(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Edinburgh-based asset manager abrdn reported a swing to loss and lowered its outlook, saying it feels the current market volatility will see it take longer to hit its revenue growth and cost-to-income ratio targets. abrdn's Investment unit ended the first half with assets under administration of GBP386 billion, sinking 17% from GBP464 billion at the same point a year prior. It recorded GBP37.3 billion in net outflows. abrdn booked a GBP320 million loss in the six months to June 30 versus the GBP113 million profit achieved a year prior. Fee-based revenue fell 8% to GBP696 million from GBP755 million, and its cost-to-income ratio worsened to 83% from 79%. abrdn left its interim dividend unchanged at 7.3p. It also confirmed its dividend policy remains unchanged. abrdn said it has launched a GBP150 million share buyback as part of its GBP300 million shareholder return programme.
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Life insurance and asset management firm Legal & General reported a rise in operating profit in the first half of 2022, in line with internal expectations, as its Retirement and Retail businesses led the charge. "All four of our divisions are well positioned to execute on compelling structural market opportunities to deliver further profitable growth over the medium and long-term, notwithstanding market volatility," L&G explained. In the first six months of 2022, L&G's attributable pretax profit rose 4% to GBP1.37 billion from GBP1.32 billion a year before. Operating profit improved 8% to GBP1.16 billion from GBP1.08 billion, led by strong performances from its Retirement Institutional and Retail businesses. L&G upped its interim dividend by 5% to 5.44 pence from 5.18p. It also noted its Solvency II coverage ratio improved to 212% from 182%. Chief Executive Nigel Wilson said L&G has made a "good" start to 2022.
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Munich Re confirmed its 2022 outlook despite a challenging environment which saw its interim profit fall. In the six months ended June 30, the Munich-based insurance company reported profit of EUR1.38 billion, down 19% from EUR1.70 billion the previous year. Earnings per share fell to EUR9.83 from EUR12.13. The firm said its investment results, which dropped to EUR1.96 billion from EUR3.62 billion, was down considerably as a result of impairment losses, write-downs on Russian and Ukrainian bonds, and interest rate hedging. More positively, gross premiums written grew 12% year-on-year to EUR32.68 billion from EUR29.19 billion, and its combined ratio improved to 90.5% from 94.3%.
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National Australia Bank shares suffered after the lender lifted cost guidance, as it warned of expected provisions of up to AUD100 million, around USD69.7 million. NAB shares closed down 2.9% in Sydney. NAB said net profit for the quarter ended June amounted to AUD1.85 billion, up 12% from AUD1.65 billion a year earlier. "Our performance this quarter is pleasing, highlighting the ongoing execution of our strategy including completing the acquisition of Citigroup's Australian consumer business," Chief Executive Ross McEwan commented. NAB completed the AUD1.2 billion acquisition of Citigroup's Australian consumer business in June. NAB said it now expects costs to grow between 3% and 4% for the financial year, up from the previous 2% to 3% guidance. NAB expects payroll and customer-related remediation provisions of AUD60 million to AUD100 million. The provision includes a hit related to an agreement with the Australian Transaction Reports & Analysis Centre in relation to shortcomings in following anti-money laundering and counter-terrorism financing laws.
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German insurer Allianz is mulling a sale of its Saudi Arabian unit, Bloomberg reported. Citing people familiar with the matter, Bloomberg said Allianz is working with an adviser over the potential disposal of its controlling stake in Allianz Saudi Fransi Cooperative Insurance Co. Some insurers have shown interest, according to the people, but Allianz could still choose to retain the unit. Shares in Allianz Saudi Fransi have fallen 44% since the start of 2022. Allianz Saudi Fransi is a joint venture between Allianz and Banque Saudi Fransi.
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Holiday Inn- and Crowne Plaza-owner InterContinental Hotels Group reported a strong rise in profit in the first half as it continues to see travel demand increase. In the six months to June 30, Pretax profit multiplied to USD299 million from USD67 million a year prior. Operating profit more than doubled to USD361 million from USD138 million. Total revenue was up 52% to USD1.79 billion from USD1.18 billion. Comparable revenue per available room improved 61% in the first quarter, then grew 44% in the second quarter, the firm noted, meaning it saw 51% growth in the first half as a whole. When compared to the pre-pandemic levels of 2019, however, comparable RevPAR was still down 11% in recent half-year. The hotel operator reinstated its interim dividend, offering 43.9 US cents to shareholders for the first half. "Alongside leisure stays, the return of business and group travel demand continued to build over the period, and our hotels are seeing increased pricing power due to the strength of IHG's brands, loyalty programme and technology platform," Chief Executive Keith Barr said.
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Continental said it is optimistic for the second half of 2022 despite a "turbulent" market environment. In the second quarter of 2022, the car parts manufacturer reported sales of EUR9.4 billion, up 13% from EUR8.4 billion the previous year. The firm however swung to a net loss of EUR251 million, however, from a profit of EUR545 million a year prior. Adjusted earnings before interest and tax fell 20% to EUR411 million from EUR512 million. Continental cited the war in Ukraine, disrupted supply chains and "massive" price increases for raw materials, semi-finished products, energy and logistics as significant headwinds. A Covid-related shortage of electronic components were also "heavily" affecting its results, the firm added.
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Shell said it has completed the acquisition of Indian renewable energy supplier Sprng Energy. In late April, Shell announced that subsidiary Shell Overseas Investment had signed an agreement with Actis Solenergi to acquire Solenergi Power, and with it Sprng Energy, based in Pune, western India. Sprng Energy supplies solar and wind power to electricity distribution companies in India. Its portfolio consists of 2.9 gigawatts-peak of assets with a further 7.5 gigawatts-peak in the pipeline.
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Plane maker Boeing will be allowed to resume deliveries of its 787 Dreamliner aircraft "in the coming days," after the company made changes to its manufacturing process. Deliveries of the top-selling widebody have been halted since spring 2021, but "Boeing has made the necessary changes to ensure that the 787 Dreamliner meets all certification standards," the Federal Aviation Administration said in a statement.
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Blagnac, France-based aerospace firm Airbus delivered fewer new aircraft in July than in the previous month due to supply chain issues. In July, 46 commercial jets were handed over to customers. In June, the manufacturer had delivered 60 aircraft. Because suppliers can hardly keep up with their deliveries, Airbus boss Guillaume Faury revised his plans for 2022 at the end of July and only expects 700 deliveries this year against the originally planned 720. Meanwhile, the manufacturer won orders for 401 new aircraft in July, with nearly 300 machines going to China, while orders for a total of four jets were cancelled. Still included in the order book is a remaining order from Qatar Airways for 19 wide-body A350s. According to industry sources, the manufacturer has now terminated the contract with its major customer after months of public disputes about damage to the surface of several jets in the series.
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Alphabet's Google filed two new lawsuits in its patent dispute with consumer electronics company Sonos. In the suits, filed in a California court, Google accuses Sonos of infringing a combined seven patents, including of technologies for speech detecting and wireless charging. In a different case earlier this year, a US regulator found that Google had infringed patents originally claimed by Sonos. That lawsuit put five technologies Google mostly used in its smart speakers in contention. Devices like Google Home, Pixel devices, and Chromecasts have the ability to connect and stay in sync with each other, one of the main features Sonos claimed ownership of. The decision resulted in Google having to remove the option to automatically change the volume of a group of interconnected devices.
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MARKETS
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Concerns about the continued tense situation in the waters around Taiwan and a mixed set of company updates left markets with no real sense of direction on Tuesday, after an attempted rally on Monday petered out in New York. "For risky assets, the picture remains bleak, arguing that rallies, such as we have been seeing in equities, should be seen as tactical interruptions to an ongoing bearish trend," Rabobank said. Among reporting companies, abrdn was down 2.3% in London, recovering from a larger opening fall. Munich Re was up 1.4% in Frankfurt and Allianz was up 0.7%.
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CAC 40: marginally higher, up 0.54 point at 6,524.98
DAX 40: down 0.4% at 13,633.62
FTSE 100: marginally higher, up 1.51 points at 7,483.88
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Hang Seng: closed down 0.2% at 20,003.44
Nikkei 225: closed down 0.9% at 27,999.96
S&P/ASX 200: closed up 0.1% at 7,029.80
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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: up at USD1.0242 (USD1.0217)
GBP: flat at USD1.2116 (USD1.2114)
USD: up at JPY134.91 (JPY134.61)
Gold: up at USD1,791.10 per ounce (USD1,789.50)
Oil (Brent): down at USD95.37 a barrel (USD96.22)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Taiwan held an artillery drill on Tuesday, simulating defence against an attack as its top diplomat accused Beijing of preparing to invade the island after days of massive Chinese war games. China launched its largest-ever air and sea exercises around Taiwan last week in a furious response to a visit by US House Speaker Nancy Pelosi, the highest-ranking American official to visit the self-ruled island in decades. "China has used the drills in its military playbook to prepare for the invasion of Taiwan," foreign minister Joseph Wu told a press conference in Taipei on Tuesday, accusing Beijing of using Pelosi's visit as a pretext for military action. "China's real intention is to alter the status quo in the Taiwan Strait and entire region," he said. The Chinese military said its Taiwan drills continued Tuesday and involved air and sea units.
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The EU submitted a "final text" at talks to salvage a 2015 deal aimed at reining in Iran's nuclear ambitions and Tehran said it was reviewing the proposals. Britain, China, France, Germany, Iran and Russia, as well as the US indirectly, resumed talks on Thursday in Vienna, months after they had stalled. The EU has submitted a "final text", a European official said on Monday. "We worked for four days and today the text is on the table," the official told reporters on condition of anonymity. "The negotiation is finished, it's the final text... and it will not be renegotiated." "Now the ball is in the court of the capitals and we will see what happens," the European official added. "No one is staying in Vienna." The official said he hoped to see the "quality" text accepted "within weeks". Iran said it was examining the 25-page document.
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The EU's emergency gas plan preparing the bloc for a possible halt in Russian gas supplies came into force on Tuesday. Under the plan, EU countries are to reduce their gas consumption voluntarily by 15% between August 1 and March 31, compared to the average consumption in the same period during the past five years. The move was sparked by Moscow's recent drastic reductions in gas deliveries to the EU in recent months amid Russia's war on Ukraine. There are fears that supplies could be cut off entirely. To reach the target, 45 billion cubic meters of gas must be saved overall, and Germany alone must reduce consumption by around 10 billion cubic meters, according to EU Commission figures. If not enough gas is saved and there are wide-ranging supply shortages, the EU will be able to trigger a bloc-wide alert with mandatory targets to cut gas usage. However, the bar is high for such a step. It would require the agreement of at least 15 EU countries representing at least 65% of the bloc's total population.
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Concerns for safety at the Zaporizhzhya nuclear power plant in southern Ukraine grew after days of repeated shelling. The Zaporizhzhya facility - Europe's largest nuclear power plant - is occupied by Russian forces and Kiev and Moscow have each blamed each other for shelling in recent days. UN Secretary General Antonio Guterres said any attack on a nuclear plant was a "suicidal thing," while Ukraine's ambassador to the International Atomic Energy Agency said an accident at the plant in Russian-occupied Zaporizhzhya would be far worse than the Chernobyl or Fukushima disasters. Speaking in Vienna, Yevheny Zymbalyuk warned an accident would have severe consequences not only for Ukraine, but all of Europe.
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The World Bank announced it is mobilizing another USD4.5 billion in US-provided financial support for war-torn Ukraine. The funds will help Kyiv pay for services and pensions, key to easing economic impacts of the Russian invasion, the bank said in a statement. "This economic assistance is critical in supporting the Ukrainian people as they defend their democracy against Russia's unprovoked war of aggression," US Treasury Secretary Janet Yellen said in a statement. The latest tranche of aid, most of which will be disbursed this month, is part of USD8.5 billion in total US support "which is helping Ukraine's government keep hospitals, schools, and other critical government services for the people of Ukraine."
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UK retailers got a boost from last month's heatwave, with summer clothing and picnic food lifting sales in July. But weak consumer confidence and a recent interest rate hikes by the Bank of England, including its largest for nearly 30 years last week, could mean the rest of 2022 is "rocky" for both retailers and shoppers. The latest British Retail Consortium-KPMG sales monitor showed retail sales increased 2.3% year-on-year in July. This snapped a streak of three successive sales declines. They had fallen 1.0% in June, 1.1% in May and 0.3% on April. Growth compared to pre-pandemic times accelerated to 11% in July, hitting double-figures for the first time in 2022, from 8.8% in June. "Sales improved in July as the heatwave boosted sales of hot weather essentials. Summer clothing, picnic treats, and electric fans all benefited from the record temperatures as consumers made the most of the sunshine. However, with inflation at over 9%, many retailers are still contending with falling sales volumes during what remains an incredibly difficult trading period," BRC Chief Executive Helen Dickinson commented.
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Former US president Donald Trump said his Mar-A-Lago residence in Florida was "raided" by FBI agents in what he called an act of "prosecutorial misconduct". The FBI declined to comment on whether the search was happening or what it might be for, nor did Trump give any indication of why federal agents were at his home – a situation that adds to the legal pressure on the ex-president. "These are dark times for our Nation, as my beautiful home, Mar-A-Lago in Palm Beach, Florida, is currently under siege, raided, and occupied by a large group of FBI agents," Trump said in a statement posted on his Truth Social network. Aerial footage of Mar-a-Lago showed police cars outside the property.
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By Tom Waite; thomaslwaite@alliancenews.com
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