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The following is a summary of top news stories Thursday.
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COMPANIES
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London Stock Exchange Group said its Refinitiv deal has been ‘successful’ with the firm's cost savings ahead of target amid burgeoning income which has led to increased shareholder payouts. In 2021, pretax profit doubled to £987 million from £492 million in 2020. Total income surged to £6.42 billion from £2.03 billion. Data & Analytics income ballooned to £4.29 billion from £824 million. Capital Markets income was up to £1.18 billion from £288 million, but Post Trade income was flat at £913 million versus £915 million in 2020. Pro forma results - which assumes LSEG's Refinitiv acquisition took place at the start of 2020 - shows total income grew to £6.81 billion from £6.77 billion. Data & Analytics income was flat at £4.61 billion from £4.65 billion, while Capital Markets income increased to £1.26 billion from £1.17 billion, while Post Trade income was flat at £913 million versus £915 million in 2020. LSEG said its group 2021 performance gives it confidence it is on track to achieve the 5% to 7% 2020 to 2023 compound annual growth rate target. LSEG declared a final dividend of 70.0 pence for 2021, giving it a total payout of 95.0p, which is increased by 27% from the 75p total dividend handed out to shareholders in 2020.
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ITV announced significant growth in profit and revenue in its full-year results as it reinstated dividends, but said it still trails behind pre-pandemic returns. The London-headquartered media company reported profit before tax in 2021 of £480 million, a 48% increase from £325 million in 2020. However, this is still down 9.4% from £530 million in 2019. Total revenue grew by 24% year-on-year to £4.04 billion from £3.26 billion. Total external revenue grew 24% to £3.45 billion from £2.78 billion, which is still 11% short of revenue of £3.89 billion in 2019, or 2% down on a constant currency basis. ITV proposed a final dividend of 3.3 pence for 2021, having suspended dividends in 2020. ITV paid out 8.0p back in 2019. It is targeting a dividend of ‘at least 5p per annum’ going forward, with potential for growth over time.
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Housebuilder Taylor Wimpey said it delivered a strong 2021 performance with results in line with its expectations. For 2021, it posted pretax profit £679.6 million, up from £264.4 million in 2020 on revenue of £4.28 billion, up from £2.79 billion. 2021 saw a 47% increase in UK completions including joint ventures to 14,087, up from 9,609 in 2020, driven by good build performance and strong demand. Taylor Wimpey declared a final dividend of 4.44 pence for 8.58p total, up from 4.14p in 2020. It also plans £150 million share buyback in 2022 to return excess cash. Looking ahead, the company continues to expect to deliver low single-digit year-on-year completions growth in 2022 and to make further progress towards 21% to 22% operating margin target. Its operating margin in 2021 was 19.3%, up from 10.8% in 2020.
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CRH said 2021 was another year of record delivery for the Dublin-based building materials firm, with continued strong cash generation and profit growth. For 2021, CRH posted pretax profit of $3.34 billion, doubled from $1.66 billion in 2020 on revenue of $30.98 billion, up 12% from $27.59 billion. CRH generated record net cash flows from operating activities of $4.2 billion in 2021, up from $3.9 billion in 2020. CRH declared a final dividend of 98.0 US cents per share, resulting in a total dividend of 121.0 cents for the year, up from 115.0 cents in 2020. Looking ahead, CRH expects underlying demand and pricing backdrop to remain favourable in 2022 albeit against an inflationary input cost environment and continued supply chain challenges. Federal funding for infrastructure is underpinned by the passing of the $1.2 trillion infrastructure package by the US Congress.
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Coca-Cola HBC revoked its 2022 financial guidance due to the conflict between Russia and Ukraine, two of its key sales territories. The soft drinks bottler noted that 20% of its 2021 volumes and earnings before interest and tax came from the two countries. It temporarily stopped product at its plant in Kyiv on February 24 and evacuated its employees. Coca-Cola HBC said it will use management actions to mitigate the headwinds outside its control and is ready to redeploy marketing spend and capital expenditure to other markets.
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Investment manager Schroders said pretax profit jumped by 25% in 2021 to £764.1 million from £610.5 million in 2020, as net income rose by 18% to £2.57 billion from £2.18 billion. Schroders hiked its annual dividend by 7.0% to 122.0 pence from 114.0p. ‘After a period of benign markets there is a risk that the current turbulence will be with us for some while,’ the company said.
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Toyota said it will suspend operations at its only factory in Russia and stop shipping vehicles to the country, citing ‘supply chain disruptions’ linked to Moscow's assault on Ukraine. The world's top-selling carmaker said its plant in Saint Petersburg produced around 80,000 vehicles last year, mainly for the Russian market and representing just a fraction of the 10.5 million vehicles made worldwide by the Japanese group. ‘Toyota Motor Russia will stop production at its Saint Petersburg plant from 4 March and has stopped imports of vehicles, until further notice, due to supply chain disruptions,’ the company said in a statement. The Saint Petersburg plant employs around 2,600 people, a Toyota spokeswoman told AFP, confirming the supply disruption was linked to the conflict. Toyota has no factories in Ukraine but said sales operations in the country had been suspended since February 24, when Russian President Vladimir Putin launched an air and ground assault on the neighbouring country.
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Mercedes-Benz said it was suspending vehicle exports to Russia and local production in the country, becoming the latest carmaker to respond to Moscow's invasion of Ukraine. ‘Mercedes-Benz will suspend the export of passenger cars and vans to Russia as well as the local manufacturing in Russia until further notice,’ it said in a statement. German rivals BMW and Volkswagen made similar announcements earlier this week as Western companies withdraw from sanctions-hit Russia. Germany's Daimler Truck has halted its 12-year partnership with Russian lorry maker Kamaz, which also makes armoured vehicles.
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MARKETS
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Asia-Pacific stock markets rose Thursday on the back of a positive US close, but European markets were having none it. Major indices were lower as the situation in Ukraine became more precarious, and Wall Street was called to open lower as well. Brent oil rose above $118 a barrel before falling back a little. Added to the ramp-up of sanction against Russia were shipping disruptions and a fall in US crude stocks, SP Angel noted. Meanwhile, OPEC+ ignored calls to increase the pace of production increase.
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CAC 40: down 0.4% at 6,474.62
DAX 40: down 1.0% at 13,856.50
FTSE 100: down 0.5% at 7,391.88
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Hang Seng: closed up 0.6% at 22,467.34
Nikkei 225: closed up 0.7% at 26,577.27
S&P/ASX 200: closed up 0.5% at 7,151.40
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DJIA: called down 0.2%
S&P 500: called down 0.2%
Nasdaq Composite: called down 0.4%
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EUR: down at $1.1085 ($1.1130)
GBP: up at $1.3390 ($1.3363)
USD: up at JP¥115.73 (JP¥115.60)
GOLD: up at $1,930.70 per ounce ($1,923.31)
OIL (Brent): up at $115.65 a barrel ($109.94)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russian forces have taken the Black Sea port of Kherson in southern Ukraine, the first major city to fall after a string of setbacks for Moscow. Russia's invasion so far has been astonishingly badly managed, a blundering ‘disaster, through and through’, US defence experts said. It is like Moscow ‘tripped over the doorframe on the way into the house,’ one expert said, citing food and fuel shortages, poor intelligence and planning. Ukraine's second city Kharkiv continues to come under heavy Russian shelling, with police and university buildings among the latest struck.
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Russia mooted the possibility of ceasefire talks with Ukraine after Russian forces shelled several Ukrainian cities and troops battled in the streets of Kharkiv. Ukraine said a delegation was ‘on its way’ for the talks at an undisclosed location on the Belarus-Poland border but Foreign Minister Dmytro Kuleba said Kyiv would not accept ‘ultimatums’. Speaking seven days since President Vladimir Putin ordered Moscow's troops to attack Ukraine, Russian negotiator Vladimir Medinsky said the Ukrainian officials were expected at the location on Thursday. Hundreds of civilians have been killed and hundreds of thousands of Ukrainians have fled their country since the invasion began, while the West has imposed sanctions to cripple Russia's economy.
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The Defence Ministry in Moscow said 498 Russian soldiers have been killed and 1,597 injured in fighting in Ukraine, marking the first time casualty figures have been released by the government since the Kremlin's invasion began a week ago. On the Ukrainian side, there have so far been 2,870 deaths and about 3,700 wounded, said Igor Konashenkov, spokesman for the Russian Defence Ministry. Ukraine had previously claimed that around 6,000 Russian soldiers had been killed. These figures cannot be independently verified, and Ukraine has not given any current information about casualties in its own ranks.
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Ratings agencies Fitch and Moody's slashed Russia's sovereign debt to 'junk' status, or the category of countries at risk of not being able to repay their debt, a week after Moscow began its assault on Ukraine. Moody's downgraded the rating on Russian long-term debt from Baa3 to B3 subject to a further review over the West's sanctions against Russia, while Fitch lowered its rating from BBB to B, also with a negative outlook. ‘The multi-notch downgrade of Russia's ratings and maintaining the review for further downgrade were triggered by the severe sanctions that Western countries have imposed on Russia’, including on its central bank and some large financial institutions, Moody's said in a statement. The agency also noted a ‘heightened risk of disruption’ to sovereign debt repayment in the face of ‘severe and coordinated sanctions’.
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Following a slowdown in January, private sector growth in the eurozone regained momentum in February, according to survey results released by IHS Markit. The services business activity index rose to 55.5 points in February from January's nine-month low of 51.1, signalling the strongest expansion in services output for three months. After slumping in January to an 11-month low, the seasonally adjusted composite output index rebounded to 55.5 in February from 52.3. Overall, this signalled the strongest increase in combined manufacturing and services output since last September and was also faster than the series average. Released on Tuesday, eurozone manufacturing PMI fell to 58.2 in February, down from 58.7 in January.
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Unemployment in the eurozone fell in January as hiring on the continent staged a solid recovery from the Covid-19 pandemic, figures from Eurostat showed. The eurozone's unemployment rate fell to a record low of 6.8% in January from 7.0% in December and from 8.3% in January 2021. However, the latest reading was just shy of the market estimate, cited by FXStreet, of 6.9%.
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The rate of annual producer inflation in the euro area hit a fresh record high in January, according to Eurostat. On an annual basis, the producer price index rose to 31% in January, accelerating sharply from a 26% jump in December. The print was well-above market forecasts of 27%.
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The Germany services PMI rose to 55.6 points, climbing from January's 52.2, with its services sector enjoying a six-month high. Its composite PMI rose to 55.6 from 53.8 in January - its highest since last August.
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In France the services sector score rose to 55.5 points from 53.1 as demand rose at its fastest rate since July. France's composite PMI increased to 55.5 in February, up from January's nine-month low of 52.7.
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The Italy services PMI rose to 52.80 points in February from 48.50 in January. The composite PMI rose to 53.6 points in February from 50.1 in January on the back of the services sector improvement. On Tuesday, IHS Markit had reported Italy's manufacturing PMI as 58.3 points in February, the same as in January.
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Spain's services PMI score hit a three-month high at 56.5 points, up from 46.6 in January, rebounding strongly from a Omicron-induced contraction at the start of the year. Its composite PMI improved to 56.5 from 47.9.
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UK services activity saw a sharp acceleration in growth in February, continuing the new year momentum for the sector, as the number of cases of the Omicron variant of Covid-19 waned. The IHS Markit-CIPS UK services PMI rose to 60.5 points in February from 54.1 in January. However, the reading was lower than the preliminary flash estimate of 60.8. The UK composite PMI increased to 59.9 points in February from 54.2 in January as the easing of Omicron cases saw faster growth across both the manufacturing and services sectors. However, it was lower than the flash estimate of 60.2. Released on Tuesday, 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.
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Service providers in Ireland reported the fastest growth in new business in six years, as overall business activity hit a four-month high in February, according to survey results released by IHS Markit. The AIB services business activity index jumped to 61.8 points in February from 56.2 in January, as Covid-19 restrictions were lifted in Ireland. The reading was the highest in four months and well above the long-run average of 55.0 points. The month-on-month acceleration in growth was the sharpest on record, IHS Markit said. The strong services score lifted the AIB Ireland composite purchasing managers' index to 59.1 in February from 56.1 in January, overcoming a decline in the factory sector reading. On Tuesday, IHS Markit had said the manufacturing PMI score was 57.8 points last month, down from 59.4 in January.
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China's service sector grew at the slowest rate in six months in February, survey results from Caixin and IHS Markit showed, though businesses expressed a stronger optimism for the year ahead. The seasonally adjusted headline business activity index slipped to 50.2 points in February from 51.4 in January. At just above the neutral score of 50, it signalled only a marginal rise in services activity. At 50.1 points in February, the seasonally adjusted composite output index was unchanged from January. As a result, the reading remained below the series average of 52.6. On Tuesday, the Caixin general manufacturing purchasing managers' index was reported at 50.4 points in February, up from 49.1 in January.
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The contraction in Japan's service sector worsened last month, after a sharp rise in cases of the Omicron variant of Covid-19, survey results from IHS Markit showed. The services business activity index component of the au Jibun Bank services purchasing managers' index fell to 44.2 points in February from 47.6 in January, both scores below the neutral mark of 50. The February score indicated the sharpest contraction in activity since August last year. As a result of the hobbled services sector in Japan, the composite PMI output index fell to 45.8 points in February from 49.9 in January. On Tuesday, IHS Markit had said the manufacturing PMI slipped to 52.7 points in February from 55.4 in January, meaning Japan's manufacturing sector had improved for the 13th month in a row - albeit at a slower pace in February.
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Australia's service sector expanded in February following an abrupt decline in January, according to the latest IHS Markit PMI survey data. The seasonally adjusted business activity index posted above the 50.0-point no-change mark at 57.4 in February, up from 46.6 in January. The rate of growth was the fastest since May 2021, reflecting a strong recovery of the service sector following January's contraction. The composite index, which measures combined services and manufacturing output, rose to 56.6 in February from 46.7 in January. This indicated an expansion of private sector output following January's decline. On Tuesday, IHS Markit had said the manufacturing purchasing managers' index rose to 57.0 in February from 55.1 in January.
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