CORRECT: LONDON BRIEFING: WPP Credits "Decisive Action"

(Correcting Barclays third-quarter results.) (Alliance News) - WPP on Friday maintained its ...

Alliance News 25 October, 2019 | 8:26AM
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(Correcting Barclays third-quarter results.)

(Alliance News) - WPP on Friday maintained its annual guidance for 2019 following an improved performance in the third quarter.

The stock was trading 4.8% higher early on Friday at 962.00 pence a share in London.

The advertising and public relations company said third quarter reported revenue from continuing operations, excluding Kantar, was up 5.2% at GBP3.29 billion.

In mid-July, WPP agreed to sell 60% of Kantar to investment firm Bain Capital Private Equity, which valued all of Kantar at USD4.0 billion. The company also said that it intends to reorganise to separate the Kantar business from the wider WPP group, with completion expected in early 2020.

Revenue in constant currency was up 1.9%. WPP explained that the difference to the reported number reflecting the weakening of the pound against a number of currencies, particularly US dollar.

Looking ahead, WPP said its financial guidance remains unchanged, both including and excluding Kantar.

"In the last 12 months, WPP has taken decisive action and made substantial progress on many fronts: we have fewer, stronger agency brands; new leadership in many of our companies; enhanced central teams supporting our companies; and a renewed commitment to creativity, powered by technology," said Chief Executive Officer Mark Read.

He said the Kantar stake disposal will "further simplify our business".

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: marginally lower at 7,323.38

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Hang Seng: down 0.4% at 26,704.14

Nikkei 225: closed up 0.2% at 22,799.81

DJIA: closed down 28.42 points, 0.1%, at 26,805.53

S&P 500: closed up 0.2% at 3,010.29

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GBP: up at USD1.2856 (USD1.2828)

EUR: firm at USD1.1111 (USD1.1100)

Gold: up at USD1,505.44 per ounce (USD1,501.50)

Oil (Brent): flat at USD61.50 a barrel (USD61.65)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Friday's Key Economic Events still to come

0930 BST UK capital issuance

1000 CEST Germany Ifo business climate index

1000 EDT US University of Michigan survey of consumers

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EU leaders are expected to announce a decision over a Brexit delay, in a move that could have a bearing on whether Boris Johnson gets his pre-Christmas general election. The prime minister challenged MPs to back his call for a December 12 vote in return for more time to scrutinise his Brexit deal as he tried to break the deadlock. Johnson will need Labour votes if he is to win the attempt on Monday, with a "super majority" of two-thirds of MPs required to get an election under the Fixed-Term Parliaments Act. Jeremy Corbyn said his decision would come after inspecting the terms of any extension to Article 50 granted by Brussels, which he was expecting to come on Friday. The PM said the outcome of the announcement was "likely" to be the delay until January 31 which he was compelled to request by Parliament.

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Confidence in the UK jobs market has fallen to its lowest level in five years, a new study suggests. Research by jobs site Monster and the Centre for Economic and Business Research indicated that over a third of workers do not feel confident about their current or future employment prospects because of the political landscape. The report said growth in the number of job vacancies had started to slow slightly over the past year. The "volatile" state of politics was having a substantial impact on confidence in the jobs market, said the report.

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US Vice President Mike Pence criticised China for failing to live up to promises made on reining in intellectual property theft as well as raised other common US complaints about human rights violations in the country. China's government continues to "aid and abet" the theft of intellectual property, said Pence, speaking in Washington. The Chinese Communist Party also continues to resist change, especially in its treatment of religious minorities and its stance on pro-democracy protests in Hong Kong, in ways that harm the potential for building a foundation for better ties with the US, he said. But Pence said that despite China's "aggressive and destabilising" behaviour in the last year, the US does not seek confrontation.

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Japan's new trade minister has submitted his resignation after being accused of violating election law by offering voters money and gifts, Prime Minister Shinzo Abe said. Isshu Sugawara had been in the hot seat after a magazine reported he was suspected of paying 20,000 yen, about USD185, to a bereaved family in his constituency. He was also reported to have given gifts to other voters, including pricey melons and even crabs, Kyodo news agency said. The sums involved, while small, would constitute a violation of Japan's public office election law. Abe said Sugawara submitted his resignation after a cabinet meeting and that he had accepted it.

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BROKER RATING CHANGES

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RBC RAISES BHP GROUP TO 'OUTPERFORM' ('SECTOR PERFORM') - TARGET 1900 PENCE

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LIBERUM RAISES ASTRAZENECA TO 'BUY' ('HOLD')

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UBS CUTS HAMMERSON TO 'SELL' ('NEUTRAL') - TARGET 290 (280) PENCE

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UBS CUTS MAN GROUP TO 'NEUTRAL' ('BUY') - TARGET 155 (195) PENCE

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COMPANIES - FTSE 100

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Barclays reported a sharp drop in quarterly profit as the lender's operating expenses rose sharply, in what Chief Executive Jes Staley described as a "resilient" period for the bank. In the three months to September 30, the lender recorded a pretax profit of GBP246 million, 83% lower than the GBP1.46 billion posted a year earlier. Excluding litigation and conduct charges, third-quarter pretax profit rose 18% to GBP1.81 billion. The sharp quarterly drop was attributed to a GBP1.4 billion payment protection insurance provision. Operating expenses rose 42% to GBP4.86 billion from GBP3.43 billion, with litigation & conduct charges jumping to GBP1.57 billion from GBP105 million the year before. Barclays has included a provision of GBP1.4 billion for PPI in its third-quarter accounts, with the deadline for claims falling within the quarter.

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Advertising agency WPP reported a 5.2% rise in revenue for the third quarter of 2019 to GBP3.29 billion, with the like-for-like figure rising 1.5%. Minus pass-through costs, revenue rose 3.7% and 0.5% like-for-like. WPP reported an improvement in conditions in major markets and sectors in the quarter, with a "significant" improvement in North America and China. By business, the Global Integrated Agencies unit showed a strong improvement, WPP said, but Public Relations and Specialist Agencies did less well. Guidance for 2019 is unchanged.

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Miner Glencore reported a 4% yearly decline in third-quarter copper production, but cobalt rose 21%, zinc by 3%, and lead by 12%. Elsewhere, oil production climbed 8%, coal by 8%, while nickel fell 2% and gold by 20%. Glencore said copper output was down due to a revised mining plan at Mutanda in the Democratic Republic of the Congo, as well as a smelter shutdown at Mopani in Zambia and the disposal and depletion of South American assets. Cobalt was helped by a ramp-up of production from the Katanga mine in the DRC.

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COMPANIES - FTSE 250

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Synthomer said growing weakness in the global economy is creating a "more challenging" backdrop for the chemicals market. In the Performance Elastomers unit, there has been continued weakness in the third quarter of 2019 in Europe, and Synthomer has now started a review, saying it will update on "asset re-purposing and cost base" in March next year. The company expects slower trading to continue for the rest of 2019 and into 2020. If current weakness continues as is, Synthomer said, 2019 underlying pretax profit will be 10% below 2018 and 10% off market consensus of GBP135.3 million.

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Plastic and fibre products firm Essentra said third-quarter underlying revenue is broadly flat year-on-year, despite Brexit problems and a more difficult environment. On a like-for-like basis, it has fallen 2.9%. The Filters business suffered a fall in revenue, Essentra said, but it expects this to reverse in the last quarter and said the unit has now secured a first "significant" outsourcing deal.

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Insurer Hastings Group reported a 5% rise in third-quarter live customer policies to 2.8 million, with retention "strong". Gross written premiums were up 2% to GBP753.1 million for the nine months to September. However, Hastings's net revenue for the nine-month period dipped 2% to GBP563.8 million due to lower earning premiums and lower reinsurance commissions. Hastings said the 2019 loss ratio will be dependent on claims in the fourth quarter, and it could move from the top of its target range to slightly above should "elevated" claims continue.

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Telecommunications firm Airtel Africa reported a 10% rise in customer numbers for the six months to September, reaching 104 million, with revenue up 8.4% to USD1.64 billion. Pretax profit for the quarter more than doubled to USD316 million, and Airtel Africa, which listed in June, has declared a 3 US cent dividend for the half. Chief Executive Raghunath Mandava said it was a strong period for the company, crossing the 100 million customer mark. The outlook remains positive, he added.

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COMPANIES - INTERNATIONAL

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Amazon.com lagged behind market expectations for third-quarter earnings, after the firm introduced free, one-day Prime delivery, prompting its shares to drop 7% in after-hours US trading. Amazon, which has expanded beyond online retailing to video streaming and cloud computing, posted diluted earnings per share of USD4.23 for the three months ended September 30, down 8.4% versus the USD4.62 per share predicted by analysts. This figure also was 26% lower than the USD5.75 EPS posted for the same quarter of 2018. Total net sales were up 24% at USD69.98 billion from USD56.58 billion. This included an 18% rise in net product sales to USD39.73 billion from USD33.75 billion and a 33% increase in net service sales to USD30.26 billion from USD22.83 billion.

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Citigroup promoted its Latin America chief executive, Jane Fraser, as group president and head of Global Consumer Banking. The role of Citigroup president has been open since earlier in the year, with Jamie Forese's departure announced back in April. Fraser also replaces Stephen Bird as chief executive of Global Consumer Banking, as Bird is leaving for a position outside the bank.

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Anheuser-Busch InBev reported revenue growth in the third quarter though its beer volumes declined during a "challenging" period for the Stella Artois brewer. In the three months to September 30, revenue grew by 2.7% year-on-year to USD13.17 billion from USD12.92 billion. Normalised earnings before interest, depreciation, taxation and amortisation declined by 0.4% to USD5.29 billion from USD5.31 billion. However, profit attributable to shareholders jumped to USD3.00 billion from USD959 million. The better result by that measure was due to the company booking just USD677 million in net finance costs during the recent period, down from USD1.80 billion last year.

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Friday's Shareholder Meetings

Trafalgar Property Group

Jaywing

Aggregated Micro Power Holdings

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By Tom Waite; thomaslwaite@alliancenews.com

London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Hammerson PLC 66.30 GBX -7.92 -
Man Group PLC 121.90 GBX 1.41 -
WPP PLC 510.27 GBX -1.11
AstraZeneca PLC 7,012.00 GBX 0.46

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