(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Intel unveiled plans to take Mobileye, its driver-assistance and autonomous driving business, public in the US next year. "The move will unlock the value of Mobileye for Intel shareholders by creating a separate publicly traded company and will build on Mobileye's successful track record and serve its expanded market," the Santa Clara, California-based computer microprocessor maker said. Mobileye went public in 2014 before being bought by Intel in 2017. Intel will remain the majority owner of Mobileye after the IPO and the two will continue to co-develop technologies.
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Saudi Arabian Oil Co signed a USD15.5 billion gas pipeline deal with a global consortium led by BlackRock Real Assets and Hassana Investment Co. Aramco said that the transaction "marks one of the world's largest energy infrastructure deals". As part of the deal, a newly-formed subsidiary, Aramco Gas Pipelines Co, will lease usage rights in Aramco's gas pipelines network and lease them back to Aramco for a 20-year period. Aramco will hold a 51% majority stake in Aramco Gas Pipeline Co and sell a 49% stake to investors led by BlackRock and Hassana.
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ABB, ahead of a capital markets day, lifted its annual revenue growth target and unveiled plans to list its e-mobility division in Switzerland next year. The Zurich, Switzerland-based electrical equipment and automation technology firm is targeting constant currency revenue growth of 4% to 7% through the economic cycle, up from its previous aim of 3% to 5%. Of this new sales target, 3% to 5% should be organic growth and the remainder acquired growth. ABB expects to make five or more small to medium-sized acquisitions per year.
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GlaxoSmithKline, working alongside partner Vir Biotechnology, said it continues to build positive test data for Covid-19 treatment sotrovimab in relation to its effectiveness against the Omicron variant. Last week, Glaxo said its investigational monoclonal antibody treatment sotrovimab demonstrated that it retains activity against all Covid-19 variants of concern, including the Omicron's spike protein. On Tuesday, Glaxo said further preclinical results were generated through pseudo-virus testing of the combined known mutations of the Omicron variant, which included the maximum number of changes - 37 mutations - identified to date in the spike protein.
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British American Tobacco said its performance was benefiting from strong momentum in New Categories which is now a "sizeable" contributor to revenue growth. Further, BAT highlighted it was making "excellent progress" towards its GBP5 billion revenue target for New Categories by 2025, supported by a clear focus on tobacco heating products. New Categories include BAT's glo tobacco heating brand, as well as its Vuse and Vype vapour products and Velo modern oral products. BAT maintained its 2021 guidance at mid-single-figure constant currency adjusted diluted earnings per share growth. BAT said this will allow it to absorb a GBP260 million profit hit from excise changes and competitive pricing in Australia and New Zealand, an increase from the GBP170 million profit hit guided at the interim results. The Dunhill and Lucky Strike cigarette maker said it expects annual revenue growth at constant currency to be above 5% and is confident in delivering on 2021 financial guidance.
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Plumbing and heating products supplier Ferguson said supportive end-markets and continued market share gains drove substantial sales growth during the first quarter of its financial year. For the three months to October 31, net sales were USD6.80 billion, up from USD5.37 billion in the first quarter last year and pretax profit rose to USD711 million from USD422 million. Ferguson's US business grew net sales by 27% which comprised 25% organic growth and a further 1.9% from acquisitions. Price inflation was in the low teens during the quarter, it noted. "Since the start of the second quarter, Ferguson has generated revenue growth similar to that of [first quarter] 2022. We continue to expect a tapering of growth in the second half on tougher prior year comparatives and we remain mindful that the recent tailwinds from inflation on gross margins will likely moderate, although the timing and extent remain uncertain. Given the strong momentum in the business and the agility of our business model, our full year expectations have increased," the company said.
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Equipment rental firm Ashtead raised its dividend after robust interim results. Ashtead said it delivered a record first-half performance with clear momentum across the business. For the six months to October 31, revenue increased by 19% to USD3.88 billion from USD3.26 billion last year and pretax profit jumped by 38% to USD889.8 million from USD645.8 million. In the US alone, revenue rose by 13% to USD3.12 billion from USD2.75 billion a year ago. Ashtead declared an interim dividend of 12.5 US cents, up 28% from 9.76 cents paid last year. "Our business has strong momentum in supportive markets. The benefit we derive from the diversity of our products, services and end markets, our investment in technology and ongoing structural change, enhanced by the environmental and social aspects of ESG, enables the board to look to the future with confidence. Notwithstanding the volatility that continues to arise from Covid, the fundamentals of our business are strong and we now expect full year performance to be ahead of our previous expectations," the company said.
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Liontrust Asset Management said it has agreed to buy peer Majedie Asset Management for up to GBP120 million in cash and shares. Liontrust said the acquisition of Majedie will add GBP5.8 billion in assets under management and advice, raising its total to more than GBP42.3 billion. It said the purchase will be earnings enhancing for adjusted diluted earnings per share, starting from the financial year ending March 2023. Liontrust will issue up to GBP97.0 million in new shares, plus pay up to GBP23.0 million in cash, to buy Majedie. Majedie Chief Executive Officer Rob Harris will join Liontrust as head of Global Institutional Business.
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MARKETS
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Stock markets were higher globally on Tuesday amid easing fears over the Omicron variant of Covid-19, which has been found to not cause severe symptoms in early studies. Meanwhile, treatments, such as the one produced by GlaxoSmithKline and Vir Biotechnology, have been found effective against Omicron.
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CAC 40: up 2.1% at 7,012.65
DAX 40: up 2.0% at 15,689.24
FTSE 100: up 1.2% at 7,315.46
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Hang Seng: closed up 2.7% at 23,983.66
Nikkei 225: closed up 1.9% at 28,455.60
S&P/ASX 200: closed up 1.0% at 7,313.90
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DJIA: called up 1.0%
S&P 500: called up 1.2%
Nasdaq Composite: called up 1.7%
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EUR: up at USD1.1295 (USD1.1278)
GBP: up at USD1.3282 (USD1.3253)
USD: up at JPY113.70 (JPY113.46)
Gold: up at USD1,783.12 per ounce (USD1,780.00)
Oil (Brent): up at USD74.25 a barrel (USD71.92)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Export growth in China lost some steam in November as holiday demand from abroad faded, but demand for overseas fuel pushed up imports to spike above expectations. Strong exports have helped to boost growth in the world's second-largest economy since mid-2020, with China containing domestic outbreaks of Covid-19 through tough lockdowns and mass testing. Despite recent power outages caused by emissions-reduction targets, the surging price of coal, and supply shortages, factories kept the goods flowing and the power crisis has been winding down. But experts have warned that the export boom is likely to fade as the world gradually returns to normalcy. In November, exports rose 22% on-year, better than analysts expected but below the 27% growth clocked in October, according to the latest customs data. Imports, however, rose an unexpected 32% – well above the 22% increase tipped by a Bloomberg consensus poll.
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Debt-laden Chinese property developer Evergrande has for the first time missed a deadline to repay some of its overseas creditors, raising the prospect of it defaulting as it prepares for a government-backed mega-restructure. As a 30-day grace period on USD82.5 million in overdue coupon payments ended Tuesday, Bloomberg News reported some bondholders had yet to receive payment, citing sources. The coupons were initially due on November 6 with a one-month grace period with Evergrande's initial default exacerbating already swirling concerns over its future and the wider Chinese property market.
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China has sharply criticized the diplomatic boycott of February's Beijing Winter Olympics by the US. Washington should stop politicizing sports, Foreign Office spokesman Zhao Lijian said on Tuesday in Beijing. He announced "resolute countermeasures", without giving details. The Olympics are not a stage for "political manipulation", he added. White House spokeswoman Jen Psaki had announced the previous day that President Joe Biden's administration would not send diplomatic or official representatives to the Games in China because of alleged human rights abuses. US athletes will still attend. Other countries are mulling a diplomatic boycott.
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The EU on Monday extended sanctions on China until December 2022 for abuses against the Uighur people in the western region of Xinjuang. As part of a wider package of measures against Libya, Russia and North Korea, the EU in a press release said the sanctions target individuals and entities "responsible for serious human rights violations and abuses in various countries worldwide." The EU introduced the sanctions in March 2021, the first measures taken against Beijing for human rights violations since the Tiananmen Square massacre in 1989. Those targeted were hit with asset freezes and travel bans. China has previously hit back against EU lawmakers and institutions. The breakdown in diplomatic relations led to a pause in the introduction of a major EU-China investment deal agreed late last year.
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Eurozone gross domestic product grew faster than previously anticipated, figures from Eurostat showed. Euro area GDP grew 3.9% year-on-year in the third quarter of 2021, stronger than the 3.7% reported in November. This still marked a significant slowdown from the second quarter's 14% jump, however. Quarter-on-quarter, GDP growth was 2.2%, in line with the prior estimate and the second quarter result.
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German industrial production fared better-than-expected in October, data from Destatis showed. Production rose 2.8% month-on-month in October, reversing September's 0.5% fall and beating expectations, cited by FXStreet, for 0.8% growth. Annually, however, sales fell 0.6%, extending September's 0.4% decline. Industrial production remains 6.5% below pre-pandemic levels.
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Germany's Social Democratic Party, the Greens and the pro-business Free Democrats signed a coalition agreement in Berlin, paving the way for a new government to take office this week. Leaders of the three groups - known collectively as the "traffic light" coalition, because of their party colours: red, yellow and green - gathered at a central Berlin venue to ink the deal hammered out in the weeks following the late September elections. Olaf Scholz of the SPD is set to to take over as chancellor following a vote in parliament on Wednesday, as Angela Merkel bows out after 16 years in office. The new Cabinet, made up of seven ministers from the SPD, five from the Greens and four from the FDP, and nearly evenly divided between men and women, is to be sworn in the same day.
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UK house prices continued to climb in November boosted by a shortage in available properties, figures from Halifax showed. On an annual basis, the Halifax UK house price index rose by 8.2% in November, the same pace as in October. However, the latest reading missed the market forecast, cited by FXStreet, for a 9.4% increase. UK house prices rose 1.0% month-on-month in November, also the same pace as in October. This print beat the market estimate of 0.6%. The average UK house price stood at a fresh record high of GBP272,992 in November, up from GBP270,184 in October.
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Retail sales in the UK rose by 5.0% in November from a year before and by 4.1% from pre-pandemic November 2019, according to the BRC-KPMG retail sales monitor. The British Retail Consortium said the increase in sales last month - covering the period from October 31 to November 27 - compares to 0.9% annual growth in November 2020. On a like-for-like basis, UK retail sales rose by 1.8% from a year before and 7.8% from two years before.
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Separately, Kantar said UK take-home grocery sales fell by 3.8% in the 12 weeks to November 28 compared to 2020 but were up 7.0% from 2019. As workers go back to the office and restaurants have reopened, average shop size has shrunk by 8% compared to a year ago, when many restrictions were still in place.
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By Tom Waite; thomaslwaite@alliancenews.com
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