Anglo American profits ahead at year-end, Lloyds underlying profit down amid tough market
London open
The FTSE 100 is expected to open one point higher on Thursday, having closed up 1.02% at 7,457.02 on Wednesday.
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Strong precious metals and iron ore prices offset weakness in diamonds and coal as Anglo American reported a rise in full year profits. Underlying core earnings rose 9% to $10bn, higher than analysts expectations while net debt increased to $4.6bn. A final dividend of 47 cents a share was declared for a total of $1.09 a share, up 9 cents year on year. Capital expenditure increased to $3.8bn from $2.8bn a year earlier, the company said on Thursday.
Lloyds Banking Group's underlying profit fell 7% last year as revenue declined amid challenging market conditions. Underlying profit for the year to the end of December declined to £7.5bn from £8.1bn as net income fell to £17.1bn from £17.8bn. Pretax profit dropped by 26% to £4.4bn as the bank paid out £2.5bn for payment protection insurance - up from £750m a year earlier.
Engineering and industrial software company Aveva Group updated the market on its trading on Thursday, reporting “high” single-digit organic constant currency revenue growth in the first 10 months of the financial year. The FTSE 100 firm said that was supported by strong orders in its rental and subscription division, for both on-premise and cloud solutions, which was partly offset by “significantly lower” initial and perpetual licences and services, as expected. As such, Aveva said its new business model transition was improving revenue mix and quality, while increasing long-term operating margins and cash flows, adding that it achieved early contract renewals in the first half, with that revenue pull forward affecting third quarter revenue growth.
Newspaper round-up
The coronavirus could cost the global economy more than $1tn in lost output if it turns into a pandemic, according to a leading economic forecaster. Oxford Economics warned that the spread of the virus to regions outside Asia would knock 1.3% off global growth this year, the equivalent of $1.1tn in lost income. – Guardian
Boris Johnson’s goal of rebalancing Britain’s lopsided economy is at risk of failure because of the government’s neglect of its industrial strategy, the watchdog established to monitor progress of the flagship policy has warned. In a critical report, the Industrial Strategy Council (ISC) said the policy to earmark government support for key sectors of the economy had made only limited progress since Theresa May first unveiled the plan three years ago. – Guardian
Airbus is shedding almost one in 10 staff in the UK working in its defence and space arm after poor sales. The cuts are part of wider restructuring of the pan-European company’s badly performing unit, with 2,350 jobs going worldwide by the end of next year. – Telegraph
Doubts over Anglo American’s £405m takeover of Sirius Minerals have deepened after the hedge fund run by Crispin Odey opposed the deal. Odey Asset Management said that Anglo’s 5.5p-a-share offer “does not represent fair value for shareholders in Sirius” and claimed that the FTSE 100 mining group “would be willing to bid substantially more” for the North Yorkshire fertiliser mine developer. – The Times
Investors withdrew £200m from Invesco funds run by Mark Barnett last month, betraying their continuing nervousness about the former protégé of Neil Woodford. January’s net outflows came after more than £1 billion was pulled from the three portfolios managed by Mr Barnett during the last quarter of 2019. That prompted the stockpicker last month to reassure his investors about the health of his funds. - The Times
US close
US stocks finished in the green on Wednesday, as market participants remained largely focused on the potential economic fallout of the Wuhan coronavirus outbreak.
The Dow Jones Industrial Average ended the session up 0.4% at 29,348.03, the S&P 500 was ahead 0.47% at 3,386.15, and the Nasdaq Composite was 0.87% firmer at 9,817.18.
Wall Street stocks had finished mixed on Tuesday, as the ongoing coronavirus outbreak took its toll on Apple and other stocks exposed to China's manufacturing sector.
China's National Health Commission revealed a further 1,749 cases of the coronavirus across the country overnight, with another 136 deaths taking the total death total above 2,000.
The world's second-largest economy also announced that more than 80% of Chinese state-controlled firms were back in business, although some dealers have questioned the numbers.