UK MIDDAY BRIEFING: The Man From The Pru To Leave On High Note

LONDON (Alliance News) - Prudential Tuesday reported a big increase in profit for 2014, helped by growth in its key Asian markets, the UK and the US, but the results were overshadowed by news that Chief Executive Tidjane Thiam will leave to become the new CEO of Swiss bank Credit Suisse.

Credit Suisse confirmed media reports that its current Chief Executive Brady Dougan is to step down and will be replaced by Thiam in June. However, Thiam's replacement is yet to be confirmed, despite a report that Mike Wells, an executive director and the CEO of its Jackson National Life Insurance Company, is to succeed him at the helm.

"As would be expected of a FTSE 100 company, the board is always focused on succession planning and a process has already examined a range of external and internal candidates. We are fortunate to have a very strong management team across the group and we have identified a successor and expect to be able to announce a new CEO once the regulatory approval process has been completed," Paul Manduca, chairman, said in a statement.

Prudential reported a net profit of GBP2.22 billion for 2014, up from 1.35 billion in 2013, while its closely-watched operating profit rose 14% at constant exchange rates to GBP3.19 billion. Total revenue, net of reinsurance, rose to GBP60.13 billion, driven up by higher gross premiums.

Operating pretax profit based on longer-term investment returns, a figure closely watched by analysts, rose by 8% to GBP3.19 billion, bolstered by double-digit growth in long-term business operating profit in the US, and single-digit growth in the UK and Asia. However, at constant currency, Asia also showed double-digit growth, as currencies in some of its "sweet spot" markets depreciated.

Prudential raised its full-year dividend by 10% To 36.93 pence a share.

Led by Thiam, Prudential has embarked on a strategy of growth in the US, where it aims to provide income in retirement to the 'baby boomer' generation, while expanding its presence in Asia, where it has been targeting the growing middle class. The departing chief executive had planned a USD35 billion acquisition of AIA, the then Asian business of US insurer AIG, in 2010, but the deal collapsed after opposition from shareholders. AIA proceeded with a public listing on the Hong Kong Stock Exchange, helping AIG to sell the remainder of its stake. The strong rise in AIA's share price since it listed in Hong Kong has been the source of much regret for Thiam.

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Markets: UK stocks are lower with oil-related stocks leading FTSE 100 decliners, as oil prices weaken and following mixed Chinese consumer and producer price inflation reports. The euro hit USD1.0734 in early trade, its lowest level since April 2003 as Eurozone finance ministers urged Greece to speed up the implementation of its reforms in order to release aid money that keeps the nation solvent.

Wall Street is also set for a lower start, with stock futures indicating that the DJIA and S&P 500 will open down 1.0% and the Nasdaq 100 down 0.9%.

FTSE 100: down 1.5% at 6,773.27
FTSE 250: down 0.9% at 17,010.87
AIM ALL-SHARE: down 0.4% at 713.39
GBP-USD: down at 1.5062
EUR-USD: down at 1.0739
GOLD: up at USD1,169.28 an ounce
OIL (Brent): down at USD57.75 a barrel
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Other Top Corporate News
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Tesco has put in its best UK sales performance for 18 months in recent weeks, while discount retailer Aldi has achieved a new record market share, but the grocery sector as a whole is continuing to be hit by price deflation, according the latest industry data from Kantar Worldpanel. Tesco's till-roll in the 12 weeks to March 1 was up 1.1% on a year earlier at GBP7.6 million, its best performance for 18 months, according to Kantar. That meant the drop in its market share slowed, with its share standing at 28.7%, down from 28.8% in the 12 weeks to March 2, 2014. J Sainsbury's market share was 16.8% in the latest period, down from 17.0% a year earlier, while Wm Morrison Supermarkets saw its share decline to 11.0% from 11.1%.
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Antofagasta said the Civil Court of Los Vilos has ordered the company's subsidiary to tear down part, or all, of the tailings dam wall at the Los Pelambres project in Chile after it rejected the company's plans over fears the dam would affect the flow of water. Antofagasta said its subsidiary will appeal the decision as it believes the work it has carried out should be sufficient to comply with the court's orders. In the meantime, the company can continue to operate the dam until the appeal process is finalised.
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WPP said it has agreed to buy a minority stake in FlowNetwork, a new Swedish over-the-top television service that delivers its programmes via the internet and also supplies Sweden's regional newspapers with content. The media buying giant didn't give any financial details about the deal.
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Legal & General Capital, the main investment division of Legal & General Group, has taken a 50% stake in the Peel Group's MediaCityUK scheme at Salford Quays in Manchester, as it looks to create the "media Canary Wharf of the North".
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Miner BHP Billiton said it will reaffirm its ongoing commitment to safely maximising returns on installed capacity at its Western Australia Iron Ore business. The business achieved record production of 124 million tonnes in the first half and is on track to deliver 245 million tonnes in the 2015 financial year. Speaking in Perth at the annual Global Iron Ore and Steel Forecast Conference, BHP Billiton President Iron Ore, Jimmy Wilson, will highlight the exceptional returns from the company's productivity agenda. "For the first half of this financial year the team has delivered a solid underlying EBIT margin of 49% and a return on assets of 34%," Wilson said. Wilson will also reiterate Western Australia Iron Ore is on track to achieve unit cash costs of less than USD20 per tonne through a relentless pursuit of equipment availability and utilisation, efficient procurement and supply management and capital and workforce productivity.
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G4S said it swung to a pretax profit in 2014 after 2013 was hit by hundreds of millions of pounds of charges and restructuring costs related to issues with UK government contracts, but Chief Executive Ashley Almanza admitted the company has a lot more to do before it's fully back on track. The company reported a pretax profit of GBP148 million for 2014, compared with a restated GBP190 million pretax loss in 2013 when it had booked GBP386 million in charges and restructuring costs in the wake of the issues with some UK government contracts. It increased the provisions for the contracts by a further GBP45 million in 2014 and took a further restructuring charge of GBP29 million, but this was a big drop from 2013.
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esure Group reported a fall in pretax profit for 2014, blaming motor insurance market conditions and costs related to the acquisition of the remaining parts of GoCompare, as gross written premiums fell and the group cut its final dividend. The FTSE 250 constituent said its pretax profit for 2014 was GBP103.3 million, down 13% on the GBP118.4 million posted a year earlier due to the challenging conditions in the motor insurance market and due to costs related to the acquisition of the 50% of price comparison service GoCompare that it did not already own. Gross written premiums ticked down to GBP517.8 million, 3.4% lower than the GBP535.8 million it reported last year, while in-force policies increased by 0.7% to GBP1.95 billion from GBP1.93 billion a year earlier.
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Automotive retailer and distributor Inchcape said its pretax profit declined due to exceptional costs, but the company reported a rise in revenue and hiked its dividend. FTSE 250-listed Inchcape said its pretax profit for 2014 was GBP255.8 million, down from GBP266.1 million last year due to a GBP47.4 million goodwill impairment charge the company booked on its Russian operations. Stripping out exceptional costs, pretax profit rose to GBP303.2 million from GBP274.6 million. The company will pay a final dividend of 13.8 pence, up 18% on the 11.7 pence paid a year earlier. Its total dividend for the year will be 20.1 pence, up 15.5% on the 17.4 pence it paid in 2013.
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Ocado Group reported strong growth in sales for the first quarter of its financial year, driven by a large increase in average orders per week even though the average size of each order fell slightly. The online grocery company, which has also teamed with Wm Morrison Supermarkets to be its online delivery company, also said it expects to continue growing slightly ahead of the overall online grocery market. Gross sales in the 12 weeks to February 22 were GBP271.1 million, up from GBP227.5 million in the 12 weeks to February 23, 2014.
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Grafton Group reported a strong increase in pretax profit for 2014, as the continued recovery in the housing markets in both the UK and Ireland drove up revenue in its merchanting business, and it said its outlook remains favourable because those markets are set to remain strong. The Irish builders merchanting and DIY company reported a pretax profit of GBP80.0 million for 2014, up from GBP62.0 million in 2013, as revenue rose to GBP2.08 billion, from GBP1.90 billion, and its underlying operating profit margin rose to 5.3% from 4.1%. It raised its dividend for the year to 10.75 pence, from 8.5p.
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SEGRO said it has exchanged contract to sell its recently completed Energy Park office campus near Milan to Hines Italia SGR for EUR118.7 million, or about GBP85.4 million, a 5% premium to the property's book value at the end of 2014 and representing a net initial yield of 7.3%. It expects the deal to complete in the second quarter of 2015.
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IP Group said it is planning to raise GBP128 million via a share placing, as its pretax profit for 2014 fell substantially and it appointed a new chairman. The intellectual property company said it intends to raise GBP128 million by issuing 56.9 million shares at 225 pence per share, a 6.6% discount to its closing middle-market price of 240.9 pence on March 9. The fundraising came after the company said its pretax profit in 2014 fell to GBP9.5 million from GBP72.6 million in 2013, primarily due to the non-recurrence of a GBP82.4 million net fair value gain made in 2013.
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AIM Movers
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Optare shares hit an 11-month high after it got a GBP7.3 million order for its Solo single-decker buses from Stagecoach Group in the UK. AFC Energy is doing well after it signed a formal project development agreement with Samyoung Corp and Changshin Chemcial Co, two South Korean companies, to work together to deliver an initial 50 megawatts of fuel cell generation capacity, which will generate USD1 billion in revenue over 10 years. IGas Energy is up after it signed a farm out and purchase agreement with Swiss chemicals company INEOS. STM Group is another gainer after it reported that its 2014 operating earnings more than doubled on strong growth in pensions revenue driven by the investments it made in expanding its network in recent years. Bango is up after it said its pretax loss widened in 2014 due to its switch to a subscription model, but reported a leap in end-user spend and set out its guidance for future developments. Sunrise Resources is also up after it signed a lease agreement on additional claims at the Bay State silver project in Nevada and said it has generated a new project in the US state. InterQuest is up after it said its 2014 pretax profit more than doubled on the back of its acquisition of ECOM and as the recruiter focused on filling difficult specialist roles that command higher margins. Airea is up after it reported higher profit and revenue for the first half of its financial year despite challenging markets in the UK retail sector and in mainland Europe. Beowulf Mining is down after it raised GBP350,000 via a discounted share placing of 29.2 million new shares at 1.2 pence a share. Collagen Solutions is also down after it warned it expects its full-year revenue to be below market expectations due to contract delays, though the company still thinks its earnings will meet the market view. Allergy Therapeutics is another faller after it raised GBP20.8 million via a share placing of 94.1 million shares at 22.1 pence a share.
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Top Economics And General
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Like-for-like retail sales in the UK were up 0.2% on year in February, the British Retail Consortium said. That was unchanged from the previous month, although it fell short of forecasts for an increase of 0.5%. Overall retail sales were up 1.7% on year, the BRC said - up slightly from 1.6% in the previous month. "So far, 2015 has been positive for both retailers and consumers and it shows no signs yet of changing course," said BRC director general Helen Dickinson.
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China's inflation accelerated more than expected from a five-year low in February but producer prices declined the most since late 2009 underscoring the persistent risk of deflation. Inflation rose to 1.4% in February from 0.8% in the prior month, data published by the National Bureau of Statistics showed. It was forecast to increase moderately to 1%.
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French industrial production grew unexpectedly in January from the prior month, data from the statistical office Insee revealed. Industrial production rose 0.4% month-on-month, defying expectations for a 0.3% fall. This was the second consecutive rise in output. Nonetheless, the rate of growth was weaker than the revised 1.4% expansion seen in December.
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Eurozone finance ministers urged Greece to speed up reforms to successfully conclude the review and reinforced that there will be no rolling-back on measures previously agreed. Eurogroup Chairman Jeroen Dijsselbloem said, "We agreed today that there is no further time to lose." Greece will resume talks with lenders in Brussels on Wednesday. "The discussions between the Greek authorities and the institutions must and will start as from Wednesday," Dijsselbloem added. The debate about who meets who and where in what configuration had been a complete waste of time, Dijsselbloem said at a press conference in Brussels. "There can be no talk of early disbursements if there is no agreement and no implementation," Jeroen Dijsselbloem said after the ministers met in Brussels.
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US President Barack Obama and European Council President Donald Tusk called for unity on Ukraine and discussed Europe's security challenges, including terrorism. Obama saluted German Chancellor Angela Merkel and French President Francois Hollande for their work in establishing the Minsk ceasefire process. "But we also know from experiences over the last year that unless we have strong monitoring and strong implementation, that these agreements will be meaningless," Obama said at the Oval Office meeting.
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Afternoon Watchlist (all times in GMT)

n/a EU EcoFin Meeting
12:55 US Redbook index
14:00 US JOLTS Job Openings
14:00 US Wholesale Inventories
14:35 UK BOE's Governor Carney speech
23:50 Japan Domestic Corporate Goods Price Index
23:50 Japan Machinery Orders
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Wednesday's Key UK Corporate Events

Centaur Media - Full Year Results
N Brown - Trading Statement
BWIN - Full Year Results
Foxtons - Full Year Results
Brooks Macdonald - Half Year Results
Hikma - Full Year Results
Servelec Group - Full Year Results
Modern Water - Full Year Results
Michael Page International - Full Year Results
Ceres Power Holdings - Half Year Results
FDM Group - Full Year Results
Boohoo.com - Trading Statement
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Wednesday's Key Economic Events (all times in GMT)

02:00 China M2 Money Supply
02:00 China New Loans
05:30 China Industrial Production
05:30 China Retail Sales
05:30 China Urban investment
06:30 France Nonfarm Payrolls
07:45 France Current Account
09:30 UK Industrial Production
11:00 US MBA Mortgage Applications
13:30 US EIA Crude Oil Stocks change
15:00 UK NIESR GDP Estimate
18:00 US Monthly Budget Statement
23:50 Japan BSI Large Manufacturing
23:50 Japan Foreign bond/stock investment

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