LONDON (Alliance News) - UK shares have opened mixed as investors digest a raft of corporate earnings and economic data Thursday.
The mid-cap FTSE 250 is underperforming, weighed down by Afren, Balfour Beatty and Carillion. Afren suspened its CEO and COO pending a probe into alleged unauthorized payments, while Balfour and Carillion have called off their merger discussions amid recriminations.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: up 0.2% at 6,785.30
FTSE 250: down 0.5% at 15,555.69
AIM ALL-SHARE: flat at 772.54
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Hang Seng: up 0.3% at 24,816.86
Nikkei 225: closed down 0.2% at 15,620.77
DJIA: closed down 0.2% at 16,880.36
S&P 500: closed flat at 1,970.07
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GBP-USD: flat at USD1.6903
EUR-USD: flat at USD1.3390
GOLD: flat at USD1,294.68 per ounce
OIL (Brent): down at USD105.65 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times British Summer Time)
08:55 Germany Unemployment Rate
09:00 Italy Unemployment
10:00 EU Consumer Price Index
10:00 Italy Consumer Price Index
10:00 EU Unemployment Rate
11:00 Italy Producer Price Index
12:00 Russia Central Bank Reserves
12:30 US Challenger Job Cuts
13:30 US Employment cost index
13:30 Canada Gross Domestic Product
13:30 US Jobless Claims
14:45 US Chicago Purchasing Managers' Index
15:30 US EIA Natural Gas Storage
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Consumer confidence in the UK took a hit in July, research firm GfK said on Thursday, with an index score of -2. That was well shy of forecasts for +2, and it was down from +1 in June. The July reading marked the first decline in six months. "The almost relentless rise of the last six months couldn't continue indefinitely, and the government will be hoping this is just a temporary setback rather than the forerunner of a wider decline in confidence," Nick Moon, managing director of GfK NOP Social Research, said in a statement.
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UK JULY NATIONWIDE HOUSE PRICES UP 0.1% ON MONTH; CONSENSUS +0.5%; UP 10.6% ON YEAR; CONSENSUS +11.3%
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GERMANY JUNE JOBLESS RATE UNCHANGED AT ADJ 5.1%
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Germany retail sales recovered in June after falling for three consecutive months, provisional data from Destatis showed. Retail sales advanced by 1.3% month-on-month in June, reversing the revised 0.2% drop in May. The rate was also faster than the 1% growth forecast by economists. The initial estimate for May showed a 0.6% decline. On a yearly basis, retail turnover grew 0.4% in June, which was slower than the expected increase of 1.3%.
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FRANCE JUN PPI UNCHANGED ON MONTH, CONSENSUS -0.1%; UP 0.5% ON YEAR, CONSENSUS -0.1%
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FRANCE JUNE CONSUMER GOODS SPENDING 0.9% M/M, 1.8% Y/Y
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The Federal Reserve is cutting its monthly purchases of government-linked bonds to USD25 billion, down from the USD35-billion level set at the central bank's last meeting in June. The latest cut continues a policy launched in January of regularly trimming the stimulus programme as it works to end its so-called quantitative easing by the end of the year. Until this year, the Fed had been buying USD85 billion of bonds every month. The US central bank noted economic activity had rebounded in the second quarter and labour conditions improved, even as "there remains a significant underutilization of labour resources." It also said household and business spending was improving, but recovery in the housing sector remained slow. The US economy grew at an annual rate of 4% in the second quarter, the Bureau of Economic Analysis said earlier Wednesday. The figure marks a turnaround after gross domestic product registered its first decline in three years in the previous quarter.
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The International Monetary Fund said China should target 6.5-7% growth for 2015, lower than the 7.5% goal for this year, and deploy stimulus only if growth were to slow significantly below the target. While most of its directors estimate 6.5-7% growth, a few others assessed a lower target as more appropriate, the IMF said in a report published late Wednesday. The Washington-based fund reiterated that the growth will slow to 7.4% in 2014 and to 7.1% next year.
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Japan's housing starts declined less than expected in June. Housing starts dropped 9.5% year-over-year in June, a slower rate of decline than the 15% fall in May, the Ministry of Land, Infrastructure, Transport and Tourism said. Economists expected a 11.5% drop.
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Automobile production in Japan expanded for the tenth consecutive month in June, figures from the Japan automobile Manufactures Association showed. Production volume of four-wheel vehicles advanced 6.6% to 857,137 units in June. In the year-ago period, production was at 804,125 units. Domestic automobile demand was up 0.4% annually to 452,555 units in June. Meanwhile, exports dropped by 4.0%.
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Fighting between government forces and pro-Russian separatists in eastern Ukraine continued to rage Wednesday, as the international community kept up the pressure on Russia to stop meddling in the crisis. The US and EU this week issued economic sanctions against Moscow, their toughest measures yet. The Group of Seven industrialized nations warned Wednesday that they are ready to "further intensify the costs" of Russia's "adverse actions."
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Two weeks after starting its ground offensive in the Gaza Strip, Israel has mobilized 16,000 more reserve troops. Israel Radio reported Thursday they will relieve some of the troops currently operating in the strip. The Israeli security cabinet instructed the army to further expand the offensive. The full Israeli cabinet is scheduled to hold a special session Thursday to discuss the future of the offensive.
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The US House of Representatives Wednesday voted to bring legal charges against President Barack Obama on the politically charged issue of health insurance reform. The House voted mostly along party lines 225-201 to go forward with the lawsuit in a measure initiated by US House Speaker John Boehner, a Republican. Boehner said the lawsuit would challenge Obama's "attempts to make his own laws" on the hot button issue of health insurance reform. Democrats charged that Republicans were choosing lawsuits over legislating. Democratic Representative Sander Levin reeled off a long list of issues including immigration reform that needed attention but were blocked by Republicans.
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Standard & Poor's has lowered a Argentina's credit rating to selective default, indicating that Argentina defaulted on some of its foreign currency obligations. The US private ratings agency said it took the step when the grace period expired Wednesday on a payment owed to bondholders. The country was barred from making that payment by a US court ruling unless it also paid hedge funds that hold defaulted debt. The agency said if Argentina makes the payment, it could revise its ratings on Argentina.
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Liberian President Ellen Johnson Sirleaf late Wednesday ordered all schools closed and put non-essential government workers on leave in added emergency measures to stem the escalating Ebola crisis. In a nationwide speech, Johnson Sirleaf said the government was providing 5 million dollars to implement the expanded emergency plan to contain the spread of the deadly virus that has claimed nearly 130 lives in Liberia alone. Throughout the region, including Guinea and Sierra Leone, Ebola has claimed more than 600 lives among more than 1,000 cases.
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BROKER RATING CHANGES
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JPMORGAN CUTS HAMMERSON TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 655 (570) PENCE
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CITIGROUP CUTS JUPITER FUND TO 'NEUTRAL' ('BUY') - TARGET 410 (440) PENCE
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JPMORGAN RAISES UNITE GROUP TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 475 (450) PENCE
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JPMORGAN RAISES HELICAL BAR TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 400 (365) PENCE
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SOCGEN RAISES DEVRO TO 'HOLD' ('SELL') - TARGET 240 (200) PENCE
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COMPANIES - FTSE 100
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Royal Dutch Shell PLC said its pretax profit jumped in its second quarter due to lower purchase charges, divestment gains and higher interest payments but fell in its first half after it was hit by write-off charges in the first quarter. The European oil and gas giant said its second quarter pretax profit increased 70% to USD9.12 billion for the three months ended June 30 from USD5.37 billion the previous year.
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Meanwhile, Shell's plans to sell a major stake in Australian oil and gas producer Woodside Petroleum Ltd for USD2.68 billion may be falling through after too few Woodside shareholders voted in favour of the plan. On Thursday, ahead of its general meeting to vote on the deal, Woodside said preliminary votes showed that roughly 71.3% of votes cast so far were in favour of the deal and 28.7% against. For the deal to proceed, the resolution requires that a 75% majority of votes are cast in favour of the buy-back.
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BAE Systems PLC said it remains on track to deliver earnings in line with its expectations for the full-year and increased its interim dividend, as it reported a drop in sales and operating profit in its first-half. In its first-half results for the six months to June 30, 2014, the defence, security and aerospace company reported sales of GBP7.61 billion, down from the GBP8.49 billion reported for the comparable period last year.
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Lloyds Banking Group PLC said its first-half underlying profit increased by 32%, boosted by a significant reduction in impairment charges as the bank comes closer to the end of a three-year turnaround plan to return the itself to health following the upheaval of the financial crisis. Lloyds said that it made a GBP3.82 billion underlying profit in the six months ended June 30, compared with GBP2.90 billion in the corresponding period last year. Underlying income fell to GBP9.25 billion from GBP9.46 billion as an increase in net interest income was more than offset by lower other income. Costs were reduced to GBP4.68 billion from GBP4.75 billion, while impairment charges fell by 58% to GBP758.0 million. Lloyds reiterated that it will apply the Bank of England's Prudential Regulation Authority in the second-half to restart dividend payments.
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Alcoholic beverage giant Diageo PLC posted a fall in both profit and sales in its last financial year, hit by a combination of weaker consumer demand, a hefty slowdown in Asia and other emerging markets, currency rate movements, and de-stocking issues in Asia. Diageo, the world's largest spirits producer and a major producer of beer and wine, reported a pretax profit of GBP2.71 billion for the financial year ended June 30, lower than the GBP3.06 billion profit it recorded a year earlier. The group declared a 9% increase in its final dividend for the year to 32.0 pence.
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Centrica H1 Pretax Profit Down, GBP890M Vs GBP1.49B; Revenues Up, GBP15.75B Vs USD13.65B; Interim Dividend Up 4% to 5.10p; Expects to Return To Earnings Growth In 2015
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Rolls-Royce Says H1 In Line With Guidance, Reflects Defence Business Reduction; H1 Order Book Down 2% To GBP70.44B Vs GBP71.61; Expects H2 To Improve On Higher Revenue, Cost Reduction; Retains Group FY Guidance, Expects To Face Challenges; H1: Dividend Up 5% To 9.0P Vs 8.6P
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BG Group H1 Pretax Profit Up, USD4.02B Vs USD3.55B; Revenues Up, USD10.49B Vs USD9.32B; Increases Interim Dividend By 10% to 8.47 Pence Per Share
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Intu Properties H1: Pretax Profit GBP567.8M Vs GBP179.9M
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BT Q1 Pretax Profit GBP546M Vs GBP449M; Revenue GBP4.35B Vs GBP4.45B; Outlook Remains Unchanged
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Schroders H1 Net Inflows GBP4.8B Vs GBP4.5B; Interim Dividend 24.0p Vs 16.0p; H1 AuM At GBP271.5B
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COMPANIES - FTSE 250
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Afren Board Suspends CEO, COO Pending Probe Into Alleged Unauthorised Payments; Makes Toby Hayward Interim CEO While Probe Continues; To Postpone Interim Results, Doesn't Expect Financial Impact
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Balfour Beatty PLC said it has ended its merger talks with peer Carillion PLC because Carillion had demanded that Balfour halted its planned sale of US project management business Parsons Brinckerhoff, a demand it called unexpected and contrary to early agreements. In a tersely worded statement that comes just a week after news of the potential GBP3.05 billion merger of the British infrastructure and construction companies broke, Balfour accused Carillion of misleading it. "The termination of discussions follows Carillion's wholly unexpected decision to only progress the possible merger in the event that Parsons Brinckerhoff remained part of the potential combined entity. This change is contrary to the basis upon which the Balfour Beatty Board agreed to engage in preliminary discussions," Balfour said.
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Investec Q2 Third Party AUM Up 5% To GBP114.9B; Q2 Operating Profit Up 1% YoY
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Essentra Expects At Least Single-Digit LFL Revenue Growth In 2014; H1: Pretax Profit Up 6% To GBP64.2M Vs GBP60.3M; Ups Dividend To 5.7P Vs 4.8P
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Inchcape Interim Dividend 6.3p, Up From 5.7p;Sets New GBP100M Share Buyback Programme Over Next 12 Months; Pretax Profit GBP162.1M, Up From GBP138.5M
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Laird H1 Pretax Profit Up To GBP16.0M Vs GBP10.2M; Revenue Up 4% To GBP252.6M Vs GBP243.5M;Interim Dividend Of 4.27 Pence Vs 4.10 Pence Per Share
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Thomas Cook Q3 Q1 EBIT GBP43M Loss On Statutory Basis Vs GBP30M Loss; Q3 Revenue GBP2.22Bn Vs GBP2.35Bn; Encouraging Bookings For Winter 14/15, Summer 15 Seasons
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Colt Group H1 Pretax Profit EUR5.5M Vs EUR16.7M; Revenue EUR770.4M Vs EUR788.9M; Maintains FY EBITDA Guidance
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Merlin Entertainments H1 Pretax Profit Of GBP40M Vs GBP1M Loss; Revenue GBP513M Vs GBP483M; Declares Interim Dividend Of 2.2p; Says July Trading Consistent With FY Expectations
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Kazakhmys H1 Copper In Concentrate Production Down, 152,500t Vs 157,800t
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Millennium & Copthorne Q2 Revenue Down To GBP205.3M Vs GBP206.3M; Pretax Profit Down To GBP38.3M Vs GBP44.8M
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Countrywide H1: Revenue Up 29% To GBP334.5M Vs GBP258.8M; Pretax Profit Jumped To GBP37.1M Vs GBP12.3M; On target To Deliver FY Profit Expectations;To "Significantly" Increase Cash Returns To Shareholders; Interim Dividend 5.0P Vs 2.0P, Special Dividend Of 9.0P
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Spirent Communications H1 Revenue Up 16% To USD221M Vs USD190.4M; Operating Profit Down 4% To USD13.9M Vs USD14.5M; Interim Dividend Up 10% To 1.68 Cents Per Share
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Bodycote H1: Pretax Profit Up To GBP52.6M Vs GBP48.5M; Interim Dividend Up To 4.6P Vs 4.4P
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RPS H1 Revenue Of GBP279.4M Vs GBP280.9M; Pretax Profit Of GBP21.7M Vs GBP21.0M; Declares Interim Dividend Of 4.05p Per Share Vs 3.52p
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COMPANIES - MAIN MARKET AND AIM
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New World Resources Says H1 Operating Loss To Be Lower Than Prior Year; Says Revenue Declined In H1
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Proton Power Systems Appoints Joseph Peden To Board As Non-Exec Chairman
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Paragon Entertainment Wins Contract To Create Branded Attraction For In The Night Garden
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Redhall Group Now Expects Pre-Items Operating Profit To Break Even; Hit By Lower Volumes On Nuclear Contracting Business; To Book Exceptional Charges Of GBP2.7M
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TSB Banking H1 Statutory Pretax Profit GBP128.5M, Vs GBP48.7M In Half To Dec 31; Management-Basis Pretax Profit GBP78.6M, Vs GBP94.6M In Half To Dec 31; Common Equity Tier 1 Capital Ratio 18.2%
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Hyder Consulting Has Agreed GBP256.2M Offer Takeover Offer From Arcadis UK Investments; FY Outlook Remains Unchanged, Confident On Future Prospects; Q1 Trading In Line With Expectations
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Creston Says Trading In Line With Expectations For FY
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Communisis H1 Pretax Profit GBP2.2M Vs GBP1.0M; Revenue GBP169.3M Vs GBP121.2M; Interim Dividend 0.67p Vs 0.60p
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Centaur Media H1 Pretax Profit GBP13.8M Vs Pretax Loss GBP32.4M; Revenue GBP40.8M Vs GBP41.6M; Interim Dividend 1.7p Vs 1.575p; Chairman Patrick Taylor To Retire After AGM
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Xchanging H1 Pretax Profit GBP22.2M Vs GBP21.2M; Net Revenue GBP205.1M Vs GBP270.7M
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Marimedia To Acquire Mobile Advertising Technology Firm Taptica For Up To USD15.6M
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James Halstead Now Expects FY Pretax Profit To Be Above Last Year; Says Trading Improvement Continued In Q4
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Bonmarche Sales Up 16.9% In 13 Weeks To June 28; Store Like-For-Like Sales Up 13.5%; Retains Expectations For FY Results
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Portmeirion H1 Pretax Profit GBP1.2M Vs GBP0.9M; Revenue GBP24.5M Vs GBP23.8M; Increases Interim Dividend 10% To 5.50p; Remains Confident In FY Outcome
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Arden Partners H1 Pretax Loss Of GBP0.5M Vs GBP1M Profit; Revenue Down To GBP3.5M Vs GBP5.7M; CEO: Frustrating H1 But Encouraging Start To H2
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Leni Gas & Oil Settles Med Oil & Gas Costs At GBP1.2M; Says Settlement Less Than Previously Provided For
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COMPANIES - INTERNATIONAL
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Belgian brewer Anheuser-Busch InBev, known as AB InBev reported that its second-quarter profit attributable to equity holders of the company fell to USD2.818 billion from USD7.458 billion in the same quarter last year. Basic earnings per share was USD1.73 down from USD4.64 last year. But, normalized profit attributable to equity holders of the company grew to USD2.614 billion from USD1.504 billion last year.
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German conglomerate Siemens AG posted higher net income of ERU1.40 billion, or EUR1.61 per share in the third quarter of 2014, versus EUR1.10 billion, or EUR1.26 per share, last year.
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German aviation group Deutsche Lufthansa AG reported its first-half net loss was EUR79 million, sharply narrower than last year's EUR203 million. Operating profit climbed 41% to EUR114 million from EUR73 million a year ago.
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Spanish telecom group Telefónica SA said its second-quarter net income increased 4.9% to EUR1.210 billion. Basic earnings per rose 2% to EUR0.26.
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French lender BNP Paribas said net losses attributable to equity holders came to EUR4.317 billion, compared to net income of EUR1.765 billion in the second quarter 2013. The firm said its results this quarter include the impact of the comprehensive settlement with the US authorities regarding the review of certain US dollar transactions, which includes among other things the payment by BNP Paribas of a total amount of USD8.97 billion in penalties.
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Aerospace and defense giant Boeing Co. and All Nippon Airways or the ANA Group have finalised an order for 40 widebody airplanes, including 20 777-9Xs, 14 787-9 Dreamliners and six 777-300ERs (Extended Range), pursuant to the airline's strategic long-haul fleet renewal plan. The order, which is worth nearly USD13 billion at list prices, was announced originally as a commitment in March.
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Kraft Foods Group Inc Wednesday reported a plunge in second-quarter profit despite a marginal increase in sales, hurt mostly by higher selling and other expenses, while the prior year included one-time gains. Results for the quarter fell short of Wall Street estimates, partly on flat beverage sales and weakness at its meals and desserts segment, while cheese and refrigerated meals businesses saw some growth. Kraft, based in Northfield, Illinois, posted quarterly net earnings of USD482 million or USD0.80 per share, compared with USD829 million or USD1.38 per share last year.
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Profits at South Korean electronics giant Samsung Electronics Co. were significantly down in the second quarter of 2014 compared to the previous year, amid slowing growth in the mobile phone market, according to results released. Net profit during the April to June quarter fell 19.5% year on year to 6.25 trillion won (USD6.1 billion), the world's largest manufacturer of memory chips, televisions and mobile phones said in a regulatory filing. Samsung had previously forecast an earnings drop. Sales fell 8.9% to 52.35 trillion won.
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Thursday's Scheduled AGMs/EGMs
Torotrak
Pennon Group
Vitesse Media
Thor Mining
Elektron Technology
Jupiter Green Investment Trust
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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