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TOP NEWS SUMMARY: Mario Draghi resigns as Italian premier amid turmoil

Thu, 21st Jul 2022 11:06

(Alliance News) - The following is a summary of top news stories Thursday.

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COMPANIES

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Roche reported increased sales in the first half of 2022, despite competition from biosimilars, and confirmed its outlook for 2022. Basel, Switzerland-based Roche posted sales of CHF32.30 billion in the first half of 2022, around USD33.21 billion, up 5.2% from CHF30.71 billion the previous year. In its Pharmaceuticals division, sales grew by 3% year-on-year as a result of continued demand for new severe disease medicines. The Diagnostics division saw growth of 11% on the back of a strong base business, though Roche said demand for Covid-19 tests is expected to decline in the second half. Income rose 12% to CHF9.16 billion from CHF8.22 billion while diluted earnings per share climbed 11% to CHF11.76 from CHF10.56. The income figure included positive effects of the resolution of a patent dispute in Japan and the repurchase of Roche shares from Novartis. Roche also announced that Chair Christoph Franz will not seek re-election at the company's annual general meeting next March. The company intends to propose Severin Schwan as its new chair. Schwan has served as CEO since 2008. Thomas Schinecker, the current chief executive of the Diagnostics division, will succeed Schwan as Roche CEO from March 15.

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SAP reported a sharp fall in second-quarter profit as the German enterprise software company announced a new EUR500 million share buyback and the acquisition of analytics start-up company Askdata. SAP's operating profit dropped 32% to EUR673 million in the second quarter of 2022, from EUR984 million a year prior. Basic earnings per share fell 75% to EUR0.29 from EUR1.15. The company explained the drop in operating profit was primarily due to the impact of the war in Ukraine, with SAP seeing a restructuring expense of EUR130 million due to the exit from Russia and Belarus. It reported an overall impact of EUR280 million from the war. Revenue climbed 13% to EUR7.52 billion from EUR6.67 billion a year prior. Its Cloud arm became SAP's largest revenue stream in the quarter as it grew 34% against the previous year.

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Zurich-based industrial conglomerate ABB said it has decided to exit the Russian market due to the impact of sanctions, as it reported a drop in quarterly income and revenue. ABB posted a net income of USD379 million in the second quarter of 2022, down 50% from USD752 million the previous year. Basic earnings per share dropped 47% to USD0.20 from USD0.37. Revenue fell more modestly, dropping 3% to USD7.25 billion from USD7.45 billion, despite orders increasing 10% year-on-year to USD8.81 billion from USD7.99 billion. Chief Executive Bjorn Rosengren said this was achieved despite the pressure from a tight supply chain, Covid-related lockdowns in China and an inflationary environment. The issue of component supply is expected to ease, however, he said.

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Anglo American reported a mostly weaker production performance in the first half of 2022, with declines in copper, platinum group metals and iron ore output. For the six months ended June 30, the miner posted a 17% drop in copper output to 273,000 tonnes from 330,000 tonnes the same period a year before, driven by planned lower grades from the Los Bronces and El Soldado mines in Chile. For 2022 as a whole, Anglo American's copper guidance remained between 660,000 and 750,000 tonnes. Only diamond production from the De Beers business achieved a positive result in the half year, rising 10% to 16.9 million carats from 15.4 million carats. Anglo American's guidance for diamond output for the year was increased to between 32 and 34 million carats, from prior guidance of 30 million carats to 33 million.

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China has hit ride-hailing firm Didi with a fine CNY8 billion, around USD1.2 billion, regulators announced, concluding a year-long investigation. The probe found "conclusive evidence" that Didi had committed violations of an "egregious nature", the Cyberspace Administration of China said in a statement. It accused Didi of illegally storing the ID information of more than 57 million drivers in plain text instead of a more secure format. The regulator said the firm also analysed passenger details without their knowledge – including photos on their mobile phones and facial recognition data.

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Online grocer Ocado reported an interim revenue decline and widened loss, which it put down to a UK grocery market that "contracted post pandemic and the rising cost of living crisis in UK". Revenue in the six months to May 29 fell 4.4% to GBP1.26 billion from GBP1.32 billion a year earlier. Ocado Group's pretax loss ballooned to GBP211.3 million from GBP27.9 million. Hitting its bottom line was depreciation, amortisation and impairment losses, which rose 51% to GBP157.3 million. "The significant increase in cost of living is having a significant impact on customer behaviour and will be an ongoing challenge for the remainder of the year," Ocado warned. Following a near GBP580 million cash raise, the company said its medium-term financing needs are met. Ocado has "ample liquidity", it said.

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Tesla late Wednesday reported a sharp rise in second-quarter earnings as the electric vehicle maker grappled with a shutdown of its Shanghai factory and production challenges at new plants. For the three months to June 30, revenue was USD16.93 billion, up 42% from USD11.96 billion in the second quarter last year. Second quarter net income was USD2.26 billion, or USD1.95 per diluted share, up sharply from USD1.14 billion, or USD1.02 diluted EPS, last year. Its second quarter automotive gross margin stood at 27.9%, down from 28.4% at the same time last year. The Austin, Texas-based firm said it continued to make significant progress across the business during the second quarter. Tesla pointed to challenges during the period, including limited production and shutdowns in Shanghai for the majority of the quarter. However, it achieved an operating margin "among the highest in the industry" of 14.6%.

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Go-Ahead suitor Kelsian said it will not table a bid for the UK transport operator, citing "volatile" equity markets in Australia, where Kelsian is listed. Go-Ahead re-affirmed its support for a GBP647.7 million takeover from a consortium consisting of Kinetic Holding and Globalvia Inversiones.

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MARKETS

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Oil and gold prices both were lower while the dollar was higher on Thursday. The flow of Russian gas to Europe resumed but the continent was hit by more political uncertainty as a shaky Italian coalition government crumbled. It all provides more grist to mill for the policy makers of the European Central Bank, which announces its latest policy decision at 1315 BST. The ECB already has said it will raise interest rates for the first time since 2011, but the size of the increase and other policy details await confirmation.

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CAC 40: down 0.1% at 6,178.12

DAX 40: down 0.6% at 13,202.61

FTSE 100: down 0.6% at 7,221.71

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Hang Seng: closed down 1.5% at 20,574.63

Nikkei 225: closed up 0.4% at 27,803.00

S&P/ASX 200: closed up 0.5% at 6,794.30

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DJIA: called down 0.3%

S&P 500: called down 0.2%

Nasdaq Composite: called down 0.1%

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EUR: down at USD1.0175 (USD1.0202)

GBP: down at USD1.1926 (USD1.1988)

USD: up at JPY138.80 (JPY138.05)

Gold: down at USD1,682.85 per ounce (USD1,707.88)

Oil (Brent): down at USD103.10 a barrel (USD107.06)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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Italian Prime Minister Mario Draghi handed in his resignation on Thursday, the office of President Sergio Mattarella said, after his national unity coalition government crumbled. Draghi submitted "his resignation and that of the government he heads," said the brief statement. The president "took note of this" and the government remained in place to "conduct current business," the statement added. Mattarella has summoned the two leaders of parliament to his residence. Senate President Maria Elisabetta Casellati and Chamber of Deputies President Roberto Fico are expected at the Quirinal Palace in Rome on Thursday afternoon, a statement from Mattarella's office said.

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The Nord Stream gas pipeline linking Russia to Germany restarted on Thursday after 10 days of maintenance work, its operator told AFP. "It's working," a Nord Stream spokesman said, without specifying the amount of gas being delivered. The German government had feared the pipeline would not be reopened by Moscow after the scheduled work. According to data given by Russia's state-owned energy giant Gazprom to Gascade, the German operator of the line, 530 gigawatt hours would be delivered during the day. This was only 30% of its capacity, Klaus Mueller, president of Germany's energy regulator, the Federal Network Agency, said on Twitter. Gazprom has cut flows to Germany via the vital Nord Stream 1 pipeline by some 60% in recent weeks, blaming the absence of a Siemens gas turbine that was undergoing repairs in Canada.

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The Bank of Japan dug its heels in on its easy-money policies while raising its inflation forecast, even as other countries hike interest rates to tackle soaring prices. Policymakers have refused to move away measures put in place a decade ago as the BoJ battles to achieve sustained price rises in the world's third-largest economy. But the decision leaves it increasingly alone as its peers raise rates, sending the yen tumbling to a 24-year low against the dollar. Highlighting the different approaches, the European Central Bank is later Thursday expected to announce its first rate increase since 2011. Prices are rising in Japan, and the BoJ raised its inflation forecast for fiscal 2022-23 to 2.3%, up from 1.9% in April, "due to rises in prices of such items as energy, food, and durable goods". "Thereafter, the rate of increase is expected to decelerate" as energy prices stabilise, it said. The BoJ added that it would hold rates at minus 0.1% and continue buying unlimited government bonds to maintain a low cap on long-term yields. These monetary easing policies are intended to achieve sustained two-percent inflation, a target the bank considers key for stable growth.

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UK government borrowing increased in June, figures from Office for National Statistics showed. Public sector net borrowing, excluding banks, amounted to GBP22.9 billion in June, up 22% year-on-year from GBP18.8 billion. The latest figure was the second-highest June borrowing amount on record, the ONS noted. In June 2020, borrowing was GBP32.2 billion. For the year to June, borrowing hit GBP55.4 billion, down 9.3% from GBP61.1 billion a year earlier, but more than doubled from the year to June 2019, so before the Covid-19 pandemic. Public sector net debt excluding public sector banks and the Bank of England was GBP2.068 trillion, which is 83% of UK gross domestic product.

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In the race to lead the ruling UK Conservative party, Liz Truss criticised Rishi Sunak's record on taxation and the former chancellor claimed he was the only one who could beat Labour as the leadership contenders turned their focus to winning over Tory members. Foreign Secretary Truss vowed to bring in an emergency budget to swiftly axe the national insurance rise if she wins the race to be the next prime minister. Sunak made his own pitch to win over the Conservative membership who will crown the winner by arguing he could win an election, whereas Truss could not. Tory members of Parliament chose the pair to enter the run-off for the leadership, as Penny Mordaunt was eliminated when she came third behind Truss by eight votes. Sunak was the parliamentary party's favourite, winning 137 votes to Truss's 113. But bookmakers placed Truss as the frontrunner, with early indications suggesting she is more popular with Tory members ahead of a summer of campaigning.

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US President Joe Biden, thwarted by lawmakers and the Supreme Court, sought Wednesday to revive his ambitions to tackle climate change as heat waves batter the US and Europe. Rocketing summer temperatures have highlighted the growing threat, with 100 million people in the US currently under excessive heat alerts and devastatingly hot conditions causing misery across Europe. "Climate change... is literally, not figuratively, a clear and present danger," Biden said, announcing executive actions including USD2.3 billion in investments to help build US infrastructure to withstand climate disasters. "The health of our citizens and our communities is literally at stake...Our national security is at stake as well...And our economy is at risk. So we have to act." Biden, delivering a speech at a former coal-fired electricity plant in Massachusetts, said his administration would do whatever necessary, with or without lawmakers on board. "Congress is not acting as it should...This is an emergency and I will look at it that way. As president, I'll use my executive powers to combat the climate crisis," he said. But he stopped short of declaring a formal climate emergency, which would grant him additional policy powers. Upon his return home, when asked about the emergency designation, Biden told reporters: "I will make that decision soon."

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The World Health Organization will reconvene its expert monkeypox committee on Thursday to decide whether the outbreak now constitutes a global health emergency – the highest alarm it can sound. A second meeting of the WHO's emergency committee on the virus will be held to examine the evidence on the worsening situation, with nearly 14,000 cases reported from more than 70 countries. A surge in monkeypox infections has been reported since early May outside the West and Central African countries where the disease has long been endemic. On June 23, the WHO convened an emergency committee of experts to decide if monkeypox constitutes a so-called Public Health Emergency of International Concern – the UN health agency's highest alert level. But a majority advised the WHO's chief Tedros Adhanom Ghebreyesus that the situation, at that point, had not met the threshold. Now a second meeting will be held, with case numbers rising and spreading to six more countries in the past week.

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.

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