(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Oil major BP said its decision to exit its near 20% stake in Russia's Rosneft will not harm its ability to increase payouts. BP said it will sell its 19.75% stake in the oil producer, which it co-owns with the Kremlin, after facing pressure from the UK government. Chief Executive Bernard Looney is resigning from the Rosneft board with "immediate effect", BP said. Looney was one of two BP-nominated directors, having held the position since 2020. The other is former BP CEO Bob Dudley, who has also resigned. BP said the exit from Rosneft shareholding does not change its distribution guidance and its financial frame guidance remains unchanged. The oil major said it still expects to have capacity for 4% annual increases in dividend through 2025. It also still expects to deliver a 7% to 9% compound annual growth rate in earnings before depreciation and amortisation to 2025, based on oil prices of USD50 to USD60 a barrel. Brent oil was trading above USD100 a barrel early Monday in London. BP said it will report a material non-cash charge in its first-quarter results in May, due to the required changed accounting treatment of the Rosneft stake.
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Facebook will prohibit Russian state media from running ads or monetizing on the social media platform. Facebook will also continue to apply labels to additional Russian state media, head of security policy Nathaniel Gleicher announced via Twitter. "We are closely monitoring the situation in Ukraine and will keep sharing steps we're taking to protect people on our platform," he said. Facebook earlier launched a new feature in Ukraine, allowing users to lock their profiles for extra security and privacy. Russia has partially restricted Facebook in response to its blocking of some Russian state media outlets. Russia's communications regulator Roskomnadzor accused Facebook owner Meta Platforms of violating "fundamental human rights and freedoms as well as the rights and freedoms of Russian citizens" by blocking pages, including of state news agency RIA Novosti. Twitter has also paused advertising in Russia and Ukraine to "ensure critical public safety information is elevated and [that] ads don't detract from it." Meanwhile Ukrainian Vice Prime Minister Mykhailo Fedorov has called on Apple to cut Russia off from Apple products and services.
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CRH said it is planning to sell its Building Envelope business for an enterprise value of USD3.8 billion. Dublin-based CRH had confirmed media reports it was in conversation to sell the unit. A half hour later, the company announced it had come to an agreement with KPS Capital Partners LP to offload the business. The deal includes USD3.45 billion in cash and a transfer of lease liabilities of USD350 million. CRH said the unit - which provides architectural glass, storefront systems, architectural glazing systems and related hardware to customers primarily in North America - recorded pretax profit of USD210 million in 2020, while all of CRH recorded USD1.66 billion.
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Associated British Foods forecast higher first-half sales and adjusted operating profit. For the six months ending March 5, AB Foods expects sales and adjusted operating profit to be strongly ahead of a year before. It also expects sales and adjusted operating profit to be ahead of the pre-Covid levels achieved in the half year to February 29, 2020. At its Primark fashion shops, sales for the first half are expected to be over 60% ahead of last year at constant currency with an operating profit margin of around 11%. This, it explained, reflected the fact that all stores remained open and trading throughout the period except for short periods in Austria and the Netherlands "We expect growth in adjusted operating profit for the group in the second half. As a result, our outlook for the full year is unchanged with significant progress expected in adjusted operating profit and adjusted earnings per share for the group," AB Foods said.
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Distribution firm Bunzl is confident in its 2022 prospects after robust annual results. Bunzl said it continued to perform strongly during the virus pandemic, with ongoing growth in 2021, prompting the distribution firm to raise its dividend. For 2021, Bunzl posted a pretax profit of GBP568.7 million, up 2.3% from GBP555.7 million in 2020, on revenue of GBP10.29 billion, up 1.7% from GBP10.11 billion. Bunzl declared a 57.0 pence annual dividend, up 5.4% from 54.1p paid out in 2020. Looking ahead, Bunzl expects moderate revenue growth in 2022, driven by acquisitions completed in the past 12 months and supported by a slight increase in organic revenue. A continued recovery of the base business is expected to be offset by the further normalisation of sales of Covid-19 related personal protective equipment, albeit these are expected to remain ahead of 2019 levels, it noted. Bunzl also expects its operating margin in 2022 to be slightly higher than historical levels, as the mix of sector and product sales continues to transition to more typical levels.
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British Airways has come under pressure to improve its IT systems and communication with passengers after cancelling flights due to technical issues. The airline, owned by International Consolidated Airlines Group, cancelled all short-haul flights from Heathrow until midday on Saturday, with the airport's online departure board showing further BA cancellations throughout the day. BA said the problem was related to a hardware issue and was not because of a cyber attack. The major outage caused cancellations and delays of flights, pile-ups of luggage and passengers stuck on planes after landing at Heathrow. BA's website and app were inaccessible for hours on Friday evening, preventing customers from checking in online or booking flights, while on Saturday passengers criticised the "absolute chaos" at Heathrow.
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Berkshire Hathaway reported an 11% rise in fourth-quarter earnings, topping off a year that saw profit more than double, though Chair Warren Buffett said there is "little that excites us" in the current investment climate. Net earnings attributable to shareholders was USD39.65 billion in the last three months of 2021, up from USD35.84 billion in the fourth quarter of 2020. This consisted mostly of net gains on investments and derivatives, which increased by 5.0% to USD32.36 billion from USD30.83 billion. Operating earnings added USD7.29 billion, jumping 45% from USD5.02 billion. For all of 2021, attributable earnings were USD89.80 billion, multiplying from USD42.52 billion. Investment gains were USD61.58 billion, nearly doubled from USD31.72 billion. Operating earnings were USD27.46 billion, up 25% from USD21.92 billion. In 2020, Berkshire also took a USD10.99 billion impairment of intangible assets, versus no such charge for 2021.
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MARKETS
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The ruble collapsed against the dollar and the euro on the Moscow Stock Exchange on Monday. The ruble fell sharply at the start of trading, reaching 100.96 to the dollar, compared to 83.5 on Wednesday, the day before the invasion of Ukraine, and 113.52 to the euro, compared to 93.5 before the assault. This came after the ruble-based MOEX index increased the upper trading limit. That followed an announcement by the West that it would remove some Russian banks from the SWIFT bank messaging system, and freeze central bank assets.
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CAC 40: down 3.0% at 6,552.45
DAX 40: down 2.6% at 14,192.17
FTSE 100: down 1.4% at 7,383.38
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Hang Seng: closed down 0.2% at 22,713.02
Nikkei 225: closed up 0.2% at 26,526.82
S&P/ASX 200: closed up 0.7% at 7,049.10
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DJIA: called down 1.4%
S&P 500: called up 0.6%
Nasdaq Composite: called up 0.1%
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EUR: down at USD1.1178 (USD1.1258)
GBP: down at USD1.3372 (USD1.3409)
USD: down at JPY115.53 (JPY115.61)
GOLD: up at USD1,899.12 per ounce (USD1,887.00)
OIL (Brent): up at USD102.60 a barrel (USD97.16)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Ukraine demanded an immediate Russian ceasefire and troop withdrawal on Monday as its delegation arrived in Belarus for talks with Russian negotiators on the fifth day of the Kremlin's offensive. Ukraine's delegation is set to meet Russian representatives for the first talks since Moscow's invasion on Thursday last week. The meeting will take place just across the border in neighbouring Belarus, a key Kremlin ally that has allowed Russian troops passage to attack Ukraine. "The Ukrainian delegation arrived at the Ukrainian-Belarusian border to take part in talks with representatives of the Russian Federation," the Ukrainian presidency said in a statement. "The key issue of the talks is an immediate ceasefire and the withdrawal of troops from Ukraine." Ukrainian President Volodymyr Zelensky in a separate statement urged Russian troops to abandon their equipment and leave the battlefield in order to save their lives, claiming that more than 4,500 Russian soldiers had already lost their lives. He also urged the EU to give Ukraine "immediate" membership, via a special procedure.
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The Ukrainian military said Russian troops had slowed down their offensive as Moscow's assault against Ukraine went into its fifth day. "The Russian occupiers have reduced the pace of the offensive, but are still trying to develop success in some areas," the general staff of the armed forces said. Ukraine forces, backed by Western arms, have managed to slow the advance of the Russian army. The Ukrainian military also accused Russia of launching a missile strike on residential buildings in the cities of Zhytomyr and Chernigiv, cities in the country's northwest and north.
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US President Joe Biden will hold a secure call with allies and partners on Monday to discuss "developments" in Russia's attack on Ukraine and "coordinate our united response," the White House said. The administration did not elaborate on who would participate in the call, which will take place at 11:15 am Washington time. On Sunday, the G7 threatened fresh sanctions as top US diplomat Antony Blinken said the group of wealthy nations was "fully aligned" against Moscow's invasion of Ukraine. Also on Sunday, Russian President Vladimir Putin ordered that Russia's nuclear "deterrence forces" be put on high alert, prompting an immediate international outcry, with the US slamming the order as "totally unacceptable".
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Russia's central bank announced it is raising its key interest rate to 20% from 9.5% as the West pummelled the country with sanctions over Moscow's invasion of Ukraine. "The Bank of Russia's board of directors has decided to raise the key rate to 20%," the central bank said in a statement Monday. It said it was taking the emergency measure because the Russian economy's situation had "drastically changed". The bank said that this would allow it to "support financial and price stability and protect citizens' savings from depreciation".
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Russian aircraft are now banned from EU airspace; the new sanctions came into force on Monday after their publication in the EU Official Journal. The latest sanctions salvo extends to not only the planes of Russian airlines like Aeroflot but also the private jets of oligarchs, European Commission President Ursula von der Leyen said in a tweet on Sunday announcing the measures. Individual EU member states had previously introduced bans on Russian aircraft. The EU-level decision now poses a massive blockade of the continent's skies towards Moscow. Canada also said on Sunday it was closing its airspace to Russian carriers.
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Saudi Arabia confirmed its commitment to the OPEC+ agreement with Russia, the Saudi Press Agency reported. Crown Prince Mohammed bin Salman made the comments during a conversation with French President Emmanuel Macron that also covered the situation in Ukraine and its impact on the energy markets, said the agency. Members of the OPEC+ oil producers' group will meet Wednesday to discuss loosening the taps – just days after Russia's invasion of Ukraine sent crude soaring past USD100 a barrel. While Saudi Arabia is seen as the kingpin of the original OPEC member states, Russia is the major player among the 10 other countries that make up OPEC+.
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The US and Western allies sought to cripple Russia's banking sector and currency on Saturday with an extraordinary set of sanctions punishing Moscow's invasion of Ukraine. Taking measures unprecedented against a country of Russia's size and international stature, the allies cut selected banks from the SWIFT system, rendering them isolated from the rest of the world. They hobbled the Russian central bank's ability to use reserves to support the already sinking ruble, which a senior US official said will now "go into freefall". And they warned that a task force will "hunt down" the "yachts, jets, fancy cars and luxury homes" owned around the world by oligarchs in Putin's ultra-wealthy inner circle, the US official said.
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The US announced on Friday it will move to freeze the assets of Putin and Foreign Minister Sergey Lavrov, following the EU and the UK in directly sanctioning top Russian leadership. The Treasury Department announced the sanctions shortly after the EU said it had approved an asset freeze against Putin and Lavrov as part of a broader package of sanctions against Russia for the invasion of Ukraine.
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The European Central Bank is ready to support price and financial stability in the eurozone if needed during the Russia-Ukraine crisis, its chief Christine Lagarde said Friday. "The ECB stands ready to take whatever action is necessary within its responsibilities to ensure price stability and financial stability in the euro area," Lagarde told reporters in Paris after meetings with finance ministers from the whole EU and the 19-nation single currency bloc. The central bank had been weighing a response to surging inflation that could include a reduction in its massive easy-money policies introduced before and during the coronavirus pandemic, including ultra-low interest rates and bond-buying. But Russia's attack on its neighbour has shaken economic confidence, throwing growth into doubt while also driving up prices for energy resources like gas and oil – with uncertain consequences for inflation. "It is premature to assess the economic impact of the current conflict because the situation is evolving every hour," Lagarde said. "We will evaluate the impact of rising energy prices which are likely in the short term to increase inflation," she added.
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By Tom Waite; thomaslwaite@alliancenews.com
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