FTSE 100 news summary: Lloyds, Barclays, Hammerson, Centrica, Aberdeen …

This week, FTSE 100 banking groups Lloyds (LON:LLOY) and Barclays (LON:BARC) released their interim results.

Lloyds has increased its payment protection insurance (PPI) provision by a further £700 million in the second quarter, resulting in an interim loss of £439 million.

The provision takes the total charge for mis-selling PPI to £4.3 billion.

On an adjusted basis, Lloyds saw its profits climb by £715 million from a year earlier to £1.06 billion.

In addition, the partly-nationalised bank said parts of the group had received subpoenas and requests for information from government agencies relating to the Libor rate rigging scandal and were co-operating with their investigations.

The interim report from Barclays was ahead of forecasts.

The figures showed that adjusted pre-tax profits climbed 13 percent to £4.23 billion with improvements of 15 percent in retail and business banking (RBB), 11 percent in corporate and investment banking and 38 percent in wealth and investment management.

Expectations were for profits of just below £4 billion.

Statutory pre-tax profits tumbled 71 percent to £759 million as a result of the write-down of own credit of nearly £3 billion and fines of £290 million for attempting to rig Libor and Euribor, the interest rates at which banks lend to each other.

Earlier this month, chief executive Bob Diamond and chief operating officer Jerry del Missier quit in the wake of the scandal.

Chairman Marcus Agius also handed in his resignation, but later agreed to stay on board to help the bank find a replacement for Diamond.

“We continue to deliver a good financial performance in the context of the current macroeconomic environment,” said Agius.

“Our competitive position continues to grow and our financial strength is serving us well in this period of uncertainty and volatility.

“These remain challenging times for Barclays, as well as the industry, and we are sorry for what has happened because of recent events.”

Other blue chips that reported their half-yearly results this week included British American Tobacco (LON:BATS) and commercial property group Hammerson (LON:HMSO).

British American Tobacco reported increased profits in the first half of the year despite lower sales in Southern and Western Europe.

Overall in the six months ended June, underlying profit from operations increased three per cent to £2.8 billion.

The firm, which makes cigarette brands such as Lucky Strike and Dunhill reported revenue of £7.4 billion in the half, as sales in developing markets helped offset tough conditions in the European markets.

Cigarette market volumes in Spain, Italy and Greece were down 10 per cent as customers cut back on cigarettes.

Meanwhile, Hammerson reported that earnings per share for the first six months of the year rose 6.3 percent from a year earlier to 10.2 pence despite a 1.6 percent decline in net rental income to £141.6 million.

During the period, group retail occupancy reached 97.5 percent, above the group’s target of 97 percent.

“Our strong income focus and strategic positioning are delivering good financial performance and dividend growth against a difficult consumer backdrop,” said chief executive of Hammerson David Atkins.

“We expect to deliver further growth to shareholders by building scale in our chosen retail sectors through extensions, developments and acquisitions.”

Centrica (LON:CNA) saw profits warm up as Britons were forced to turn up their heating during an unusually cold period between April and June.

The company’s residential energy arm, British Gas, which is the UK’s biggest energy supplier with 15.8 million customers, was the star performer thanks largely to recent price hikes.

British Gas boosted operating profit in the first six months of 2012 by 23 per cent to £345 million, which helped Centrica’s total profits rise 18 per cent to £737 million (2011: £625 mln), while residential energy revenues climbed 17 per cent to £4.8 billion compared with the same period last year.

However, the company warned investors not to expect the same increase in profits in the second half as it saw last year.

In other news in the top flight, pharmaceutical giant AstraZeneca (LON:AZN) remains on track to hit its full year targets despite seeing its pre-tax profits tumble nearly 40 percent in the second quarter.

The pharmaceutical giant said that the expiration of some of its patents led to a 21 percent drop in revenues to US$6.66 billion in the June quarter, while pre-tax profits dropped to US$1.76 billion from US$2.86 billion a year earlier.

For the first six months of the year, the group posted revenues of US$14 billion and profits of US$3.8 billion, down 16 percent and 38 percent respectively.

Aberdeen Asset Management (LON:ADN) said it has assets under management of £182.7 million at the end of June. During the June quarter, the company secured £8.8 billion of new business, taking the total for the nine month period to June 30 to £27 billion.

“This has been another successful quarter for Aberdeen, despite the global economic uncertainties and subdued conditions in the world’s financial markets,” said chief executive of Aberdeen Martin Gilbert.

In the meantime, Fashion house Burberry (LON:BRBY) told investors that it is no longer in talks over the termination of its licence agreement with Interparfums SA.

Earlier this month, Burberry decided to end the agreement with Interparfums, the exclusive worldwide licensee for its fragrance and beauty products, to “maintain flexibility in pursuing its objective to develop fully this business in the future”.

Upon termination, which will take effect at the end of the year, Burberry will pay Interparfums €181 million in cash.

The two companies had been in talks regarding the potential establishment of a new operating model for the Burberry fragrance and beauty business.

Water group United Utilities (LON:UU.) reported that it has been trading in line with forecasts and expects to meet its targets over the 2010-15 regulatory period.

“We have reported another good set of results in a tough economic climate and have delivered significant improvements in customer satisfaction. We are also confident that we can improve further,” said chairman of United Utilities John McAdam.

The group proposed a final dividend of 21.34 pence per share, taking the total dividend for the year to 32.01 pence.

In the mining sector, Anglo American (LON:AAL) reported that despite a strong operational performance, profits fell sharply in the first half of the year due to higher production costs and “markedly weaker” commodity prices.

Pre-tax profits plummeted 55 percent to US$2.94 billion and earnings before interest, tax, depreciation and amortisation fell 31 percent to US$4.94 billion as revenues declined 10 percent to US$16.41 billion.

Despite the sharp drop in profits, Anglo decided to raise its interim dividend by 14 percent to 32 US cents per share, saying that it is “committed to returning cash to shareholders”.

“Alongside continuing structural problems in the euro zone, economic growth has slowed in the US and major emerging economies, such as China, India and Brazil, albeit from high levels,” said chief executive of Anglo American Cynthia Carroll.

In oil and gas, BG (LON:BG.) confirmed this week it would take a US$1.3 bln write-down on its shale gas assets due to the glut that has sent US gas prices tumbling.

Underlying earnings of $1.07 billion in the three months to June also missed forecasts, though the UK group was upbeat over the longer term prospects for its key developments in Brazil and Australia.

BG shares have been hit by worries the two projects, especially Brazil, could be affected by cost overruns but chief executive Frank Chapman said recent developments had affirmed its capital cost forecast in Brazil and that its net share of production would reach 600,000 barrels daily by 2020.

In the US, BG said it would focus on exporting liquid gas (LNG) because of the weak domestic gas price.

The group added LNG profits this year would also be at the top end of its US$2.6 bln to US$2.8 bln forecast range due to strong demand from the Far East.


Saturday, July 28th, 2012 EN

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