LONDON (Alliance News) - BT Group Friday reported a strong increase in third-quarter pretax profit that beat analysts' expectations, but saw its shares drop as it agreed a 16-year recovery plan to plug its pension scheme deficit, including pumping in GBP2.0 billion over the next three years.
The telecommunications company, which is in talks to acquire the UK's largest mobile network EE, said it is making good progress on due diligence, but declined to give any further updates on the takeover. It also declined to give details on its bidding stance for the upcoming Premier League football TV rights, other than to say it is determined not to overpay.
That left questions over its future cost base.
"The looming costs of bidding for football rights, acquiring EE Ltd and having to pump a further GBP2 billion into the company’s pension fund have dominated traders thinking," IG Market analyst Alastair McCaig said.
BT posted a pretax profit of GBP694 million for quarter to end-December 2014, up from GBP617 million a year before, ahead of consensus analyst expectations of GBP658 million, although revenue fell to GBP4.48 billion, from GBP4.60 billion, just missing analysts' expectations of GBP4.49 billion. The rise in pretax profit came from a reduction in operating costs before depreciation and amortisation of 5%.
International Consolidated Airlines Group said state-owned Qatar Airways has acquired a 9.99% stake in the company, a move that strengthens and formalises the ties between the two carriers and continues the recent consolidation in the sector.
No financial details were given on the acquisition of the stake, but based on IAG's closing share price on Thursday of 564.00 pence a share, the stake would be worth nearly GBP1.2 billion.
Qatar Airways said it may consider increasing its stake in IAG over time, but does not currently intend it to exceed the 9.99% level. It is bound by European Union airline ownership rules that state EU airlines must be majority owned by EU shareholders. Overall non-EU ownership of any EU airline is therefore capped.
“IAG represents an excellent opportunity to further develop our Westwards strategy. Having joined the oneworld alliance it makes sense for us to work more closely together in the near term and we look forward to forging a long-term relationship,” Qatar Airways Chief Executive Akbar Al Baker said in a statement.
"We're delighted to have Qatar Airways, one of the world's premier airlines, as a long term supportive shareholder. We will talk to them about what opportunities exist to work more closely together and further IAG's ambitions as the leading global airline group," said IAG Chief Executive Willie Walsh.
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Markets: The FTSE 100 trades lower, with BT Group and food retailers amongst the worst-performing stocks.
US stocks are set for a lower open, with stock futures indicating the DJIA will open down 0.7%, the S&P 500 down 0.6% and the Nasdaq Composite down 0.3%.
FTSE 100: down 0.5% at 6,779.50
FTSE 250: down 0.2% at 16,328.15
AIM ALL-SHARE: up 0.4% at 689.31
GBP-USD: up at USD1.5077
EUR-USD: up at USD1.1338
GOLD: up at USD1,263.03 an ounce
OIL (Brent): up at USD49.40 a barrel
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Other Top Corporate News
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UK Business Secretary Vince Cable tabled measures in Parliament which will give the Groceries Code Adjudicator powers to fine supermarkets in the UK that breach the Groceries Code in their relationships with their suppliers. Under the plans, the adjudicator will be able to impose penalties on the UK's biggest supermarkets, including listed supermarkets Tesco, J Sainsbury and Wm Morrison Supermarkets, of up to 1% of their annual UK turnover.
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Diageo has emerged among a group of blue-chip companies interested in taking over the headline sponsorship of the English Premier League at the end of next season, Sky News reported. The FTSE 100-listed drinks group has emerged as a potential bidder for the sponsorship deal, thought to be worth more than GBP150 million, alongside incumbent sponsor Barclays, Sky said. Barclays had been expected to withdraw from the deal when it expires at the end of the 2015-16 season, but is now understood to have signalled to league administrators it may bid again.
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Vedanta Resources said earnings fell in the third quarter from a year earlier, despite revenue rising, due to lower oil and commodity prices and said production increased quarter on quarter across the board. For the third quarter ended December 31, the company reported earnings before interest, tax, depreciation and amortisation of USD1.02 billion, down 11% from a year earlier when it reported Ebitda of USD1.14 billion. Revenue during the quarter totalled USD3.35 billion, compared with USD3.33 billion a year earlier. Gross daily production averaged 218,900 barrels of oil equivalent per day during the quarter from its oil and gas production following production at Rajasthan resuming normal levels after a planned maintenance shut-down carried out in the second quarter. This is a 13% increase quarter on quarter.
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Nostrum Oil & Gas said KazStroyService Global BV has transferred its Nostrum shares into two affiliate companies, one of which has signed a deal to continue its relationship agreement with Nostrum. Nostrum said KazStroyService has transferred 48.3 million shares to Mayfair Investments BV, a company indirectly owned by the three main shareholders of KazStroyService, and 1.7 million shares to its other shareholder. Nostrum has 188.2 million shares, so the stake transferred is just under 27%.
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AIM Movers
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Weatherly International shares are up sharply after it said progress at its Tschudi copper mining project in Namibia is ahead of schedule, with first copper forecast to be produced in February 2015. UK Oil & Gas Investments is up after it signed an alliance and consulting services agreement with US company NUTECH Energy Alliance Ltd to maximise the potential value of the Horse Hill license areas in the UK. Aurora Russia is another gainer after it sold its 24.3% shareholding in Russian DIY retailer Superstroy for GBP680,000, a price it thinks was "as good as the company could realistically expect to obtain" in the current climate surrounding Russia. It said Superstroy would have needed significant restructuring to turn it around. Ashley House shares are down by more than a quarter after it said it's likely to post a pretax loss for its full year, after it reported a widened pretax loss for its first half due to significant investment made into establishing its Extra Care fund and ongoing challenges in its healthcare business. It also expects to post a full-year pretax loss as a result of the newly established fund being incorporated into its business as a subsidiary. Rambler Metals & Minning shares are also down more than a quarter after it said it has implemented a revised plan for the Ming copper-gold mine in order to cut costs and said it has faced further issues in the dilution of ore production stopes at the site. Red Leopard Holdings is another faller after reporting further problems at the Idora Mine in the US state of Idaho. Red Leopard said rock falls have been discovered further inside the tunnel, hindering access to the ore body and therefore preventing any sampling activity.
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Top Economics And General
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UK mortgage approvals increased in December from a 17-month low in the prior month, the Bank of England reported. The number of mortgages approved for house purchases rose to a 3-month high of 60,275 from 58,956 in November. It was forecast to rise slightly to 59,000 in December. Secured lending rose by GBP 1.6 billion in December versus GBP 1.9 billion in November. Economists had forecast lending to rise again by GBP 1.9 billion. Net consumer credit increased GBP 0.6 billion from the prior month, but slower than a GBP 1.2 billion rise seen in November. Consumer credit was expected to rise by GBP 1.2 billion.
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Eurozone harmonized consumer prices decreased for the second straight month in January and marked the biggest fall since 2009. The harmonized index of consumer prices fell 0.6% year-on-year in January, a similar rate of decline was last seen in July 2009. This was the second consecutive fall in prices and exceeded a 0.5% drop forecast by economists. Prices were down 0.2% in December, which was the first decline since October 2009.
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The euro area jobless rate fell unexpectedly in December to the lowest rate since August 2012, data from Eurostat showed. The unemployment rate came in at a double-digit 11.4% in December, slightly down from 11.5% in November. It was expected to remain at 11.5% in December. This was the lowest rate reported in the euro area since August 2012. The number of unemployed decreased by 157,000 from November and 693,000 from December 2013.
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Germany's retail sales rose at a slower than expected rate in December, preliminary data from Destatis showed. Sales grew a calendar and seasonally-adjusted 0.1% month-on-month in December following the 0.5% gain in November. Economists had expected sales to increase 0.3%.
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The head of eurozone finance ministers' group, Jeroen Dijsselbloem, will launch debt talks with Greece's newly elected leftist government. The Eurogroup head is scheduled to meet with Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis. The SYRIZA government is determined on changing the conditions of its international bailout programme, while Dijsselbloem has stressed the importance of upholding the existing agreements. The Dutch finance minister has said that he is prepared to hear Varoufakis' proposals for debt relief.
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Russia's central bank unexpectedly cut the key interest rate by 200 basis points to 15%. On December 15, the Bank of Russia hiked the rate to 17% from 10.5% in a surprise move, just a week after raising it by 100 basis points. The hikes were aimed at limiting the slide in the ruble and risks to inflation, the bank had said. Economists had expected the central bank to leave rates unchanged this month.
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EU foreign ministers laid the groundwork for a new round of sanctions over the crisis in Ukraine, amid renewed fighting in the east of the country. "We hope that this can help putting pressure in particular on Russia to make positive steps and prevent negative steps that we have seen in the recent days," EU foreign policy chief Federica Mogherini said. The bloc's 28 ministers said in a joint statement that they were "shocked by the high number of casualties" in the fresh fighting and condemned the use of "indiscriminate shelling" in residential areas.
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The unemployment rate in Japan was a seasonally adjusted 3.4% in December, the Ministry of Internal Affairs and Communications said. That beat forecasts for 3.5%, which would have been unchanged from the November reading.
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Consumer prices in Japan were up 2.4% on year in December, the Ministry of Internal Affairs and Communications said - topping expectations for 2.3% and unchanged from November. Core CPI, which excludes the volatile costs of food, added 2.5%. That was below forecasts for 2.6% and down from 2.7% in the previous month.
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The US Senate approved a controversial cross-country oil pipeline, putting the new all-Republican-majority Congress on course for its first veto. The Senate voted 62-36 to authorize construction of the Keystone XL Pipeline from the Canadian border to Texas that has been a political hot-button issue for more than five years. The lower house passed similar legislation earlier this month, meaning the bill will soon go to the White House for President Barack Obama's signature into law. Obama has vowed to veto the bill, and White House spokesman Josh Earnest Thursday repeated the threat.
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Saudi Arabia's King Salman reshuffled the monarchy's government less than a week after ascending to the throne of the oil-rich Western ally. Prince Bandar, the former ambassador to the US, was removed from his post as the head of the National Security Council and the body was dissolved. Also, Prince Khaled bin Bander was replaced as the head of intelligence by Khaled al-Humaidan, an interior ministry official. The monarch also replaced the governor of Riyadh, according to the decree which was reported by Saudi television. Khaled al-Faysal was named as governor of Mecca, the city holy to Muslims, replacing a son of recently deceased King Abdullah.
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Afternoon Watchlist (all times in GMT)
13:30 US Employment cost index
13:30 US Gross Domestic Product
13:30 US Personal Consumption Expenditures Prices
14:45 US Chicago Purchasing Managers' Index
15:00 US Reuters/Michigan Consumer Sentiment Index
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Monday's Key UK Corporate Events
RM Full Year Results
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Monday's Key Economic Events (all times in GMT)
01:35 Japan Nomura/ JMMA Manufacturing Purchasing Manager Index
01:45 China HSBC Manufacturing PMI
08:45 Italy Markit Manufacturing PMI
08:50 France Markit Manufacturing PMI
08:55 Germany Markit Manufacturing PMI
09:00 EU Markit Manufacturing PMI
09:30 UK Markit Manufacturing PMI
10:00 EU Unemployment Rate
13:30 US Personal Consumption Expenditures
14:45 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US ISM Manufacturing PMI
23:50 Japan Monetary Base
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29 Jun 2016 10:34
