(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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The UK Competition & Markets Authority said it has provisionally cleared the proposed merger of Virgin Media and Virgin Mobile with O2. O2 is a cellular network operator and the commercial brand of Telefonica UK, which is part of the telecommunications company Telefonica. Virgin Media, meanwhile, is a subsidiary of Liberty Global, a television & telecommunications company. Liberty Global and Telefonica announced the tie-up last May, which is expected to create GBP11 billion in revenue. Back in December 2020, an in-depth investigation into the GBP31 billion mega-merger was launched by the competition watchdog. The CMA previously had blocked a merger between O2 and rival network Three, although it had approved BT's deal with EE.
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UK grocer Tesco reported a drop in annual profit despite "exceptionally strong" sales growth during the Covid-19 pandemic, but it predicted a rebound in profitability in its new financial year. For the year that ended February 27, revenue including fuel was GBP57.9 billion, down 0.4% from GBP58.1 billion in financial 2020 and pretax profit was GBP825 million, down 20% from GBP1.03 billion. Revenue excluding VAT and fuel on a comparable 52-week basis was GBP53.45 billion, up 7.1% on GBP49.95 billion the year before but missing the company-compiled consensus forecast of GBP58.41 billion, while pretax profit missed the estimate of GBP891 million. The UK's largest supermarket chain held its annual dividend at 9.15 pence by declaring a 5.59 final payout. In addition, Tesco confirmed a press report that it hired Kingfisher CEO Thierry Garnier as a non-executive director. Tesco also appointed Bertrand Bodson, the chief digital officer of Swiss pharmaceutical firm Novartis, as a non-executive director. Bodson was previously chief digital & marketing officer at the Argos division of Tesco peer J Sainsbury.
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AstraZeneca said its Tagrisso drug has been approved in China for early-stage lung cancer. The approval comes after positive results from a Phase 3 trial, in which Tagrisso "reduced the risk of disease recurrence or death by 80%," AstraZeneca said. Tagrisso the only early-stage treatment for the disease to show efficacy in a global trial and the first to be approved in China, which has more than a third of the world's lung cancer patients, the drugmaker said. The drug is approved in "more than a dozen" countries including the US.
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SAP upped its annual guidance, on the back of a promising first quarter which saw its new cloud business grow at the fastest pace in five years. The Walldorf, Germany-based enterprise software developer hailed its "stellar start" to 2021. IFRS Software Licenses revenue rose 7% in the first quarter, or 11% at a constant currency non-IFRS basis. SAP labelled it the "fastest growth in new cloud business in five years". "SAP saw a sharp acceleration in new cloud business across its cloud portfolio, as well as a strong start for 'RISE with SAP' which is driving customers' business transformation in the cloud. Software licenses had strong, double-digit growth at constant currencies," the company said. "Despite the continued impact of global travel restrictions on Concur's business, SAP's cloud revenue growth was resilient in the first quarter, up 13% at constant currencies."
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LVMH Moet Hennessey Louis Vuitton said it kicked off the new year with a sales surge and added that its first-quarter revenue even topped 2019's levels. The French luxury goods firm said trading in the US and China was promising, though it cautioned that Europe continued to struggle with store closures and travel curbs. LVMH's revenue in the first quarter of 2021 came in at EUR13.96 billion, jumping 32% from EUR10.60 billion a year earlier. "All activities contributed to the good performance of the group, with the exception of Selective Retailing, which was still impacted by the restrictions on international travel," LVMH said. "Fashion & Leather Goods, in particular, had an excellent start to the year and achieved record levels of revenue." Compared to 2019's levels, so before the pandemic hit, first quarter revenue is 8% higher on an organic basis.
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Air France KLM launched an equity raise worth about EUR1 billion. The carrier said the capital increase will secure it EUR980 million, though the equity raise could be upsized. This would secure the company just over EUR1.1 billion in total. "The net proceeds of the capital increase will be allocated to strengthen the equity of Air France. Air France will use the allocated amount to consolidate its liquidity and finance general corporate purposes in the context of the Covid-19 crisis," Air France KLM said. The company last week Tuesday plotted a series of "capital-strengthening measures" worth EUR4 billion as it prepares for life after Covid-19 lockdowns. The financing plan included an equity raise and the conversion of a EUR3 billion French loan into perpetual hybrid bonds.
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MARKETS
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European markets were slightly higher at midday, with Frankfurt underperforming after the report of a decline in industrial production in the euro area in February. "Production had fully recovered to pre-pandemic levels at the start of the year but dipped back later," commented ING Economics. "The decline will mean that the manufacturing contribution to GDP may disappoint a bit given the strong performance seen in the fourth quarter, adding to our view of another GDP contraction in 1Q before the economic rebound starts."
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CAC 40: up 0.4% at 6,208.59
DAX 30: marginally higher, up 1.63 points at 15,235.99
FTSE 100: up 0.2% at 6,907.11
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Hang Seng: closed up 1.4% at 28,900.83
Nikkei 225: closed down 0.4% at 29,620.99
S&P/ASX 200: closed up 0.7% at 7,023.10
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DJIA: called up 0.1%
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.2%
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EUR: up at USD1.1967 (USD1.1930)
GBP: up at USD1.3795 (USD1.3738)
USD: down at JPY108.97 (JPY109.25)
Gold: up at USD1,746.30 per ounce (USD1,742.96)
Oil (Brent): up at USD64.66 a barrel (USD63.84)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US health authorities have recommended pausing the Johnson & Johnson Covid-19 shot over blood clot fears, with the company announcing it would delay its European rollout in a setback for global immunization efforts. Out of nearly 7 million Americans who have so far received the single-dose vaccine, 6 women between age 18 and 48 developed a rare type of clot in the brain, officials said. One later died, while another is in critical condition. US Food & Drug Administration scientist Peter Marks has said the disorder might be triggered by a rare immune response to the vaccine similar to that seen in a few hundred recipients of the AstraZeneca jab in Europe. Meanwhile in Germany, people under the age of 60 who have received a first dose of the AstraZeneca vaccine will receive a different jab for their second dose. But while J&J paused output, Pfizer said it increased production and could deliver 10% more doses than expected to the US by the end of May.
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Rapid spread of coronavirus variants could necessitate the reimposition of lockdown measures, a scientist advising the UK government said. Professor Peter Openshaw said his fellow scientists were "very concerned" after a cluster of cases of the South African coronavirus variant were found in London. Some 44 confirmed cases of the variant have been found in Lambeth and Wandsworth, with a further 30 probable cases identified, the Department of Health & Social Care said. Surge testing for those who live, work or travel through those areas is being made available, while NHS Test & Trace is providing additional testing in an area of Southwark where a case linked to the other cluster has been identified.
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Eurozone industrial production decreased in February, figures from Eurostat showed. In February, seasonally-adjusted industrial production fell by 1.0% in the euro area and by 0.9% in the EU, compared with January, according to estimates from the statistical office of the EU. Among member states for which data are available, the largest decreases were registered in France, Malta and Greece. The highest increases were observed in Hungary, Ireland and Croatia. In January, industrial production rose by 0.8% in the euro area and in the EU. On a year-on-year basis, industrial production in the euro area decreased by 1.6% and by 1.1% in the EU.
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China's economy grew at a record pace during the first quarter as it rebounded from a historic contraction caused by Covid-19, and boosted by exports and domestic demand, an AFP poll of analysts found. The world's number two economy is tipped to have expanded 18.7% on-year, according to the average forecast by economists from 15 institutions, having been the only major one to grow at all last year. While the virus first emerged in central China in late 2019, the country was also the quickest to bounce back after authorities imposed strict lockdowns and virus control measures. Analysts forecast China's gross domestic product growth for the whole year will be 8.5%, markedly higher than leaders' modest target of above six percent. It is also a strident advance from 2.3% growth in 2020.
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US President Joe Biden has urged Russian President Vladimir Putin to de-escalate border tensions with Ukraine and proposed the two leader hold a summit in the coming months, the White House said. Biden spoke by phone with Putin on Tuesday to discuss a range of issues, from arms control to cyberattacks and fresh worries over the amassing of Russian troops on the Ukraine border, a statement said. The US president suggested their meeting take place "in a third country." The Kremlin in Moscow confirmed Biden's proposal, but left open whether Putin would accept the invitation. The last Russia-US summit was held in Helsinki in July 2018. At the time, then-president Donald Trump was embroiled in investigations over Russian interference in the 2016 presidential election. In March, the Kremlin was outraged by Biden's comments about Putin during an interview. Biden had answered "I do" to the question of whether he considered Putin a "killer." Because of this statement, Russia has temporarily withdrawn its ambassador from the US. However, Putin had also offered to talk to Biden after the comment was made.
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By Tom Waite; thomaslwaite@alliancenews.com
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