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The following is a summary of top news stories Tuesday.
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COMPANIES
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Shell has promoted Sinead Gorman to chief financial officer, starting April 1. Gorman replaces Jessica Uhl, who will step down on March 31 but remain with the oil major until June 30. Uhl has worked at Shell for 17 years, the last five as CFO. Gorman currently is executive vice president for Finance at Shell's Upstream division, having joined Shell in 1999. She will be based in London.
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Shell on Monday said it will exit its joint ventures with Russian energy giant PJSC Gazprom and also its involvement with the Nord Stream 2 pipeline project, following Russia's invasion of Ukraine. Shell will exit its 28% interest in the Sakhalin-II liquefied natural gas facility, its 50% stake in Salym Petroleum Development NV and its 50% interest the Gydan energy venture.
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Disney and Sony Pictures are suspending the release of their films in theatres in Russia after Moscow's assault on Ukraine, the companies announced separately on Monday. It follows the example of other major firms choosing to pull out of the country since President Vladimir Putin launched the invasion last week. ‘Given the unprovoked invasion of Ukraine and the tragic humanitarian crisis, we are pausing the release of theatrical films in Russia, including the upcoming 'Turning Red' from Pixar,’ Disney said in a statement. ‘We will make future business decisions based on the evolving situation,’ the US entertainment giant added. ‘In the meantime, given the scale of the emerging refugee crisis, we are working with our NGO partners to provide urgent aid and other humanitarian assistance to refugees.’
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German chemicals and pharmaceuticals company Bayer said it was back in the black in 2021, thanks primarily to a strong performance of its agrochemicals division. Its return to profit came after the coronavirus pandemic and litigation costs had pushed it into a massive loss a year earlier. Bayer said in a statement that it booked a net profit of €1.0 billion last year, compared with a loss of €10.5 billion in 2020. The maker of aspirin said it also returned to profit at an underlying or operating level, with earnings before interest and tax showing a profit of €3.3 billion, compared with a loss of €16.1 billion the year before. ‘The Bayer group had a successful year in 2021, both operationally and strategically,’ the statement said. ‘We posted substantial growth, strengthened our innovation pipeline and made progress toward our sustainability targets. All this shows that Bayer is on the right track!’ said Chief Executive Werner Baumann.
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Toyota Motor plans to resume work at all of its plants in Japan on Wednesday following a brief shutdown due to a cyberattack on one of its domestic suppliers, the carmaker said on Tuesday. Supplier Kojima Industries suspects it may have been hit by a cyberattack on Monday that crippled its computer system. Kojima Industries makes metal, plastic and electronic components. Toyota temporarily shut down work at 28 production lines in 14 factories across Japan. Toyota has already been suffering from chip shortages and Covid-19-related disruptions since January.
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Investment manager abrdn reported its first increase in annual revenue since the merger that created the current company. The Edinburgh-based firm, whose name is a shortening of Aberdeen, reported IFRS pretax profit of £1.12 billion in 2021, up 33% from £838 million, as fee-based revenue rose by 6.3% to £1.52 billion from £1.43 billion in 2020. The rise in revenue was the first since Standard Life merged with Aberdeen Asset Management in 2017 to create, at the time, Standard Life Aberdeen, later changed to abrdn. Assets under management and administration grew by 1.3% to £542 billion at the end of 2021 from £535 billion a year before. The growth in AuMA was due to a positive investment performance. Net flows were negative £6.2 billion, improving from negative £29.0 billion in 2021. abrdn kept its annual dividend unchanged at 14.6 pence per share.
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Paddy Power-owner Flutter Entertainment swung to a pretax loss in 2021, but growth in the US continued. Flutter Entertainment said 2021 was another strong year of growth as the gambling operator made progress against strategic objectives, driven by recreational customers. For 2021, revenue increased 37% to £6.04 billion from £4.41 billion in 2020 but swung to a pretax loss of £288 million from a £1.1 million profit, after taking a £543 million charge for non-cash amortisation from acquired intangibles. On a adjusted pro forma basis, Flutter posted a pretax profit of £620 million, down 24% from £813 million. The Dublin-based firm said recreational customers drove revenue growth, rising 23% to 7.6 million average monthly players. In the US, its FanDuel sports-betting arm maintained the ‘number one position’ due to product leadership, Flutter asserted, with 40% online sportsbook market share in the fourth quarter. Looking ahead, Flutter said trading in the first 7 weeks of 2022 has been in line with expectations with revenue up 2% year-on-year, reflecting strong comparatives which had benefited from very favourable sports results. Further, assuming there are a normal run of sports results, Flutter expects revenue growth to accelerate as 2022 progresses, reflecting the phasing of sports margin comparables and safer gambling measures taken in 2021.
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Croda International said it delivered a record performance in 2021 with all of the speciality chemical company's businesses trading ahead of pre-pandemic levels. For 2021, pretax profit was £411.5 million, up 53% from £269.5 million in 2020 on revenue of £1.89 billion, up 36% from £1.39 billion. Croda declared a 100.0p annual dividend, up 9.9% from 91.0p paid out in 2020. Looking ahead, Croda expects to post growth in 2022 in line with medium-term expectations. It thinks margins in the Consumer Care and Life Sciences divisions will remain strong this year. ‘Our excellent strategic progress during the COVID-19 pandemic has included progressing our transition to a pure-play Consumer Care and Life Sciences company, with our agreement to sell the majority of our industrial businesses. As a result, Croda will now be focused on faster growth, higher return markets, positioning us to deliver more consistent sales growth and an even stronger profit margin,’ said Chief Executive Officer Steve Foots.
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Testing specialist Intertek Group said it achieved strong progress in 2021, highlighting that global supply chain disruption meant the need for safety and sustainability assurance ‘more critical than ever’. For 2021, pretax profit was £413.4 million, up 20% from £343.9 million in 2020 on revenue of £2.79 billion, up 1.9% from £2.74 billion. Intertek declared a 2021 dividend of 105.8p, unchanged from 2020. Looking ahead, Intertek said it was well-positioned to generate robust like-for-like revenue growth at constant rates, margin progression, and strong free cash flow in 2022. ‘The Covid-19 pandemic has made the case for total quality assurance clearer and stronger for our clients and we expect the $250 billion global quality assurance market to grow faster post-Covid. Moving forward, all stakeholders in society expect governments and corporations to build back a better world with a sharper focus on end-to-end quality assurance,’ said Chief Executive Officer Andre Lacroix.
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Shares in one-time pandemic winner Zoom Video Communications slumped after hours on Monday, with the stock hurt by an underwhelming outlook. The video conferencing firm, which saw its fame and fortune skyrocket during the pandemic, expects revenue growth to slow in its latest financial year. In the fourth quarter ended January 31, revenue increased 21% to $1.07 billion from $882.5 million a year earlier. Pretax profit, however, fell 48% to $138.5 million from $264.7 million. The San Jose, California-based firm reported a $110.7 million loss on strategic investments. Meanwhile, operating expenses surged 57% to $562.2 million. For the year, revenue increased 55% to $4.10 billion from $2.65 billion. Pretax profit rose to $1.10 billion from $678.0 million.For the new financial year, Zoom expects revenue between $4.53 billion and UD4.55 billion. At best, this would represent growth of just 11% slowed markedly from financial 2022's increase. In pre-market activity in New York on Tuesday, Zoom was down 4.7%.
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MARKETS
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Stock markets were depressed and oil prices were again above $100 a barrel, as the world awaited the final assault by Russia on the major cities of Ukraine. Wall Street was called to open lower.
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CAC 40: down 2.3% at 6,504.54
DAX 40: down 2.3% at 14,134.56
FTSE 100: down 0.8% at 7,400.64
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Hang Seng: closed up 0.2% at 22,761.71
Nikkei 225: closed up 1.2% at 26,844.72
S&P/ASX 200: closed up 0.7% at 7,096.50
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DJIA: called down 0.6%
S&P 500: called down 0.7%
Nasdaq Composite: called down 1.0%
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EUR: down at $1.1198 ($1.1243)
GBP: flat at $1.3420 ($1.3415)
USD: down at JP¥114.78 (JP¥115.27)
Gold: down at $1,915.35 per ounce ($1,900.27)
Oil (Brent): up at $101.35 a barrel ($97.65)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russia will continue the offensive in Ukraine until its ‘goals are achieved’, Russian Defence Minister Sergei Shoigu said. ‘Russian armed forces will continue to conduct the special military operation until set goals are achieved,’ Shoigu told at a press conference aired on state television on Tuesday. He said Moscow aims to ‘demilitarise and de-Nazify’ Ukraine, as well as protect Russia from a ‘military threat created by Western countries’.
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Russian forces bombarded government headquarters in the centre of Ukraine's second city Kharkiv after pounding residential areas of the city, killing at least 11 civilians, its mayor said. Satellite images showed a vast military column amassing just north of the Ukrainian capital Kyiv, where residents are braced for a Russian assault. The Russian army tells them they can ‘freely leave’ on one highway going south as it hints of attacks on civilian areas.
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Seventy Ukrainian soldiers have been killed in a Russian missile attack in the region of Sumy in eastern Ukraine, the Ukrainian parliament confirmed. It said on Twitter that an army unit was fired upon in the town of Okhtyrka, located between the capital Kiev and Kharkiv. Russian forces are currently fighting to take control of both those cities, along with other key territories across the country.
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The EU and its allies are preparing new sanctions against Russia to ‘raise the cost’ of President Vladimir Putin's war in Ukraine, a top French official said on Monday. ‘There will be more sanctions. It's a priority,’ an aide to French President Emmanuel Macron told reporters on condition of anonymity, saying they could be announced ‘in the coming days’. He held out little hope that the sanctions would force Putin to agree to a ceasefire in the short-term, but said they were designed to ‘raise the cost of the war and change his calculations. ’Today the sanctions are causing pain, and more pain than President Putin anticipated,‘ the aide said.
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Canadian Prime Minister Justin Trudeau announced a ban on Russian oil imports, saying oil revenues have helped to prop up Putin and Russian oligarchs. ’Today, we are announcing a ban on all imports of crude oil from Russia, an industry that has benefited President Putin and his oligarchs greatly,‘ Trudeau told a news conference. ’And while Canada has imported very little amounts in recent years, this measure sends a powerful message,‘ he added.
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The number of people fleeing war in Ukraine has surged to over half a million, while a scandal was brewing at the border with Poland over the alleged racist treatment of African refugees. More than 500,000 people have fled the war in Ukraine to neighbouring countries, according to UN High Commissioner for Refugees Filippo Grandi. This was around 80,000 more than the figure reported on Sunday by the UN refugee agency UNHCR. The majority of Ukrainian refugees have so far fled to Poland, with around 300,000 arriving since the war broke out, according to the Polish border guard. On Sunday alone, almost 100,000 people are said to have crossed the shared border into Poland.
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Manufacturing growth slowed slightly in the eurozone in February but was still strong with demand keeping pace with January and fewer delivery delays, survey data from IHS Markit showed. The IHS Markit eurozone manufacturing purchasing managers' index fell to 58.2 in February, down from 58.7 in January and also from the flash reading of 58.4. February's reading was well above the 50.0 mark separating growth from contraction. By nation, the Netherlands saw the strongest improvement in February, IHS Markit noted, with Germany and Austria not far behind. Italy, Ireland and Greece also recorded strong growth, despite slowdowns in the latter two. Spain was the weakest-growing of the monitored euro area nations, followed by France.
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In Germany, the manufacturing PMI slipped to 58.4 in February from 59.8 in January. New orders in February helped maintain the growth but the drop from January came from a temporary decline in staff availability owing to Covid-related absences. In France, the PMI rose to a six-month high of 57.2 from 55.5 in January. In Spain, it hit a three-month high of 56.9 from 56.2 the previous month. The index in Spain has now shown growth for 13 months in a row, IHS Markit said.
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UK manufacturing sector activity accelerated in February amid an easing of raw material shortages and supply chain blockages, IHS Markit said. The IHS Markit-CIPS manufacturing PMI rose to a three-month high of 58.0 points in February, up from the preliminary reading of 57.3, which also was January's score. The PMI has remained above the neutral 50.0 mark for 21 successive months, Markit noted.
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UK supermarket sales fell by 3.7% in the 12 weeks to February 20 from a year ago, figures from Kantar showed, though sales remained 8.4% above pre-pandemic levels. The fall in spending comes despite new highs in grocery pricing with inflation standing at 4.3% in February. This is the fastest rate of inflation recorded since September 2013, and with ongoing supply chain pressures and the potential impact of the conflict in Ukraine, customers may see prices continuing to rise. Further evidence that shoppers are moving beyond the pandemic can be seen in online sales, down by almost 20% year-on-year over the past month. Some 835,000 fewer people bought groceries online over the past four weeks compared to the record 6.6 million buyers seen last year. Digital sales now account for 13.3% of all spending, down 2.1 percentage points from last year.
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The manufacturing sector in Ireland continued to grow strongly in February but at a slower pace than the month before, survey results showed. The AIB Ireland manufacturing PMI score was 57.8 points last month, down from 59.4 in January. IHS Markit, which conducts the survey, said the factory activity reading has been trending down since hitting a record high of 64.1 points in May last year. However, February's score remained well above the long-run survey average of 52.2. Coming in above 50 points, the reading indicated expansion and was the 17th successive month to do so. Input price inflation remained a problem for Irish manufacturers, however.
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There was a slight improvement in business conditions across China's manufacturing sector in February, according to the latest IHS Markit survey. The headline seasonally adjusted PMI rose to 50.4 in February from 49.1 at the start of the year. The rate of improvement was softer than the long-run series average of 51.0. Production has now risen in three of the past four months, though this month's increase was only slight, being only just above the neutral reading of 50. Factories reported a slight increase in output and the fastest increase in total sales since June. However, the pandemic weighed on external demand with new export orders falling again in February. This was also stymied by difficulties in shipping items to clients. Suppliers' delivery times lengthened amid reports of material and staff shortages. Average input costs also hit a high and selling prices increased at the steepest rate since last October.
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Japan's manufacturing sector saw softer expansion in February, figures from IHS Markit showed, as lower production levels and stagnating new orders weighed. The headline au Jibun Bank Japan manufacturing PMI slipped to 52.7 points in February from 55.4 in January, meaning Japan's manufacturing sector has improved for the 13th month in a row - albeit at a slower pace in February. February's figure marked the weakest expansion since September last year.
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Australia's central bank decided to maintain low interest rates, citing Australian economy's recent ’resilience‘ as Omicron subsides, despite growing uncertainty across the world from the invasion of Ukraine. The Reserve Bank of Australia held its cash rate target at 10 basis points, or 0.10%. It said macroeconomic policy settings continued to be ’supportive of growth‘. ’The Australian economy remains resilient and spending is picking up following the Omicron setback. Household and business balance sheets are in generally good shape, an upswing in business investment is underway and there is a large pipeline of construction work to be completed,‘ said Governor Philip Lowe. Whilst the central bank said inflation had increased quicker than it had expected, it noted Australia's inflation rate is below many other countries. It forecasts underlying inflation increase in ’the coming quarters‘ to around 3.25%, before dropping to around 2.75% over 2023, as supply chains and consumption patterns normalise.
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