(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Bayer said it grew sales in the third quarter of 2021 amid gains in all divisions and regions. The Leverkusen, Germany-based pharmaceutical and life sciences company said sales rose by 14% to EUR9.78 billion in the three months to September 30. Bayer posted substantial growth in the agricultural business, while the Pharmaceuticals division benefited in particular from large gains for the Eylea ophthalmology drug. The Consumer Health division was up in all regions and product categories. Earnings before interest, tax, depreciation, amortization and special items increased by 16% to EUR2.089 billion. Net income amounted to EUR85 million, swung from a EUR2.744 billion loss a year ago.
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Munich Re said its performance in the third quarter was hurt by high winds and flash floods. The reinsurance provider posted a profit of EUR366 million for the three months that ended September 30 and EUR2.06 billion for the first nine months of 2021, up from EUR199 million and EUR999 million, respectively, a year earlier. The operating profit fell to EUR204 million in the third quarter of 2021 compared with EUR353 million for the same quarter last year. Munich Re stressed Hurricane Ida in the US caused losses of EUR1.2 billion, while Storm Bernd in German resulted in losses of EUR600 million. The company also recorded higher-than-expected expenditure totalling around EUR170 million on Covid-19-related losses in the life & health reinsurance business.
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National Australia Bank posted an annual profit hike as the lender was spared from sharp impairment charges amid easier market conditions. Melbourne, Australia-based NAB said net operating income in the year ended September inched 2.2% lower to AUD16.81 billion from AUD17.19 billion a year earlier. However, pretax profit jumped 70% to AUD9.21 billion from AUD5.42 billion. NAB posted an AUD217 million impairment write-back, compared to an AUD2.76 billion charge the previous financial year. NAB more than doubled its payout to 127 cents per share from 60 cents.
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Nissan Motor reported a swung to positive net income in the first half of its current financial year amid double-digit sales growth. The Kanagawa, Japan-based car manufacturer reported annual net sales growth of 28% in the six months to September 30 to JPY3.947 trillion, about USD34.94 billion. As a result, the company swung to net income of JPY168.65 billion from a JPY329.96 billion loss in the first half of financial 2021. Although sales volume was lower than expected, mainly due to the impact of the semiconductor supply shortage, Nissan said selling expenses and fixed costs decreased, and the quality of sales in each market continued to improve, resulting in higher profit per unit.
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Toshiba plans to split into three companies as early as 2023, a newspaper report said, after a series of crises at the Japanese conglomerate, including the ouster of the board's chair and a contentious buyout offer. The Nikkei business daily said the three units would focus on infrastructure, devices and semiconductor memory and are expected to be listed, possibly within two years. Toshiba told AFP the option of splitting its business up was under consideration but said nothing had been decided yet. The Nikkei, which did not cite sources, said the move could be announced Friday when Toshiba reports earnings and unveils a new mid-term business plan.
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PayPal late Monday posted a third quarter earnings hike and flagged a pact with Amazon. California-based PayPal said revenue in the third quarter ended September 30 rose 13% annually to USD6.18 billion from USD5.46 billion. Pretax profit increased 1.8% to USD1.17 billion from USD1.14 billion a year earlier. In addition, Chief Executive Dan Schulman noted PayPal, through its Venmo unit, will partner with Amazon. "We're thrilled that we are teaming up with Amazon to enable customers in the US to pay with Venmo at checkout," Schulman added. PayPal shares were down 3.3% in pre-market trade on Tuesday.
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Advanced Micro Devices shares jumped on Monday after the company said it has won Facebook as a customer. AMD will supply Facebook, soon to be renamed Meta, with its AMD EPYC processors, the Santa Clara-based chip maker said. "We are in a high-performance computing megacycle that is driving demand for more compute to power the services and devices that impact every aspect of our daily lives," AMD Chief Executive Lisa Su said. "We are building significant momentum in the data center with our leadership product portfolio, including Meta's adoption of AMD EPYC to power their infrastructure and the build-out of Frontier, the first US exascale supercomputer which will be powered by EPYC and AMD Instinct processors." AMD shares closed up 10% on Monday and were up 2.0% more in pre-market trade Tuesday.
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Robinhood Markets said it was the victim of a cyber attack that exposed personal data from about 7 million customers. The trading platform experienced a "data security incident" last Wednesday which has since been contained, it said in a statement released after the US market closed on Monday. According to Robinhood, the hackers obtained email addresses of about 5 million customers and "full names for a different group of approximately 5 million people". The company said the hackers accessed further data, including date of birth and zip code of a group of about 310 people, "with a subset of approximately 10 customers having more extensive account details revealed". "Based on our investigation, the attack has been contained and we believe that no Social Security numbers, bank account numbers, or debit card numbers were exposed and that there has been no financial loss to any customers as a result of the incident," Robinhood said.
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London Stock Exchange Group said it will only take a very minor revenue hit should a contract its clearing services arm has with Euronext be cancelled early. Fellow stock exchange operator Euronext on Monday said that it now owns a clearing service, thanks to its April acquisition of Borsa Italiana from LSEG. This included CC&G, a clearing house in Milan. The deal means Euronext no longer has to rely on LSEG's LCH SA arm to provide clearing arrangements, and it can now use the services of its own units. LSEG said Euronext's LCH deal runs through to 2027. However, Euronext has "limited early termination rights", including one exercisable in January 2024. Though uncertain on timing and details, LSEG added the potential impact to revenue is less than 1%.
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Persimmon said it has continued to perform well in 2021 thanks to healthy demand. The York, England-based housebuilder said private sales reservation rates per site are still ahead of 2019. For the period July 1 to this past Monday, average private new home sales reservation rate per site was 16% ahead of the same period in 2019. Persimmon said demand for newly built homes continues to underpin positive pricing conditions in the UK housing market.
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DCC announced a strong interim performance with all four divisions showing growth, leading to a bolstered dividend. The Dublin-based sales, marketing and support services firm reported pretax profit of GBP115.0 million in the six months to September 30, rising 13% from GBP102.1 million last year. In financial 2021, the firm's interim pretax profit had almost doubled from GBP57.6 million a year prior. The profit increase came on the back of a 26% rise in revenue to GBP7.52 billion from GBP5.93 billion. DCC upped its interim dividend 7.5% to 55.85 pence from 51.95 pence last year.
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Coca-Cola Europacific Partners raised financial guidance and declared a sharply higher annual payout, amid what it called strong trading and the successful integration of recent acquisition Coca-Cola Amatil. The Uxbridge, England-based soft drinks bottler bought the Sydney-based Coca-Cola Amatil from its independent shareholders and US brand owner Coca-Cola. The deal valued Amatil at AUD9.77 billion, about GBP5.40 billion, and completed back in May. Following the acquisition, CCEP renamed itself Coca-Cola Europacific Partners from Coca-Cola European Partners. Group revenue totalled EUR3.95 billion in the third-quarter, which ended October 1, up 24% on a year before or 22% at constant currency. However, most of this rise was due to the addition of EUR700 million in revenue from Amatil. In Europe, revenue was EUR3.25 billion, up 2.0%, or 1.0% on a currency-neutral basis. CCEP declared a dividend for 2021 of EUR1.40, up 65% from last year and 13% from 2019.
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MARKETS
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Markets were little moved on Tuesday, with Asia mostly failing to follow through on a positive US close on Monday, though European markets were holding small gains near midday. "European markets have shrugged off the weakness seen in Japanese stocks overnight and instead have focussed on the continued positive theme of earnings season on both sides of the Atlantic," commented Chris Beauchamp, chief market analyst at IG. Among companies reporting Tuesday, Bayer was up 2.6% in Frankfurt. However, in London, DCC was down 2.8%.
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CAC 40: up 0.2% at 7,059.71
DAX 40: up 0.2% at 16,077.96
FTSE 100: up 0.1% at 7,310.01
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Hang Seng: closed up 0.2% at 24,813.13
Nikkei 225: closed down 0.8% at 29,285.46
S&P/ASX 200: closed down 0.2% at 7,434.20
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DJIA: called marginally lower, down 11.00 points
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.2%
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EUR: flat at USD1.1595 (USD1.1590)
GBP: up at USD1.3594 (USD1.3558)
USD: down at JPY112.85 (JPY113.18)
Gold: up at USD1,825.33 per ounce (USD1,823.51)
Oil (Brent): up at USD84.03 a barrel (USD83.60)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Germany's exports fell in September, figures from Destatis showed, as Europe's top economy grapples with global supply shortages. Germany registered a trade surplus of EUR13.2 billion in September, widening from a EUR13.0 billion surplus in August. However, the latest figure missed the market forecast, cited by FXStreet, of EUR13.6 billion. On a monthly basis, German exports were down by 0.7% in September to EUR117.8 billion, but up 7.1% annually. Imports were 0.1% higher monthly at EUR101.6 billion and up 13% yearly.
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UK retail sales growth accelerated in October, figures showed, despite logistics issues hurting the consumer electronics segment. According to the latest British Retail Consortium and KPMG sales monitor, total UK retail sales rose 1.3% annually in October, following a 0.6% hike in September. The decline in like-for-like sales eased to 0.2% from 0.6% in September. Over the three months to October, food sales rose 1.5%, below the average 12-month growth of 4.7%, however. Non-food sales rose 1.8% over the three-month period, though this was also below a 12-month average of 15%. In store sales of non-food items were 7.9% higher during the three months, coming in below the 12-month average of 26%.
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UK Prime Minister Boris Johnson is under increasing pressure after a minister admitted the government made a "mistake" by attempting to change standards rules to prevent a Tory MP from being suspended. Johnson skipped an emergency Commons debate on Parliament's standards system, leaving it to the Chancellor of the Duchy of Lancaster to respond for the government as the prime minister chose to instead honour a "long-standing" commitment to visit a North East hospital. Steve Barclay told members of Parliament that, while there were concerns with the way allegations of wrongdoing by MPs are probed, it had been an error for ministers to proceed in the way they did last week as they sought to rip up the current rules. The fiery debate also saw former chief whip Mark Harper call on Johnson to apologise for his handling of the sleaze row which has engulfed the Conservative Party over the past week, with more recently elected Tories expressing their dissatisfaction with Downing Street's attitude.
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Stresses in China's real estate sector including from heavily-indebted Evergrande have the potential to impact the US if they spread first to the Chinese financial system, the Federal Reserve said Monday. Noting the concerns about high debt levels and inflated real estate values causing regulators in Beijing to take action, the central bank's latest Financial Stability Report said the stresses could cause "a sudden correction of real estate prices" and impact the China's financial system As one of China's biggest property developers, fears around Evergrande's debt mountain have battered investor sentiment and shaken the country's mammoth real estate market, but the firm recently met an interest payment it was expected to miss. "Given the size of China's economy and financial system as well as its extensive trade linkages with the rest of the world, financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the US," the report said.
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Federal Reserve board member Randal Quarles announced he is resigning at the end of December, leaving another vacancy on the central bank for President Joe Biden to fill. Quarles had served as the Fed's first vice chair overseeing banking supervision, but his four-year term in that position ended in mid-October. He could have remained on the board as a governor until January 2032. Biden has yet to appoint someone to the vice chair role, and has several other decisions to make about the Fed's leadership including whether to reappoint Jerome Powell to the top position after his four-year term expires February 5. Biden has been under intense pressure from the liberal wing of his Democratic party to put officials in those positions who will be tougher on banks.
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By Tom Waite; thomaslwaite@alliancenews.com
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