(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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The UK Competition & Markets authority said it has provisionally found that Pfizer, alongside partner Flynn, "abused their dominant positions" to overcharge the National Health Service for anti-epilepsy drugs. The CMA said Pfizer and Flynn broke competition law by charging unfairly high prices for phenytoin sodium capsules. For four years after de-branding the drug, previously known as Epanutin, Pfizer's prices were between 780% and 1,600% higher than it had previously charged, the regulator said. Pfizer then supplied the drug to Flynn, which sold its to wholesalers and pharmacies at prices 2,300% to 2,600% higher than what they paid previously, the CMA charged.
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Glencore swung to half-year profit, as soaring commodities prices gave the miner and trader ample leeway to boost its cash distribution to shareholders and to buy back shares. Glencore said pretax profit increased to USD2.01 billion in the six months that ended June 30, recovering from a pretax loss of USD5.18 billion in the same period last year, while revenue leapt 32% to USD93.81 billion from USD70.96 billion. Glencore said it plans additional shareholder returns worth about USD1.2 billion. This will be comprised an additional USD0.04 a share cash distribution amounting to about USD530 million for payment in September and a USD650 million share buyback to be completed by the release of the full-year results in February next year. In addition to its base cash distribution of USD1.6 billion, or USD0.12 a share, already declared, the additional amounts increase announced shareholder returns to around USD2.8 billion for the year, Glencore noted.
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Jet engine maker Rolls-Royce Holdings unveiled a swing back to profit and said it is on track to turn free cash flow positive in the second half after a "good" start to the year. Revenue for the first half of 2021 fell to GBP5.16 billion from GBP5.67 billion a year ago, but the jet engine maker swung to a pretax profit of GBP114 million from a loss of GBP5.21 billion. Rolls-Royce reported negative free cash flow of GBP1.15 billion for the period, an improvement on the outflow of GBP2.80 billion recorded a year ago. It is targeting turning free cash flow positive during the second half 2021, and aims to improve the full-year figure to negative GBP2.0 billion from negative GBP4.2 billion in 2020. "This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound," said Chief Executive Warren East.
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Ad agency WPP hailed a return to pre-virus trading levels a year ahead of plan. Revenue for the first half of 2021 rose 9.8% to GBP6.13 billion, while WPP swung to a pretax profit of GBP394 million from a loss of GBP3.18 billion a year ago. Revenue less pass-through costs rose 16% on a like-for-like basis, and the firm noted the second-quarter growth of 19% was its highest on record. "We have returned to 2019 levels in 2021, a year ahead of our plan, with good momentum into 2022," said Chief Executive Mark Read. Full-year like-for-like revenue less pass-through costs growth is now expected to be around 9% to 10%, returning to 2019 levels a year ahead of plan. WPP declared an interim dividend of 12.5 pence, up 25% from 10p a year ago. It added that it has GBP350 million in share buybacks planned for the second half after GBP248 million was completed in the first.
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Sports Direct-owner Frasers Group posted a hefty profit fall and confirmed founder Mike Ashley will step down from the chief executive role. Ashley will move to an executive director role, paving the way for future son-in-law Michael Murray to become the company's new boss. CEO Ashley founded the company in 1982 and still owns 64% of it. He had been executive deputy chair until taking back over as CEO in 2016. Frasers said it is discussing transitioning the CEO role from Ashley to Murray over the course of the 2022 financial year. It is currently proposed that Murray will assume the role on May 1 next year and that Ashley would step down as CEO but remain on the board as an executive director. Murray is currently the company's "head of elevation", meaning upgrading stores. Frasers also reported a huge drop in full-year profit, down to GBP8.5 million in the 52 weeks to April 25 from GBP143.5 million the year before. This was on revenue that fell 8.4% to GBP3.63 billion from GBP3.96 billion.
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Adidas raised its 2021 outlook for a second time but flagged that growth will slow for the rest of the year, after a summer of sport drove a jump in second-quarter sales. Revenue in the second quarter of 2021 rose 52% year-on-year to EUR5.08 billion from EUR3.35 billion. Pretax profit came in EUR510 million, versus a loss of EUR292 million a year ago. The sports clothing and equipment maker lifted its full-year sales growth forecast to 20% on a constant currency basis, up from a "high teens" percentage. But the rate of sales growth will slow to 7% in the second half, the Herzogenaurach, Germany-based company said. Second-half sales figures will be compared against stronger earnings from the second half of 2020, when Adidas rebounded from the shock of the outbreak of the pandemic.
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Uber Technologies late Wednesday reported a rise in revenue and gross bookings even as the ride-hailing business grapples with driver shortages. For the second quarter to June 30, revenue more than doubled to USD3.93 billion from USD1.91 billion in the second quarter of 2020. The San Francisco, California-based company swung to a net income of USD1.14 billion, having posted a loss of USD1.78 billion in the prior year, with diluted earnings per share of USD0.58, swinging from a loss per share of USD1.02. Gross bookings more than doubled year-on-year to USD21.9 billion. Uber posted mobility gross bookings of USD8.6 billion and delivery gross bookings, from its Uber Eats business, of USD12.9 billion. Further, Delivery revenue continued to outperform the company's core ride-hailing business at USD1.96 billion, compared with USD1.62 billion. As the Covid-19 pandemic subsides, Uber sought to tempt drivers back to the platform by increasing incentives and bonuses.
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New extradition hearings of the chief financial officer of China's Huawei Technologies kicked off Wednesday in Vancouver, after nearly three years of court battles and diplomatic sparring. Meng Wanzhou, 49, the daughter of Founder & Chief Executive Officer Ren Zhengfei, is fighting extradition to the US. She is accused of defrauding HSBC Bank by falsely misrepresenting links between Huawei and Skycom, a subsidiary that sold telecoms equipment to Iran, putting the bank at risk of violating US sanctions against Tehran as it continued to clear US dollar transactions for Huawei. Meng appeared smiling Wednesday morning as she left her mansion in the western Canadian coastal city, where she has to wear an ankle monitoring bracelet at all times.
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MARKETS
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The pound was firm and the FTSE 100 index flat on Thursday ahead of a Bank of England interest rate decision at midday London time. Asian markets closed mixed but European markets were trading higher and Wall Street was called for a positive open. Pfizer shares were up 0.8% in New York pre-market trade, having closed down 1.1% on Wednesday.
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CAC 40: up 0.6% at 6,783.18
DAX 30: up 0.2% at 15,724.50
FTSE 100: marginally higher, up 2.34 points at 7,126.20
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Hang Seng: closed down 0.8% at 26,204.69
Nikkei 225: closed up 0.5% at 27,728.12
S&P/ASX 200: closed up 0.1% at 7,511.10
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DJIA: called up 0.2%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.1%
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EUR: flat at USD1.1838 (USD1.1835)
GBP: firm at USD1.3912 (USD1.3905)
USD: down at JPY109.58 (JPY109.65)
Gold: up at USD1,810.94 per ounce (USD1,808.00)
Oil (Brent): down at USD70.28 a barrel (USD71.22)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone construction sector slipped into reverse in July to mark the first fall in activity since February, survey results from IHS Markit showed. The IHS Markit eurozone construction total activity index fell to 49.8 points in July from 50.3 in June. Slipping just below the no-change mark of 50 indicates a marginal contraction in activity last month - which marks the sector's first output decline since February, with companies citing rising costs and raw material shortages. The input prices index pointed to a "sharp and accelerated" rise in costs face by construction firms in July.
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German factory orders recovered some poise in June, returning to month-on-month growth. New orders rose 4.1% on a monthly basis in June, recovering the 3.2% fall reported for May and beating market forecasts, according to FXStreet, for a 1.9% advance. Domestic orders increased 9.6%. Compared with February 2020's pre-virus level, factory orders in June were up 11%.
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The UK construction industry last month notched its slowest rise in output since February as the sector lost momentum. The IHS Markit/CIPS construction purchasing managers' index registered 58.7 points in July - still a strong reading, but falling from June's 24-year high of 66.3. House building was the best performing category, followed by commercial building. Both saw the slowest rate of expansion since February, however. Civil engineering, while still in expansion territory in July, also saw momentum slow. Construction firms noted that reduced materials availability had acted as a brake on purchasing volumes in July, while input cost inflation continued continued apace.
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Ireland's service sector expanded at the fastest pace in over two decades in July, boosted as virus restrictions were lifted. The AIB services business activity index strengthened to 66.6 points in July from 63.1 in June, remaining above the no-change mark of 50.0 for the fifth month in a row. "This is the highest reading since August 2000 and the third month in a row that the index has been above 60. It points to a rapid rebound in services activity, driven by the release of pent-up demand as lockdown restrictions are gradually lifted," said Oliver Mangan, AIB chief economist. New business expanded at the fastest rate since January 2016, while input cost inflation hit a 13-year high. The composite output index grew to 65.0 points in July from 63.4 in June.
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The US, which closed its borders to much of the world as the pandemic took hold, said Wednesday it plans eventually to begin allowing fully vaccinated foreigners back in, while China tightened overseas travel curbs amid surging infection numbers. The two countries' travel-related moves come as the fast-spreading Delta variant cuts a deadly swath across the planet, not only affecting movement between countries but also the northern hemisphere's summer tourist season. Recognizing the importance of international travel, a White House official said in a statement that the US administration wants to reopen to visitors from abroad in a "safe and sustainable manner," though without specifying a timeframe. Reopening is to include the development of "a phased approach that over time will mean, with limited exceptions, that foreign nationals traveling to the US – from all countries – need to be fully vaccinated," the official said. Meanwhile in China, which had previously boasted of its success in crushing Covid-19 after it first emerged there in December 2019, mass testing campaigns have uncovered Delta variant infections across the country.
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The UK has agreed a new partnership with the south-east Asian bloc in a further sign of a post-Brexit shift away from Europe towards the Indo-Pacific region. The new agreement sees the UK become a dialogue partner of the Association of Southeast Asian Nations, increasing co-operation on issues including trade and the environment. Foreign Secretary Dominic Raab said the closer relationship with the 10-member bloc was a "landmark moment" for the UK. Raab said: "I am delighted that the UK has, today, formally become a dialogue partner of the Association of Southeast Asian Nations bloc – the first new country in 25 years. This is a landmark moment in the UK's tilt towards the Indo-Pacific. Our closer ties with Asean will help create green jobs, reinforce our security cooperation, promote tech and science partnerships, and safeguard key pillars of international law like the UN Convention on the Law of the Sea."
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By Tom Waite; thomaslwaite@alliancenews.com
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