(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Deliveroo has confirmed it has picked London for a potential listing as it looks set to become one of the latest in a flurry in recent stock market floats, PA reports. The takeaway delivery company is eyeing a listing on the London Stock Exchange just eight years after it was founded in the city by Will Shu. It was reported last month the company hired six investment banks to work on the floatation, which could value it at up to GBP7.5 billion. Deliveroo said its intent to go public in London underlines its commitment to make the UK its "long-term home" despite global growth ambitions. It comes after the company saw demand soar during the pandemic as hundreds of restaurants across the UK sought to join its platform after sites were closed to dine-in customers.
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Aviva said it will sell its remaining Italian life and general insurance businesses for EUR873 million in cash and promised to return the proceeds of its programme of streamlining the company to shareholders. Aviva will sell its general insurance business in Italy to Germany's Allianz for EUR330 million and life insurance business to French insurance firm CNP Assurances for EUR543 million. Aviva said it expects to use the increased capital and cash to support debt reduction, investment for long-term growth, and the return of excess capital to shareholders. For 2020, the insurer posted adjusted operating profit of GBP3.16 billion, down 0.6% from GBP3.18 billion in 2019. The insurer declared a 2020 total dividend of 21 pence, up 35% from 15.5p per share in the prior year.
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Deutsche Lufthansa said coronavirus badly hobbled operations in 2020, though cargo handling provided a lonely bright spot. The German airline said demand fell dramatically in 2020 due to the coronavirus pandemic and the associated travel restrictions, which forced it to secure financial support from the government in Berlin. Revenue fell to EUR13.6 billion in 2020, little more than a third of the EUR36.4 billion booked in 2019. Despite rapid and extensive cost reductions, Lufthansa reported an adjusted loss before interest and tax of EUR5.5 billion compared to a profit of EUR2.0 billion the year before. The company noted that personnel costs were significantly reduced through workforce reductions, crisis agreements with social partners, and short-time working. At year-end 2020, the number of employees was 110,000, around 20% lower than a year before. However, buoyed by a strong increase in average yields amid persistently high demand, Lufthansa Cargo achieved a record result, with an adjusted Ebit of EUR772 million compared to EUR1 million in 2019, despite a 36% decline in freight capacity.
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Building materials firm CRH said it delivered a robust performance in a challenging environment due to Covid-19 related disruption in key construction markets of North America and Europe. For 2020, revenue was USD27.6 billion, down 1.8% from USD28.1 billion in 2019 and profit before tax from continuing operations was USD1.66 billion, down 24% from a restated USD2.18 billion. CRH raised its annual dividend 25% to 115.0 cents with 93.0 cent final payout and said it plans to resume its share buyback programme with USD0.3 billion by end of June.
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Schroders said it delivered strong results with a focus on cost discipline and good client inflows, despite the challenging conditions. For 2020, net income was GBP2.18 billion, up from GBP2.12 billion in 2019, while pretax profit fell to GBP610.5 million from GBP624.6 million. Schroders said it generated net flows of GBP42.5 billion, and assets under management increased 15% to a record high of GBP574.4 billion from GBP500.2 billion in 2019. The asset manager declared a 2020 total dividend 114.0p per share, unchanged from 2019.
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Melrose Industries swung to a pretax loss of GBP523 million in 2020 from a profit of GBP55 million, due to restructuring charges and lower revenue. Adjusted pretax profit was GBP120 million, down from GBP699 million. Revenue declined to GBP8.77 billion from GBP10.97 billion. Melrose said trading was at the top end of management expectations throughout the second half of 2020. Proposes 0.75 pence final dividend to resume payouts. "Whilst the Covid-19 crisis has had a major detrimental effect this year, Melrose has generated record cash flows and continued to invest to improve our businesses," Chair Justin Dowley said. "All of this positions the group well for a good recovery and strong performance in the future."
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Thales said it is set to "regain profitable momentum" going forward after double-digit earnings fall in 2020. The Paris-based aerospace company said order intake in 2020 was EUR18.5 billion, down 3% year-on-year, resulting in sales fall of 7.7% to EUR17.0 billion. Earnings before interest and tax came in at EUR1.35 billion, down 33% on the prior year, with adjusted net income also falling by a third year-on-year to EUR937 million. Net income totalled EUR483 million, down 57% year-on-year. Thales cut its dividend per share 34% to EUR1.76 from EUR2.65 paid a year earlier.
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Vivendi on Wednesday posted an annual earnings rise, despite a slip in fourth-quarter revenue, as the French media firm plans for life without Universal Music Group. In the three months ended December 31, revenue fell 1.8% annually to EUR4.49 billion from EUR4.58 billion. For the whole of 2020, revenue was up 1.2% to EUR16.09 billion from EUR15.90 billion. "This increase mainly resulted from the growth of Universal Music Group, Canal+ Group and Editis, partially offset by the slowdown in other activities, mainly Havas Group and Vivendi Village, all of which were affected by the consequences of the Covid-19 pandemic," Vivendi said. Annual pretax profit jumped 48% to EUR2.18 billion from EUR1.48 billion. Profit was helped by a EUR591 million revaluation of its investment in Spotify and Tencent Music Entertainment, compared to EUR139 million in 2019.
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Trip.com Group said it intends to focus on operations in the domestic Chinese market as coronavirus hurt international unit performance during 2020. The Chinese online travel company said its domestic business continues to show strong recovery momentum, with China domestic air ticketing business maintaining positive year-over-year revenue growth in the fourth quarter of 2020. Its China domestic hotel unit maintained positive growth, with mid-to-high end domestic hotel reservations reaching double digit year-on-year growth in the fourth quarter of 2020. As a result, the company reported net revenue for the fourth quarter of 2020 of RMB5.0 billion - about USD761 million - representing a 40% decrease from the same period in 2019.
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MARKETS
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Stock prices were lower around the world on Thursday, amid renewed concern about widened US Treasury yields and rising inflation pressure. Stephen Innes, chief global markets strategist at axi, noted that Fed Chair Jerome Powell will speak at a Wall Street Journal online event about 1700 GMT. "There is almost no chance he will push back on long-end yields. The Fed's message has been consistent all week: it is not too concerned by the back up in yields." Innes added: "Much more likely is that he'll remind everyone how long the recovery is likely to take, how difficult inflation is to create on a sustained basis, and that the Fed will look through 2021 upside inflation."
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CAC 40: down 0.3% at 5,811.92
DAX 30: down 0.6% at 14,002.28
FTSE 100: down 1.1% at 6,599.06
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DJIA: called down 0.4%
S&P 500: called down 0.6%
Nasdaq Composite: called down 0.9%
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S&P/ASX 200: closed down 0.8% at 6,760.70
Hang Seng: closed down 2.1% at 29,246.01
Nikkei 225: closed down 2.1% at 28,930.11
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EUR: down at USD1.2040 (USD1.2077)
GBP: down at USD1.3935 (USD1.3988)
USD: up at JPY107.34 (JPY106.87)
Gold: down at USD1,713.92 per ounce (USD1,722.45)
Oil (Brent): down at USD63.51 a barrel (USD64.16)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Chancellor of the Exchequer Rishi Sunak has vowed to build a "fairer and more just" country in the memory of those who lost their lives to coronavirus, after setting out plans to begin repairing the nation's finances after the pandemic. Sunak used Wednesday's government budget to extend the furlough scheme and Universal Credit increase as part of a GBP65 billion lifeline for an economy still battered by the Covid crisis. But taxes on business profits are set to rise from 2023, while income tax thresholds will be frozen, meaning more than a million extra people will be dragged into paying it as wages increase. It will take the UK's tax burden to its highest level since the 1960s, according to the Office for Budget Responsibility.
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UK construction activity saw a solid return to growth in February amid optimism over economic recovery and a swift vaccination rollout, the latest figures from IHS Makit showed. The IHS Markit-CIPS purchasing managers' index print increased to 53.3 points in February from 49.2 points in January, breaching the 50.0 mark that separates expansion from contraction. Markit said new orders regained momentum as project starts increased in anticipation of improving UK economic conditions over the course of the year. Residential construction remained the strongest area of growth in February, although the speed of recovery eased slightly since January.
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Eurozone construction firms reported a sustained downturn in activity during February, figures from IHS Markit showed. The IHS Markit eurozone construction total activity index ticked up to 45.0 points in February from 44.1 points in January, indicating a softer, albeit still considerable, decline in construction activity. February data pointed to a rapid fall in German construction activity, the fastest recorded since last May. The headline seasonally adjusted IHS Markit Germany construction purchasing managers' index came in at 41.0 points in February. This was down from 46.6 points in January and the lowest since May last year. The decline was overwhelmingly linked to unusually bad weather, IHS Markit said.
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Activity in the US economy expanded only "modestly" in recent weeks, but firms are becoming more upbeat about their prospects as Covid-19 vaccines are rolled out nationwide, the Federal Reserve said Wednesday. However, the employment gains are slow and companies are again reporting difficulty finding and retaining workers, the Fed said in its "beige book" survey of economic conditions. In the New York region, the only one of the Fed's 12 districts to see activity slow, businesses "have grown considerably more optimistic about the near-term outlook," the report said.
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US President Joe Biden declared the promotion of democracy worldwide to be a central component of his national security strategy in new guidelines released on Wednesday. "Authoritarianism is on the global march," the president's Interim National Security Strategic Guidance said. "We will strengthen and stand behind our allies, work with like-minded partners, and pool our collective strength to advance shared interests and deter common threats. We will lead with diplomacy," the 24-page document said. Pandemics, the climate crisis, cyber threats and violent extremism were cited among the "biggest threats." The document stressed that many of these "respect no borders or walls, and must be met with collective action. We must also contend with the reality that the distribution of power across the world is changing, creating new threats," the document continued.
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Members of the OPEC group of oil producers and allies are expected to raise output in a meeting Thursday, in response to a rebound in demand and prices. While the so-called OPEC+ group is often at loggerheads over how much oil to pump to the market, a sudden plunge in prices triggered by the coronavirus pandemic led members to agree on a dramatic cut in output to underpin prices. Now that vaccination campaigns are underway and demand from China, the world's largest oil importer, has bounced back to pre-pandemic levels, the success of the meeting on Thursday will hinge on whether heavyweights Russia and Saudi Arabia can agree on a way forward. "There is within the alliance a major difference of opinion on the capacity of the oil market to absorb new volumes" of crude, said Bjarne Schieldrop, chief commodities analyst at SEB research group. The world's second-largest crude producer after the US, Russia "leans for caution", Schieldrop explained, while number three, Saudi Arabia, "defends the increase in supply".
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Hong Kong has been removed from an annual index of the world's freest economies because the think-tank that compiles the league table said the city was now directly controlled by Beijing. The announcement is a reputational blow for Hong Kong and comes as Beijing ramps up its bid to quash dissent after huge and sometimes violent pro-democracy demonstrations in 2019. The Heritage Foundation, a conservative US think-tank, publishes an annual Index of Economic Freedom ranking countries and territories for how business-friendly their regulations and laws are. Over the last 26 years Hong Kong topped the table for all but one year – a source of pride to the city's government which often used the accolade in its official press releases and investment brochures. But when the 2021 ranking is released later on Thursday, Hong Kong will not appear because the report's authors believe the city is no longer independent enough of Beijing to justify separate inclusion.
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