(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Royal Dutch Shell said it plans to slash thousands of jobs as it looks to seal up to USD2.5 billion in annual cost savings by 2022 as the oil major grapples with tumbling demand. The company said it expects third-quarter production in its Integrated Gas arm to be between 820,000 and 860,000 barrels of oil equivalent per day, at best a 10% annual decline. In its Upstream operations, output is tipped to land between 2.15 million boepd and 2.25 million, with the segment hit by the hurricane season in the US. Hurricanes in the Gulf of Mexico hurt output by between 60,000 boepd and 70,000 boepd, Shell explained. The Anglo-Dutch firm said it expects to cut 7,000 to 9,000 jobs by the end of 2022 following the plunge in demand. The "reduced organisational complexity" and other measures, Shell said, are expected to deliver sustainable annual cost savings of between USD2.0 to USD2.5 billion by 2022.
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Compass Group said it was expecting a sharp revenue drop for its 2020 financial year, though there have been signs of improvement in its fourth quarter. Compass said revenue for its financial year ending Wednesday was down 19%, having fallen 44% in the third quarter and 36% in the fourth. The company said it saw some improvement in the fourth quarter as students began to return to schools and workers to offices. However, it is reviewing its contract portfolio and currently estimates that, subject to audit, it will have to impair around GBP100 million of contract assets. Including these impairments, it expects to post a negative underlying operating margin of about 3% for the fourth quarter, improved from a 5.3% negative underlying operating margin in the third quarter. Before impairments, its operating margin was at breakeven in the fourth quarter. For its financial year as a whole, Compass expects to report a positive underlying operating margin after estimated contract impairments of around 3%.
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SSE warned that the coronavirus pandemic will hurt its first half outcome, but the electricity utility continues to perform well and is making a good progressing on divestments. The FTSE 100-listed energy company estimates a hit of around GBP120 million to GBP130 million in the six months to September 30 from the virus outbreak. Overall, SSE estimates damage of between GBP150 million and GBP250 million in financial 2021, before mitigation measures. For the first half, the Perth, Scotland-based company expects adjusted earnings per share in the range 10 pence to 12.5p, down at least 88% from 18.0p recorded a year ago. Energy output for the year to September 21 was 362 gigawatt, 9% below plan and a 3% shortfall on annual output. The company, however, said its performance for the full-year and year-to-date remains broadly in line with the board's expectations.
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Caesars Entertainment said it has reached an agreement to acquire UK gambling company William Hill for GBP2.9 billion, as part of the US gaming company's plan to expand its sports and online gaming business. Under the terms of the agreement, Caesars will pay 272 pence for each William Hill share. The high street bookmaker, through a joint venture with Caesars, already runs online sports betting operations in some US states and retail sports wagering in Caesars' properties in the US. William Hill directors consider the terms of the acquisition offer to be "fair and reasonable" and have decided to unanimously and unconditionally recommend the acquisition offer to shareholders.
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boohoo Group reported its first-half profit doubled and expects annual revenue to climb by almost a third as the fast-fashion firm promised "substantive" changes following an independent review into its supply chain. Revenue in the six months to August 31 surged 45% year-on-year to GBP816.5 million from GBP564.9 million. Pretax profit jumped 51% to GBP68.1 million from GBP45.2 million a year earlier. The period coincided with the Covid-19 lockdown in the UK which forced high street retailers to shutter stores, boosting demand for online fashion sellers such as boohoo. Helping the interim revenue rise was 55% growth in its international arm, including an 83% surge in the US. Boohoo's international operations now account for 47% of its revenue, up from 44% a year ago. UK revenue meanwhile, climbed 37% year-on-year in the first half. For the year ending February, boohoo now expects revenue growth between 28% and 31%, up from its previous forecast of 25% growth.
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MARKETS
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London shares were lower following an acrimonious US presidential election debate overnight. Compass was the worst blue-chip performer, down 4.5%. Shell 'A' shares were up 0.2%. The pound was down against the dollar despite a slight upward revision to UK GDP. Wall Street was pointed to a lower open.
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FTSE 100: down 0.3% at 5,878.28
FTSE 250: up 0.1% at 17,187.01
AIM ALL-SHARE: down 0.4% at 953.17
GBP: down at USD1.2828 (USD1.2859)
EUR: down at USD1.1705 (USD1.1741)
GOLD: down at USD1,884.02 per ounce (USD1,892.11)
OIL (Brent): flat at USD41.11 a barrel (USD41.08)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson will lead a Covid-19 briefing Wednesday after the UK recorded the highest number of daily coronavirus cases since the outbreak began. Johnson will be joined at a Downing Street press conference by chief medical officer for England Chris Whitty and chief scientific adviser Patrick Vallance in what will be the 100th coronavirus briefing since the pandemic hit the UK. The last time the three men appeared together at the podiums was September 9 when Johnson outlined the "rule of six" and urged people to limit their social contact "as much as possible". As of 9am on Tuesday, there had been a further 7,143 lab-confirmed cases of coronavirus in the UK - the highest daily figure recorded since the outbreak began, although far more tests are being carried out than in the spring.
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A UK government minister has hinted that concessions for Tories disgruntled by quick-fire coronavirus rules could be on their way as one of the rebel ringleaders vowed not to let the issue lie. Business Secretary Alok Sharma said ministers would "come forward with some suggestions" to pacify concerns that there had been a lack of scrutiny in a recent flurry of restrictions designed to stem the second wave of Covid-19 infections across the UK. Members of Parliament are due to vote on Wednesday to renew the powers in the Coronavirus Act enabling ministers to impose sweeping controls, but more than 50 Tory MPs have signed an amendment by the chairman of the influential Conservative backbench 1922 Committee, Graham Brady, requiring the government to consult Parliament on any new measures. With Labour and the Liberal Democrats backing the motion, the rebels believe they have the numbers to defeat the government if it is put to a vote.
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The UK economy's second-quarter slump was not as bad as first estimated, according to the latest figures from the Office for National Statistics. On an annual basis, UK gross domestic product fell by a revised 21.5% in the three months to June, having contracted 1.7% in the first quarter of 2020. The second-quarter reading was revised to a slightly smaller annual decline from the original estimate of 21.7%. On a quarterly basis, UK GDP shrank by 19.8%, revised from the initial estimate of a 20.4% fall, having contracted 2.2% in the first three months of 2020. The quarterly figure was in line with the consensus estimate. The ONS said this was the largest quarterly contraction in the UK economy since quarterly records began in 1955.
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The average UK house price has hit a new record in September, pushing over GBP225,000 for the first time, according to an index released. Nationwide Building Society said the average UK house price was GBP226,129 in September - the first time it has been above the GBP225,000 mark. In August, the average house price was GBP224,123. House prices increased by 5% annually in September, marking the highest growth rate in four years. Prices increased by 0.9% month-on-month. "The stamp duty holiday is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown," said Nationwide's Robert Gardner.
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Retailers in the UK continued to cut prices in September, data showed, but experts warned companies will have no choice but to pass cost rises onto the consumer should the UK and EU fail to get a Brexit deal over the line. According to the British Retail Consortium-Nielsen shop price index, prices fell by 1.6% annually in September, the same rate of decline seen in August. It was a steeper fall than the 12-month average decline of 1.1%, but slightly slower than the 1.7% average six-month decline.
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Factory activity in China improved slightly in September, according to official data published Wednesday, showing a small rebound in the economy ahead of the week-long National Day public holiday. The Purchasing Managers' Index is a key gauge of manufacturing activity in the world's second-largest economy, which has largely bounced back after plunging in February because of tough coronavirus measures. In September, the PMI figure increased slightly to 51.5 after slipping to 51.0 in the previous month. Any figure above the 50-point mark represents growth while below it signals a contraction.
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Democrat Joe Biden told a raging President Donald Trump to "shut up" in an opening debate that turned almost immediately into a shouting match 35 days ahead of the most tense US election in recent memory. The debate in Cleveland, Ohio, was as bad-tempered as had been feared, with Trump leading the way in yelling over his challenger and the Fox News moderator Chris Wallace alike. At times, neither Biden nor Wallace could get a word in, as Trump loudly touted his economic record and went after Biden's son Hunter over his work for a Ukrainian gas firm. At one point an exasperated Biden, who leads strongly in the polls, turned to Trump and said: "Will you shut up, man!" Hours before the Cleveland showdown, Biden published his own tax returns – and at the debate demanded that Trump do likewise. Trump insisted at the debate that he has paid "millions" in taxes.
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