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(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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BHP reported a "strong" set of interim results, leading to the miner declaring a bumper payout. Revenue from continuing operations for the six months to December 31 rose 27% to USD30.53 billion from USD24.04 billion a year earlier. Pretax profit increased 61% to USD14.49 billion from USD9.01 billion. The figures do not include BHP's petroleum assets, as those are soon to be transferred to Woodside Petroleum, in a deal announced in November 2021 and set to close in the June 2022 quarter. The results were BHP's first since its corporate unification as BHP Group Ltd with its primary stock market listing in Sydney. The robust half led to BHP declaring a record interim dividend of USD1.50, up from USD1.01 a year before and beating forecasts of USD1.24. The payout was supported by a "reliable operating performance" and "continued strong markets".
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Miner Glencore unveiled a bumper shareholder return alongside strong 2021 profit growth, though also said it has taken USD1.50 billion aside as a provision for a litany of investigations. Also in its annual results was news that it agreed the sale of its interest in Russian oil firm Russneft in December. Completion of the disposal is conditional on regulatory approvals and should occur in the first half of 2022. Glencore, which did not name the buyer or any financial details of the sale, said its investment in Russneft is pledged under a loan facility issued to the company. Glencore's partnership with the Russian firm began two decades ago. Revenue for 2021 grew 43% to USD203.75 billion from USD142.34 billion in 2020. This helped Glencore swing to a pretax profit of USD7.38 billion from a loss of USD5.12 billion the year before. Glencore set out plans for USD4.0 billion worth of shareholder returns. Of this, USD3.4 billion will come from a USD0.26 per share base distribution in respect to 2021 cash flow, and USD550 million through a share buyback. Glencore did not pay a dividend in 2020. The miner, however, had to set aside a USD1.50 billion provision for probes involving the US Department of Justice, the US Commodity Futures Trading Commission, the UK Serious Fraud Office, and the Brazilian Federal Prosecutor's Office.
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Separately, Glencore has supported a GBP200 million funding round by low-carbon batteries firm Britishvolt, the Financial Times reported. Britishvolt said Glencore will be the cornerstone investor in its Series C financing. The miner has committed GBP40 million at a significantly higher valuation than its previous investment in Britishvolt, the FT said. The launch of the funding round comes weeks after Britishvolt raised GBP1.7 billion in sales and leaseback funding from warehouse provider Tritax and investment manager abrdn to construct its factory in Northumberland. Britishvolt's gigafactory, which at its peak aims to produce enough cells for 300,000 electric car batteries a year, will be the UK's fourth-largest building. To help finance the project, which could cost as much as GBP3.8 billion, the FT said Britishvolt has been mulling a London listing.
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Warren Buffett's Berkshire Hathaway disclosed it had purchased shares in Activision Blizzard late last year, before Microsoft announced its agreement to buy the video game maker. In a regulatory disclosure to the US Securities & Exchange Commission on Monday, first reported by the Financial Times, Berkshire Hathaway said that, during the fourth quarter of 2021, it had bought 14.7 million shares for USD975.2 million, suggesting an average price of 66.34 per share. Shares in Activision, which created games such as Call of Duty and Guitar Hero, closed at USD81.50 in New York on Monday. At this price, Berkshire Hathaway's stake would be worth USD1.20 billion. On January 18, Microsoft announced agreement to acquire Activision for USD95.00 per share, around USD68.7 billion for the entire California-based company. Separately, Berkshire Hathaway said major shareholder Tom Murphy has resigned from its board with immediate effect following a bout with Covid-19.
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AstraZeneca and Merck & Co reported positive trial results for Lynparza in combination with abiraterone in patients with prostate cancer. Results from the PROpel phase three trial showed Lynparza in combination with abiraterone reduced the risk of disease progression or death by 34% in patients with metastatic castration-resistant prostate cancer versus just abiraterone alone. Results also showed a favourable trend towards improved overall survival, however the difference did not reach statistical significance at the time of the data cut-off. The trial will continue to assess overall survival as a key secondary endpoint.
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After seeing sales of medical masks soar during the Covid-19 pandemic, US manufacturer 3M warned that demand is expected to slow sharply this year. The warning echoes that of other companies like vaccine-maker Pfizer and the CVS drugstore chain that have said pandemic-related sales are likely to soften. After Covid-19 broke out in 2020, 3M, a conglomerate that makes a wide range of products from Post-it notes to air filters, quickly ramped up output of face masks, which became ubiquitous. But in its quarterly earnings report Monday, 3M forecast a "decline in Covid-related respirator demand" which it said will weigh on overall sales growth and also dampen earnings.
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Tax preparation software provider Intuit warned revenue for the second quarter is expected to be lower than previous guidance due to a slower forming tax season. Intuit now expects second quarter revenue between USD2.66 billion and USD2.67 billion. This is down from the prior range of USD2.72 billion to USD2.75 billion. The company behind TurboTax, QuickBooks, Mint, Credit Karma and Mailchimp also reiterated full-year 2022 revenue guidance. It continues to expect revenue of USD12.17 billion to USD12.30 billion, growth of 26% to 28%, including Mailchimp as of November 1 and a full year of Credit Karma.
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Michelin reported a sharp rise in annual earnings prompting the French tyre maker to raise guidance for 2022. For 2021, sales were up to EUR23.80 billion from EUR20.47 billion in 2020. The Clermont-Ferrand, France-based firm reported 2021 net income of EUR1.85 billion, or EUR10.31 earnings per share, up sharply from EUR625 million, or EUR3.52, in 2020. Michelin declared a full-year dividend of EUR4.50, double from EUR2.30 paid out in 2020. Looking ahead, Michelin expects 2022 segment operating income at EUR3.2 billion, up from EUR2.87 billion in 2021.
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MARKETS
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European equity markets were rebounding on Tuesday, and Wall Street was called to open higher, after Russia said it had pull back some troops from the border of Ukraine, easing concern about imminent war. The FTSE 100 index in London was underperforming Paris and Frankfurt peers, as the lowered tensions also pushed down the price of oil and gold, hurting the shares of its drillers and diggers.
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CAC 40: up 0.9% at 6,915.55
DAX 40: up 1.0% at 15,270.48
FTSE 100: up 0.5% at 7,570.27
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Hang Seng: closed down 0.8% at 24,355.71
Nikkei 225: closed down 0.8% at 26,865.19
S&P/ASX 200: closed down 0.5% at 7,206.90
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DJIA: called up 0.8%
S&P 500: called up 1.2%
Nasdaq Composite: called up 1.7%
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EUR: up at USD1.1351 (USD1.1300)
GBP: up at USD1.3554 (USD1.3520)
USD: unchanged at JPY115.58
Gold: down at USD1,855.00 per ounce (USD1,865.30)
Oil (Brent): down at USD93.84 a barrel (USD94.70)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Germany's new Chancellor Olaf Scholz landed in Moscow on Tuesday for his first face-to-face talks with longtime Russian President Vladimir Putin in the midst of a diplomatic barrage aimed at averting conflict in Ukraine. The meeting comes hours after Moscow announced that it had begun withdrawing troops deployed in the south and west of the country, near Ukraine's border, back to their permanent bases, although it did not give an exact number. "As combat training measures are coming to a close, the troops, as is always the case, will conduct combined marches to their permanent garrisons," Defence Ministry spokesperson Igor Konashenkov said. "Units of the Southern and Western Military Districts that have accomplished their tasks have already begun loading personnel and equipment on railway and auto transport means and will today begin heading to their military garrisons," he said in a statement quoted by the TASS news agency.
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The eurozone economy advanced in the fourth quarter of 2021, according to the latest flash estimate by Eurostat, shaking off the emergence of the Omicron variant of Covid-19. Year-on-year, the bloc's economy grew 4.6% in the final three months of 2021, in line with a first estimate by Eurostat. Quarter-on-quarter, the single currency bloc's gross domestic product was 0.3% higher, in line with the previous estimate. For 2021 as a whole, the eurozone expanded 5.2%, recovering somewhat after a 6.6% fall in 2020.
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Separate figures from Eurostat showed the eurozone posted a trade deficit of EUR4.6 billion in December, swinging from a surplus of EUR28.3 billion a year earlier. Exports to the rest of the world rose 14% annually to EUR218.7 billion from EUR191.7 billion. Imports jumped 37% to EUR223.3 billion from EUR163.4 billion. On a monthly basis, the trade deficit widened from EUR1.5 billion in November.
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The UK unemployment rate was unchanged at the end of last year, but pay failed to keep up with inflation, providing further evidence of a building cost-of-living crisis in the country, figures from the Office for National Statistics showed. In the three months to December, the UK unemployment rate was steady at 4.1%, in line with market expectations. The jobless rate in the three months to November also was 4.1%. On a quarter-on-quarter basis, the unemployment rate declined from 4.3%. Compared to the three months to February 2020, so before the onset of the pandemic, the UK unemployment rate was 0.1 percentage point higher. Annual growth in total pay - so including bonuses - was 4.3%. Regular pay, which excludes bonuses, was up 3.7%. Both failed to keep pace with the UK's annual consumer price inflation rate in December of 5.4%. Faring the worst were public sector employees whose total pay rose 2.6%, compared to 4.6% in the private sector.
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Japan's economy rebounded in the last part of 2021, as virus cases slowed and restrictions were eased, spurring demand before the Omicron wave hit the country, data showed. The world's third-largest economy grew 1.3% in the three months to December, rebounding from a revised contraction of 0.7% in the previous three months, as virus cases surged. The quarter-on-quarter figure released by Japan's cabinet office Tuesday was slightly lower than market expectations of 1.5%, and was driven by a sharp recovery in spending after the lifting of emergency virus restrictions in October. The data also showed the economy grew 1.7% in real terms in 2021, the first annual expansion for the economy in three years. After a spike in virus cases in the summer of 2021, when Japan hosted the Olympics with virtually no spectators, the government lifted restrictions in October, prompting private consumption to grow 2.7% quarter-on-quarter.
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Hong Kong's leader said she would not impose a mainland China-style hard lockdown as the city faces its worst coronavirus wave to date, even as she vowed no switch to living with Covid-19. For more than two years, Hong Kong has followed China's zero-Covid strategy, but a wave of the highly transmissible Omicron virus variant has battered the city's capacity for testing, quarantine and treatment. No place in the world has managed to return to zero Covid cases after such an outbreak except mainland China, which has imposed citywide lockdowns and mass stay-at-home orders when even a handful of cases are detected. Hong Kong Chief Executive Carrie Lam ruled out that approach. "We have no plans whatsoever to impose a complete, wholesale lockdown," she told reporters. But she also rejected calls from some public health experts and business figures to switch from zero-Covid to a mitigation strategy.
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Canadian Prime Minister Justin Trudeau invoked rarely-used emergency powers to bring an end to trucker-led protests against Covid health rules, after police arrested 11 people with a "cache of firearms" blocking a border crossing with the US. It marked only the second time in Canadian history such powers have been invoked in peacetime, and came as hundreds of big rigs still clogged the streets of the capital Ottawa, as well as two border crossings. "The federal government has invoked the Emergencies Act to supplement provincial and territorial capacity to address the blockades and occupations," Trudeau told a news conference. Trudeau said the military would not be deployed at this stage, but that authorities would be granted more powers to arrest protesters and seize their trucks in order to clear blockades, as well as ban funding of the protests.
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By Tom Waite; thomaslwaite@alliancenews.com
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