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LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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BP PLC warned that further sanctions against Russian partner Rosneft OAO could "adversely impact" the company, as the oil and gas major reported higher profit in its second quarter but a decline in profit for all of the first half. The oil and gas giant said its first half pretax profit more than halved to USD11.14 billion for the six months ended June 30 from USD24.62 billion in the previous year as revenues and other income fell 7.0% to USD188,82 billion from USD202.92 billion. The company said revenues fell as production dropped 7.3% to 2,118 million barrels of oil equivalent per day, leading to a downstream drop in revenues to USD171.17 billion from USD175.13 billion. In the first half of 2014, the company posted disposal gains of USD379 million, but in the same period the previous year, the company disposed of USD12.78 billion worth of assets. In its second quarter figures, the company made a 22% pretax profit gain to USD5.50 billion from USD4.49 billion in the same period the previous year, despite a slight fall in revenues.
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GKN PLC saw its shares jump after the company said pretax profit rose in its first half, while revenues declined marginally due to a currency translation impact. In its results for the half-year to June 30, 2014, the British multinational automotive and aerospace components company said pretax profit rose 6% to GBP296 million from GBP278 million in the comparative period last year, with GBP24 million of adverse currency this half matching restructuring costs of GBP25 million in the first half of 2013. The FTSE 100-listed company increased its interim dividend to 2.8 pence per share, up 8% on the 2.6 pence per share paid in the first half of 2013.
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St James's Place PLC raised its interim dividend for the half year to end-June and pledged further dividend growth for the full year, as it saw strong growth in its net inflow of funds under management but a sharp fall in half-year pretax profit. The financial services company posted an interim dividend of 8.93 pence, up 40% from 6.38 pence. St James's said it expects to increase its full-year dividend by a similar amount, signalling its confidence for the future, it said. The company said it plans to continue its progressive dividend policy, growing its future dividend in line with its underlying performance.
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The UK's big-four supermarket chains continue to face pressure from heavy discounters and upmarket grocers, but while J Sainsbury PLC and Asda have maintained market share and sales, Tesco PLC and Wm Morrison Supermarkets PLC are seeing drops in both, according to the latest figures from Kantar Worldpanel. Morrisons and Tesco both recorded sales drops of 3.8% in the 12 weeks to July 20 from the same period a year earlier, and also saw a dip in their market shares. Morrisons' market share fell to 11.0% from 11.5% last year, while Tesco's market share declined to 28.9% from 30.3% a year before. In contrast, both Sainsbury's and Asda continue to outperform the other two, posting growth in sales in the 12 week period and managing to maintain market share. Sainsbury's sales rose 1.2% year-on-year, and its market share remained level at 16.6%, compared to a year before.
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Wm Morrison Supermarkets PLC said Andrew Higginson is to replace Ian Gibson as the company's chairman when Gibson retires in 2015. Ahead of taking up the role, Higginson will join the board of the supermarket on 1 October as non-executive deputy chairman and chairman elect. Higginson currently holds chairmanships at Poundland PLC and N Brown PLC and is a senior independent director at British Sky Broadcasting Group PLC. Prior to this, he was an executive director at Tesco PLC for 15 years. As part of the move, Higginson will step down as chairman of Poundland, which said Tuesday he would be replaced by Darren Shapland.
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UK clothing and homeware retailer Next PLC raised its profit and sales forecast for the current financial year for a second time, after reporting strong growth in the first half of the year driven by all parts of the business. Next total brand sales were up 11% in the second quarter and for the first half of the year to July 26, driven by a combination of improving sales from its stores, new retail space, strong growth online and a flourishing international business. In the first half, 2.4% of sales growth was the contribution from new retail space. The retailer also raised its pretax profit guidance for the year ending in January 2015 by GBP25 million, and said it now expects to deliver a profit in the region of GBP775 million and GBP815 million, growth of between 11% and 17%.
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Rolls-Royce Holdings PLC was hit by another cancellation of an order for large Airbus aircraft that had been due to be fitted with the British company's engines, just weeks after a cancellation wiped about 3.5%, or GBP2.6 billion, off its order book. In a statement, the aircraft and marine engine maker said Airbus had terminated an order for six A380 aircraft from Skymark airline of Japan. The planes, which had been due for delivery between 2014 and 2015, had been due to be fitted with Rolls-Royce Trent 900 engines, and the airline had also booked Rolls-Royce's follow-up servicing package for the engines. Rolls-Royce said the new cancellation had reduced its order book by GBP351 million, or about 0.5% of its GBP71.4 billion order book as at December 31, 2013.
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Mondi PLC said it expects underlying operating profit for its first half to come in higher than the comparative period last year as a net special item charge will be reduced in the half-year due to restructuring activities. The international packaging company said in a statement that it expects its underlying operating profit to be above that of the EUR367 million recorded in the first half of 2013.
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Babcock International Group PLC said it has appointed Finance Director Bill Tame as chief executive of the group's enlarged International division. Tame has served as group finance director since 2002. In the new role he will take over responsibility for the South African operations and the Avincis Group, as well as the group's business development activities in the Middle East. Following Tame's appointment, Babcock has promoted Franco Martinelli to the role of group finance director. Martinelli has served as Babcock's group financial controller for 12 years.
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Drax Group PLC said it swung to a pretax loss in its first half and lowered its interim dividend, as higher revenues were more than offset by significant costs during the period. The FTSE 250-listed UK energy provider posted a pretax loss of GBP10.8 million for the six months ended June 30 compared with a pretax profit of GBP205.6 million the previous year. Drax said at the time that since publishing its preliminary results on February 18, mild weather across Europe had led to weaker gas markets and a further fall in power prices, while abnormally high amounts of wind generation had pushed down the price of its renewables obligation certificates prices.
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Tullett Prebon PLC said that revenue and pretax profit declined in its first-half amid challenging market conditions as the overall level of activity in the financial markets remained subdued. In an interim management statement for the six months to June 30, 2014, the interdealer broker said revenue fell 15% to GBP360.3 million compared to GBP439.8 million last year, while pretax profit slumped to GBP8.9 million from the GBP52.5 million recorded in the first half of 2013. The company has retained its interim dividend at the 5.6 pence per share paid last year.
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Elementis PLC said its pretax profit increased in its first half due to sales improvements in its Specialty Products division. The FTSE 250 listed chemicals company said its pretax profit increased 7.2% to USD72.4 million for the six months ended June 30 from USD67.5 million in the previous year, as revenue increased 3.0% to USD400.0 million from USD388.2 million The company said revenues were supported by a 4% increase in Specialty Products' sales, with personal care products sales volumes increasing 21% and growth in both North American and Asia Pacific coatings operations. As such, the company increased its interim dividend by 5% to 2.70 cents from 2.57 cents previously.
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MARKETS
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The UK's main stock indices are trading modestly higher, as investors remain reluctant to significantly add to positions ahead of some major pieces of economic data to come later in the week, as well as the expected announcement of new EU sanctions against Russia.
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FTSE 100: up 0.2% at 6804.43
FTSE 250: up 0.6% at 15708.43
AIM ALL-SHARE: down 0.1% at 771.13
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The pound is currently down, having earlier rose to a session high of USD1.6995 but failing to rise above USD1.70. Major currency pairs remain in extremely tight ranges ahead of the major US data to come later in the week.
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GBP-USD: down at USD1.6969
EUR-USD: flat USD1.3435

GOLD: up at USD1308.69 per ounce
OIL (Brent): up at USD107.88 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK mortgage approvals increased more than expected in June to the highest level since last February, data showed. Approvals for house purchases increased to 67,196, a 4-month high, from 62,007 in May, the Bank of England said. It was forecast to rise moderately to 63,000. Total lending to individuals increased GBP 2.5 billion. Within the total, lending secured on dwellings increased by GBP 2.1 billion in June, compared to GBP 2.3 billion rise in May. On a yearly basis, secured lending was up 1.5%. Consumer credit grew only GBP 0.4 billion after rising GBP 0.7 billion. Annually, growth remained unchanged at 5.3%.
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The International Monetary Fund advised the UK to tighten its monetary policy if new regulations introduced to contain overheating in the housing market prove ineffective. The IMF late Monday said the monetary policy should stay accommodative until inflation show signs of rising or that costs move ahead of productivity growth. However, the lender said interest rates might need to be raised quickly if inflationary pressures intensify. The Bank of England may need to consider raising interest rates in case macroprudential measures prove insufficient to deal with financial stability risks from the housing market, it said. The Washington-based lender welcomed the micro and macroprudential measures taken by both the government and central bank. Last month, the BoE introduced new controls on mortgage lending.
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Germany's import prices continued to decline in June, data from Destatis showed. Import prices were down 1.2% year-on-year in June, slower than the 2.1% decrease seen in May. The rate of decline came in line with economists' expectations. On a monthly basis, import prices advanced 0.2% after staying flat in May. Economists had forecast a 0.3% rise for June.
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The EU was set to consider imposing economic sanctions against Russia, amid an international effort to turn up the heat on Moscow for its actions in Ukraine. The EU has already hit individuals, companies and other entities with such measures, but had steered clear of targeting whole sectors of the Russian economy amid fears of the fallout for its own finances. Many EU countries have close business and trade ties with Moscow. But the downing of a Malaysia Airlines plane with 298 people on board, which has been blamed on Moscow-backed separatists, helped tip the scales. The EU has issued several new round of sanctions over the last week, with the economic sanctions set to be the toughest so far.
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The US government is convinced that Russia violated an arms control treaty by testing a ground-launched cruise missile, according to a report in The New York Times late Monday. President Barack Obama had informed Russian President Vladimir Putin of the findings in a letter on Monday, the report said, citing unnamed senior American officials. The move further complicates an already fraught relationship between Moscow and Washington over the Ukraine crisis.
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Fighting in the area around the Malaysia Airlines crash site in eastern Ukraine prevented a team of unarmed Dutch and Australian police officers from reaching the wreckage for a second consecutive day Monday. The Organization for Security and Co-operation in Europe (OSCE) said "security reasons" led to their convoy turning back to the city of Donetsk. A visit by the Dutch and Australian teams to secure the debris site and collect remaining bodies was also cancelled on Sunday amid reports of fighting between government forces and pro-Russian separatists.
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Israeli military jets struck the house of Ismail Haniya, deputy chief of the Islamist Hamas movement, in western Gaza City, local media and witnesses said. No injuries were reported and neither Haniya nor his family were at home when it was destroyed by the missiles, Hamas' al-Aqsa television reported. Airstrikes on central and southern areas of the Gaza Strip killed at least 16 Palestinians and wounded more than 50 others early Tuesday, medics and witnesses said.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun

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