Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The following is a summary of top news stories Tuesday.
----------
COMPANIES
----------
Volkswagen presented lower figures for the first quarter of the calendar year due to an ongoing shortage of semiconductors and persistent global supply chain problems that are affecting the car industry. VW sold just under 65,000 new cars there in the opening quarter, according to a statement on Monday, 29% fewer than a year ago. Sales in the US had already dropped significantly in the final quarter of 2021. VW saw significant losses for sales of all its most important models in the first quarter of 2022. Sales of the Tiguan and Atlas SUVs, both popular in the US and a major source of income for the company, fell as steeply as the Jetta and Passat. However, sales of the ID.4 electric model rose by 481%, although with only 2,755 units, that increase had little impact on the balance sheet.
----------
Pharmaceutical firm Novartis said it has received US regulatory approval for a new site in Durham, North Carolina. The backing from the US Food & Drug Administration allows for a ‘state-of-the-art’ 170,000 square foot facility to be built. The site will the make, test and release gene therapy medication Zolgensma for commercial use. ‘The Durham site will build on Novartis Gene Therapies' manufacturing capacity to form a two-site network, adding extensive segregated production suites for multi-product manufacturing,’ the company said.
----------
Dutch bank ING and Societe Generale unit Boursorama have signed a deal to offer retail banking services in France. The deal allows ING customers to join Boursorama. Customers will benefit from a ‘simplified account opening process and exclusive offers’. ‘The agreement follows ING's announcement in December 2021 to exit the French retail banking market. The aim is to finalise this exit by the end of 2022. ING will continue its Wholesale Banking activities in France, with a focus on strengthening its position and the ambition to be the go-to bank for sustainable finance,’ ING explained.
----------
Airtel Africa said it has adopted regulatory SIM card measures at its Nigeria telecommunications unit, though the financial impact of the move is uncertain. Under a directive announced by the Nigerian Communications Commission back in December 2020, operators were required to ensure all their subscribers provided a valid National Identification Number to update SIM registration records. Africa-focused telecommunications provider Airtel on Tuesday said that so far, it has collated NIN records for 73% of its Nigeria active customer base, accounting for 79% of revenue at the unit. By nation, Nigeria was Airtel's largest revenue contributor in the first half ended September 30. The Nigeria arm generated revenue of $896 million, up 25% yearly. Airtel's total interim revenue was $2.27 billion.
----------
Moonpig Group lifted its revenue guidance for financial 2022 on a strong trading performance and expressed confidence in a permanent uplift in ‘customer cohort frequency.’ The London-based online greeting card and gifting company said its performance for the financial year to April 30 has remained strong. Moonpig lifted its annual revenue expectations to £300 million, with the upgrade reflecting ‘the temporary impact of Covid-19 on customer behaviour in late December and January.’ In financial 2021, Moonpig generated revenue of £368.2 million. It had previously guided for financial 2022 revenue of between £250 million and £260 million. The upgraded guidance, therefore, reflects a 23% decline compared to financial 2021 levels but between a 15% to 20% increase compared to the previous guidance. The company anticipates that underlying revenue is going to remain unchanged at approximately £265 million in financial 2022.
----------
Investors Advent International and Centerbridge Partners are considering a fresh takeover offer for Germany's Aareal Bank, the bank said. Their bidding company, Atlantic BidCo, has concluded talks with shareholders holding in total around 37% of voting rights in Aareal Bank, with a view towards making a potential new takeover offer. An offer price of €33, around $36, per share is apparently being contemplated. Aareal Bank shareholders Petrus Advisers, Talomon, Teleios and Vesa have committed to accept the offer for their shares or to sell them to the bidder company separately from the offer. Atlantic BidCo in early February had said that its previous public takeover offer for Aareal Bank was not successful as the minimum acceptance level of 60% was not reached. Following a new successful offer, the shareholders are set to participate partially and indirectly in the BidCo exclusively through non-voting rights.
----------
Crest Nicholson Holdings said it intends to sign a pledge committing the housebuilder to high-rise building remediation, saying it was ‘in the best interests’ of the company. The Building Safety Pledge programme was established by the UK government in the wake of the Grenfell Tower fire in 2017 to make sure that residents of high-rise buildings are safe by removing combustible materials, such as cladding. The pledge commits housebuilders to new guidelines for work on potentially unsafe cladding on buildings between 36 feet and 59ft high. Housebuilders had until April 5 to sign the Building Safety Pledge guidelines. The housebuilder said it would be taking further steps to support those living in affected buildings. As a result of making these new commitments, it said it would need to record a further exceptional charge in its financial statements. The pledge will cost the company between £80 million and £120 million, the Chertsey, Surrey-based housebuilder explained. Its board ‘does not consider this to present a risk to current or future operations,’ the firm said.
----------
Go-Ahead Group said it will reinstate its pre-Covid dividend policy as it set out medium-term plans to boost revenue and profit. The public transport operator will return to paying a dividend equivalent to between 50% and 75% of underlying earnings per share. As such, it intends to recommend a dividend of not less than 50p in respect of the financial year ending July 2022. It revealed payout plans alongside a new strategy, ‘The Next Billion Journeys’. Go-Ahead wants to grow in existing geographies as well as replicate the London & International Bus business model in selected international markets. The company aims to explore new urban mass transit modes such as metro, light rail and bus rapid transit. On the financial side, Go-Ahead is targeting annual group revenue of around £4 billion in the medium-term, which it said would be up by around 30%, and operating profit of at least £150 million. For the 2021 financial year, Go-Ahead posted adjusted operating profit of £115.5 million.
----------
MARKETS
----------
The tone was cautious on Tuesday as the West vowed fresh sanctions on Russia in the wake of alleged war crimes in Ukraine. Oil prices remained supported as the EU said it would discuss energy sanctions. ‘The latest bout of public outrage has strengthened the resolve of Western leaders to take further action. Even Germany, which has a high reliance on the import of Russian gas, is looking to refrain from further imports,’ said Richard Hunter, head of markets at Interactive Investor.
He added: ‘The vestiges of the conflict remain unknown, even after the aggression has subsided. In the meantime, the war has already shown signs of threatening economic growth, while from an investor perspective sentiment remains fragile given the volume of news emanating from the region. Alongside the pre-existing issues of inflation and rising interest rates, some repositioning is increasing the attraction of defensive stocks.’
----------
CAC 40: down 0.7% at 6,687.02
DAX 40: up 0.1% at 14,526.51
FTSE 100: down 0.2% at 7,544.93
----------
Hang Seng: closed for Tomb-Sweeping Day
Nikkei 225: closed up 0.2% at 27,787.98
S&P/ASX 200: closed up 0.2% at 7,527.90
----------
DJIA: called down 0.1%
S&P 500: called down 0.1%
Nasdaq Composite: called down 0.1%
----------
EUR: down at $1.0981 ($1.0996)
GBP: up at $1.3140 ($1.3121)
USD: up at JP¥122.79 (JP¥122.70)
GOLD: down at $1,929.61 per ounce ($1,930.80)
OIL (Brent): up at $109.16 a barrel ($107.45)
(currency and commodities changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
The EU is considering to hit Russia with sanctions on oil or coal over the war in Ukraine, a top official said on Tuesday, though some countries remain worried of the potential economic fallout. The EU and US are currently preparing more sanctions against Russia after allegations that Russian forces carried out war crimes when dozens of bodies were discovered near Kiev. The Europeans are under pressure to hit Moscow in the crucial energy sector and stop paying out the huge proceeds from gas, oil and coal that are helping Russia pay for the war. ‘I don't want to preview but indeed there are discussions on what can be done in an area of energy like coal and oil,’ said EU Executive Vice President Valdis Dombrovskis as he arrived for EU minister talks in Luxembourg.
----------
Ukraine's President Volodymyr Zelensky will address the UN Security Council on Tuesday, where he is expected to demand tough new sanctions on Moscow over killings in the town of Bucha that he has called ‘war crimes’ and ‘genocide’. The speech, Zelensky's first to the body since Russia's invasion, comes after he made an emotional trip to Bucha, where dozens of bodies were discovered after the withdrawal of Russian troops. Horrific images of corpses lying in the streets, some with their hands bound behind them, have drawn international condemnation of Russia. Moscow has denied responsibility and suggested the images are fake or that the deaths occurred after Russian forces pulled out of the area. But newly released satellite photographs taken by Maxar Technologies in mid-March, before the Russian withdrawal, showed what appeared to be bodies in some of the same places they were later found by Ukrainian troops and seen by journalists.
----------
The US will announce new sanctions against Russia this week, a senior US official said Monday after the emergence of alleged atrocities in formerly Russian-occupied areas of Ukraine. ‘You can expect further sanctions announcements this week,’ National Security Advisor Jake Sullivan told reporters. He said that discussions about sanctions with European allies include ‘options that relate to energy.’ The next phase of the war in Ukraine could last for months after Russian forces pulled away from Kyiv in a shift toward the eastern regions, Sullivan also said Monday. Russia's military is ‘repositioning’ to focus its firepower on attempting to conquer a swath of eastern Ukraine after failing to control the whole country, the same senior US official said.
----------
The eurozone's private sector growth faded in March, figures showed, after hitting a five-month high the month prior. The ‘main impetus’ for March's growth came from the services economy, S&P Global noted. Eurozone factories saw progress slow in March. The S&P Global services purchasing managers' index inched up to 55.6 points in March, from 55.5 in February. ‘Overall, the rate of growth was the quickest in four months,’ S&P Global said. The composite PMI, calculated using the services and manufacturing scores, slipped to 54.9 in March, from 55.5 in February. Composite PMI figures for Ireland and France hit highs of five months and eight months respectively. Figures for Germany, Spain and Italy all hit two-month lows. On Friday, numbers from S&P Global had showed the eurozone manufacturing PMI declined to 56.5 points in March from 58.2 in February, signalling the slowest improvement in operating conditions since the start of 2021.
----------
Germany's services sector saw its best expansion for six months in March, figures from S&P Global showed, though inflation hit a record high and growth in the wider private sector slowed. The S&P Global services PMI rose to 56.1 points in March, from February's tally of 55.8. March's number, further above the 50.0 neutral threshold, was the best since September. Survey respondents pointed to an easing of virus curbs in March. ‘That said, the overall rate of new business growth slowed amid reports of headwinds from geopolitical uncertainty, a squeeze on purchasing power, and supply issues. Inflows of new business from abroad in fact fell at the end of the first quarter, thereby reversing the rise seen in the previous month,’ S&P Global said. The composite PMI, a weighted average of the services and manufacturing tallies, fell to 55.1 in March from 55.6 in February. Manufacturing output fell, weighing on the index, S&P Global noted.
----------
UK service sector activity accelerated in March at its fastest pace since May 2021 following an Omicron-induced slowdown at the start of the year, S&P Global said. The S&P Global-CIPS UK services PMI rose for the third month running to reach 62.6 points in March, up from 60.5 in February. The reading was higher than the preliminary estimate of 61.0. S&P said UK service providers signalled a strong increase in business activity during March, and the rate of expansion accelerated to its fastest for 10 months. Survey respondents widely noted that the removal of pandemic restrictions and return to offices had led to a sharp rebound in customer demand, it noted. However, S&P said, business expectations for the year ahead dropped for the second month running and were at the lowest level since October 2020. Weaker optimism was mainly linked to the war in Ukraine and subsequent economic uncertainty.
----------
The UK's automotive industry suffered its worst March for new car sales since 1998, according to new figures. Just 243,479 new cars were registered last month, the Society of Motor Manufacturers & Traders said. That is down 14% compared with March 2021. It is the lowest March total since 1998, which was prior to the introduction of new number plates every March and September. SMMT chief executive Mike Hawes described the figures as ‘deeply disappointing’, with March crucial for the industry because it is normally the busiest month of the year as buyers demand the latest number plate. He said: ‘While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.’
----------
Channel 4 has said it is ‘disappointed’ at the UK government's decision to proceed with plans to privatise the broadcaster without ‘formally recognising the significant public interest concerns which have been raised’. The government, which currently owns the channel, has been consulting on whether to privatise the broadcaster following concerns for its survival in the streaming era. A statement by the Department for Digital, Culture, Media & Sport said it had made the decision to allow the channel to ‘thrive in the face of a rapidly-changing media landscape’ while a government source said the move would ‘remove Channel 4's straitjacket’. A statement by Channel 4 said: ‘With over 60,000 submissions to the government's public consultation, it is disappointing that today's announcement has been made without formally recognising the significant public interest concerns which have been raised.’
----------
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.