3.6% in the 13 weeks to July 3, with retail sales up 3.4% and autocentres up 5.0%. On a like-for-like basis, total sales grew 3.5%, with retail like-for-likes up 3.5% and autocentres up 4.0%.
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JD Wetherspoon reported a rise in revenue in the 50 weeks to July 12 but reaffirmed that pretax profit for the full year is unlikely to be higher than the prior year. The pub company said that total sales increased 6.5% in the 11 weeks to July 12 and 7.6% in the 50 weeks to the same date, growing 2.9% and 3.4% on a like-for-like basis, respectively. Operating margin in the 11 weeks was 7.0%, compared with 8.3% in the same period the year before, and is expected to be around 7.4% for the full year.
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ICAP said it is well positioned to benefit from increased trading activity when macroeconomic conditions allow, as the company reported that revenue increased in the opening quarter of its new financial year, when excluding businesses it has closed under a restructuring programme. Revenue, excluding the discontinued businesses, was up 2% in the quarter ended June 30, when compared with the corresponding quarter of the prior year. It was down 1% at constant currency.
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MARKETS
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London shares are mixed mid-morning, as the pound dropped after UK jobless claims increased in June, while mining stocks are pushing higher on the back of reassuring economy growth figures from China.
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FTSE 100: flat at 6,756.23
FTSE 250: down 0.2% at 17,612.25
AIM ALL-SHARE: flat at 755.45
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GBP: down at USD1.15618
EUR: up at USD1.1023
GOLD: down at USD1155.21 per ounce
OIL (Brent): down at USD58.03 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK jobless claims increased unexpectedly in June, data from the Office for National Statistics revealed. The number of people claiming jobseeker's allowance increased by 7,000 in June from May, confounding expectations for a decline of 9,000. This was the first increase since October 2012. During March to May, the ILO jobless rate came in at 5.6%, little changed compared with three months to February, but lower than 6.5% seen a year earlier, the statistical office said. Pay for employees including bonuses increased by 3.2% in three months to May and that excluding bonuses by 2.8%.
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The International Monetary Fund said Greece's debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far. The Athens parliament is set to vote on the deal agreed by Eurozone leaders early this week, in exchange for a new bailout. The deal needs to be approved by the other 18 national parliaments of the euro area before starting fresh negotiations. Eurozone finance ministers will hold a conference call on Wednesday to discuss the Greece situation. In an interview with state television, Greece Prime Minister Alexis Tsipras said he took full responsibility for mistakes and for putting signature to a document that "I don't believe in". In a report released Tuesday, the IMF said the closure of banks and imposition of capital controls exacted a "heavy toll" on the banking system and the economy. Consequently, they further deteriorated debt sustainability.
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US Treasury Secretary Jacob Lew will travel to Germany and France for talks on the Greek bailout deal, officials said. Lew will travel to Frankfurt on Wednesday to meet European Central Bank President Mario Draghi. He was due in Berlin on Thursday to meet German Finance Minister Wolfgang Schaeuble. He was then to go to Paris to meet French Finance Minister Michel Sapin before returning to Washington, the US Treasury Department said.
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China's economy grew in the second quarter of this year by 7% year-on-year, the National Bureau of Statistics announced in Beijing on Wednesday, slightly outpacing predictions. Growth was also 7% in the previous quarter, according to the authority. Analysts had expected a slightly weaker growth of 6.9% for the second quarter. "The national economy has been running within a proper range and the major indicators picking up steadily, showing moderate but stable and sound momentum of development," the bureau said.
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The US said it was open to negotiating with North Korea following this week's historic nuclear deal with Iran, a news report said. "Progress in the nuclear talks with Iran clearly demonstrates our willingness to engage countries with whom the US has long-standing differences," said State Department spokesman John Kirby, according to Yonhap News Agency. The US was prepared for such negotiations with North Korea, "provided that they are authentic and credible, get at the entirety of the North's nuclear programme, and result in concrete and irreversible steps toward denuclearization."
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun
Copyright 2015 Alliance News Limited. All Rights Reserved.
12 Sep 2014 15:00
