(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Associated British Foods said its outlook remains unchanged as input cost inflation has been offset by sales growth and strong margins at fast-fashion retailer Primark. Total sales for the 16 weeks to January 8 stood at GBP5.57 billion, up 16% on a year ago. Driving the growth was AB Foods' retail arm, which houses Primark, where sales jumped 32% to GBP2.67 billion. Grocery, Sugar, Agriculture and Ingredients revenue rose 5% in total to GBP2.90 billion. "All businesses have experienced inflationary pressures in raw materials, commodities, supply chain and energy. Margins in Grocery and Ingredients were impacted where sales price actions have lagged the effects of input cost inflation," said AB Foods. In Retail, however, operating profit margin was ahead of expectations and is expected to be over 10% at the half-year. Inflationary pressures were broadly mitigated by a favourable dollar exchange rate and a reduction in store operating costs and overheads. AB Foods added that supply chain pressures have alleviated somewhat.
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Sports betting and gaming operator Entain said net gaming revenue rose by 7% in 2021, or by 8% at constant currency, from the year before. In the fourth quarter alone, NGR was up 4%, or 6% at constant exchange rates. For 2021, earning before interest, tax, depreciation and amortisation is expected to be GBP875 million to GBP885 million, ahead of previous expectations. In the US, Entain said BetMGM expects net revenue from operations to be more than USD1.3 billion in 2022 and expects to be Ebitda positive in 2023. "2021 has been a successful and eventful period for Entain, and our market-leading platform has driven another year of strong, sustainable and diversified growth," said Chief Executive Officer Jette Nygaard-Andersen. "All of our major markets have performed well. BetMGM, our hugely exciting business in the US, has been a particular highlight with FY21 net gaming revenue ahead of expectations and an upgraded outlook for 2022."
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DS Smith said its financial performance has remained in line with its expectations since its interim results early in December, "delivering a significant improvement in profitability during the second half of this year and towards our medium-term targets". The paper-based packaging company made the comment as it set out an accelerated commitment on carbon emissions reduction.
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United Airlines said its loss in the fourth quarter narrowed but guided for a tough start to 2022 as the airline continues to deal with the ebb-and-flow of the coronavirus pandemic. For the three months ended December 31, the Chicago, Illinois-based firm recorded a net loss of USD646 million, narrowed sharply from USD1.90 billion in the same period the year before. Diluted loss per share narrowed to USD1.99 from USD6.39. Passenger revenue in the fourth quarter jumped to USD6.88 billion from USD2.41 billion the year before, while Cargo revenue expanded to USD727 million from USD560 million.
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Woodside Energy reported a stronger performance for the fourth quarter of 2021, as a sharp increase in commodity prices more than offset a drop in production. For the three months ended December 31, the Perth, Australia-based petroleum firm posted revenue of AUD2.91 billion, up from AUD957 million the same period a year before, driven by a rise in the prices of liquefied natural gas, condensate and oil on a year-on-year basis. However, the company's total share of production for the quarter dipped to 22.6 million barrels of oil equivalent from 24.9 million boe. Looking ahead, for 2022 Woodside's production guidance range stands at 92 to 98 million barrels.
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MARKETS
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European markets were lower on Thursday despite a positive lead from Asia, but major US stock indices were called higher, rebounding from 1.0% to 1.2% declines on Wednesday. The eurozone added to a global picture of rising inflation, as consumer prices increased by 5.0% in December, matching the first estimate and market expectations. Core inflation was unchanged at 2.6%, also in line with the consensus and first estimate.
Looking ahead, the headline eurozone inflation figure is set to fall back in the first quarter, Pantheon Macroeconomics said, but inflation - including core inflation - will rebound strongly in the second and third quarter. "This will be a challenge for market and the ECB. Assuming we are right, and assuming we are correct on a continued fall in unemployment and robust underlying GDP growth from Q2 onwards, we, and other forecasters, will soon have to take the idea of 2023 ECB rate hikes more seriously," said Chief Eurozone Economist Claus Vistesen.
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CAC 40: down 0.5% at 7,136.96
DAX 40: down 0.2% at 15,777.04
FTSE 100: down 0.1% at 7,581.88
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Hang Seng: closed up 3.4% at 24,952.35
Nikkei 225: closed up 1.1% at 27,772.93
S&P/ASX 200: closed up 0.1% at 7,342.40
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DJIA: called up 0.3%
S&P 500: called up 0.4%
Nasdaq Composite: called up 0.6%
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EUR: flat at USD1.1348 (USD1.1345)
GBP: flat at USD1.3625 (USD1.3630)
USD: up at JPY114.32 (JPY114.25)
Gold: down at USD1,838.64 per ounce (USD1,840.20)
Oil (Brent): down at USD87.77 a barrel (USD88.68)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The growth rate of consumer prices in the euro area in December continued to accelerate, data from Eurostat showed. The eurozone annual inflation rate was 5.0% in December, up from 4.9% in November. In the same month a year before, consumer prices dropped 0.3%. The highest contribution came from energy with 2.46 percentage points, as Europe's ongoing energy shortage continues to drive up prices. On a monthly basis, the inflation rate for the eurozone was 0.4%.
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German factory price inflation surged at the end of 2021. The German producer price index was 24% higher on an annual basis in December, "the highest increase ever", Destatis said. This marked a sharp acceleration from the 19% growth notched in November. Month-on-month, December's factory prices jumped 5% after November's 0.8% increase. "Mainly responsible for the increase of producer prices still was the price increase of energy," said Destatis.
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Spain's trade deficit widened in November on annual basis, data from the Ministry of Industry, Trade & Tourism showed, with imports continuing to outpace exports. On an annual basis, exports grew 23% in November to EUR30.31 billion from EUR24.73 billion, while imports climbed 36% year-on-year to EUR34.52 billion from EUR25.32 billion. As a result, Spain's trade deficit stretched to EUR4.21 billion from EUR593.1 million in the same month in 2020.
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China further reduced bank lending costs in the latest move to boost its stuttering economy, providing some much-needed support to the country's beleaguered developers. The People's Bank of China said it had lowered the one-year loan prime rate to 3.7%, from 3.8% in December. It had reduced the LPR – which guides how much interest commercial banks charge to corporate borrowers – in December, for the first time in 20 months, as the economy was threatened by the real estate crisis and coronavirus flare-ups. The central bank also cut the interest rate on its one-year policy loans on Monday – the first drop in the key rate for loans to financial institutions since early 2020.
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Japan posted a narrowed trade deficit in December, according to provisional data from the Ministry of Finance. The nation reported a trade deficit of JPY582.35 billion in December, about USD5.09 billion, compared to a JPY708.28 billion deficit recorded in the same month in 2020. Japan's exports rose by 18% to JPY7.881 trillion in December from JPY6.706 trillion the year before, while imports jumped 41% year-on-year to JPY8.463 trillion from JPY5.998 trillion. For 2021 as a whole, Japan reported a JPY1.472 trillion deficit, swinging from a JPY388.28 billion surplus in 2020. Exports for the year increased 22% to JPY83.093 trillion from JPY68.399 trillion, while imports rose 24% to JPY84.565 trillion from JPY68.010 trillion.
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Data from the Australian Bureau of Statistics showed that the nation's unemployment rate declined to 4.2% in December from 4.6% in November, beating market consensus of 4.5%. The number of employed people for the month increased by 64,800 to 13.24 million people. In December 2020, the unemployment rate stood at 6.6%.
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Commuters across England were travelling into work for the first time since Plan B measures to curb the spread of Omicron were axed on Wednesday. UK Prime Minister Boris Johnson told MPs in the Commons that work-from-home guidance would be dropped immediately and rules on face coverings in classrooms would also be scrapped in England from Thursday. Other measures including the requirement to wear face masks on public transport and in shops will end next Thursday. The legal requirement for people with coronavirus to self-isolate will also be allowed to lapse when the regulations expire on March 24, and that date could be brought forward. The move could help appease Johnson's Tory critics at a time when he has been under pressure over Downing Street parties.
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US senators dealt a death blow to President Joe Biden's push to defend voting rights against what Democrats frame as an all-out assault by conservative states targeting racial minorities. Faced with a blockade from Republicans complaining of federal overreach, the ruling Democrats were unable to push through the Freedom to Vote Act and John Lewis Voting Rights Advancement Act passed by the House of Representatives last week. "I am profoundly disappointed that the Senate has failed to stand up for our democracy. I am disappointed – but I am not deterred," Biden said in a statement posted to social media immediately after the vote.
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Biden said he expects Russia to "move in" on Ukraine but warned that Moscow will pay a stiff price for a full-blown invasion. Biden said he did not believe that President Vladimir Putin wants a war, but said the Russian leader has created a situation that is proving extremely difficult to defuse – and that could easily "get out of hand" in the region. "My guess is he will move in. He has to do something," Biden said during a press conference marking his first year in office, predicting a "minor incursion" to test the US. With more than 100,000 troops and war-making machinery poised on Ukraine's borders, Moscow has sent alarms through the West over its threat to Kyiv.
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By Tom Waite; thomaslwaite@alliancenews.com
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