(Alliance News) - The following is a summary of top news stories on Friday.
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COMPANIES
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Just Eat Takeaway.com said it is selling its remaining 33% stake in the iFood joint venture to Amsterdam-based technology investor Prosus. This will make Prosus the sole owner of Brazil-based delivery platform iFood. The acquisition is worth up to EUR1.8 billion. "The consideration represents an equity multiple of over 5 times on the investments over the life of the joint venture," Just Eat highlighted. It will receive EUR1.5 billion in cash on closing and up to EUR300 million in deferred consideration. "The contingent consideration may become payable if the food delivery sector re-rates on a GMV and gross profit multiple basis over the next twelve months," said Prosus. Prosus is majority-owned by Cape Town, South Africa-based technology and media investor Naspers. As part of the transaction, Just Eat will buy IF-JE Holdings BV's 49% interest in El Cocinero a Cuerda SA for no additional consideration. El Cocinero a Cuerda is a holding company of Sindelantal, a restaurant delivery app run by iFood, that ceased its operational activities in December 2020. Just Eat said the deal needs shareholder approval, and believes the sale to be in the best interests of the firm.
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Applied Materials reported record quarterly sales in the third quarter, and has guided for another in the fourth quarter. In the three months to July 31, it reported net income of USD1.61 billion, slipping 6% from the USD1.72 billion recorded the year prior. Diluted earnings per share fell to USD1.85 from USD1.87. Net sales, however, improved 5% to USD6.52 billion from USD6.20 billion. Semiconductor System sales rose to USD4.73 billion from USD4.45 billion, while Applied Global Services sales were up to USD1.42 billion from USD1.29 billion. Looking ahead to the fourth quarter, Applied is guiding for net sales to be about USD6.65 billion, which includes the expected impact of ongoing supply chain challenges.
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Ross Stores lowered its guidance for its financial year as a whole, following a weak performance in the second quarter as inflationary pressures remained. For the three months ended July 30, the discount department store posted net earnings of USD384.5 million, down 22% from USD494.3 million the same period a year before. Diluted earnings per share dropped 21% to USD1.11 from USD1.40, on sales which declined 4.6% year-on-year to USD4.58 billion from USD4.80 billion. The weaker performance for the quarter was attributed to ongoing headwinds from higher freight costs, and an increasingly promotional retail environment. Looking ahead, for the financial year Ross Stores has lowered its EPS guidance to between USD3.84 and USD4.12, from prior guidance of USD4.34 to USD4.58 posted in May.
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Apple is warning of a flaw that is allowing hackers to seize control of iPhones, iPads and Mac computers, and is urging users to install emergency software updates. Patches were released Thursday and Wednesday by the tech titan to fix what it described as a vulnerability hackers already knew about and may be taking advantage of. "Apple is aware of a report that this issue may have been actively exploited," the Silicon Valley-based company said. Apple did not disclose whether it had information regarding the extent to which the issue has been exploited. The technical description indicated that a hacker could use the flaw to take control of devices, accessing any of its data or capabilities.
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Facebook-owner Meta said it had kicked one of the most influential US anti-vaccination groups off the social media network for spreading Covid-19 misinformation. The Children's Health Defense, which has been a critic of Covid vaccines, immediately accused Meta of stifling its free speech rights. "Facebook is acting here as a surrogate for the federal government's crusade to silence all criticism of draconian government policies," CHD founder Robert Kennedy Jr., nephew of late president John F Kennedy, said in a press release. Meta spokesperson Aaron Simpson told AFP that the group's accounts at Facebook and Instagram were shuttered on Wednesday. The ban came after repeated violations of Meta's misinformation rules.
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Kingspan Group posted a sharp interim earnings hike and lifted its payout. For the six months that ended on June 30, the Kingscourt, Ireland-based building materials company said revenue rose 42% to EUR4.15 billion from EUR2.92 billion a year earlier. It has the first time half-year revenue topped EUR4 billion. Pretax profit surged 30% to EUR387.6 million from EUR297.2 million. Trading profit rose 32% to EUR434.2 million from EUR328.9 million, while gross profit rose 33% to EUR1.10 billion from EUR832.3 million a year earlier. "Despite a challenging trading environment, Kingspan delivered record half year results, with revenues over EUR4 billion for the first time. We have been able to navigate large input cost increases with only modest margin impact," Chief Executive Gene Murtagh commented. Kingspan upped its payout by 29% to 25.6 cents from 19.9 cents.
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MARKETS
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European markets were mostly in the red late on Friday morning though the FTSE 100 edged into the green, as record low UK consumer confidence and record high German producer inflation dented investor sentiment. Asian markets ended largely flat, with investor confidence not helped by new figures showing Japanese core inflation continues at speed. US markets were called down, as seemingly cryptic comments from the Federal Reserve split analyst opinion on what its next moves would be.
"The FTSE 100 was broadly flat on Friday after a mixed set of retail sales, and with inflation driving the cost of servicing government debt higher. The Bank of England faces the unenviable task of trying to get inflation down without inflicting too much pain on businesses and households and the seeming impossibility of this task is raising the spectre of prolonged stagflation - a slowing economy and surging prices. That's reflected in weakness in the pound, which is actually good news for a globally-orientated FTSE 100 as it flatters the relative value of overseas earnings," said AJ Bell financial analyst Danni Hewson.
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CAC 40: down 0.6% at 6,531.17
DAX 40: down 0.8% at 13,595.96
FTSE 100: up 0.1% at 7,546.93
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Hang Seng: closed up 9.1 points at 19,773.03
Nikkei 225: closed down 11.8 points at 28,930.33
S&P/ASX 200: closed up 1.7 points at 7,114.50
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DJIA: called down 0.5%
S&P 500: called down 0.7%
Nasdaq Composite: called down 0.9%
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EUR: lower at USD1.0082 (USD1.0132)
GBP: lower at USD1.1871 (USD1.2000)
USD: higher at JPY136.57 (JPY135.10)
GOLD: lower at USD1,753.30 per ounce (USD1,761.70)
OIL (Brent): lower at USD95.21 a barrel (USD96.12)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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German producer prices increased by 37% year-on-year in July, data from Destatis showed. Annual growth quickened from a 33% in June and topped FXStreet cited consensus of a 32% rise. Monthly, producer prices rose 5.3% in July, beating expectations of a 0.6% rise. In June, producer prices had increased 0.6% from May. Both the annual and monthly rises were the highest on record, Destatis said. Energy prices more than doubled against the previous year and were up 15% against the previous month. Mineral oil products were up 42% year-on-year, though they fell 4.3% from June. Intermediate goods saw prices increase by 19% against the previous year, and capital goods increased by 8.0% year-on-year.
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Germany can afford another relief package worth billions of euros to fight inflation without compromising the so-called debt brake, Finance Minister Christian Lindner said. Chancellor Olaf Scholz had last week promised more measures to help offset soaring food and energy costs without busting the debt brake, which limits the country's public deficit to 0.35% of GDP. Asked in an interview with the Rheinische Post newspaper how big the new package could be while still adhering to the debt brake, Lindner replied: "I think a figure in the low double-digit billions is achievable." The relief package would comprise measures aimed at both low and middle-income households as well as "targeted economic aid for energy-intensive companies", he said.
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German Chancellor Olaf Scholz will be questioned for a second time by a state parliamentary committee in Hamburg investigating the sprawling "Cum-Ex" trading scheme to defraud tax authorities. The "Cum-Ex" scandal saw traders in Europe use a legal loophole to shift shares back and forth at high speed between parties around the time dividends were paid out, in order to receive tax repayments for taxes they had not paid. In Hamburg, the focus is on whether Scholz or other leading Social Democrats used their influence to help spare Warburg Bank from paying back EUR47 million in taxes. Scholz, who denies using his office to help the private Hamburg-based lender that participated in the Cum-Ex scheme, has been shadowed by the affair that dates back to his time as mayor of the northern city.
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UK public sector borrowing declined year-on-year in July but remained firmly above pre-virus levels, the latest figures showed. According to the Office for National Statistics, UK public sector net borrowing, excluding public sector banks, amounted to GBP4.94 billion in July. The figure was down from GBP5.73 billion a year earlier and GBP20.86 billion in June. However, July's figure was up sharply from a surplus of GBP900 million three years earlier, so before the onset of Covid-19, the ONS said. Public sector borrowing levels spiked during the pandemic. Public sector net debt, excluding public sector banks and the Bank of England, came in at GBP2.070 trillion, around 82.8% of gross domestic product. Debt is up GBP94.8 billion from a year earlier, but the percentage to GDP ratio is down from 84.5%. Michal Stelmach, senior economist at KPMG UK, said the latest figures will mean "tough choices" for the next chancellor following the Conservative leadership election. "The cost-of-living crisis will likely require further support to households, while a slowing economy will put downward pressure on receipts, making the fiscal targets ever less achievable."
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The UK's Labour party has written to Boris Johnson, as well as the two Tory leadership contenders, demanding that parliament returns early in order to tackle soaring energy bills. Keir Starmer has unveiled a "fully costed" GBP29 billion plan to freeze the cap at the current level of GBP1,971 for six months from October, saving the average household GBP1,000. The call for MPs to return two weeks early on August 22 comes ahead of the announcement of the new energy price cap at the end of the month, which Labour has called a "crucial deadline" for government action. In the letter, Thangam Debbonaire, the shadow leader of the House of Commons, told Mr Johnson that the country faces an "urgent choice". She said: "Across Britain, people are having to make unthinkable choices about how to pay their bills, causing endless worry for households and businesses." Neither the government nor Liz Truss and Rishi Sunak have shown any willingness so far to adopt Labour's strategy, with the foreign secretary sticking to her plans for tax cuts and promising an emergency budget if she becomes prime minister in a few weeks.
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UK retail sales defied expectations and grew on a monthly basis in July, figures showed, though they slightly missed a year-on-year forecast. According to the Office for National Statistics, UK retail sales volumes fell 3.4% on a yearly basis in July, a sharper than the FXStreet-cited market consensus of a 3.3% slide. In June, they had slumped 6.1% year-on-year. Excluding fuel sales, UK retail sales fell 3.0% on a yearly basis in July, easing from a 6.2% decline in June. The latest adjusted figure beat FXStreet consensus of a 3.1% decline. On a monthly basis, sales increased 0.3% in July from June, outperforming expectations of a 0.2% decline. They had fallen 0.2% on a monthly basis in June. Excluding fuel, retail sales rose 0.4% monthly in July, ahead of expectations of a 0.2% fall. In June, retail sales ex-fuel rose 0.2% from May.
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UK consumer confidence has hit a record low amid "acute concerns" in the face of the soaring cost of living and bleak economic prospects. GfK's long-running Consumer Confidence Index fell three points in August to minus 44, its lowest figure since records began in 1974. All five measures that make up the index fell last month, including confidence in personal finances and the general economy. Confidence in the general economy looking back over the previous year has decreased for eight months in a row to reach minus 68 – some 26 points lower than last August. Similarly, confidence in the economy for the year ahead has also seen a consistent sharp decline over the same period, falling to a new low of minus 60. The forecast for personal finances over the next 12 months fell five points on July to minus 31 – some 42 points lower than this time last year. The Major Purchase Index, a measure of confidence in buying big ticket items, fell by four points in August to minus 38 – a total of 35 points lower than this time last year.
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Japan's core consumer prices for items excluding fresh products rose 2.4% on-year in July, the highest in more than seven years and marking four straight monthly gains of more than two percent, government data showed. While energy prices continued to mount, the speed of the increase has slowed, according to data released by the internal affairs ministry, which matched market expectations. The figure is the highest since December 2014. Prices have increased for nearly 80% of non-fresh food products, NLI Research Institute said, predicting that core CPI may touch 2.9% by October. "Until now, sharp rises in energy prices, triggered by rising crude oil costs, drove up the core CPI. But the main cause is shifting to food," NLI said.
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Russian President Vladimir Putin and his Chinese counterpart Xi Jinping will attend the upcoming Group of 20 summit, the leader of host nation Indonesia said in an interview published Friday. The pair's attendance would set the stage for showdown talks with US President Joe Biden at a time when Washington is at odds with both of the rival powers, particularly over crises in Ukraine and Taiwan. It has been unclear whether Putin and Xi would turn up to the November talks on the Indonesian resort island of Bali. Moscow is isolated after its invasion of Ukraine, while the Chinese leader is limiting foreign trips because of Covid-19. But President Joko Widodo, in an interview with Bloomberg, said both leaders would attend the G20 summit in person. "Xi Jinping will come. President Putin has also told me he will come," Widodo said, according to the report.
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By Elizabeth Winter; elizabethwinter@alliancenews.com
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