(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Commonwealth Bank of Australia reported an annual profit hike, and said it is "optimistic" despite cautioning on macro-economic conditions. In the year ended June 30, operating income rose 3.1% to AUD24.90 billion, around USD17.33 billion, from AUD24.16 billion. Pretax profit jumped 11% to AUD13.62 billion from AUD12.24 billion. CBA lifted its payout 10% to 385 cents from 350 cents. Chief Executive Matt Comyn commented: "It is a challenging time but we remain optimistic that a path can be found to navigate through these economic conditions. We remain of the view that the medium term outlook for Australia is a positive one."
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Prudential labelled its first-half performance as resilient, though the Asia-focused insurer said it faced tough macro conditions and Covid-19 disruption. New business profit suffered, held back by its showing in Hong Kong, though total new policies sold advanced, thanks to Pru's "diversified geographic footprint". Market conditions may be "challenging" in the remainder of the year, it cautioned. In the six months to June 30, group attributable pretax profit slumped to USD300 million from USD1.26 billion. Gross premiums earned were 6.2% higher year-on-year at USD12.24 billion from USD11.52 billion. Pru declared an interim dividend of 5.74 US cents, up 7% year-on-year and equal to one-third of its previous full-year dividend of 17.23 cents per share. Anil Wadhwani will take over as CEO of Prudential in February next year. The appointment of the Manulife Financial Corp executive was announced in May.
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Aviva reported an "excellent" first half, and the London-based insurance company said it is confident of meeting annual targets. In the six months to June 30, its IFRS loss widened to GBP633 million from a GBP198 million loss a year prior. Aviva explained that this "largely" reflects adverse market movements and has no impact on capital or cash remittances. Adjusted operating profit rose 14% to GBP829 million from GBP725 million. General Insurance gross written premiums rose 7.3% to GBP4.69 billion from GBP4.37 billion, but the combined operating ratio worsened to 94.0% from 91.6%. A combined ratio below 100% indicates underwriting profit. Aviva declared an interim dividend of 10.3p per share, rising 40% from 7.35p a year earlier, in line with its full year guidance of around 31.0p per share. Aviva said it expects to start a share buyback programme when its 2022 full year results are announced.
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Admiral revealed a first-half profit fall, hurt by accelerating claims inflation in its motor insurance arm. Admiral provides home, car, pet and travel insurance. Revenue in the six months to June 30 rose 5.7% year-on-year to GBP1.85 billion from GBP1.75 billion. Total UK premiums written, which comprises its motor, home and travel insurance units, was 2.8% higher year-on-year at GBP1.27 billion from GBP1.23 billion. Group pretax profit fell 48% year-on-year to GBP251.3 million from GBP482.2 million. Compared to pre-Covid times, however, pretax profit was up 19%. Admiral declared a 60.0p per share ordinary interim dividend, down 48% from 115.0p a year prior. Including special dividends, stemming from the sale of its Penguin Portals comparison site, the total interim dividend was down 35% at 105.0p. The special dividend linked with the disposal amounted to 45p in the first half of 2022, down a touch from 46p a year earlier.
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Honda Motor said motorcycle sales boosted its first-quarter revenue, though semiconductor shortages and lockdowns in China hurt profit. It raised both its sales and profit outlook, however, though the bottom-line figure is still expected to weaken year-on-year. In the first quarter ended June 30, sales revenue climbed 6.9% year-on-year to JPY3.830 trillion, about USD28.38 billion, from JPY3.584 trillion. Pretax profit declined 24% to JPY237.40 billion from JPY311.36 billion. Total operating costs rose 8.0% to JPY3.607 trillion.
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SMC reported a first-quarter sales and profit rise, as demand for its products remained high in key markets. The Tokyo-based firm produces pneumatic control devices used in actuators, valves, vacuum products and sensors. It has customers in the automotive, mining, packaging and energy efficiency fields. Net sales in the first quarter ended June 30 rose 16% to JPY211.36 billion, about USD1.57 billion, from JPY182.77 billion a year earlier. Pretax profit jumped 73% to JPY106.18 billion from JPY61.41 billion.
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Ahold Delhaize said its second quarter profit increased, shaking off cost inflation, as sales surged. The Zaandam, Netherlands-based supermarket chain lifted annual guidance. It also announced it will delay the float of its bol.com unit, citing uncertain market conditions. Ahold Delhaize's revenue in the second quarter of 2022 jumped 15% year-on-year to EUR21.45 billion from EUR18.65 billion. Pretax profit rose 8.0% to EUR750 million from EUR694 million. It lifted its interim payout by 7.0% to EUR0.46 per share from EUR0.43.
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Simon Wolfson, CEO of FTSE 100 retailer Next, left the board of Deliveroo on Tuesday, the food delivery company said. "After much consideration, and with regret, I believe that the time required to continue in my role at Deliveroo is no longer compatible with my executive and other commitments," Wolfson said. The announcement came as Deliveroo reported a wider half-year loss. The pretax loss widened to GBP147.3 million in the first half of 2022 from GBP95.4 million a year before, even as revenue rose by 12% to GBP1.01 billion from GBP907.0 million. Deliveroo still expects expects to reach breakeven on adjusted earnings sometime between the second half of next year and the first half of 2024.
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Samsung is expected to use a virtual event on Wednesday to unveil a new generation of its foldable smartphone ranges. The technology giant launched its first foldable in 2019 and has introduced several generations and a second form factor since then with the long-term aim of offering a genuine alternative to traditional "flat" smartphones. With premium smartphone rivals Apple and Alphabet's Google still yet to launch a foldable device, and other brands including Motorola and Huawei struggling to capture the public's imagination with their own takes on the technology, Samsung is hoping to build on its head-start in what it sees as an increasingly important market.
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Meta Platforms has issued USD2.75 billion in 3.500% senior unsecured notes due 2027, USD3.00 billion of 3.850% notes due 2032, USD2.75 billion of 4.450% notes due 2052, and USD1.50 billion of 4.650% due 2062. The bond offering ends the Facebook parent's time as one of the few large companies without debt. It comes after Meta reported its first year-on-year drop in quarterly revenue last week. It said on Thursday it will use the funds towards "capital expenditures, repurchases of outstanding shares of its common stock, acquisitions, or investments".
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MARKETS
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Stocks in Europe were narrowly mixed on Wednesday, though they were performing better than Asia shares had and Wall Street was pointed toward a higher open. However, markets were effectively on hold ahead of the month's key data point, the US consumer price index for July, due at 1230 GMT. The headline inflation rates is expected to have eased to 8.7% in July from 9.1% in June. The core rate, however, is seen ticking up to 6.1% from 5.9%. The reading is expected to heavily influence the US Federal Reserve's next move on interest rates.
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CAC 40: down 0.1% at 6,485.71
DAX 40: up 0.2% at 13,559.54
FTSE 100: marginally higher, up 2.84 points at 7,490.99
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Hang Seng: closed down 2.0% at 19,610.84
Nikkei 225: closed down 0.7% at 27,819.33
S&P/ASX 200: closed down 0.5% at 6,992.70
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DJIA: called up 0.2%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.3%
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EUR: unchanged at USD1.0224 (USD1.0223)
GBP: firm at USD1.2095 (USD1.2086)
USD: soft at JPY134.89 (JPY134.96)
GOLD: flat at USD1,793.50 per ounce (USD1,793.82)
OIL (Brent): down at USD95.52 a barrel (USD97.62)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Against the background of the continuing tensions over Taiwan, China again threatened to take the democratic self-governing island republic by military means if necessary. "We will work with the greatest sincerity and exert our utmost efforts to achieve peaceful reunification," it said in a white paper on the Taiwan issue published by the Chinese government on Wednesday. "But we will not renounce the use of force, and we reserve the option of taking all necessary measures." It added: "Use of force would be the last resort taken under compelling circumstances. We will only be forced to take drastic measures to respond to the provocation of separatist elements or external forces should they ever cross our red lines."
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China's consumer price inflation quickened in July to a two-year high, with a surge in pork prices pushing up the cost of food. China's consumer price index grew less than expected at 2.7% from a year ago in July, National Bureau of Statistics data showed. Growth of 2.9% was expected. It had advanced 2.5% in June. The producer price index – measuring the cost of goods at the factory gate – rose 4.2% in July, down from 6.1% in June.
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Producer price growth in Japan was hotter than expected in July. According to the Statistics Bureau of Japan, producer prices advanced 8.6%, beating an FXStreet cited forecast of an 8.4% rise. Growth slowed from 9.4% in June. On a monthly basis, prices rose 0.4% in July, slowing from a 0.9% in June.
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Consumer prices in Germany rose at a slower pace in July, the Federal Statistical Office said, continuing a trend seen since May, but inflation remained elevated. Annually, consumer price inflation was 7.5% in July, confirming flash estimates, falling back slightly from 7.6% in June and 7.9% in May. On a monthly basis, prices rose by 0.9% in July from June, having risen by 0.1% in June from May. On a harmonised basis, designed for EU-wide comparison, Germany's annual inflation rate warmed up to 8.5% from 8.2% in June. On a monthly basis, prices rose by 0.9%, having declined by 0.1% in June.
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Germany will offer tax relief worth EUR10 billion to help workers cope with soaring inflation, Finance Minister Christian Lindner said. The package will raise base tax-free allowance as well as bring up the level from which the top income tax rate of 42% will apply. Families will also benefit from higher tax exemptions for dependent children.
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A slowdown in energy prices allowed Italy's inflation rate to ease in July from its recent peak, figures from national statistics office Istat showed. The annual consumer price inflation rate slowed to 7.9% in July from the 36-year high of 8.0% in June, in line with market estimates cited by FXStreet. On a monthly basis, consumer prices increased by 0.4% following the rise of 1.2% in June, in line with estimates. Harmonized inflation slowed to 8.4% from 8.5% in June on an annual basis, while deflation of 1.1% was recorded in July from a rise of 1.2% in June on a monthly basis.
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EU member states will not be allowed to import any more coal from Russia after the transitional period for the bloc's embargo ends at midnight on Wednesday. The embargo was part of the fifth sanctions package agreed by the EU in April and will be in full force from Thursday onwards. EU countries had agreed on a transitional period of 120 days to give the industry time to adapt to the import ban. The aim is to weaken the Russian economy amid its invasion of Ukraine.
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UK consumer confidence rose in July, possibly due to the government's cost-of-living payments, according to a YouGov survey. The two-point rise in the overall index from YouGov and the Centre for Economics & Business Research brings an end to a seven month stretch of decline that began in December 2021. Despite the boost, the overall public mood around household finances remains downbeat – with the survey taken before the Bank of England announced that inflation was expected to hit 13% this year.
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President Joe Biden signed US ratification of bids by Finland and Sweden to enter NATO, taking expansion of the Western alliance in response to Russia's Ukraine invasion one step closer. Biden said the two northern European countries would become "strong, reliable highly capable new allies" by making the "sacred commitment" to mutual defence in the US-led transatlantic alliance. Earlier this month, the Senate voted 95-1 in favour of the Nordic states' accession, making the US the 23rd of the 30 NATO countries to give formal endorsement. Unanimous support is needed for new membership.
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Biden signed into law a multibillion-dollar bill boosting domestic semiconductor and other high-tech manufacturing sectors that US leaders fear risk being dominated by rival China. The Chips & Science Act includes around USD52 billion to promote the production of microchips, the tiny but powerful and relatively hard-to-make components at the heart of almost every modern piece of machinery. Tens of billions of dollars more are allocated for scientific research and development. The White House says the government commitment to bolstering high-tech industries is already drawing in large-scale private investors, with some USD50 billion in new semiconductor investment alone.
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By Tom Waite; thomaslwaite@alliancenews.com
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