(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Lloyds Banking Group posted a slump in profit and net income for 2020, though still managed to beat market expectations. For 2020, the high-street and commercial lender saw pretax profit plunge 72% to GBP1.23 billion from GBP4.39 billion but was able to outperform market expectations of profit of GBP905 million. Driving the drop in profit was the sharp increase in impairments, rising to GBP4.25 billion from GBP1.29 billion in 2019. Market consensus had predicted the credit loss charge at GBP4.71 billion. Net income slumped 16% to GBP14.40 billion from GBP17.14 billion, after a 13% drop in net interest income to GBP10.77 billion from GBP12.38 billion. Despite the double-digit percentage fall, Lloyds net income was ahead of market consensus, which had called for GBP14.24 billion. Lloyds's CET1 ratio ended 2020 at 16.2%, up from 13.8% at the end of 2019. The lender declared a final dividend of 0.57 pence, the maximum allowed under the current guidelines in the UK, and outlined its intention to resume progressive and sustainable ordinary dividend policy in 2021.
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Insurer Aviva has agreed to sell its entire 40% stake in its Turkey joint venture, AvivaSA Emeklilik ve Hayat, to Ageas Insurance International for GBP122 million.
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Vodafone confirmed its plans for an initial public offering of mobile phone tower operator Vantage Towers. The IPO will be in Frankfurt before the end of March and will consist entirely of existing shares held by Vodafone GmbH. Vodafone said it is targetting a meaningful minority free float for Vantage Towers, which has 82,000 sites across 10 countries in Europe. The IPO is being co-ordinated by Bank of America, Morgan Stanley and UBS. Barclays, Berenberg, BNP Paribas, Deutsche Bank, Goldman Sachs and Jefferies are joint bookrunners.
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Reckitt Benckiser said it swung to profit in 2020 as its cleaning and disinfectant brands got a sales boost from the coronavirus pandemic. The Slough, Berkshire-based consumer health and hygiene firm swung to a pretax profit of GBP1.87 billion from a loss of GBP2.11 billion in 2019. Net revenue for 2020 increased 8.9% to GBP13.99 billion from GBP12.85 billion the year before, a hair below company-compiled consensus of GBP14.02 billion. The annual dividend was maintained at 174.6 pence per share, with a final 101.6p per share payout. "Our category-leading germ protection/disinfection brands have all seen substantial market growth, with around 80% of our consumers expecting to retain many of their new improved habits post pandemic. We capitalised on these new behaviours with Dettol and Lysol entering 41 markets, with plans to enter a further 29 markets in 2021," said Chief Executive Laxman Narasimhan.
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AstraZeneca said Tuesday its EU supply chains would only be able to deliver half of an expected supply of Covid-19 vaccines to the bloc in the second quarter – but that it would look to make up the shortfall from elsewhere. A spokesman for the drugmaker told AFP that AstraZeneca was "working to increase productivity in its EU supply chain" and would use its "global capability in order to achieve delivery of 180 million doses to the EU in the second quarter". "Approximately half of the expected volume is due to come from the EU supply chain" while the remainder would come from its international supply network, he added. The announcement follows controversy over deliveries of the AstraZeneca-Oxford University jab to the EU in the first quarter, which has caused tension between the bloc and the pharmaceutical company. Ahead of the EU's approval of the vaccine at the end of January, the British-Swedish company sparked fury among European leaders by announcing that it would miss its target of supplying the EU with 400 million doses, due to a shortfall at the firm's European plants.
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Iberdrola reported a rise in profit in 2020 but saw revenue fall on lower demand. In 2020, the Bilbao-headquartered electricity utility recorded net profit of EUR3.61 billion, which is 4.2% higher from EUR3.47 billion in 2019. The profit gain was attributed to Iberdrola's EUR1.10 billion stake sale in Siemens Gamesa in February. Revenue, however, slipped 9.0% to EUR33.15 billion from EUR36.44 billion. Looking ahead, Iberdrola is planning investments of EUR75 billion by 2025 and EUR150 billion by 2030, which it believes will boost net income to EUR5 billion in 2025 and about EUR7 billion in 2030. Iberdrola also reaffirmed its target to double its renewable capacity to 60GW installed by 2025 and to 95GW by 2030.
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Plane engine maker Pratt & Whitney, a subsidiary of Raytheon Technologies, said Tuesday it will carry out inspections as ordered by the US Federal Aviation Administration on 125 planes with engine blades similar to those that recently failed on a Boeing 777 aircraft. The company said the fan blades would be examined using Thermal Acoustic Imaging inspection "to confirm airworthiness". "Pratt & Whitney is coordinating all actions with Boeing, airline operators and regulators. The safe operation of the fleet is our top priority," the company said in a statement.
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MARKETS
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European markets were clawing back early morning losses Wednesday and Wall Street was called higher after a strongly negative trading day in Asia. "While this week has seen significant jitters over the prospective withdrawal of the expansive monetary policy employed by the Fed, bulls will hope that sentiment improves as we look for approval of [US President] Joe Biden's fiscal stimulus package," commented Josh Mahony, senior market analyst at IG. The pound continued its rise against the dollar, holding above USD1.41 after exceeding USD1.42 briefly earlier Wednesday.
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CAC 40: up 0.3% at 5,794.08
DAX 30: up 0.9% at 13,984.96
FTSE 100: down 3.87 points at 6,622.07
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DJIA: called up 0.1%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.3%
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S&P/ASX 200: closed down 0.9% at 6,777.80
Hang Seng: closed down 3.0% at 29,718.24
Nikkei 225: closed down 1.6% at 29,671.70
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EUR: soft at USD1.2154 (USD1.2160)
GBP: up at USD1.4144 (USD1.4103)
USD: up at JPY105.78 (JPY105.11)
GOLD: down at USD1,808.00 per ounce (USD1,803.05)
OIL (Brent): up at USD65.75 a barrel (USD65.07)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US Federal Reserve Chair Jerome Powell on Tuesday attempted to play down rising inflation concerns and pledged to keep benchmark lending rates low until jobs recover and prices have risen consistently. The Covid-19 pandemic remains the key factor determining how quickly the world's largest economy can recover, but Powell said vaccine rollouts offer hope things can return to normal quickly and the Fed has the tools to deal with price increases. With Congress moving towards approving President Joe Biden's USD1.9 trillion rescue plan, the central bank chief remained steadfastly non-committal about the package, but he did downplay the need to address the USD3 trillion US government deficit immediately. He insisted that the Fed will keep rates at the current level near zero until the economy reaches "maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time."
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The UK Chancellor is reportedly planning to extend the stamp duty holiday by three months. The Treasury announced last year that it would temporarily raise the stamp duty threshold from GBP125,000 to GBP500,000 for property sales in England and Northern Ireland. But many people have been left scrambling to complete their transactions before the deadline of March 31, worried that if they do not, they could be left with a GBP15,000 tax bill. The Times newspaper said it has been told that Chancellor Rishi Sunak - who has been urged not to end the stamp duty holiday - will use his Budget next week to move the deadline to the end of June. A spokesman for The Treasury said they could not speculate on tax ahead of fiscal events.
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The German economy grew slightly more than initially expected for the final quarter of 2020. Gross domestic product rose by 0.3% quarter-on-quarter in the final three months of 2020. This latest reading beat the initial estimate, released in January, of just 0.1% growth. After slumping a historic 9.7% in the second quarter of 2020, the German economy recovered in the third quarter to post 8.5% growth. However, a resurgence in coronavirus infections and subsequent restrictions imposed saw the rebound slow sharply towards the end of the year. GDP in the fourth quarter of 2020 was down a price-adjusted 2.7% compared with a year ago. For 2020 as a whole, the economy contracted 4.9%. This, again, was improved from January's reading of a 5.0% decline in 2020.
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