(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Dutch Shell reported a significant fall in annual earnings, driven by a decline in oil and gas prices. Shell's 2019 current cost of supplies earnings attributable to shareholders excluding items, its preferred profit metric, fell 23% to USD16.46 billion, which is short of market consensus of USD16.74 billion. The figure for the fourth quarter of the year slumped 48% to USD2.93 billion, and was around half the third-quarter figure. Shell is paying a USD0.47 quarterly dividend, as expected by the market, taking the annual total to USD1.88, again as expected. This means no annual dividend increase. Shell is to start the next tranche of its ongoing USD25 billion share buyback for 2018 to 2020. It has so far bought back USD14.75 billion of that, and will purchase USD1 billion more to April 27. The oil major did warn that the pace of the current buyback programme is subject to macroeconomic conditions and the company's progress in reducing debt.
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Unilever reported sales growth across the board but profit fell by a third following a sharp reduction of gains made from a joint-venture disposal. For 2019, revenue was 2.0% higher at EUR51.98 billion from EUR50.98 billion, though pretax profit was 33% lower year-on-year at EUR8.29 billion from EUR12.36 billion. Unilever, which owns names such as Dove soap and Ben & Jerry's ice cream, said underlying sales climbed 2.9% year-on-year in 2019, though growth was below its guided range following a fourth quarter "slowdown". The company declared a fourth quarter dividend of EUR0.4104 per share, up 6.0% year-on-year from EUR0.3872 per share. Looking ahead, Unilever said: "In 2020, our underlying sales growth is expected to be in the lower half of the multi-year 3% to 5% range and will be second-half weighted. While we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first half underlying sales growth will be below 3%."
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BT Group said third-quarter performance missed expectations, though it is on track for the full-year. The telecommunications firm's revenue for the nine months to December fell 2% to GBP17.25 billion, with pretax profit down 8.6% at GBP1.91 billion. Adjusted earnings before interest, tax, depreciation, and amortisation was 3% lower at GBP5.90 billion, while normalised free cash flow fell 42% to GBP1.00 billion in part due to a deposit for the rights to European football. BT said revenue declined due to "ongoing headwinds from regulation, competition, and legacy product declines". BT blamed the falling profitability on the lower revenue, higher spectrum fees, investment, and higher operating costs in Openreach, the firm's UK broadband infrastructure business.
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Diageo upped its interim dividend by 5% after reporting a consistent set of first half results, with broad-based organic sales growth across regions and categories. The brewer and distiller, however, warned that full-year organic net sales growth will be towards the lower end of its mid-term guidance range of 4% to 6% due to changes it is making in the business following increased levels of volatility. For the six months to December 31, Diageo recorded pretax profit of GBP2.46 billion, down 6.2% from GBP2.63 billion a year ago. This was largely due to a non-repeating GBP146 million gain received in the year-earlier period, which mainly related to the sale of a portfolio of 19 brands. London-based Diageo lifted its interim dividend 5.0% to 27.41p per share from 26.10p.
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St James's Place presented a "robust" set of results, with a 22% annual rise in funds under management, as a positive investment return compensated for slightly lower net inflows. The wealth manager said that UK investor sentiment has improved following the December general election. St James's Place reported assets under management of GBP116.99 billion for 2019, up from GBP95.55 billion a year ago. Net inflows totalled GBP8.99 billion, down from GBP10.28 billion in 2018, with gross inflows of GBP15.10 billion, down from GBP15.70 billion.
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Facebook late Wednesday reported quarterly earnings and user growth stronger than most forecasts, but its shares have taken a hit. The leading online social network said net income rose 7% from a year ago to USD7.3 billion, while revenue increased 25% to USD21 billion in the final three months of last year. The number of people using Facebook monthly climbed 8% to 2.5 billion; for all its apps including Instagram, Messenger and WhatsApp, the figure was 2.89 billion. The stock is down 7.3% in pre-market trade in New York on Thursday.
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MARKETS
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London shares were lower amid fears the coronavirus in China is hurting parts of the global economy. In the FTSE 100, BT was the worst performer, down 5.9%. Shell B shares were down 2.6%. The pound was firm against the dollar ahead of the Bank of England's interest rate decision at midday. This will be followed by a press conference with Mark Carney - his last at the helm of the central bank. Wall Street was pointed to a lower open with tobacco stock Altria, telecom firm Verizon, and Coca-Cola reporting earnings before the market open in New York. Amazon will report after the market close.
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FTSE 100: down 0.7% at 7,428.57
FTSE 250: down 0.2% at 21,436.77
AIM ALL-SHARE: down 0.3% at 955.09
GBP: firm at USD1.3012 (USD1.3003)
EUR: firm at USD1.1012 (USD1.100)
GOLD: up at USD1,579.75 per ounce (USD1,569.44)
OIL (Brent): down at USD58.78 a barrel (USD59.94)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Britain has begun its last full day in the EU after Prime Minister Boris Johnson's Brexit deal was given its final seal of approval. British MEPs are packing up their offices in Brussels and millions of new coins will go into circulation promising "friendship with all nations" as the country prepares to exit the bloc at 11pm on Friday. It comes as Johnson prepares to deliver a speech next week saying he is willing to accept border checks after Brexit, with sovereignty prioritised over frictionless trade. The prime minister's speech will come in apparent defiance of EU warnings that Britain must accept the bloc's standards on goods for the best trade agreement, The Daily Telegraph reports while citing Whitehall sources.
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UK Chancellor Sajid Javid is set to throw his weight behind the controversial HS2 rail project. Javid is minded to support the high speed train initiative at a meeting with Johnson and Transport Secretary Grant Shapps on Thursday. The PA news agency understands that having reviewed costs and alternatives the Chancellor will "broadly back" the high-speed line from London to Birmingham, Manchester and Leeds. Shapps has insisted that no decision on the controversial infrastructure project – the biggest in Europe – will be announced this week. It has been estimated the scheme, which was allocated GBP56 billion in 2015, could cost up to GBP106 billion.
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Johnson will meet with the US secretary of state as transatlantic tensions simmer over the decision to allow a Chinese tech giant to take part in Britain's 5G roll-out. Mike Pompeo will meet the UK prime minister in Downing Street after insisting Huawei presents a "real risk" to security. The pointed comments came after Johnson claimed allowing the Chinese company to be involved in the UK's 5G network would not damage transatlantic security co-operation.
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Car manufacturing in the UK fell for the third consecutive year and was lowest since 2010, data from the Society of Motor Manufacturers & Traders showed. According to data from the trade body, UK car production fell 14% in 2019 to 1.3 million, with a 6.4% drop in December rounding off a third year of decline. SMMT said car production output was affected by multiple factors, including weakened consumer and business confidence in the UK, slower demand in key overseas markets, a number of significant model production changes and a shift from diesel across Europe.
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The eurozone unemployment rate edged lower in December to hit its best level in over a decade, official data showed. Separately, economic sentiment saw a boost in January, the European Commission reported. Eurostat said the seasonally-adjusted unemployment rate was 7.4% in December, down from 7.5% in November and better than consensus forecasts, according to FXStreet, which saw the unemployment rate remaining steady. The latest reading marked the lowest jobless rate recorded in the euro area since May 2008.
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China reported its biggest single-day jump in novel coronavirus deaths on Thursday, as confirmation that three Japanese evacuated from the outbreak's epicentre were infected deepened fears about a global contagion. The World Health Organization, which initially downplayed the severity of a disease that has now killed 170 nationwide, warned all governments to be "on alert" as it weighed whether to declare a global health emergency. As foreign countries evacuated their citizens from Wuhan, the locked-down city where the virus was first detected, concern over the economic impact has steadily intensified.
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The US Federal Reserve held its policy interest rate steady on Wednesday, but again said it is monitoring "global developments" to decide its next move. Fed Chairman Jerome Powell said however that while the global economy seems to have stabilized, the deadly virus outbreak in China presents a potential risk. "There will clearly be implications at least in the near term for Chinese output and I would guess for some of their close neighbours," Powell told reporters following the Fed's policy meeting.
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