(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Lloyds Banking followed peer Barclays in announcing a big improvement to second-quarter results, while also restoring its payout and announcing an acquisition to accelerate its push into wealth management. Lloyds said it swung to a GBP3.91 billion pretax profit in the first half of 2021, from a GBP602 million loss a year earlier. The lender's net income rose 2.0% to GBP7.56 billion from GBP7.41 billion. Net interest margin was 2.5%, which it guided for the rest of 2021 as well. Lloyds was boosted by an impairment credit of GBP656 million in the first half, following a GBP3.82 billion hit a year earlier. It resumed interim dividends by declaring a 0.67 pence per share payout, having not made on in the first half of 2020. The dividend is 18% higher than its 0.57p payout for the second half of 2020. In addition, Lloyds announced plans to acquire investment and retirement platform Embark Group for GBP390 million.
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Credit Suisse said its earnings in the first half of 2021 were hurt by additional costs associated with the Archegos Capital Management debacle. Separately, Credit Suisse posted a report based on an independent external investigation into Archegos. The move follows US hedge fund's default on March 25. The Archegos investigation found a failure to effectively manage risk in Credit Suisse's prime services business by both the first and second lines of defence as well as a lack of risk escalation. It also found a failure to control limit excesses across both lines of defence as a result of an insufficient discharge of supervisory responsibilities in its investment bank and in risk. However, Credit Suisse highlighted that the investigation found that this was not a situation where the business and risk personnel engaged in fraudulent or illegal conduct or acted with ill intent. Net revenue for the three months to June 30 was EUR5.10 billion, down 18% on the prior year. Pretax income dropped by 48% year-on-year to EUR813 million.
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Oil major Royal Dutch Shell said it is "stepping up" shareholder returns. Shell said it has rebased its second quarter dividend to 24 US cents, up 38% quarter-on-quarter. For the second quarter of last year, it had declared a 16 cents payout. In addition, Shell is targeting USD2 billion in buybacks which it aims to complete by the end of 2021.Chief Executive Ben van Beurden said: "We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy." He added: "Total shareholder distributions for 2021 are expected to be around the middle of the 20-30% range of [cash flow from operations] from the previous four quarters. Our progressive dividend policy to grow dividends per share by 4% annually, subject to board approval, remains unchanged." Shell said it saw "another quarter of operational and financial delivery". It swung to a USD3.43 billion profit attributable to shareholders, from a USD18.13 billion loss a year earlier. Shell posted pretax profit of USD4.13 billion, swinging from a USD23.91 billion loss a year prior. Second quarter total revenue, so including joint-ventures, surged 90% to USD61.76 billion from USD32.49 billion.
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TotalEnergies said it swung to profit in the second quarter of 2021 as it sales almost doubled. The Paris-based oil major, formerly known as Total, said its net income in the three months to June 30 totalled USD2.30 billion compared to the net loss of USD8.42 billion posted a year ago. Sales jumped to USD47.05 billion from USD25.73 billion year-on-year. TotalEnergies noted that its purchases, net of inventory variation, doubled to USD26.72 billion from USD12.03 billion year-on-year, hurting income. In contrast, depreciation, depletion and impairment of tangible assets and mineral interests reduced to USD3.12 billion from USD11.59 billion. Given the strong second quarter results, TotalEnergies said it will distribute a payout of EUR0.66 per share, stable year-on-year.
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Miner Anglo American also set out plans to return USD2 billion to investors. It will buyback USD1 billion, and it declared a special payout of USD0.80 per share, equal to USD1 billion. Finance Director Stephen Pearce explained: "As a result of our prudent approach to capital allocation, including our commitment to our established base dividend policy of returning 40% of underlying earnings to our shareholders, our balance sheet is in a strong position." The buyback will kick off immediately and end "no later" than February 14. In addition, Anglo lifted its regular half-year payout to USD1.71 per share, from USD0.28 a year earlier. Anglo noted that including the buyback and special dividend, its interim payout is USD3.31 per share. In the six months to June 30, Anglo American's revenue more than doubled to USD21.78 billion from USD10.19 billion. Pretax profit surged to USD10.70 billion from USD1.56 billion. CEO Mark Cutifani said: "The first six months of 2021 have seen strong demand and prices for many of our products as economies begin to recoup lost ground, spurred by stimulus measures across the major economies."
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AstraZeneca said its Covid vaccine generated USD1.2 billion in sales in the first half of the year. The group added in its interim results statement that it shipped about 319 million doses worldwide during the period, which included USD572 million of sales in Europe and USD455 million in emerging markets. Overall first half revenue was USD15.54 billion, up 23% from a year before. Pretax profit rose 25% to USD2.37 billion. Astra declared an unchanged first interim dividend of USD0.90 per shares. It expects revenue to increase by a low-twenties percentage in the full year.
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Brewer and distiller Diageo reported an 81% rise in annual pretax profit to GBP3.71 billion from GBP2.04 billion the year before. Net sales in the financial year that ended June 30 were GBP12.73 billion, up 8% from GBP11.75 billion and up 16% on an organic basis. Volumes rose by 10%, or 11% organically, while Diageo's operating margin improved dramatically to 29.3% from 18.2%. Diageo declared a 72.55 pence total dividend, up 4% from 69.88p in financial 2020.
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Airbus said it bounced back strongly into profit in the first half of the year as aircraft deliveries rose, leading the company to revise its performance forecasts upwards. Airbus posted a net profit of EUR2.2 billion for the first six months of 2021, compared to a loss of EUR1.9 billion last year as the airline industry was walloped by the Covid-19 pandemic. Airbus said it delivered 297 aircraft between January and June against 196 last year. As clients pay most of the cost of the aircraft upon delivery, revenues jumped 30% to EUR24.6 billion. The European plane manufacturer now expects to deliver 600 planes this year, instead of the previously estimated 566, the number delivered in 2020.
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Swiss food and drink company Nestle raised its full-year organic sales growth guidance after reporting higher year-on-year sales and profit in the first half. In the six months ended June 30, Nestle's underlying trade operating profit grew to CHF7.25 billion, around USD7.98 billion, up 1.3% from CHF7.16 billion in the same period a year prior, with an underlying profit margin of 17.4%. Sales also grew modestly in the first half, rising 1.5% to CHF41.76 billion from CHF41.15 billion the year before. Organic growth reached 8.1%, the company said, with real internal growth of 6.8% and pricing up 1.3%. The nutrition firm updated its full-year outlook for 2021, predicting full-year organic sales growth between 5% and 6%.
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Anheuser-Busch InBev reported a strong performance in the second quarter of the year, with annual earnings possibly seen growing in the double-digit range. AB InBev is a Leuven, Belgium-based drink and brewing company which owns brands such as Corona and Budweiser. Underlying profit attributable to equity holders surged 45% to USD2.61 billion in the second quarter to end-June from USD1.80 billion a year prior. Revenue rose 21% to USD25.83 billion from USD21.30 billion.
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Samsung Electronics' net profits surged more than 70% in the second quarter thanks to higher memory chip prices fuelled by pandemic-led demand, the South Korean tech giant reported. Coronavirus-driven working from home boosted demand for devices and appliances powered by Samsung's memory chips. The company said that "memory shipments exceeded previous guidance and price increases were higher than expected". The world's biggest smartphone maker saw net profits rise 73% year-on-year to KRW9.6 trillion, about USD8.4 billion, for the April to June period, the company said in a regulatory filing.
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Facebook late Wednesday posted strong quarterly revenue and profit figures, though looked ahead to tough comparatives for the remainder of the year. Shares in the social media titan rose 1.5% to USD373.28 in New York on Wednesday, though tumbled 4.0% after-hours. For the three months to the end of June, net income doubled to USD10.39 billion from USD5.18 billion a year ago, with diluted earnings per share boosted to USD3.61 from USD1.80. Revenue jumped 56% to USD29.08 billion from USD18.69 billion a year ago. This mirrored a 56% increase in advertising revenue, to USD28.58 billion. However, it cautioned that year-on-year total revenue growth rates are set to "decelerate significantly" in the third and fourth quarters as the company laps "periods of increasingly strong growth".
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Robinhood has said its mission is to "democratize finance for all", and that stretches to its plan for the company's debut on public markets Thursday. The online investment platform, which is expected to begin trading under the ticker symbol "HOOD" on the Nasdaq, has set aside up to 35% of the shares under its initial public offering for sale to its users. On Wednesday, the company said it raised USD1.9 billion in an initial public offering priced at USD38 per share, at the low end of the range in its prospectus and giving a USD32 billion valuation. Robinhood, whose commission-free stock trading model has been copied by some rivals, had USD81 billion in assets under its custody at the end of March, up from USD14.2 billion at the end of 2019.
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MARKETS
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Stock markets were rallying globally amid strong company results. Only the Nasdaq Composite was called slightly lower as its tech stocks react to a small hint of a more hawkish stance by the US Federal Reserve.
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CAC 40: up 0.7% at 6,653.71
DAX 30: up 0.3% at 15,617.71
FTSE 100: up 0.8% at 7,071.71
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Hang Seng: closed up 3.3% at 26,315.32
Nikkei 225: closed up 0.7% at 27,782.42
S&P/ASX 200: closed up 0.5% at 7,417.40
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DJIA: called up 0.4%
S&P 500: called up 0.2%
Nasdaq Composite: called down 0.1%
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EUR: up at USD1.1874 (USD1.1807)
GBP: up at USD1.3950 (USD1.3881)
USD: down at JPY109.82 (JPY110.09)
Gold: up at USD1,820.36 per ounce (USD1,800.47)
Oil (Brent): up at USD75.12 a barrel (USD74.62)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Consumer confidence in the eurozone slipped for the first time in five months, data from the European Commission showed. The commission's consumer confidence indicator fell 1.1 points to a tally of minus 4.4 in July from minus 3.3 in June. It ends a streak of five monthly increases. The print remains markedly higher than November's low of minus 17.6 points, however. More promisingly, commission noted the economic sentiment indicator reached an "all-time high". It rose by 1.1 points to a tally of 119.0 in July, from 117.9 points in June.
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Germany's unemployment rate dropped to 5.7% in July, the federal labour agency said, as Europe's biggest economy rebounded in the summer after coronavirus restrictions were loosened in May. Seasonally adjusted figures showed the number of unemployed people had dropped by a dramatic 91,000 this month, with the unemployment rate falling from 5.9% in June.
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The US Federal Reserve kept interest rates on hold on Wednesday and signalled that the economy has made progress against its QE taper goals. The policy-setting Federal Open Market Committee left its benchmark rate unchanged in the range of 0.00% to 0.25%, as widely expected. The Fed also left its quantitative easing programme unchanged. However, it added: "Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least USD80 billion per month and of agency mortgage‑backed securities by at least USD40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings." Indicators of economic activity and employment have continued to tick up, the central bank said, while it reiterated its belief that recent inflation strength is being driven by "transitory" factors.
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The US Senate voted to advance a historic, trillion-dollar infrastructure package late Wednesday, a breakthrough after weeks of often-bitter negotiations on a bill that President Joe Biden said could "transform America." The deal, if passed by Congress and signed into law, would pump historic levels of federal funding into fixing US roads, bridges and waterways, ensuring broadband internet for all Americans and expanding clean energy programs. The bipartisan measure passed 67-32, with 17 Republicans joining all 50 Democrats to formally begin debate on the bill. The plan, part of Biden's sweeping domestic agenda, includes some USD550 billion in new spending. It came together despite a near collapse of the volatile talks, which Biden and his Democrats wanted to see concluded before Congress breaks for its August recess. The legislation's language has yet to be written, but because the bill itself is just a shell, the Senate can advance it before voting on the final text.
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Beijing scrambled to calm investors after a crackdown on some of China's biggest firms rattled markets with regulators calling bankers in for a last-minute call Wednesday night, Bloomberg reported. The call hosted by the China Securities Regulatory Commission included executives of international investment banks, Bloomberg added. The business models of private tutoring firms were obliterated by a shock announcement on Saturday that they must become non-profits, sending stock prices crashing. A source with knowledge of the call on Wednesday told Bloomberg that bankers were given the impression that the sudden edicts for education companies were not going to ripple out to other industries. The crackdown on the sector is the latest in a series of new rules for industries ranging from education to e-commerce.
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France will from August 9 enforce new legislation that will make a health pass compulsory to visit a cafe, board a plane or travel on an inter-city train, the government's spokesman said Wednesday. The legislation passed by parliament at the weekend has sparked mass protests in France but the government is determined to press ahead and make the health pass a key part of the fight against Covid-19. A valid health pass is generated by two jabs from a recognised vaccine, a negative coronavirus test or a recent recovery from infection. The legislation also makes vaccination compulsory for health-workers and carers.
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An 8.2 magnitude earthquake struck off the Alaskan peninsula late Wednesday, the US Geological Survey said, generating small waves but no major tsunami. The earthquake hit 56 miles southeast of the town of Perryville, the USGS said. Perryville is a small village about 500 miles from Anchorage, Alaska's biggest city.
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By Tom Waite; thomaslwaite@alliancenews.com
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