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(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Vodafone said its first half went according to plan, with the telecommunications firm recording a swing to profit and reporting an improved quarter-on-quarter service revenue performance. Group revenue in the six months to September 30 fell 2.3% annually to EUR21.43 billion from EUR21.94 billion. Vodafone swung to a pretax profit of EUR2.05 billion from a EUR511 million loss a year earlier. The first half of the last financial year was hit by a EUR2.60 billion loss from its share of results from joint ventures. This year, Vodafone booked a EUR260 million such gain. Vodafone generates the bulk of its cash from service revenue, which includes monthly access charges, airtime usage and roaming. For the whole of the first half, service revenue was 0.8% lower year-on-year at EUR18.42 billion from EUR18.54 billion. Promisingly, its service revenue performance improved quarter-on-quarter on an organic basis. The organic service revenue decline in the second quarter was 0.4%, tempered from the 1.3% annual fall in the first quarter.
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Smiths Group said it is confident of meeting market expectations for financial 2021 due to a "resilient" performance in the first quarter despite disruption caused by the pandemic. The FTSE 100 engineering business said revenue for the three months ended October 31 was down 2% on an underlying basis, noting John Crane performed as expected, with challenging market conditions in Energy partially offset by "modest" growth in its Industrials unit. Elsewhere, Smiths reported "strong performance" in its Detection division driven by the delivery of original equipment orders. It added that the Flex-Tek division also saw good Industrial sales that more than offset weakness in the Aerospace unit. Revenue for the quarter for Smiths Medical, recorded as discontinued operations, was up 4% on an underlying basis driven by further growth in Infusion Systems and Vital Care.
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National Grid said it has filed a request with the Massachusetts Department of Public Utilities to increase gas distribution revenue for its Massachusetts Gas business. The electricity and gas utility said it has requested a revenue increase of USD138 million, which will allow it to cover increased operating costs and core investments as well as allow it a return on equity of 10.5%. National Grid is proposing a new performance-based rate mechanism that would link annual revenue increases to inflation. The filing includes a request for investments of up to USD50 million. The proposals are to decarbonise its natural gas networks, including hydrogen blending, shared geothermal loops, renewable natural gas, and demand-side response measures. The investments would be claimed back through existing regulatory mechanisms outside the requested revenue increase.
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G4S targets annual revenue of USD600 million by 2025 at its Retail Cash Solutions arm, the security services firm said, as it set out its defence in the wake of rejecting a pair of takeover attempts. The cash handling unit "represents exceptional unrecognised value within G4S", the company said. "RCS is revolutionising global cash management with the potential to generate significant returns for G4S shareholders," G4S added. In the medium-term, G4S expects revenue growth of 25% per year from the unit, "attaining more than USD600 million by 2025". "With a huge addressable market of USD13 billion, RCS has significant further potential," G4S added.
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The UK will be the first country to run final-stage trials of a coronavirus vaccine being developed by a company owned by Johnson & Johnson. The phase-three trial of the vaccine from pharmaceutical company Janssen starts on Monday and will be the first of its two-dose study. The jab has already undergone phase one and two trials, and interim analysis of the single-dose study suggests the Covid-19 vaccine candidate induces a robust immune response and is generally well-tolerated. For the two-dose study, researchers are aiming to recruit around 6,000 UK participants – from a total of 30,000 people globally – at 17 sites across the country. These include Southampton, Bristol, Cardiff, London, Leicester, Sheffield, Manchester, Dundee and Belfast.
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Banco Bilbao Vizcaya Argentaria said it has agreed to sell its US subsidiary for USD11.60 billion in cash. PNC Financial Services Group, a New York-listed financial services firm, will buy the assets, in a deal which is expected to be completed halfway through next year. BBVA said the deal enhances its "already strong financial position" and creates value for shareholders. The Spanish financial services firm said it plans to increase shareholder distributions "with a sizeable buyback". ----------
Retail giant Walmart will sell 85% of its Japanese subsidiary Seiyu to investment firm KKR & Co and e-commerce group Rakuten, the pair announced Monday. The deal, which values Seiyu at JPY172.5 billion, or USD1.6 billion, is expected to close in the first quarter of next year, with New York-based KKR acquiring 65% of the supermarket chain. Japan's Rakuten – which already set up an online grocery delivery service with Seiyu in 2018 – will buy 20% and set up a new subsidiary called Rakuten DX Solution focused on internet sales. Walmart will keep the remaining shares in Seiyu, which was founded in the 1960s and has more than 300 stores in Japan. The US retail behemoth first acquired a stake in Seiyu in 2002 and later made it a wholly owned subsidiary despite poor financial results.
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MARKETS
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London stocks followed Asian markets higher on Monday, lifted by some encouraging data out of China and Japan overnight.
"The catalyst for the latest move for equities is more positive noises on vaccines, the formation of a new trading bloc involving the likes of China, Japan, South Korea, Australia and New Zealand, and better-than-expected Japanese GDP figures. These factors helped Asian markets sprint ahead before passing the baton on to European markets," said AJ Bell investment director Russ Mould.
Meanwhile, the pound fell below the USD1.32 mark as morning trade progressed, with UK-EU Brexit trade deal talks continuing this week.
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FTSE 100: up 0.8% at 6,363.66
FTSE 250: up 1.0% at 19,452.29
AIM ALL-SHARE: up 0.7% at 1,006.17
GBP: firm at USD1.3178 (USD1.3172)
EUR: higher at USD1.1841 (USD1.1824)
GOLD: soft at USD1,890.89 per ounce (USD1,891.34)
OIL (Brent): higher at USD43.51 a barrel (USD42.88)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Talks on a future trading relationship between the UK and EU post-Brexit continue this week as the clock continues to tick until the end of the transition period. David Frost is in Brussels for another round of negotiations ahead of a European Council video summit on Thursday which has been touted as a deadline for a draft deal. The UK formally left the EU in January, but will continue to follow the bloc's regulations until the end of the year – just over six weeks away. If no agreement is in place at the end of December, goods travelling between the two parties will be subject to tariffs set out by the World Trade Organisation. The issues which are still to be ironed out are thought to include the ongoing row over fishing rights, how any deal between the two parties would be governed, and the "level playing field" measures aimed at preventing unfair competition on issues including state subsidies.
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UK Prime Minister Boris Johnson is self-isolating after coming into contact with an MP who has since tested positive for Covid-19, Downing Street has said. The prime minister, who was admitted to intensive care with coronavirus in April, is "well" and does not have any symptoms of the virus, according to a Number 10 spokesman. Johnson was advised to self-isolate by NHS Test and Trace after attending a 35-minute meeting with a small group of MPs in Downing Street on Thursday morning, including MP for Ashfield Lee Anderson. Anderson said on Facebook that he began experiencing symptoms of Covid-19 on Friday and, after being tested on Saturday, received a positive result on Sunday morning.
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UK house prices dipped slightly in November, property portal Rightmove said, despite sellers rushing to beat the March stamp duty deadline. According to Rightmove, average UK house prices slipped 0.5%, or GBP1,505, to GBP322,025 in November, from GBP323,530 in October. In October, prices had risen 1.1% monthly. Annually, prices rose 6.3%, eclipsing the yearly growth of 5.5% in October. "New sellers appear to be pricing more keenly, to improve their chances of getting a quick sale and beating the March stamp duty deadline," Rightmove said.
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Germany warned Sunday its anti-coronavirus measures were likely to stay in place for several months while a top scientist behind vaccine efforts hoped life could return to "normal" by next winter. The predictions came as the World Health Organization unveiled data showing a record daily number of 660,905 new Covid-19 cases over the weekend. "We will have to live with considerable precautions and restrictions for at least the next four to five months," Economy Minister Peter Altmaier told the Bild am Sonntag newspaper. The government is to meet Monday to decide whether to extend new measures provisionally in place until month's end and as neighbouring Austria revealed it is planning mass testing as a second lockdown comes into force. Ugur Sahin, the Turkish co-founder of German firm BioNTech, meanwhile told the BBC's "The Andrew Marr Show" that "this winter will be hard" in the absence of a vaccine. But if vaccinations can be rolled out widely in the coming months, life could return to "normal" by next winter, he added.
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China's retail sales continued a general recovery in October, official data showed Monday, on the back of a national holiday and policies aimed at boosting spending. Although China has largely brought the coronavirus under control, spending has been slower to recover as the world still grapples with the impact of the pandemic. Beijing's National Bureau of Statistics said Monday that retail sales in the world's second-largest economy had risen 4.3% on-year last month. At a press briefing, spokesman Fu Linghui said the pandemic "has dealt a second blow to countries" including the US and those in Europe, and that global recovery had "further stalled" as a result. Industrial production growth in October remained the same as the month before, but continued to rise more than expected at 6.9%, according to the NBS.
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Japan's economy exited recession in the third quarter, growing a better-than-expected 5.0%, government data showed Monday, following a record contraction. A rise in domestic demand as well as exports helped drive the quarter-on-quarter growth, after the coronavirus pandemic and a consumption tax hike slammed the economy into reverse earlier in the year. The positive figures come after three quarters of contraction in the world's third-largest economy, with revised data showing the economy shrank 8.2% in the second quarter, more than the previously estimated 7.9%. That was the worst figure for Japan since comparable data became available in 1980, exceeding even the brutal impact of the 2008 global financial crisis. The third quarter growth will be welcome news for Japan's government, which has avoided the tough lockdown measures seen in some other countries as it tries to balance preventing the spread of coronavirus with protecting the economy.
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