(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Reckitt Benckiser Group raised its outlook after a strong first half, boosted by cleaning products such as Dettol and Lysol. The consumer goods company reported an 11% increase in net revenue in the six months to the end of June to GBP6.91 billion. On a like-for-like basis revenue grew by 12%. Reckitt reported Hygiene like-for-like sales growth of 16% and Health growth of 9.3%. Pretax profit rose to GBP1.44 billion from GBP1.26 billion year-on-year. Reckitt said its underlying performance has been ahead of expectations, with the Dettol disinfectant maker getting a boost from Covid-19. Its 2020 performance is now expected to be better than forecast back in April.
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AstraZeneca said Farxiga met all primary and secondary endpoints in the phase III DAPA-CKD trial for the treatment of patients with chronic kidney disease. CKD affects nearly 700 million people worldwide. It is associated with significant patient morbidity and an increased risk of events such as heart failure and premature death, Astra explained. The Anglo-Swedish drug manufacturer said results from the trial of Farxiga - or dapagliflozin - showed the drug significantly reduced the worsening of renal function or risk of death in patients with chronic kidney disease with and without type-2 diabetes. "DAPA-CKD is the first trial to demonstrate overwhelming efficacy, including improvement on survival, in chronic kidney disease patients both with and without type-2 diabetes. We look forward to sharing these exciting Farxiga results with the scientific community and health authorities worldwide," said Mene Pangalos, executive vice president, BioPharmaceuticals research & development.
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St James's Place reported a drop in assets under management and cancelled its interim dividend, but is confident 2020 will be a year of "major" net inflows. At June 30, the FTSE 100-listed wealth manager reported funds under management of GBP115.68 billion, down 1.1% from the GBP116.99 billion seen at the beginning of the six months. "The first half of 2020 has been an extraordinary period, both here in the UK and across the world, as the Covid-19 pandemic has profoundly impacted all our lives," Chief Executive Andrew Croft said. He continued: "We began the year with renewed confidence and momentum in the business as we saw investor sentiment rise following the UK general election in December 2019, but this gave way to a challenging external environment in the UK as Covid-19 related lockdown and associated social distancing measures impacted the way we and the Partnership conduct business.
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Baker Greggs said sales slumped in the first half with shops closed for most of the second quarter due to Covid-19. Total sales in the half were GBP300.6 million, down 45% on GBP546.3 million a year ago. Company-managed shop like-for-like sales slumped 49%. This saw the sausage roll maker swing to a pretax loss of GBP65.2 million from a GBP36.7 million profit a year prior. The closure of shops resulted in a number of one-off costs, Greggs said, with the total charge for write-offs and provisions for unusable stock being GBP9.0 million. The weekly cash outflow during the closure period, after support and mitigating actions, was GBP4.4 million per week. The FTSE 250 company did not declare an interim dividend. A year ago, Greggs returned 35.0p per share to shareholders in a special payout, on top of an interim dividend of 11.9p.
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French automaker PSA Group, which is in the process of merging with Fiat Chrysler Automobiles , said it had remained profitable during the first half of the year despite sales plunging due to coronavirus lockdowns. The firm – whose brands include Peugeot, Citroen and Opel – managed a net profit of EUR595 million, a drop of two-thirds from the same period last year. PSA had earlier said that sales fell 35% to EUR25.1 billion during the period as stay at home orders by authorities kept clients out of car showrooms. The automaker's chief executive Carlos Tavares said in the earnings statement that the result "proves the group's resilience, as a reward of six consecutive years of intense work to increase our agility and lower our breakeven point." The company has been focused on boosting profit margins in recent years rather than chasing sales volumes, and it moved to quickly cut costs during the coronavirus crisis.
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MARKETS
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European stocks were modestly higher on Tuesday amid Covid-19 and US stimulus hopes, though with caution lingering ahead of the US Federal Reserve's interest rate decision on Wednesday. The dollar was slightly higher, taking a break from its recent losing streak, as investors start to "consolidate their positions ahead of two risk events", said Ricardo Evangelista, senior analyst at ActivTrades - the two risk events being the two-day Fed meeting, which starts on Tuesday, and Friday's deadline for Congress to agree a new stimulus package.
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FTSE 100: up 0.3% at 6,120.96
FTSE 250: up 0.6% at 17,259.27
AIM ALL-SHARE: up 0.3% at 891.99
GBP: flat at USD1.2883 (USD1.2888)
EUR: lower at USD1.1729 (USD1.1775)
GOLD: lower at USD1,933.23 per ounce (USD1,937.08)
OIL (Brent): higher at USD43.54 a barrel (USD42.47)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK government faced a diplomatic storm with Spain and warnings that its policy on travel to the country risks major damage to business and confusion for holidaymakers. The Foreign & Commonwealth Office has warned against all but essential travel to Spain's Balearic and Canary Islands, having already issued the same advice for the mainland. Travellers from all parts of Spain are required to quarantine for a fortnight on arrival in the UK, a change imposed at short notice over the weekend. Spain's Prime Minister Pedro Sanchez described the latest move as an "error". He pointed out that the upsurge in coronavirus cases is focused in two regions, Catalonia and Aragon, adding: "In most of Spain, the incidence is very much inferior to even the numbers registered in the UK." Madrid had been urging the UK to exclude the Canaries and Balearics – which include popular tourist resorts on Ibiza, Majorca and Menorca – from its quarantine requirements. But instead, official travel advice was tightened to bring the islands in line with the Spanish mainland.
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Germany's disease control agency voiced "great concern" over rising virus numbers in the country as authorities issued a travel warning against parts of Spain. "We must prevent that the virus once again spreads rapidly and uncontrollably," Robert Koch Institute head Lothar Wieler told reporters. "The latest developments in the number of Covid-19 cases are of great concern to me and all of us at the RKI," he said. Germany has fared better than many of its neighbours in suppressing the virus, but Wieler urged citizens not to squander the progress following a spike numbers in recent weeks. "It's in our hands how the pandemic evolves in Germany," Wieler said, calling on Germans to stick with prevention measures such as washing hands and keeping a safe distance. Face masks should be worn not only indoors, but also outdoors, if the recommended 1.5-metre distancing cannot be maintained, he said, in a subtle update of the prior advice.
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The European Central Bank urged banks to refrain from paying dividends or offering bonuses until January 1, 2021, in order to ensure lenders have sufficient buffers to survive the economic storm unleashed by the coronavirus crisis. The recommendation, which extends a previous call to halt such payments until at least October 2020, "remains temporary and exceptional", the ECB said in a statement. The aim is to preserve "banks' capacity to absorb losses and support lending to the real economy" at a time of "exceptional uncertainty". The ECB has taken unprecedented action to cushion the economic impact from the pandemic, launching a EUR1.3 trillion emergency bond-buying scheme to stimulate growth and keep borrowing costs low. It has also offered ultra-cheap loans to banks and eased rules on capital buffers to keep credit flowing in the eurozone. But the Frankfurt institution has repeatedly made clear it expects lenders to make their own extraordinary efforts as well.
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Malaysia's High Court found former Prime Minister Najib Razak guilty on all counts in the first in a series of corruption trials related to state development fund 1Malaysia Development Bhd. Najib was found guilty on all seven charges of criminal breach of trust, money laundering and abuse of position, the Bernama news agency reported from the court. Addressing the High Court in Kuala Lumpur, judge Mohd Nazlan said the prosecution had succeeded in proving the charges against the former prime minister. Najib led Malaysia from 2009 to 2018. He was accused of three counts of criminal breach of trust, three counts of money laundering, and one count of abuse of power related to MYR42 million, about USD9.5 million, allegedly stolen from SRC International, a company belonging to 1MDB, which for a time was run by Malaysia's Ministry of Finance. Last week, US investment bank Goldman Sachs agreed a settlement of USD3.9 billion with the Malaysian government regarding allegations of wrongdoing by its employees related to 1MDB.
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US Republicans put forward a proposal for another coronavirus stimulus bill worth around USD1 trillion dollars on Monday. "The American people need more help," Republican majority leader Mitch McConnell said. The support must however be both "comprehensive" and "carefully tailored" as the country has "one foot in the pandemic and one foot in the recovery," McConnell said. The plan would see another round of one-off payments of USD1,200 to most American adults, Senator Chuck Grassley said. Grassley defended plans to replace USD600 weekly payments for the unemployed - which are due to expire at the end of the month - with payments of 70% of laid-off workers' last wages. The Democrats have called for a package of around USD3 trillion, including continued weekly unemployment payments of USD600, which are due to expire in several days. Republicans have rejected this, saying it is too costly.
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