LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Defence giant BAE Systems has reported a sharp drop in profit in 2013 as sharply higher impairment charges more than offset higher revenues, and the company warned that cuts to defence spending in the UK and US would continue to weigh on its performance in 2014. Shares tumbled after the company said it booked impairments of GBP887 million, up from GBP86 million, mainly to take account of cost of capital changes in its US business as well as the lower US defence spending.
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Petrofac has been awarded a contract by BP, worth roughly USD1.2 billion for work at the central processing facility for the Khazzan gas project in Oman. The contract is for engineering, procurement and construction of the facility, which will include two process trains, each having a capacity of 525 million standard cubic feet of gas per day.
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Centrica said pretax profit fell 32% to GBP1.65 billion in its full-year 2013 as increased costs offset higher revenues ahead of a tough 2014, specifically for British Gas. The company said revenue from its British Gas operations rose on higher UK wholesale gas and electricity prices.
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Drinks can maker Rexam has fallen Thursday after reporting higher pretax profit and revenues for 2013, as higher sales in North America offset disappointing volumes in Western Europe and South America and as it continued to cut costs. The company reported a pretax profit of GBP339 million for 2013, up from GBP319 million in 2012, as revenues rose to GBP3.94 billion, from GBP3.89 billion.
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Playtech has expressed confidence for 2014 and announced a special dividend of GBP100 million as it saw revenues rise in the financial year 2013, and pretax profit boosted by the sale of its share in William Hill Online to William Hill PLC
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Petra Diamonds said it swung to a pretax profit in its first-half on increased production, lower costs and major sales. The diamond mining company posted a pretax profit of USD42.2 million for the six months ending 2013 from a pretax loss of USD14.9 million the previous year.
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Essentra said its pretax profit in 2013 grew by 15% to GBP86.4 million, buoyed by further expansion in both existing and new markets and new business wins.
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Rathbone Brothers said its pretax profits rose by 15% last year, as the investment manager took advantage of buoyant financial markets and rising funds under management. The firm said it made a GBP44.2 million pretax profit for the year ended December 31 2013, compared with GBP38.5 million in 2012.
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Go-Ahead Group reported higher profits and revenues for the first-half of its financial year, driven by a strong recovery in its bus operations and as it moved record numbers of rail passengers, and the company said it is on track to increase operating profits at the bus unit to GBP100 million in 2015/16. Profits also improved in its rail business, with operating profit up to GBP10.5 million in the half, from GBP6.7 million a year earlier. However, it warned that profitability in the rail unit would be lower in the second-half.
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Medical devices to engineering services company Smiths Group has completed the refinancing of its existing USD800 million bank facility after it arranged a new committed revolving credit facility for the same amount with a consortium of ten banks.
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Engineering company Kentz Corporation said it will re-align the services it offers through its three business units to take account of recent acquisitions and strategic initiatives; it will rename its EPC business as Engineering and Projects, adding the recently acquired Valerus operations, project management consultancy and global engineering services to its EPC and EPCM businesses.
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Micro Focus International has maintained its full-year expectations as it saw trading in line with expectations in the three months to January 31, but warned on a hit from currency movements.
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MARKETS
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UK stocks are trading lower Thursday, amid negative investor sentiment following a continued contraction in the Chinese manufacturing industry as well as a raft of disappointing PMI data from across Europe.
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FTSE 100: down 0.2% at 6781.56
FTSE 250: down 0.6% at 16246.50
AIM ALL-SHARE: down 0.2% at 880.12
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GBP-USD: down at USD1.6645
EUR-USD: down at USD1.3694
GOLD: up at USD1314.10 per ounce
OIL (Brent): down at USD109.95 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Some members of the Federal Reserve questioned whether to taper the central bank's massive bond-buying plan amid signs the economic recovery has stalled, minutes from its January policy meeting revealed. At that two-day meeting ending January 29, the last under the leadership of Chairman Ben Bernanke, the US central bank went ahead with trimming its monthly bond-buying program. The Fed has cut its asset purchases by USD10 billion at each of the last two meetings. Although January's vote to taper was unanimous, their was considerable disagreement among participants about tightening monetary policy.
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The People's Bank of China is preparing to expand the trading band of the yuan, while broadening its cross-border usage. The central bank plans to continue efforts for expanding RMB's cross-border use, changing cross-border capital flow management, improving the RMB exchange rate formation mechanism and expanding the exchange rate band orderly, it noted. The Communist Party meeting in November had proposed to widen the yuan's convertibility and liberalize interest rate as part of reforms.
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The Chinese manufacturing sector contracted for the second straight month in February, with the activity indicator dropping to a seven-month low, as a renewed fall in new orders dragged production lower, suggesting that the economic recovery is losing momentum. The seasonally adjusted flash Markit/HSBC Purchasing Mangers' Index, or PMI, which gauges manufacturing activity in factories and workshops, dropped to 48.3 in February from 49.5 in January, when the index declined for the fist time in six months. Economists had expected the index to have remained unchanged at 49.5. The index has now stayed below the no-change 50 mark for the second month in a row, and is at the lowest level in seven months.
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The Bank of Japan will take appropriate measures to counter downside risks, said board member Yoshihisa Morimoto. The bank will monitor both upside and downside risks to activity and make adjustment as appropriate, he told business leaders. The aggressive easing initiated by BoJ is producing the intended results, said Morimoto. The bank aims to achieve 2% inflation. Early this week, BoJ decided to double the scale of its bank lending facility, while keeping the monetary easing plan unchanged.
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Germany's producer prices decreased for the sixth successive month in January, and at the fastest pace in nearly four years, led by a sharp fall in energy prices, data released by the Federal Statistical Office has revealed. The industrial producer price index dropped 1.1% year-on-year in January, after falling 0.5% in December 2013. The index has now recorded negative growth for the six month in a row, and the rate of fall was the biggest since March 2010. Economists had forecast a 0.8% fall for January. Driving the fall, energy prices lost 3%, and costs of intermediate goods dropped 1.8%, partially offset by a 1.2% gain in consumer goods prices, and a 0.5% rise in costs of capital goods.
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Passenger car production in the UK is set to accelerate throughout 2014, following a flat start to the year, with manufacturers preparing to launch new models in the coming months, a report from the Society of Motor Manufactures and Traders has revealed. In January, the British car industry manufactured 128,520 cars, which was broadly unchanged from a year earlier. Last year, the British automobile industry witnessed a sharp increase in output, with the passenger car sector contributing significantly.
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Iran and six world powers took a small but important first step towards resolving their conflict over Tehran's nuclear programme when they agreed in Vienna on a roadmap for their talks in the coming months. After two days of meetings in Vienna, Iranian Deputy Foreign Minister Abbas Araghchi said both sides had agreed on a programme of work and added that the next round would take place March 17-20 in the Austrian capital. Both sides agreed on its outlines in November: Iran will have to further reduce its uranium enrichment and other nuclear activities for several years to decrease the possibility that it can use its civilian programme to make weapons. In return, the world powers have offered to lift all sanctions against Tehran and to help Iran acquire additional civilian nuclear reactors.
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Australia will oppose a push for more regulation and a tax on transactions at this weekend's G20 finance chiefs meeting in Sydney, Treasurer Joe Hockey said. Hockey, who will host the meeting of finance ministers and central bankers, will resist pressure from within the EU to ramp up regulation and impose a tax on financial transactions in the wake of the global financial crisis. He said he would support moves to bolster the tax base by ensuring multinational companies do not use transfer pricing and other stratagems to lessen corporate tax.
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The International Monetary Fund urged advanced economies to avoid a quick exit from monetary stimulus, as capital outflows and sharp currency depreciation in the emerging economies pose a risk to recovery. In a note prepared for the G-20 meeting in Sydney3, the lender said the recovery is still weak and significant downside risks remain. Nonetheless, the outlook remains broadly in line with the January projections, assuming that the impact of the recent financial volatility is short lived.
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Thai anti-government protesters descended on the Bangkok office building housing firms partly owned by the family of caretaker Prime Minister Yingluck Shinawatra, in a renewed bid to force her resignation. Suthep Thaugsuban, who has been leading protests to try to bring down Yingluck and her cabinet for almost four months, has shifted his attention to the Shinawatra businesses in his campaign to topple her government.
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At least 13 people were feared dead and many more injured after heavy street fighting and gunfire broke out in Kiev, hours after a truce agreed to by the Ukrainian government and opposition crumbled. The Ukrainian Interior Ministry said that one policeman died of gunshot wounds and that 29 more had been injured. There are fears the death toll could rise, with reports and photos posted on social media networks suggesting that more dead protesters were at makeshift first aid points in the city centre.
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Heavy fighting has continued in South Sudan's oil-rich Upper Nile state leaving six civilians dead and at least 43 injured, after a ceasefire between rebels and the government was broken. Parts of Upper Nile capital Malakal were under the control of rebels, who were trying to seize the biggest oil fields in the region. Both sides have accused each other of violating the ceasefire.
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The Nigerian government suspended the central bank governor for "financial recklessness and misconduct," according to local media, days after he accused the state oil company of misappropriations. President Jonathan Goodluck ordered Mallam Lamido Sanusi to stand down while his office is investigated for "breaches of enabling laws, due process and mandate," presidential special adviser Reuben Abati said in a statement. A Senate committee last week ordered an audit of the Nigerian National Petroleum Corporation after Sanusi accused the company of misappropriating 20 billion dollars in revenue.
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By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Petrofac (PFC)
Petra Diamonds (PDL)
Centamin PLC (CEY)
Rathbone (RAT)
BAE Systems (BA.)
Smiths Group (SMIN)
Essentra (ESNT)
Playtech (PTEC)