(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Swiss food maker Nestle's net profit and sales rose in 2021 as it sold shares in cosmetic company l'Oreal and hiked prices amid soaring global inflation. Businesses have faced supply chain disruptions and decades-high inflation as the global economy recovers from the Covid pandemic and energy prices surge. Nestle – the maker of everything from coffee to pet food and plant-based meat – said net profit bounced by 3% to CHF16.9 billion, about USD18.3 billion, last year. Total sales rose 3.3% to CHF87.09 billion as restaurant sales improved and price hikes accelerated in the last quarter under inflationary pressure. Its organic growth – which excludes the effects of acquisitions or divestments to focus on a company's core operations – reached 7.5%, with coffee the largest contributor.
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Reckitt Benckiser posted a full-year loss but beat expectations on the revenue front, with the health and hygiene products maker looking towards a margin improvement in the year ahead despite inflationary pressures. Reckitt said revenue in 2021, lapping tough comparatives, fell 5.4% to GBP13.23 billion from GBP13.99 billion. At constant currency, the decline was 0.3%. However, this topped company-compiled consensus of GBP13.18 billion. Excluding the contribution of its former Infant Formula & Child Nutrition business in China, Reckitt's annual revenue fell 2.1% to GBP12.85 billion from GBP13.13 billion, though beat expectations of GBP12.80 billion. At constant currency rates, revenue by this measure was up 3.3%. Reckitt back in June agreed to sell the business to Primavera Capital Group for USD2.2 billion. The disposal was completed in September. The Nurofen painkiller maker swung to a pretax loss of GBP260 million for the year from a GBP1.87 million profit in 2020, due primarily to a huge loss on disposal. Reckitt declared an unchanged annual dividend. It expects 1% to 4% net revenue growth in 2022.
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Commerzbank, Germany's second-biggest lender, booked a profit in 2021 despite significant transformation costs, as it seeks to trim its business. The bank made a net profit of EUR430 million under the guidance of new CEO Manfred Knof, who took the reins in January last year after the group booked a whopping 2.9-billion-euro loss in 2020, its first since 2009. "In the first year of the transformation, we have delivered on our promises," Knof said in a statement, adding that the bank would seek to pay a dividend to shareholders again from 2022. The 2021 result came despite EUR2 billion in one-off costs, a fact which showed "the profit potential of our bank", CFO Bettina Orlopp said in a statement. The bank significantly reduced its risk provisions, which cover potential losses, to EUR570 million from EUR1.8 billion in 2020, the first year of the coronavirus pandemic.
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Despite doubled annual profit and a bolstered payout, Standard Chartered undershot analyst expectations on both. The London-based emerging markets lender reported pretax profit for 2021 of USD3.35 billion, more than doubled from USD1.61 billion a year prior, but missing analyst expectations of USD3.84 billion by 13%. Net interest income slipped 0.7% to USD6.80 billion from USD6.85 billion, beating the USD6.78 billion analyst consensus, as low interest rates scuppered growth. Adjusted net interest margin narrowed to 1.21% from 1.31%. StanChart ended 2021 with a CET 1 ratio of 14.1%, edging down closer to the company's minimum target of around 14.0% for 2021. StanChart noted that an imminent USD750 million share buyback programme is expected to reduce its CET 1 ratio by around 30 base points. StanChart missed analyst forecasts for dividends, having proposed a final dividend of 9 US cents per share. This matched 2020's final dividend, when 9 cents was the maximum allowed under regulatory guidance at the time. This brought StanChart's total annual payout to 12 cents, up 33% on the prior year's 9 cents.
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Airbus said it swung to profit in 2021 in a year bolstered by increased order intake and revenue. The Blagnac, France-based aerospace company reported net income of EUR4.21 million in 2021, swinging from a net loss of EUR1.13 million. The company posted earnings per share of EUR5.36, swinging from a loss per share of EUR1.45 in 2020. Revenue increased 4.4% to EUR52.1 billion from EUR49.9 billion. Airbus said this mainly reflected the higher number of commercial aircraft deliveries. Commercial aircraft deliveries rose to 611 in 2021 from 566 in 2020. Gross commercial aircraft orders totalled 771, up sharply from 383 in the virus-hit 2020. The order backlog was 7,082 commercial aircraft on December 31, not far off the previous year's figure of 7,184 aircraft. Order intake by value nearly doubled to EUR62.0 billion from EUR33.3 billion. Airbus proposed a 2021 dividend of EUR1.50 per share. It paid no dividend for 2020 or 2019.
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Air France-KLM expects to run at 73% to 78% of its passenger capacity in the first quarter of the year compared to the same period in 2019. That marks only a slight improvement compared to the 72% logged in the last quarter of 2021, a sign of the airline industry's slow recovery from the impact of the pandemic, especially for long-haul carriers such as Air France-KLM. The Franco-Dutch airline said many uncertainties remained surrounding pandemic travel, including a lack of clarity about when Japan and China will reopen to travellers from Europe. For that reason it did not offer any forward-looking guidance for 2022 when it released its latest earnings results on Thursday. In 2021, Air France-KLM was once again deeply in the red. But compared to 2020, however, its net loss was reduced by more than half to EUR3.3 billion.
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Woodside Petroleum swung to profit last year, amid increased trading activity and higher oil and gas prices, saying "2021 was a transformative year in which the foundations were laid for the company's future". The Perth, Australia-based oil and gas explorer swung to a full-year net profit after tax of USD1.98 billion from a net loss after tax of USD4.03 billion in the year prior. The company also achieved revenue growth of 93% to USD6.96 billion for 2021, a "significant" increase from USD3.60 billion in the year before. Woodside declared a final dividend of 105 US cents per share. This gave a 135 cents full-year dividend, up from 38 cents in 2020. Looking ahead, Woodside expects to complete its merger with BHP Group's petroleum business in early June, subject to a shareholder vote on the transaction May 19. The merger is expected to create "a global energy company."
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Schneider Electric said it delivered a record year amid ongoing supply constraints. The Paris-based energy management and automation company's total profit for 2021 increased by 46% to EUR3.27 billion from EUR2.24 billion. Its basic earnings per share for the year rose to EUR5.76 from EUR3.84 in 2020. Revenue was also up in 2021, rising 15% to EUR28.91 billion from EUR25.16 billion. The company's Products segment made up 59% of the annual revenue and saw double-digit growth in industrial automation products and high-single digit growth in energy management products.
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Packaging firm Mondi announced it will sell its Personal Care Components business to Osaka, Japan-based Nitto Denko for an enterprise value of EUR615 million. Nitto is a maker of tapes, sealing materials and surface films. Mondi said the unit, charged with making components for personal and home care products, has a "limited overlap" with the rest of the company.
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Former UK deputy prime minister Nick Clegg has been promoted by Mark Zuckerberg to a new role at Meta Platforms focused on regulation which puts him at the same level of seniority as the firm's founder. The 55-year-old was recruited by Facebook in 2018 to be its head of global affairs as Zuckerberg sought to repair the company's reputation over its role in spreading misinformation during elections. Zuckerberg said he had asked Clegg to become president of global affairs at Facebook parent company Meta because "we need someone at the level of myself (for our products) and Sheryl (for our business) who can lead and represent us for all our policy issues globally".
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Google, owned by Alphabet, announced plans to limit ad tracking on its Android operating system running on billions of devices, a sensitive privacy issue that rival Apple has already moved to address on its iPhones. Tech giants are under growing pressure to better balance privacy and ad-targeting, as users complain and regulators threaten tougher rules – but the companies themselves try to maintain access to the precious data helping them earn billions in ad revenue. Apple has about 50% of the US smartphone market while Google's Android software is used on roughly 85% of smartphones globally.Any changes to Android could therefore impact the data from billions of users. At present, the internet search giant assigns an identity to Android-powered devices, which enables advertisers to have a profile of people's online habits and thus send them ads they might be interested in.
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Nvidia reported a strong fourth quarter on the back of record performances from its Gaming, Data Center and Professional Visualization units. In the three months to January 30, the Santa Clara, California-based graphics card and chipsets manufacturer reported net income of USD3.00 billion, up sharply from USD1.46 billion in the same period the year prior. Diluted earnings per share improved to USD1.18 from USD0.58. Revenue surged 53% to USD7.64 billion from USD5.00 billion. Notes Gaming, Data Center and Professional Visualization units each achieved record revenue for the quarter and year.
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Cisco Systems reported a USD500 million rise in income in the second quarter, with further growth expected in the third quarter thanks to the firm's "robust" order strength and record backlog. In the three months to December 31, Cisco's second quarter, it recorded net income of USD3.0 billion, up from USD2.5 billion the year prior. Diluted earnings per share improved to USD0.71 from USD0.60. Revenue increased 6% to USD12.7 billion from USD12.0 billion. Product revenue was up 9%, more than offsetting Service revenue slipping 1%. For the third quarter, Cisco is guiding for revenue to grow 3% to 5% year on year, with non-GAAP EPS to be between USD0.85 and USD0.87. For financial 2022, revenue is guided to grow 5.5% to 6.5%.
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MARKETS
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Stock prices were mostly lower on Thursday, amid conflicting reports about the Russian military forces positioned on the border of Ukraine. Market participants also were factoring in the prospect of a faster pace of monetary policy tightening in the US than previously expected. Gold was higher amid the standoff between Russia and the West, but oil was off recent highs. Still, SP Angel predicted the Brent price is headed to USD100 a barrel in the second quarter, as fuel demand recovers from the pandemic.
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CAC 40: up 0.2% at 6,981.51
DAX 40: up 0.1% at 15,384.89
FTSE 100: down 0.6% at 7,557.72
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Hang Seng: closed up 0.3% at 24,792.77
Nikkei 225: closed down 0.8% at 27,232.87
S&P/ASX 200: closed up 0.2% at 7,296.20
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DJIA: called down 0.4%
S&P 500: called down 0.5%
Nasdaq Composite: called down 0.7%
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EUR: soft at USD1.1361 (USD1.1367)
GBP: up at USD1.3598 (USD1.3577)
USD: down at JPY115.19 (JPY115.48)
Gold: up at USD1,884.63 per ounce (USD1,862.20)
Oil (Brent): down at USD92.80 a barrel (USD96.00)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russia on Thursday announced more troop pullbacks from the Ukrainian border as Washington insisted that Moscow is still building up forces for a potential invasion of its pro-Western neighbour. After previously announced withdrawals earlier this week, the US, NATO and Ukraine all said they had seen no evidence of a pullback. The Russian defence ministry said units of the southern military district were returning to bases from Moscow-annexed Crimea and that tank units of the western military district had departed on a military train for their bases 1,000 kilometres away. It did not provide details on the specific amount of troops or equipment involved. Western officials say Russia has amassed well over 100,000 troops and significant military hardware near Ukraine's borders in preparation for a potential invasion, which Washington says could take place "at any time".
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Policymakers at the US Federal Reserve envisage a faster pace of interest rate increases during the course of 2022, according to minutes from January's meeting released Wednesday. During the January 25 to 26 meeting, minutes showed members of the Federal Open Market Committee thought "a faster pace of increases...would likely be warranted" compared to the prior tightening cycle. Members highlighted remarked that supply and demand imbalances related to the pandemic and the reopening of the economy had continued to contribute to elevated levels of inflation. Further, participants noted that inflation continued to run well above 2.0% and judged the risks to the outlook for inflation as "tilted to the upside" and it would "soon be appropriate" to raise the target range.
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The wave of rising prices remains a "great concern" for American families, but the Federal Reserve has the tools to respond, US Treasury Secretary Janet Yellen told AFP. In an interview, Yellen said she is "concerned" about inflation, calling the current rates – the highest in decades – "not acceptable." However, she said she is "confident" the Fed will take action in an "appropriate way" that will ensure the US recovery continues, noting that the economy, including the labor market, is strong. Yellen also said "some global fallout" would result if the West moves ahead with the punishing, coordinated sanctions threatened against Russia, should it attack Ukraine. If the penalties are imposed, "of course, we want the largest cost to fall on Russia," Yellen said in the interview. "But we recognize that there will be some global fallout from sanctions."
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Iran has just days left to accept a deal on its nuclear programme at talks in Vienna, France warned, while Tehran's chief negotiator promised that an agreement was closer than ever. "It is not a question of weeks, it is a question of days," French Foreign Minister Jean-Yves Le Drian told the Senate, adding that a major crisis would be unleashed if there is no agreement. The Vienna talks resumed in late November with the aim of restoring the 2015 deal. That accord had offered Tehran sanctions relief in exchange for curbs on its nuclear programme, but the US unilaterally withdrew in 2018 and reimposed heavy economic sanctions, prompting Iran to begin rolling back on its commitments. "We are closer than ever to an agreement," Iran's top negotiator Ali Bagheri wrote on Twitter on Wednesday. "Our negotiating partners need to be realistic, avoid intransigence and heed lessons of past 4yrs. Time for their serious decisions."
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Australia's unemployment rate was steady at the start of the 2022. According to the Australian Bureau of Statistics, the unemployment rate was unchanged monthly at 4.2%. The figure bettered the 6.4% jobless rate in January 2021. In February 2020, just before the onset of the pandemic, the unemployment rate stood at 5.1%.
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By Tom Waite; thomaslwaite@alliancenews.com
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