(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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SoftBank confirmed it has terminated its agreement with Nvidia to sell UK computer chip maker Arm due to "significant regulatory challenges". In September 2020, the Santa Clara, California-based chipmaker agreed to buy Arm for USD40 billion. However, the deal faced pressure from US, UK and EU regulators amid fears it would undermine competition as the merger could restrict the access of Nvidia's rivals have to Arm's technology, which is used by firms in making semiconductor chips and other products. SoftBank said it now plans a public offering of Arm by March 2023. In December, US regulators filed a lawsuit seeking to block the merger, while UK and European regulators had ordered probes into the deal. Following the collapse, SoftBank retained the USD1.25 billion deposit given by Nvidia. The company explained that the amount will be recognised as profit in the three-month period ending March 31.
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BP hailed a year of "performing while transforming" as it posted a swing back to profit on improved oil prices after a pandemic-battered 2020. At the same time, it set out plans to accelerate its move to net zero and plough a greater proportion of funds into businesses such as electric vehicle charging, renewables and hydrogen. BP's underlying replacement cost profit for the fourth quarter of 2021 was USD4.07 billion, surging from just USD115 million a year before. Based on an average Brent price of USD60 a barrel, BP expects to be able to deliver share buybacks of around USD4.0 billion a year and have room for an annual dividend uplift of 4% through 2025. For the fourth quarter of 2021, BP declared a dividend per share of 5.46 cents, up 4.0% from 5.25 cents a year ago, bringing 2021's total to 21.63 cents, down 18% from 26.35 cents in 2020. It completed share buybacks worth USD1.73 billion in the fourth quarter, and plans to carry out a further USD1.5 billion from surplus cash flow before announcing its first quarter results for 2022.
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Coast Capital has built a stake in Vodafone, Bloomberg reported, the latest activist investor to amass a holding in the telecommunications firm recently. Bloomberg reported the New York-based investor is "long-term supportive" of Vodafone's management. "We've built an important position in Vodafone after conducting detailed work with leading operators in the sector," Coast Capital Founding Partner James Rasteh said in an interview. While backing Vodafone's strategy, Coast Capital took aim at regulation in the telecoms sector. "We have made it clear to the regulators that their overreach has been destructive and is going to dissuade institutional investors from investing in the sector," Rasteh said.
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Biopharmaceutical firm Amgen said it ended 2021 with a solid profit rise in its final quarter, although this was not enough to lift the overall profit figure against higher costs. In the three months to December 31, revenue rose 3.2% to USD6.85 billion from USD6.63 billion a year earlier, as a result of the contribution from the Eli Lilly & Co Covid-19 manufacturing collaboration, more than offsetting a 1% drop in product sales. As a result, pretax profit for the quarter climbed 14% to USD2.13 billion from USD1.88 billion. Thousand Oaks, California-based Amgen reported annual revenue of USD25.98 billion, a 2.2% rise from USD25.42 billion in 2020, due to the Eli Lilly Covid-19 partnership, in spite of flat product sales. Pretax profit, however, fell 18% to USD6.70 billion from USD8.13 billion, mainly as a result of a USD1.5 billion write-off in required in-process research & development, associated with the group's acquisition of Five Prime Therapeutics, completed in April 2021.
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Swedish price comparison site PriceRunner said it is suing Alphabet's Google for EUR2.1 billion, around USD2.4 billion, for promoting its own shopping comparisons in search results. Europe has cracked down on the business practices of Big Tech firms in recent years, while the EU is moving forward with legislation to tighten regulation. US behemoths are facing fines and legal challenges in many European nations. The Swedish tech startup said it expected the "final damages amount of the lawsuit to be significantly higher", given that "the violation is still ongoing."
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UK online grocer Ocado hailed its investment into new technologies and it has "re-set the bar" within grocery via its Ocado Smart Platform. For the financial year that ended November 28, Ocado generated revenue of GBP2.5 billion, up 7.2% from GBP2.33 billion in financial 2020. It posted a pretax loss of GBP176.9 million, widened from a loss of GBP52.3 million. Ocado said the loss reflected increased investment in its Solutions business, particularly the increasing roll out of the Ocado Smart Platform. The retailer said it saw "resilient" sales growth of 4.6% in the year, driven by a 22% increase in customer numbers to 832,000. This brought an increase in orders of 12%, to 357,000, offset by a reduction in basket size of 5.8% to GBP129. Ocado highlighted the results were constrained in the second half by the still-tight labour market in the UK, as well as reduced capacity at one of its fulfilment centres because of a fire in July.
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SSE upgraded its expectations for adjusted earnings per share following a strong performance in the year so far. The Perth, Scotland-based power utility now expects adjusted earnings per share of at least 90 pence for its full-year ending March 31, up from previous guidance of at least 83p. SSE attributes this to strength and stability from its "balanced mix of regulated and market facing businesses". Strong performances were seen from its flexible thermal and hydro plants. This helped to offset renewables output that had come at only 81% of planned levels of 7,304 gigawatt hours at 5,920 gigawatt hours for the nine months to December 31. This was also 16% lower than the output in the comparable period of the year before of 7,046 gigawatt hours.
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DCC said operating profit for the third quarter ended December 31 was in line with expectations and ahead of the prior year. The Dublin-based support services firm said it delivered a good trading performance and benefited from acquisitions completed in the prior year. Further, DCC said the growth was achieved against the anticipated negative impact of currency translation. DCC continued to develop during the period and completed the acquisition of Almo, DCC's largest acquisition to date, at the end of the quarter. Looking ahead, DCC continues to expect that the financial year ending March 31 will be another year of strong operating profit growth, in line with current market consensus expectations.
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Citigroup Global Markets said it placed 58 million shares of Airtel Africa, a 1.5% stake, on behalf of shareholders Warburg Pincus and Morningstar Investment. The shares were sold at 140 pence each, raising GBP81.2 million. Citigroup didn't say how many Airtel Africa shares the two sellers have remaining, but noted they have agreed to a 90-day lock-up period for any they own. Airtel Africa won't receive any proceeds of the sale, as it was of existing shares. The stock was down 11% at 138.61p early Tuesday.
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BNP Paribas reported a strong result in 2021 as the Domestic Markets division performed well, leading to a sharp jump in profit for the Paris-based bank. Revenue for 2021 rose 4.7% to EUR43.76 billion from EUR41.78 billion the year before, lifted as commission income increased 13% to EUR15.04 billion from EUR13.30 billion. This helped to offset interest income slipping 5.3% to EUR29.52 billion from EUR31.17 billion. Before IFRS 5, revenue for 2021 stood at EUR46.24 billion. BNP highlighted that this was up 4.4% on 2020 and 3.7% higher than pre-pandemic 2019. Pretax profit jumped 36% to EUR12.74 billion from EUR9.34 billion, as cost of risk declined 45% to EUR2.97 billion from EUR5.40 billion.
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MARKETS
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Softbank Group Corp closed down 0.9% in Tokyo after abandoning its agreement to sell UK chipmaker Arm to the US's Nvidia in the face of regulatory backlash. Equity markets were trading higher in Europe, with Wall Street also called to open mostly firm. Nvidia was down 1.1% in pre-market activity in New York.
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CAC 40: up 0.6% at 7,051.39
DAX 40: up 0.4% at 15,265.14
FTSE 100: up 0.4% at 7,601.30
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Hang Seng: closed down 1.0% at 24,329.49
Nikkei 225: closed up 0.1% at 27,284.52
S&P/ASX 200: closed up 1.1% at 7,186.70
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DJIA: called up 0.2%
S&P 500: called up 0.1%
Nasdaq Composite: called marginally lower, down 1.50 points
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EUR: down at USD1.1407 (USD1.1438)
GBP: firm at USD1.3545 (USD1.3534)
USD: up at JPY115.35 (JPY115.05)
Gold: up at USD1,819.50 per ounce (USD1,816.81)
Oil (Brent): down at USD92.20 a barrel (USD92.98)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russian President Vladimir Putin said he was ready for compromise and would look at proposals put forward by French leader Emmanuel Macron in talks on Monday, while still blaming the West for raising tensions over Ukraine. Emerging from nearly five hours of talks in the Kremlin, the two leaders voiced hope that a solution could be found to the worst crisis between Russia and the West since the end of the Cold War. Repeatedly thanking Macron for coming to Moscow, Putin said at a joint press conference that the French leader had presented several ideas worth studying. "A number of his ideas, proposals...are possible as a basis for further steps," Putin said, adding: "We will do everything to find compromises that suit everyone." He did not provide any details but said the two leaders would speak by phone after Macron meets with Ukrainian President Volodymyr Zelensky on Tuesday.
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US President Joe Biden promised Monday to "bring an end" to the disputed Nord Stream 2 pipeline built to bring Russian gas to Europe, if Moscow invades neighbouring Ukraine. "If Russia invades – that means tanks or troops crossing the border of Ukraine, again – then there will be no longer a Nord Stream 2," Biden told a joint news conference with Germany's Chancellor Olaf Scholz. "I promise you," Biden said, "we will bring an end to it."
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The US will ease tariffs on steel imported from Japan, officials announced Monday, in the latest move by Biden's administration to resolve trade disputes started under his predecessor Donald Trump. Beginning in April, Japan will be allowed to pay lower duties on exports of up to 1.25 million tons of steel per year to the US. The decision ends the 25% levies Trump imposed in June 2018 on metal imports from the country and others, citing national security concerns. The dispute with Japan was one of a number Trump initiated during his time in office that Biden has worked to resolve, and follows an agreement Washington reached last year to end the metal tariffs on the EU.
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The US said a deal was possible with Iran on its nuclear program but that an agreement had to be completed urgently as Tehran advances its capabilities, on the eve of renewed talks. The negotiations – attended by China, France, Germany, Russia, UK, Iran and the US – will resume in Vienna after being halted at the end of last month. They come after parties in recent weeks cited progress in seeking to revive the 2015 accord that was supposed to prevent Iran from acquiring an atomic bomb, a goal it has always denied pursuing. "A deal that addresses all sides' core concerns is in sight, but if it is not reached in the coming weeks, Iran's ongoing nuclear advances will make it impossible for us to return to the JCPOA," a US State Department spokesperson said, referring to the 2015 framework agreement. Parties have been negotiating in Vienna since last year with indirect US participation.
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UK Prime Minister Boris Johnson has come under fresh pressure over the Jimmy Savile smear he aimed at Keir Starmer after the Labour leader had to be rescued by police from a mob near Parliament. Starmer faced baseless allegations of "protecting paedophiles" and chants about the sex offender from protesters before being bundled into a police car for protection. Former Cabinet minister Julian Smith was among several Conservative MPs to demand that the prime minister fully withdraws the Savile slur for the sake of Starmer's security in the wake of the incident on Monday. Johnson tweeted that the "behaviour directed" at the Labour leader was "absolutely disgraceful" but did not address the nature of the abuse.
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The UK retail sector had a strong start to 2022, with a combination of inflation, easier comparatives and a slight return to some pre-virus trends lifting sales in January. According to the latest British Retail Consortium-KPMG tracker, retail sales jumped 12% yearly in January. They had fallen 1.3% last January, a month when the UK was under lockdown. Compared to pre-pandemic times, UK retail sales were 7.5% higher. January 2022's annual growth tops the six-month average of 6.0%. Over the three months to January, food sales ticked down 0.1%, though non-food sales surged 11%. In-store non-food sales were 68% higher annually over the three-month period.
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By Tom Waite; thomaslwaite@alliancenews.com
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