(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Volkswagen said it will go ahead this year with a highly anticipated stock market entry for its premium sports car brand Porsche, despite less than perfect financial conditions. "The board of management of Volkswagen today resolved...to pursue an initial public offering of the preferred shares of Porsche AG with the target to list them on the regulated market of the Frankfurt Stock Exchange...at the end of September/beginning of October 2022," a statement said. "In the event of a successful IPO, Volkswagen AG will convene an extraordinary general meeting in December 2022 at which it will propose to its shareholders that a special dividend amounting to 49% of the total gross proceeds from the placement of the preferred shares and the sale of the ordinary shares be distributed," it added. The auto giant officially signalled its intention to go ahead with the IPO on February 24, the day that Russia began its invasion of Ukraine. The outbreak of the war has sown uncertainty in financial markets, sending stocks tumbling and clouding the outlook for the economy. But the luxury brand continues to attract the attention of investors, who value Porsche between EUR60 billion and EUR85 billion, according to Bloomberg News.
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Pilots from Germany's Lufthansa airline have decided on a second round of strike action, the union Vereinigung Cockpit said on Monday night. The union said Lufthansa could avert the action, set to start on Wednesday, with a "serious offer." Another negotiation meeting will take place Tuesday, according to media reports. Pilots already paralyzed Lufthansa's core operations on Friday after negotiations on a new wage deal failed to produce a result. The strike was set to affect passenger flights departing from Germany on Wednesday and Thursday while Lufthansa's cargo subsidiary was set to be affected from Wednesday to Friday. The strike will apply solely to Lufthansa and Lufthansa Cargo departures from German airports for legal reasons. Lufthansa subsidiaries such as Swiss, Austrian, Brussels and Eurowings were not included in the strike.
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Ireland's data protection watchdog has issued Meta Platform's Instagram with a EUR405 million fine over the way in which it handled teenagers' personal data – the largest fine the authority has ever issued. Meta said in a statement that it plans to appeal. The Data Protection Commission began an inquiry in September 2020 in relation to how the social media giant processed the details of teenage minors on Instagram accounts. The inquiry looked at whether child users aged between 13 and 17 were allowed to operate business accounts on Instagram, and whether that allowed, or required, the publication of children's phone numbers and/or email addresses as a result.
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Rio Tinto said it has entered a binding agreement to take full ownership of Mongolian miner owner Turquoise Hill Resources. "The independent directors of Turquoise Hill have unanimously recommended that Turquoise Hill minority shareholders vote in favour of the transaction and, together with senior officers of Turquoise Hill, have entered into voting support agreements with respect to all of the Turquoise Hill shares they own or control," it noted. Turquoise Hill owns 66% of the massive Oyu Tolgoi copper-gold mine, with the Mongolian government holding the remaining 34%. Rio currently holds a 51% stake in Turquoise Hill. Last week, Rio Tinto said it reached agreement with Turquoise Hill on an improved CAD43-per-share, around USD32.79, takeover offer. The agreement values the minority share capital in Turquoise Hill at USD3.3 billion. "Rio Tinto's offer guarantees Turquoise Hill's minority shareholders outstanding value through a significant all-cash premium for their shares. After extensive negotiations, the terms of the transaction are final and there will be no further price increase," said Rio Chief Executive Jakob Stausholm.
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Capricorn Energy said it is considering alternatives to its previously announced merger with Tullow Oil, as it posted a narrowed loss in the first half of 2022. The Edinburgh-based oil and gas company explained it continues to progress its merger with peer Tullow Oil, but it also is "exploring a number of expressions of interest relating to alternative transactions". The plan to merge was first announced in June. Capricorn plans to issue a documentation on the proposed merger in the fourth quarter of 2022 before a shareholder meeting. Capricorn said its pretax loss narrowed to USD48.7 million in the six months that ended June 30 from a USD87.4 million loss a year prior, boosted by its recent Egyptian acquisition and rising oil prices.
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Credit Suisse said it has agreed to sell the Credit Suisse Trust business to Butterfield and Gasser Partner. Under separate agreements, Bermuda-headquartered bank and trust company Butterfield will acquire Credit Suisse Trust's businesses based in Guernsey, Singapore and the Bahamas, while Gasser Partner - part of the Gasser Partner law firm in Liechtenstein - will acquire the Liechtenstein business. Both sales are expected to close in the first half of next year. No financial details were disclosed for either deal.
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UK housebuilder Berkeley said trading in the first four months of its new financial year was ahead of financial 2022. "The good level of demand continues to support pricing above business plan levels, which is sufficient to cover cost increases on a blended basis across Berkeley's developments," it said. Noted it is on track to meet profit guidance, guiding for financial 2023, ending April 30, pretax profit of GBP600 million and GBP625 million for financial 2024. Reported pretax profit of GBP551.5 million in financial 2022. Sees forward sales "marginally above" GBP2.17 billion at April 30.
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Packaging firm DS Smith said its overall trading in its first quarter, ended June 30, was in line with management expectations. Corrugated box volumes in the quarter declined "slightly" on a like for like basis, as expected. Expects corrugated box volume growth of "at least" 2% for financial 2023. Finance Director Adrian Marsh will retire once a successor is in place. The process to find Marsh's replacement is underway, and DS Smith will announce his retirement date "in due course".
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Industrial equipment rental company Ashtead said it has made a strong start to the new financial year, with profit and revenue both up 25%. In the quarter ended Jul 31, pretax profit rose to USD527 million from USD416 million, with revenue up to USD2.26 billion from USD1.85 billion. Chief Executive Brendan Horgan said: "The business is performing strongly, with revenue and operating profit ahead of our previous expectations. This performance is offset by increasing interest costs and therefore, we expect adjusted profit before taxation for the year to be in line with our previous expectations and the board looks to the future with confidence."
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MARKETS
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Wall Street was called to open higher on Tuesday, as financial markets reopened after the Labour Day holiday that traditionally marks the end of summer in the US. European stock markets also were trading positively despite a mostly negative day in Asia. Volkswagen shares were up 2.4% in Frankfurt. The pound was enjoying a partial rebound from recent lows, as the new UK prime minister moved into No 10 Downing Street.
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CAC 40: up 0.3% at 6,108.45
DAX 40: up 0.6% at 12,839.81
FTSE 100: up 0.2% at 7,299.50
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Hang Seng: closed down 0.1% at 19,202.73
Nikkei 225: closed up just 6.90 points at 27,626.51
S&P/ASX 200: closed down 0.4% at 6,826.50
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DJIA: called up 0.5%
S&P 500: called up 0.6%
Nasdaq Composite: called up 0.7%
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EUR: up at USD0.9948 (USD0.9919)
GBP: up at USD1.1589 (USD1.1507)
USD: up at JPY141.78 (JPY140.53)
GOLD: up at USD1,711.40 per ounce (USD1,710.56)
OIL (Brent): down at USD93.33 a barrel (USD95.49)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone construction sector contracted further in August in its worst performance for over a year and a half, survey data showed. S&P Global said the eurozone construction purchasing managers' index fell to 44.2 points in August from 45.7 in July. The reading, further below the no-change mark of 50.0, signalled the fastest decline in activity since January 2021. All three of the largest eurozone economies posted steeper contractions. Germany's PMI shrank to 42.6 points from 43.7, France's fell to 48.2 from 48.6, and Italy's declined to 41.2 from 46.2.
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The UK's construction sector improved slightly in August, but still recorded its second straight month of decline as new orders "slowed to a crawl". The headline seasonally adjusted S&P Global/Chartered Institute of Procurement UK construction PMI inched higher to 49.2 in August from 48.9 in July. Despite the uninspiring performance, the reading came in ahead of market consensus, according to FXStreet, of 48.0.
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Growth in UK retail sales slowed in August as the cost-of-living crisis caused consumers to reign in spending. The latest British Retail Consortium-KPMG sales monitor shows retail sales increased 1.0% year-on-year in August, above the three-month average growth of 0.7%, but below the 12-month average of 2.5%. Sales had grown 2.3% in July following a heatwave-related boost to clothing and picnic food sales.
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Boris Johnson pledged his "fervent support" for successor Liz Truss as she prepared to take over as UK prime minister and deliver a plan to address the energy crisis. In his farewell speech outside No 10 early Tuesday, the outgoing prime minister said his successor's administration would do "everything we can" to help people struggling with the cost-of-living crisis. Truss, who will travel to Balmoral to accept the role of prime minister from the Queen later on Tuesday, is thought to be drawing up plans for a freeze in bills which could cost around GBP100 billion. Truss won the contest to succeed Johnson as Tory leader on Monday and will address the nation from Downing Street later Tuesday as prime minister.
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The Reserve Bank of Australia carried out another 50 basis points interest rate hike as it flagged a "very tight" labour market. The RBA has increased the cash rate target by half a percentage point to now stand at 2.35% from 1.85% previously. This was the central bank's fourth consecutive 50 basis point rate hike. The RBA has raised rates aggressively to tackle inflation, on Tuesday reiterating its commitment to rein in price growth to its 2% to 3% target range.
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The US said oil production must be kept up to bolster global economic growth after the OPEC+ cartel agreed to cut supply to lift falling prices. President Joe Biden "has been clear that energy supply should meet demand to support economic growth and lower prices for American consumers and consumers around the world," White House Press Secretary Karine Jean-Pierre said in a statement. The US had pressed OPEC+ to increase output to bring down energy prices that have fueled decades-high inflation.
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Germany said it will keep two nuclear plants on standby beyond the end of the year in a policy u-turn, as the shut-off of Russian gas supplies sends Europe scrambling for energy sources. Following a new network stress test, two of the three remaining power plants would "remain available until mid-April 2023 in case needed", Economy Minister Robert Habeck said in a statement, partly delaying a nuclear exit planned under former Chancellor Angela Merkel. The plants would be kept in reserve to potentially "make a further contribution to the electricity grid in southern Germany", where the development of renewable power was lagging the north.
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By Tom Waite; thomaslwaite@alliancenews.com
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