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(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Taylor Wimpey posted a full-year revenue climb with completions rising to a company record. Revenue in 2019 came in 6.4% higher at GBP4.34 billion from GBP4.08 billion, with the FTSE 100-listed housebuilder's pretax profit rising 3.1% to GBP835.9 million from GBP810.7 million. Before exceptional items however, pretax profit dipped 4.1% to GBP821.6 million from GBP856.8 million. In 2019, the company made a GBP14.3 million gain from such one-off items, swinging from a GBP46.1 million loss. The exceptional credit in 2019 was related to the implementation of a pension increase exchange arrangement. In 2018, among its exceptional costs was a GBP30.0 million provision related to aluminium composite materials cladding. The company upped its full-year dividend by 22% to 7.64 pence per share from 6.24p in 2018. Looking ahead, Taylor Wimpey said it expects volumes for 2020 and its operating profit margin in the first half of 2020 will show pressure from 2019 build cost inflation and selling prices, as well as long term investment in quality and business improvement.
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Miner Rio Tinto reported a revenue rise in 2019, attributed to higher iron ore prices, but profits dipped on the absence of one-off gains in 2018. In 2019, sales revenue rose 6.5% to USD43.17 billion from USD40.52 billion, but pretax profit was down 35% to USD11.77 billion from USD18.20 billion. "USD43.2 billion consolidated sales revenue was 7% higher than 2018, primarily driven by higher iron ore prices. This was partially offset by lower copper and aluminium prices and the absence of revenues from assets divested in 2018," the company explained. For 2019, the miner reported a USD291 million net loss on consolidation and disposals, compared to a USD4.6 billion gain in 2018. It also booked impairment charges of USD3.49 billion, swinging from a USD132 million gain the year prior.
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Diageo warned of a significant dent to profit and sales due to the coronavirus outbreak in China. The Johnnie Walker whisky maker expects a negative impact on organic net sales for its year ending June in the range of GBP225 million to GBP325 million. Diageo guided for organic operating profit to be knocked in the range of GBP140 million to GBP200 million. Diageo said the final impact will be determined by timing and the pace of recovery in China as well as several other Asian countries such as South Korea, Japan, and Thailand. Diageo said these estimates exclude any impact of coronavirus on other markets, with Diageo saying it is "difficult" to predict how coronavirus will spread.
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Serco Group achieved its first revenue growth in over five years, the company said, with the dividend also returning. Serco posted revenue of GBP3.25 billion in 2019, 15% higher than the year before. Organic revenue growth was 8%. Chief Executive Rupert Soames said this was the first revenue growth since 2013. The company's pretax profit increased by 8.9% to GBP80.7 million, with the figure before exceptional items up 5.7% to GBP104.1 million. Serco has decided to pay a 1.0p per share dividend for the year, the first time it has paid a dividend since 2014, an "important milestone" for the company. Serco also said the order intake for 2019 hit a record GBP5.4 billion, meaning the order book stands at GBP14.1 billion, around 40% higher than where it was three years ago.
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Weir Group reported a sharp swing to an annual loss due to a non-cash impairment from its Oil & Gas North American assets, despite growth in revenue and orders. For 2019, the Glasgow-based engineering firm posted a reported pretax loss of GBP372 million, compared to a profit of GBP86 million the year before, due to an impairment charge of GBP546 million recognised in the Oil & Gas North American cash generating unit. Weir said challenging market conditions and uncertainty about the timing of market recovery led to estimates of future cash flows featuring lower revenue and margin assumptions, leading to a review of specific assets considered to be at risk. Weir declared a final dividend of 30.45 pence per share, bringing the total payout to 46.95p, up 2% from 46.20p the prior year. Looking ahead, Weir expects good growth in constant currency revenue from Minerals and ESCO, although it has noted the uncertainty over the global economy due to the coronavirus outbreak, even as mining markets remain positive.
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London Stock Exchange Group's USD27 billion acquisition of financial data provider Refinitiv Holdings is facing intense scrutiny in Brussels, raising the risk that regulators will subject the blockbuster deal to a much lengthier probe than the two companies had expected, the Financial Times reported. The companies have yet to notify competition regulators formally of the deal, a step required to start the review of an acquisition, according to the FT. The newspaper cited three people with knowledge who said that a plan to do so by the start of the month slipped because of the unexpected scrutiny of the deal in the so-called pre-notification phase.
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MARKETS
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London shares were firmly lower with the FTSE 100 slipped below the 7,000 mark for the first time in over a year, as investors grow increasingly fearful over the effects of the coronavirus on company earnings. Taylor Wimpey was the worst blue chip performer, down 4.3%, while leisure and travel stocks were also weighing on the large cap index. US futures point to a lower open for stocks on Wednesday.
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FTSE 100: down 0.6% at 6,977.06
FTSE 250: down 1.3% at 20,445.14
AIM ALL-SHARE: down 2.7% at 904.78
GBP: down at USD1.2936 (USD1.3009)
EUR: flat at USD1.0877 (USD1.0879)
GOLD: flat at USD1,647.03 per ounce (USD1,646.81)
OIL (Brent): down at USD54.00 a barrel (USD55.50)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The new coronavirus epidemic swelled after infections appeared in previously untouched countries, prompting dire warnings that the world was not ready to contain it. In Iran, which has reported 15 deaths out of nearly 100 infections, even the country's deputy health minister Iraj Harirchi said he had contracted the virus. At the World Health Organization headquarters in Geneva, Bruce Aylward, who headed an international expert mission to China, hailed the drastic quarantine and containment measures taken by the country. But he told reporters that other nations were "simply not ready" to contain the outbreak. The virus has killed 2,715 people and infected over 78,000 in China. There were 52 more deaths reported on Wednesday - the lowest in three weeks - with no fatalities outside the epicentre in central Hubei province.
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UK Prime Minister Boris Johnson has launched what is billed as the deepest review of Britain's foreign and security policy since the Cold War, with a warning that as the world changes "we must move with it". The cross-Whitehall review will cover all elements of foreign, defence, security and international development policy, as the government seeks to redefine its long-term strategic aims and objectives. Downing Street said it would go beyond the parameters of a traditional strategic defence and security review by looking at the "totality of opportunities and challenges" the UK faces. It will consider how the whole of government can be "structured, equipped and mobilised" in order to meet them. Unlike the 2015 review, a No 10 source said it will not be "cost neutral", meaning further spending commitments are not ruled out.
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US President Donald Trump failed Tuesday to strike a trade deal with India at the end of a visit big on photo opportunities but short on substance and overshadowed by deadly riots. US-Indian trade relations have worsened in recent years as Trump's "America First" aim of reducing deficits has collided with the "Make in India" mantra of Prime Minister Narendra Modi. Speaking at the end of a short tour that saw him hold hands at the Taj Mahal with First Lady Melania and address a huge rally, Trump said only that they had made "tremendous progress" towards an accord.
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Shop prices in the UK declined again in February, numbers showed, with retailers being forced into discounting activity amid increasing competition and falling demand. According to the British Retail Consortium-Nielsen Shop Price Index, February shop prices fell by 0.6% year-on-year, compared to a 0.3% decrease in January. The February decline was worse than the 12-month average price retreat of 0.1%, and marginally higher than six-month average decrease of 0.5%. British Retail Consortium Chief Executive Helen Dickinson said: "Consumers will welcome the fall in shop prices, which accelerated from the previous month, with non-food prices falling at their highest rate since May 2018. This decline was driven by weak consumer demand and intense competition, which led many retailers to prolong their January sales."
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