LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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BP said its pretax profit for the first quarter of 2015 was substantially lower than a year ago after its upstream division was hit by the lowest quarterly oil price since the start of 2009, and reduced activity, partially offset by the downstream division which experienced a lift in earnings. The oil and gas major reported a pretax profit of USD2.27 billion in the first quarter of 2015, significantly down from USD5.27 billion a year earlier as revenue tumbled to USD54.92 billion from USD92.98 billion as its upstream division took a substantial hit, partially due to lower oil prices and reduced activity. BP said its quarterly dividend will be 10.00 cents per share. "The dividend is the first priority within our financial framework, and the board is committed to maintaining it, as we have today," said BP Group Chief Executive Bob Dudley.
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Royal Dutch Shell and French rival Total have delayed multi-billion dollar offshore oil projects in western Africa as part of a bid to rein in costs and shore up cash flows following the plunge in the oil price, the Financial Times reported. Shell has postponed a final investment decision on the offshore Bonga South West project in Nigeria to next year. The project is estimated to require around USD12 billion of spending by the Anglo-Dutch oil giant.
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Standard Chartered reported a 22% drop in first quarter pretax profit, due to pressure on operating income and higher charges for bad loans. In a statement, the emerging markets bank said it made a USD1.47 billion pretax profit in the quarter ended March 31, compared with USD1.88 billion in the corresponding quarter of the prior year. The income statement excludes own credit adjustments. Operating income fell to USD4.40 billion from USD4.57 billion, while operating expenses edged up to USD2.47 billion from USD2.45 billion. More importantly, charges for loan impairments increased to USD476 million from USD265 million.
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Whitbread said its pretax profit rose in its recently-ended financial year as sales in both its Premier Inn and Costa Coffee chains continued to rise, and it has started looking for a new chief executive as Andy Harrison told the board he will retire by the end of the current financial year. Separately, home goods retailer Dunelm Group said Harrison will become chairman on July 7 when Geoff Cooper retires. Harrison is already a non-executive director on the company's board. Whitbread reported pretax profit for the year ended February 26 of GBP463.8 million, up from GBP347 million the year before, as revenue increased 14% to GBP2.6 billion from GBP2.3 billion. Sales at Premier Inn grew 15% while Costa Coffee revenue rose 18%. The company will pay a total dividend of 82.2 pence, up 19% from 68.8p the year before.
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St James's Place reported an increase in funds under management in the first quarter of its financial year, after taking in GBP1.30 billion of net inflows, boosted by higher limits for individual savings accounts and greater flexibility for people saving for retirement in the UK. In a statement, the British wealth management and financial advice company said its funds under management increased by 7% to GBP55.8 billion over the quarter ended March 31.
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Rolls-Royce Holdings said it is set to sell its Michell Bearings business to British Engines Ltd for GBP12.6 million in cash. The FTSE 100-listed engineering and aerospace group said the deal is set to be completed in the autumn, subject to licence consents.
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WPP said it has made an investment in the USD50 million Series D funding round for fashion and lifestyle media company Refinery29 Inc. WPP is making the investment in the funding round through its WPP Ventures business and said it is partnering with Scripps Networks Interactive, a US media company, on the investment. WPP did not say how much it had invested in the funding round.
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Henderson Group reported a 10% increase in assets under management in the first quarter of 2015, driven by what it said were record quarterly net inflows of GBP3.6 billion, and it also agreed to sell its 40% stake in TH Real Estate to TIAA-CREF for GBP80 million, giving its cash position a boost. In a statement, the fund manager said its assets under management increased to GBP89.4 billion from GBP81.2 billion in the three months ended March 31. Retail net inflows amounted to GBP2.90 billion, while institutional net inflows amounted to GBP656 million.
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Alliance Trust said it has agreed to appoint two of the directors nominated to its board by activist shareholder Elliott Advisors, a move that marks a compromise in their disagreement ahead of the trust's annual meeting of shareholders. In a statement, Alliance Trust said that it has agreed "certain mutual non-disparagement undertakings" with Elliott and that the shareholder will not call a general meeting or "seek to agitate" against the company, board or management in public until after the trust's 2016 annual meeting at the earliest. The trust said it has agreed to appoint Anthony Brooke, the former SG Warburg executive, and Rory Macnamara, previously of Morgan Grenfell, to its board. Elliott had also proposed the appointment of Peter Chambers, the former chief executive of Legal & General Investment Management, but he has agreed to stand aside as a candidate.
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Property and construction services company Kier Group said it has struck a deal to acquire UK-based infrastructure repair and maintenance services company Mouchel. Kier said it will pay GBP265 million in cash to MRBL, the holding company for the Mouchel business, with the deal to be backed by a GBP340 million fully-underwritten rights issue. Kier will offer shares at 858 pence per share on the basis of five new shares for every seven existing shares held.
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Balfour Beatty said it has agreed to sell its 50% stake in the Royal Infirmary of Edinburgh public-private partnership project for GBP72 million. The investment is being acquired by infastructure fund manager Equitix, with the consideration to be paid in cash on completion of the deal, which is set to take place in mid-June. "This transaction again underlines the quality of the investments portfolio and its ability to generate value for shareholders. It also demonstrates our commitment to maintaining a strong balance sheet through self-help as we deliver the first phase of the Build to Last transformation programme," said Leo Quinn, Balfour's chief executive.
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Apple said Monday its second quarter profit rose 33% from last year, driven by strong sales of iPhone and Mac as well as all-time record performance of the App Store. The company's quarterly earnings per share also breezed past Wall Street expectations as did its quarterly sales. "We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever," said Tim Cook, Apple's CEO. "We're seeing a higher rate of people switching to iPhone than we've experienced in previous cycles, and we're off to an exciting start to the June quarter with the launch of Apple Watch." Apple also said its board has authorized an increase of more than 50% to the company's program to return capital to shareholders. Under the expanded program, Apple plans to utilize a cumulative total of USD200 billion of cash by the end of March 2017.
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MARKETS
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UK indices are lower mid-morning, giving up Monday's gains, as Standard Chartered reported a drop in pretax profit and data showed that UK economic growth slowed in the first quarter.
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FTSE 100: down 0.8% at 7,046.18
FTSE 250: down 0.5% at 17,703.58
AIM ALL-SHARE: down 0.1% at 754.93
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The pound recovered its losses to trade higher against the dollar after the GDP report.
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GBP: up at USD1.5257
EUR: up at USD1.0916
GOLD: up at USD1201.97 per ounce
OIL (Brent): down at USD64.53 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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UK economic growth slowed more than expected in the first quarter, preliminary estimate published by the Office for National Statistics revealed. Gross domestic product expanded 0.3% sequentially during January to March period, the slowest growth since the fourth quarter of 2012. The growth rate was forecast to slow to 0.5% from 0.6% logged in the fourth quarter of 2014. On the production side, output of the dominant service sector gained 0.5%. Meanwhile, construction and production declined 1.6% and 0.1%, respectively. Agriculture output was down 0.2%. Year-on-year, GDP advanced 2.4% in the first quarter, slower than the expected increase of 2.6%.
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Loans approved for house purchase in the UK rose to the highest level in six months during March, data from the British Bankers' Association showed. The number of loans approved for house purchase climbed to 38,751 from 37,453 in March. Economists had expected an increase in the figure to 38,700. The latest figure was the highest since September last year, when mortgage approvals totaled 39,376. The BBA said that house purchase approvals were 14% lower than last year in March, but demand increased in the first quarter as a whole.
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Labour's property plans moved to the centre of the UK General Election debate, with fierce criticism of what many considered a retreat to the left by leader Ed Miliband in calling for councils to be given powers to take unused land from developers and over its plans to introduce rent controls on private landlords. Labour faced criticism over plans to seize unused plots of land from property developers. Labour leader Ed Miliband said the party would bring in "use it or lose it" powers which would allow councils to encourage building in unused land plots by putting up taxes on undeveloped land. In addition, sites left idle could be compulsorily purchased for use by another developer, under the party's plans.
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The Conservatives pushed into the lead in the daily YouGov survey and consolidated their lead in both the ICM and Ashcroft polls, as Labour kept pole position in the Populus poll and the Scottish National Party moved further into the lead in the latest TNS poll for Scotland.
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French unemployment rose to a record high in March, data released by the labor ministry revealed. The number of unemployed increased 15,400 or 0.4% from February to 3.51 million in March. The number of job seekers below 25 rose by 5,200 or 1% compared to February.
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The United Nations refugee agency said it is rushing critical supplies to Nepal in the wake of the devastating earthquake last week, while pledging to provide any further assistance needed. The agency is sending 11,000 plastic sheets and 4,000 solar lanterns from its warehouse in Damak, eastern Nepal, to the eastern hilly districts of Ramechhap, Okhaldhunga and Sindhuli. And later this afternoon, an additional 8,000 plastic sheets and 4,000 solar lamps are being flown to the Nepalese capital, Kathmandu, from Dubai via a cargo plane.
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A Saudi-led coalition carried out a new round of airstrikes on Yemeni rebels and allied military units in the south of the country, and on its Red Sea coast. In the key southern city of Aden, local residents said a coalition airstrike aimed at the mainly Shiite Houthi rebels missed its mark, hitting an apartment building and causing civilian casualties. The strike came amid ongoing clashes between Houthi forces and local fighters who have been resisting their presence in Aden, the former capital of once independent southern Yemen.
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The Maryland National Guard started moving into Baltimore Monday night to help control city-wide rioting, looting and arson. Up to 5,000 armed troops will be deployed, in addition to 500 regional police officers from around Maryland, state officials said in a broadcast news conference. At the request of the city of Baltimore, Governor Larry Hogan declared the state of emergency that enabled calling up the National Guard.
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Alliance Trust (ATST)
Balfour Beatty (BBY)
BP (BP.)
Standard Chartered (STAN)
Kier (KIE)
Dunelm (DNLM)
St James's Place (STJ)
Whitbread (WTB)
WPP (WPP)
Rolls-Royce (RR.)