(Alliance News) - The following is a summary of top news stories Wednesday.
Legal & General Group maintained its payout despite reporting a drop in interim profit and said it remains confident in delivering organic growth through the Covid-19 led volatile period. The investment management, life assurance and pension services provider, posted a 68% drop in pretax profit for the six months to June 30 to GBP342 million from GBP1.06 billion recorded a year ago. Total income fell 64% year-on-year to GBP17.42 billion. Chief Executive Nigel Wilson said: "In the first half, Legal & General delivered resilient operating profits, a robust balance sheet and highly relevant products and services. Our ambition is for a similar performance in the second half."
WH Smith said Covid-19 has continued to have a significant impact on trading, so much so that the books and stationery retailer is proposing a restructuring of operations that could lead to up to 1,500 job cuts. WH Smith said that due to the impact of the pandemic on passenger numbers and lower footfall on the UK high street, it will review its store operations for both its Travel and High Street businesses. In addition, following the impact of Covid-19, WH Smith expects to report a headline pretax loss for the year ending August 31 of between GBP70 million and GBP75 million, compared to a profit of GBP155 million in financial 2019. WH Smith did note its situation has started to improve since April, with revenue for the month of July down by 57% year-on-year, compared to an 83% fall in April. However, sales have continued to be materially lower compared to the prior year.
Soft drinks bottler Coca-Cola HBC said it is well-positioned as countries emerge from lockdowns after also posting a fall in half-year earnings. Coca-Cola HBC reported a fall in earnings due lower volume and negative package and channel mix, as Covid-19 control measures caused out-of-home consumption of its soft drinks to dry up. For the six months ended June 26, net sales revenue fell 16% to EUR2.83 billion from EUR3.35 billion last year, and operating profit declined 30% to EUR202.9 million from EUR288.9 million. Pretax profit fell 36% to EUR167.2 million from EUR260.8 million.
President Donald Trump on Tuesday defended his demand for the US government to get a piece of the action to let Microsoft or any other company in the US buy popular China-based social media app TikTok. Trump's stance was slammed by critics who said it appears unconstitutional and akin to extortion. "We have all the cards, because without us, you can't come into the US," Trump said during a White House press briefing. "If you're a landlord, you have a tenant, the tenant's business needs rent, it needs a lease." Trump maintained that a large share of any TikTok purchase price should go to the US treasury, and that Microsoft "agreed with me very much."
Walt Disney on Tuesday reported its quarterly earnings were hit hard as the pandemic emptied theme parks and cruise ships, while it hit a new milestone for streaming subscriptions. The entertainment colossus reported a net loss of USD4.7 billion on revenue of USD11.8 billion for the third quarter - about half of the amount of money it took in sales during the same period last year. A year ago, Disney reported net income of USD1.43 billion. "Despite the ongoing challenges of the pandemic, we've continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses," Disney Chief Executive Bob Chapek said in an earnings release for the quarter ending June 27. The company has more than 100 million paid subscribers in what Chapek touted as a "significant milestone" affirming the company's move to streaming its coveted content direct to homes.
London shares were higher as record gold prices boosted miners of the commodity. The pound was up against the dollar after positive UK services PMI data. US futures were pointed higher as investors monitor ongoing talks on a key US stimulus package.
FTSE 100: up 1.1% at 6,101.51
FTSE 250: up 1.1% at 17,503.33
AIM ALL-SHARE: up 1.0% at 903.42
GBP: up at USD1.3112 (USD1.3062)
EUR: up at USD1.1859 (USD1.1769)
GOLD: up at USD2,039.92 per ounce (USD1,995.19)
OIL (Brent): up at USD45.32 a barrel (USD44.27)
(changes since previous London equities close)
ECONOMICS AND GENERAL
The UK services sector activity expanded at its fastest pace in five years in July as lockdown measures eased and businesses reopened, IHS Markit said. The IHS Markit-CIPS UK services purchasing managers' index reading was 56.5 points in July, up sharply from 47.1 in June and signalling the fastest pace of expansion since July 2015. Any figure above 50 represents expanding business activity. The UK composite output index reading was 57.0 points in July, up from 47.7 in June. It was also the fastest pace of expansion since June 2015, Markit said.
The eurozone's private sector economy grew at the fastest pace in over two years in July, data from IHS Markit showed, helped by the manufacturing sector finally returning to growth after more than a year in the doldrums. The IHS Markit eurozone composite purchasing managers' index rose to 54.9 in July, above the 50.0 no-change mark for the first time since February. In June, the index came in at 48.5. The July figure "represented the fastest rate of growth since June 2018", IHS Markit said. France's composite PMI reading of 57.3 was a 29-month high, IHS Markit said. Italy reached a two-year high of 52.5, Germany posted a 23-month best of 55.3, and Spain surged to 52.8, its best showing in 15 months.
Growth of the Chinese service sector remained elevated during July as the economy maintained its recent recovery from the coronavirus pandemic, figures from the Caixin Insight Group showed. The headline seasonally adjusted business activity index recorded 54.1 in July, down from 58.4 in June. Whilst down on the previous month's more than ten-year record, the index again signalled a marked rise in activity that was in line with the survey's long-term trend. "It remained in expansionary territory, pointing to a continued rapid recovery of the services sector as the domestic Covid-19 epidemic has largely been brought under control," said Wang Zhe, senior economist at Caixin.
Rescuers searched for survivors in Beirut on Wednesday after a cataclysmic explosion at the port sowed devastation across entire neighbourhoods, killing more than 100 people, wounding thousands and plunging Lebanon deeper into crisis. The blast, which appeared to have been caused by a fire igniting 2,750 tonnes of ammonium nitrate left unsecured in a warehouse, was felt as far away as Cyprus, some 150 miles to the northwest. The scale of the destruction was such that the Lebanese capital resembled the scene of an earthquake, with thousands of people left homeless and thousands more cramming into overwhelmed hospitals for treatment. In the areas closest to the port, the amount of destruction caused by the long years of civil war between 1975 and 1990 was achieved in a second by a blast that levelled buildings within a radius of several hundred metres.
Copyright 2020 Alliance News Limited. All Rights Reserved.