LONDON BRIEFING: Rio Tinto chair follows CEO out over Aboriginal site

(Alliance News) - Rio Tinto PLC on Wednesday said Chair Simon Thompson will not seek re-election ...

Alliance News 3 March, 2021 | 8:21AM
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(Alliance News) - Rio Tinto PLC on Wednesday said Chair Simon Thompson will not seek re-election to the board at the 2022 annual general meeting.

The Anglo-Australian miner said senior independent directors Sam Laidlaw and Simon McKeon will now therefore jointly lead the search for Thompson's successor as chair.

Thompson said: "I am proud of Rio Tinto's achievements in 2020, including our outstanding response to the Covid-19 pandemic, a second successive fatality-free year, significant progress with our climate change strategy, and strong shareholder returns. However, these successes were overshadowed by the destruction of the Juukan Gorge rock shelters at the Brockman 4 operations in Australia and, as chair, I am ultimately accountable for the failings that led to this tragic event."

Last month, Rio Tinto declared a record final dividend as it shrugged off Covid-19 to post a hefty profit rise for 2020. Revenue in 2020 was up 3.3% to USD44.61 billion from USD43.17 billion. Its pretax profit surged 38% to USD15.39 billion from USD11.12 billion.

But for Rio Tinto, 2020 will be best remembered for the outcry and regulatory scrutiny that followed the miner blowing up a 46,000-year-old Aboriginal heritage site to expand the Pilbara iron ore mine in Western Australia. Following the incident, which took place in May, Jean-Sebastian Jacques resigned as chief executive, replaced by Jakob Stausholm, who had been chief financial officer.

Rio Tinto shares were up 1.4% early Wednesday.

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

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MARKETS

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FTSE 100: up 1.2% at 6,690.35

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Hang Seng: up 2.7% at 29,880.42

Nikkei 225: closed up 0.5% at 29,559.10

DJIA: closed down 143.99 points, 0.5%, at 31,391.52

S&P 500: closed down 0.8% at 3,870.29

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EUR: up at USD1.2101 (USD1.2072)

GBP: up at USD1.3982 (USD1.3946)

USD: flat at JPY106.79 (JPY106.73)

Gold: up at USD1,734.91 per ounce (USD1,727.95)

Oil (Brent): down at USD62.98 a barrel (USD63.64)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Wednesday's Key Economic Events still to come

0930 GMT UK CIPS-Markit services purchasing managers index

1100 GMT Ireland unemployment data

1230 GMT UK Chancellor Rishi Sunak's budget statement

1230 GMT UK Office for Budget Responsibility economic forecast

0930 CET EU EuroCOIN indicator of euro area economic activity

0955 CET Germany services PMI

1000 CET EU services PMI

1100 CET EU producer price index

0700 EST US MBA weekly mortgage applications survey

0815 EST US ADP national employment report

0945 EST US services PMI

1000 EST US ISM services PMI

1030 EST US EIA weekly petroleum status report

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The Irish services sector kept a barometer of the country's overall private sector in decline in February, but optimism improved with the end in sight for coronavirus lockdown restrictions. The AIB Ireland services purchasing managers' index score for the business activity index was 41.2 points last month, up from 36.2 in January, but still indicated a sharp slowdown in services output, said lender AIB and data provider IHS Markit. The neutral reading in the PMI index is 50. The services reading meant the Ireland composite output index remained below 50 in February at 42.7 points, up from 40.3 in January. On Monday, IHS Markit had said the AIB Ireland manufacturing PMI edged up to 52.0 points last month from 51.8 in January, both scores indicating growth.

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Growth in China's service sector continued to slow in February, with a weaker rise in new business, and a fresh decline in new export work, data from Caixin and IHS Markit showed. The headline seasonally adjusted business activity index dipped to 51.5 index points in February from 52.0 points in January, reflecting a consecutive loss in momentum since November. On Monday, Caixin said the manufacturing PMI fell to 50.9 points in February from 51.5 in February, also due to a slower rise in output. As a result of this and the services sector, the composite output index dipped to 51.7 points from 52.2 in January.

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Japan's service sector lightly improved in February, but remained at contraction levels as new business inflows continued to decline, data from au Jibun bank and IHS Markit showed. The seasonally adjusted Japan services business activity index edged up to 46.3 index points in February from 46.1 points in January. On Monday, data from the Jibun Bank showed the manufacturing PMI rose to 51.4 points in February from 49.8 points in January, marking a return to growth in the sector. As a result of this and the services sector, the au Jibun Bank Japan composite PMI output index rose to 48.2 index points from 47.1 points in January.

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BROKER RATING CHANGES

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SOCGEN INITIATES UNITED UTILITIES WITH 'BUY' - TARGET 1080 PENCE

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SOCGEN INITIATES SEVERN TRENT WITH 'HOLD' - TARGET 2380 PENCE

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GOLDMAN SACHS RAISES SAGE GROUP TO 'NEUTRAL' ('SELL') - TARGET 575 PENCE

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COMPANIES - FTSE 100

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Housebuilder Persimmon reported a decline in profit for 2020 amid disruption in the second quarter due to the pandemic. Revenue for 2020 fell 8.8% to GBP3.33 billion from GBP3.65 billion in 2019, with pretax profit dropping 25% to GBP783.8 million from GBP1.04 billion. New home completions fell to 13,575 from 15,855, though the average selling price rose to GBP230,534 from GBP215,709. Persimmon described the performance as "resilient", given the disruption caused by the pandemic. Looking ahead, Persimmon said its average private weekly sales rates for the first eight weeks of 2021 was 7% ahead of last year and build rates have been maintained at pre-pandemic levels since July. "We are targeting a full return to 2019 levels of new home completions in 2022. From 2023, with a stable market, we expect our enhanced quality, service and efficiency capabilities to provide the opportunity to grow further. We are focused on bringing more outlets into production to support these targets," said Persimmon.

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Cyber security firm Avast reported billings growth and raised its payout. Adjusted billings for 2020 rose 1.2% to USD922.0 million, up 7.1% on an organic basis. Revenue rose 2.5% to USD892.9 million, while pretax profit slipped 25% to USD236.3, with the firm booking an 'other' finance expense of USD64.0 million versus income of USD9.7 million the year before. Adjusted earnings before interest, taxes, depreciation and amortisation rose 2.6% to USD495.5 million. "Underpinned by a strong prior year billings performance, we expect to deliver FY 2021 organic revenue growth in the range of 6% to 8%," said Avast. This compares to organic growth of 7.9% for 2020. The company proposed a final dividend of 11.2 cents per share, bringing the total dividend for the year to 16.0 cents, up 8.8%.

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Packaging company DS Smith said trading continues to progress well, with momentum continuing into the second half of its financial year. Group like-for-like corrugated box volume growth has accelerated compared to the second quarter, with e-commerce and fast-moving consumer goods strength over Christmas continuing into 2021 together with some "encouraging signs" of recovery from industrial customers. "While the economic environment remains uncertain due to Covid-19, we are experiencing good momentum across the business in both Europe and North America. We are confident in delivering results in line with our expectations for the year and showing further good progress and momentum as we move into the next financial year," said Chief Executive Miles Roberts.

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COMPANIES - FTSE 250

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Insurer Hiscox reported a swing to loss for 2020 though noted a hardening of market rates. Gross premiums written were broadly flat at USD4.03 billion, with net premiums earnings rising to USD2.75 billion from USD2.64 billion. However, the firm swung to a pretax loss of USD268.5 million from a USD53.1 million profit in 2019. Hiscox said it expects to pay USD475 million in Covid-related claims net of reinsurance, the majority for event cancellation and the remaining for business interruption and other claims. "These are large sums and disappointingly means that we will make a pre-tax loss for the year of USD268 million. Without Covid-19 we would have produced a profit of USD207 million," the firm said. Nonetheless, Hiscox said the challenges of the pandemic have not "withered the green shoots" of a hardening market. The company noted that rates are rising across all three of its business areas.

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Waste management company Biffa said its performance in the second half has continued to be ahead of its base case expectations, with the third lockdown hitting earnings less severely than originally anticipated. Underlying Ebit for the financial year ended March 26 is expected to be "well ahead" of the board's previous expectations, in the range of GBP42 million to GBP44 million. Biffa noted that consensus stands at GBP33.8 million.

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Recruitment firm PageGroup reported an 89% fall in pretax profit in 2020 to just GBP15.5 million from GBP144.2 million in 2019. Revenue dropped 21% to GBP1.30 billion from GBP1.65 billion. PageGroup as a result declared no dividend for the year. "2020 was an unprecedented year, with all of our markets impacted by the COVID-19 pandemic," said CEO Steve Ingham, adding: "Our people made significant sacrifices, predominantly in Q2, with many of our people taking 20% salary cuts or working four day weeks, and demonstrated incredible resilience during the last 12 months." PageGroup said that despite continued economic uncertainty, it remains confident in its strategy and is continuing to invest "carefully" in headcount.

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COMPANIES - GLOBAL

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Dialog Semiconductor said its performance improved in the final quarter of 2020, with demand from clients increasing. The Reading, England-based manufacturer of semiconductors early last month said it had agreed to an all-cash takeover offer from Renesas Electronics, a semiconductor maker headquartered in Tokyo. Under the terms of the acquisition, each Dialog shareholder will receive EUR67.50 in cash per share, valuing Dialog's equity at EUR4.89 billion. Dialog noted the takeover agreement in Wednesday's earnings announcement but provided no update. The company said revenue for the three months to the end of calendar 2020 was USD438.7 million, including acquisitions, 15% above the prior year's USD380.6 million. Underlying operating profit for the final quarter totalled USD110.5 million, up 21% year-on-year.

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Hewlett-Packard Enterprise on Tuesday upped its annual earnings per share expectations amid better than expected performance in the first quarter of its current financial year. The Texas, US-based financial technology company said revenue for the three months to the end of January declined to USD6.83 billion from USD6.95 billion reported a year ago. Pretax earnings fell to USD205 million from USD378 million year-on-year. Hewlett-Packard declared a dividend of USD0.12 per share, unchanged when compared to a year prior. GAAP earnings per share came in at USD0.17 in the first quarter, above the previously provided outlook of between USD0.02 and USD0.06 per share. Non-GAAP EPS were USD0.52, also above the previously provided outlook of between USD0.40 to USD0.44 per share.

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Wednesday's Shareholder Meetings

Evgen Pharma PLC - GM re fundraise

Gunsynd PLC - AGM

Property Franchise Group PLC - GM re Hunters Property PLC acquisition

Schroder European Real Estate Investment Trust PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
PageGroup PLC 549.50 -
Severn Trent PLC 2,431.00 -
Sage Group (The) PLC 644.00 -
Rio Tinto PLC 6,054.00

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