LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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British retailer Marks and Spencer Group PLC reported a hefty drop in online sales for the first quarter of its financial year, which the retailer blamed on the transition to its new website platform and a cutback in promotions both online and in store. Ahead of its annual general meeting later, M&S reported an 8.1% fall in sales of its online business, M&S.com, for the 13 weeks to June 28. M&S told journalists that the "settling in" of the new website has held back re-registration and conversion rates. It said that fewer promotions online and in its stores also hit sales "In line with our increased focus on margin, we were less promotional, both online and in stores. While this has affected the sales performance, particularly online, we are on track to deliver our full-year gross margin guidance," said Chief Executive Marc Bolland.
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Shares in digital marketing company Matomy Media Group Ltd rose in early conditional dealings after its delayed initial public offering on the London main market, while North Sea oil and gas operator Nordic Energy PLC added itself to the AIM market IPO pipeline. The company has now priced its IPO at 227 pence a share, giving it an initial market capitalisation of GBP203 million, but its shares had risen to 235 pence in early conditional dealings. Unconditional dealings are due to start July 11. Nordic Energy, meanwhile, said it intends to list on AIM in the second half of 2014, moving from the ISDX Growth Market. The oil and gas exploration and production company operates in Denmark and Norway and the North Sea sectors of the Netherlands and UK.
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Housebuilder Bovis Homes Group PLC joined peers in reporting higher new house sales at higher average prices, confirming the continued strong recovery of the sector after several years in the doldrums in the wake of the financial crisis. In a trading update, Bovis said legal completions in the first half of 2014 were 1,487, up from 963 in the first half of 2013, at an average selling price of GBP210,000, up from GBP188.500. It said the rise in selling prices was down to it selling more expensive, larger properties, as well as "modest" improvements in house prices.
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UDG Healthcare PLC said it has acquired specialist healthcare and scientific public relations business MFRHRC Holdings Ltd for up to GBP13 million. UDG has acquired the company, which trades as Galliard and Nyxeon, for GBP6.5 million in cash, with a further GBP6.5 million payable based on profit targets over the next three years. The acquisition is expected to contribute to earnings immediately, UDG said.
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Dechra Pharmaceuticals PLC said it remains well placed for future growth, as it saw revenue rise by around 1.6% at constant currencies in the year to end-June. In a trading update the veterinary drug company said it had seen growth in all markets across the European Union except for the Netherlands, driving its European Pharmaceuticals division revenue up 0.7% compared to the previous year. In the Netherlands, the competitive environment and concerns about the use of antimicrobial products in veterinary medicine continued to make the market challenging, Dechra said.
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Building products distributor SIG PLC said it is expecting to report a strong rise in pretax profit in the first half of the year, as strong sales growth in the UK and Ireland helped offset a hit on revenue earned elsewhere due to the strength of sterling. The company warned that sales growth moderated in the last two months of the half, but kept its guidance for "good progress" for the year as a whole despite currency movements going against it. In a trading update, SIG said it expects to report underlying pretax profit of at least GBP40 million for the first six months of 2014, up from GBP33.6 million last year excluding the sale of its former German roofing and Miller Pattison businesses, as sales from continuing operations rose by about 6.5% to about GBP1.29 billion.
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UK homeware retailer Dunelm Group PLC said it expects to report a higher pretax profit and revenue for the financial year just ended, boosted by particularly strong sales growth in the final quarter of the year, as the retailer continues to benefit from an improving UK economy. Dunelm said it expects to report a pretax profit of GBP116 million for the year ended June 28, driven by a "solid trading performance in the final quarter" and a 7.8% increase in sales for the year as a whole to GBP730.2 million. This compares with a pretax profit of GBP108.1 million a year earlier, and sales of GBP677.2 million.
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Franco-Dutch airline Air France-KLM reported a 2.9% improvement in traffic, with a 1.8% increase in capacity for the month of June 2014, but its lowered its earnings before interest, tax, depreciation and amortisation target for the year as a whole as it warned that overcapacity on some long-haul routes will hit yields.
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MARKETS
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Stock indices are lower across the UK and Europe, with the fallers being led by the airlines after Air France-KLM became the latest in the sector to issue a profit warning.
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FTSE 100: down 0.6% at 6785.47
FTSE 250: down 1.1% at 15710.75
AIM ALL-SHARE: down 0.5% at 784.44
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The pound rebounded after trading at an eight-day low against the dollar due to data showing that UK manufacturing and industrial production fell in May, which analysts say doesn't bode well for hopes of a strong improvement in UK GDP in the second quarter.
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GBP-USD: down at USD1.7106
EUR-USD: down at USD1.3596
GOLD: up at USD1318.93 per ounce
OIL (Brent): down at USD109.58 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK industrial production declined unexpectedly in May driven by a fall in manufacturing, data showed. Industrial production fell 0.7% month-on-month in May, reversing a 0.3% rise in April, the Office for National Statistics said. This was the second fall in the last five months. Economists had forecast a 0.3% rise.
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Starting salaries for UK permanent staff rose to a record high levels, driven by decreasing availability of permanent staff and increasing staffing demand in June, the Recruitment and Employment Confederation, or REC, and KPMG report on jobs showed. Permanent staff salaries rose for the twenty sixth consecutive month in June to the highest level in series history. Contract staff wages rose at the sharpest rate since November 2007. The report based on results of a survey by UK recruitment consultancies and published by Markit Economics, revealed that the availability of permanent employees decreased notably in June, marking the steepest drop in the survey history. The number of available contract employees also decreased at the fastest rate since March 1998.
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The UK economy is still strong and moving in the right direction, the Quarterly Economic Survey from the British Chambers of Commerce showed. In manufacturing, balances for domestic sales, profitability confidence and capacity utilization were at their all time highs in the second quarter. At the same time, there were no balances at their all-time highs in services. Meanwhile, exports and investment balances declined in the second quarter, for both manufacturing and services, survey based on responses from 7,000 businesses revealed. Despite these falls, the second quarter export balances and most investment balances are still above their average 2007 pre-recession levels.
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German trade contracted sharply in May, with exports falling more than forecast and imports posting their biggest slump in about 18 months, data showed. While monthly exports slumped by 1.1% in May, imports dived by 3.4%, the Federal Statistics Office reported, adding to signs that Europe's biggest economy slowed in recent months. Analysts had expected the data would show exports declining by 0.4% in May, after increasing by a hefty 2.6% in April. Imports had been predicted to post a modest 0.5% rise to build on the 0.2% gain in April. The May drop in imports was the biggest since November 2012, the statistics office said. Still, when compared with May last year, exports were 4.3% higher. Imports were, however, down 0.4% on the year.
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The French economy grew 0.2% in the second quarter, the Bank of France said in its monthly survey data. The estimate was left unchanged from the previous forecast and follows a flat growth in the first quarter. The business sentiment index in manufacturing remained stable at 97 in June. The score was forecast to fall marginally to 96. The indicator for services also held steady at 93.
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Japan posted a current account surplus of JPY522.8 billion in May, the Ministry of Finance said - remaining in the black for the fourth straight month. The headline figure topped forecasts for a surplus of JPY429.9 billion, and was up from JPY187.4 billion in April.
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The Iraqi parliament might convene next week, lawmakers said, a turnabout from an earlier decision to delay their next meeting until August. The legislature had adjourned Monday and announced no plans to return before August 12, which would have extended the country's current political deadlock by more than a month. Lawmaker Mohamed al-Khaldi, of the Sunni-led Motahidon bloc, told dpa that there are discussions between politicians about convening next week, instead of the previously set date.
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Russian Foreign Minister Sergei Lavrov in a visit to Bulgaria called on the European Commission to again take up talks with Russia over the South Stream gas pipeline project. Russia is ready for "constructive dialogue," Lavrov said after talks with Bulgarian leaders in Sofia. Talks between Russia and the EU were halted over the crisis in Ukraine, while Bulgaria suspended work on its portion of Russia's new natural gas pipeline last month after the EU raised concerns about the way contracts were awarded. The 2,380-kilometre pipeline is planned to transport Russian natural gas to Italy, with branches to Greece and Austria, via the Black Sea and across the Balkans starting in 2015.
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Berlin stepped up pressure Monday on Washington over allegations that a German intelligence service employee spied for the US, with Chancellor Angela Merkel saying the case threatened to undermine trust between the two allies. "If the reports are correct, it would be a serious case," Merkel told a joint press conference with Chinese Premier Li Keqiang in Beijing. She said the incident "would represent for me a clear contradiction as to what I consider to be trusting cooperation between agencies and partners."
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Israel launched a major military offensive against the Gaza Strip early Tuesday, in response to increasing rocket attacks by Palestinian militants. The Israel Air Force bombed about 50 targets overnight, military spokesman Peter Lerner said. He warned that Israel would gradually increase the "quantity and quality" of its targets. It would expand the air offensive with a "ground mission if required," he said.
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SIG (SHI)
Marks & Spencer (MKS)
Dunelm (DNLM)