News Column

TOP NEWS: Rio Tinto Doubles Interim Profit As It Reduces Costs

August 7, 2014

Arvind Bhunjun



LONDON (Alliance News) - The following is a summary of top news stories Thursday.

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COMPANIES

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Rio Tinto PLC said its pretax profit almost doubled in its first half and it raised its interim dividend by 15%, as the company passed its operating cash cost reduction target six months ahead of schedule and benefited from foreign exchange gains. The FTSE 100 mining giant said its pretax profit increased to USD6.09 billion for the six months ended June 30 from USD3.21 billion the previous year.

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Randgold Resources PLC said its pretax profit jumped in its second quarter as higher gold production and lower cost of sales offset a fall in the price of gold. The mining company said its pretax profit increased 52% to USD92.1 million for the three months ended June 30 from USD60.7 million in the previous year, as revenue rose 28% to USD292.8 million. The company said revenue increased as its gold production rose 41% to 277,283 ounces in the second quarter from the same period a year earlier, while its costs per ounce of gold fell 12% to USD701. In its first half as a whole, the company's revenue rose 12% to USD577.2 million and pretax profit increased 37% to USD200.1 million.

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Aviva PLC reported a rise in pretax operating profit from continuing operations as increases in its life business and from fund management more than offset a drop in general insurance and health. Aviva increased its interim dividend by 4.5% to 5.85 pence from 5.60p. In a statement, the FTSE 100 insurer said it made a GBP1.05 billion pretax operating profit in the six months ended June 30, compared with GBP1.01 billion in the corresponding period last year.

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RSA InsuranceGroup PLC reported a substantial drop in first half pretax profit as Chief Executive Stephen Hester continues to implement his turnaround plans at the embattled FTSE 100 insurer. RSA did not pay an interim dividend but said it is targeting a restart at the end of the year. RSA said it made a GBP45.0 million pretax profit in the six months ended June 30, compared with GBP240.0 million in the corresponding period last year.

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Mondi PLC said that underlying operating profit rose as expected in its first-half, supported by strong performances in Packaging Paper, Fibre Packaging and its South Africa division, as it increased its dividend by 39% and benefited from a reduced special charge on restructuring activities during the period. The FTSE 100-listed company said first-half underlying operating profit - which excludes items including restructuring costs and asset impairments - rose 3% to EUR377 million from EUR366 million in the comparable period last year. Pretax profit also came in higher at EUR312 million compared to EUR229 million for the first-half in 2013 and EUR270 million in the second-half. The company said that on a like-for-like basis, excluding currency movements and disposal effects, revenue was in line with the comparable prior year period.

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Coca-Cola HBC AG, said its pretax profit rose in the second quarter despite a continued fall in net sales revenue, and said the strong second quarter drove profit growth in the first half as whole. The bottling group reported a pretax profit of EUR178.7 million for the three months to June 27, up from EUR120.0 million a year earlier, supported by an increased operating profit and lower total net finance costs. However, the group said that due to difficult economic and trading conditions, and a sudden deterioration of trading in Russia and a small number of other markets, means it now expects the volume decline trend seen in the first half to persist in the remainder of the year.

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Old Mutual PLC reported a drop in first half profit, as the group, which operates across numerous countries from the UK and South Africa to sub-Saharan Africa, was hit by the strength of sterling in the period. Old Mutual increased its interim dividend to 2.45 pence from 2.10p. In a statement, the Anglo-South African investment, savings, insurance and banking group said it made a GBP564.0 million pretax profit in the six months ended June 30, compared with GBP805.0 million in the corresponding period last year. Revenue fell by GBP1.68 billion to GBP7.96 billion, while expenses fell by GBP1.45 billion to GBP7.39 billion.

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AMEC PLC said its pretax profit slumped in its first half as revenues were hit by the strength of the sterling and the continued slow down of operations in conventional oil and gas. The consultancy, engineering and project management services supplier said pretax profit fell 29% to GBP83 million for the six months ended June 30 from GBP118 million in the same period the previous year. The company said revenue fell 7% to GBP1.86 billion from GBP1.99 billion, which the company said included GBP160 million in losses through adverse currency translation due to the strength of sterling.

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Soco International PLC said it plans to keep its full year production guidance, despite operational delays after it hit geological problems at a well in Vietnam. The FTSE 250-listed oil and gas explorer and producer said in an activity update that it expects the CNV-7PST1 well in the Vietnamese Ca Ngu Vang field to be completed in September. The company said the well hit unexpected geological problems in the upper hole section of the well, just above the reservoir, and that borehole instability issues mean that part of the well has to be re-drilled and a new casing put in place. Despite this, Soco plans to keep its full year production guidance at 14,000 to 15,000 barrels of oil equivalent per day.

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DraxGroup PLC said the UK Court of Appeal has backed the Department of Energy and Climate Change in its decision not to allow the conversion of the second unit at Drax's power station to be eligible for new subsidies. Drax shares fell 10% to 639.00 pence, making it the biggest FTSE 250 loser. The UK energy provider started legal proceedings earlier this year against the UK government, after it said the second unit at the power station, which is due to be converted to burning biomass rather than coal, will not be eligible for investment contracts under a new contracts-for-difference scheme, a subsidy for low-carbon electricity generation.

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Cobham PLC saw its shares jump after the company said that pretax profit and revenue declined in its first-half on a strong comparative period that was boosted by non-repeating large multi-year orders though said that it remains confident that it will meet its expectations and achieve good commercial growth in the full-year. In its half-year results for the six months to June 30, 2014 Cobham said pretax profit fell 14% to GBP118 million, from GBP137 million last year. Revenue declined 3% to GBP834 million from the GBP864 million recorded last year. The aerospace and security technology company said order intake for the year also dropped, taking a 25% hit to GBP728 million from GBP976 million reported in the first-half of 2013.

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HendersonGroup PLC reported a decline in assets under management over the course of the second quarter, as the creation of a 40%-owned real estate joint venture with IAA-CREF and the additional stake it took in 90 West came into effect. In a statement, the FTSE 250 investment manager said assets under management fell to GBP74.71 billion at the end of June, from GBP79.20 billion at the end of March. This was due to a GBP6.68 billion reduction due to those deals coming into effect, more than offsetting GBP1.86 billion of net inflows from retail clients and GBP179.0 million of institutional net inflows. Henderson is also awaiting the closing of a deal to acquire Geneva Capital Management, which had USD6.3 billion in assets under management at the end of May, for up to USD200.0 million.

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Lloyds BankingGroup PLC has said it will defend itself against a lawsuit filed by investors in the bank which has the potential to be one of the biggest in terms of damages ever heard in English courts, the Financial Times reports. The bank was sued in London on Wednesday by investors over its UK government-arranged takeover of HBOS in 2008. The bank's former chairman, Victor Blank, and former chief executive, Eric Daniels, are both named as defendants in the suit, the FT said. The claimants argue they were misled into approving the merger as key information regarding the true financial health of HBOS was withheld.

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InterContinental HotelsGroup PLC said it has received a binding offer from Constellation Hotels Holding Ltd to acquire IHG's InterContinental Paris Le Grand hotel for EUR330 million. The owner of the Crowne Plaza and Holiday Inn chains said within the binding offer to acquire the 470-room Paris hotel, Constellation Hotels has made a further commitment to invest over time an estimated EUR60 million in renovations of the hotel. IHG said that as at June 30, the hotel had a book value of EUR342 million.

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VodafoneGroup PLC and O2 are set to accelerate the rollout of superfast 4G networks in the UK after striking a deal with Arqiva, the Financial Times reported. The telecommunications infrastructure firm has signed a ten-year site-share deal with Vodafone and Telefonica UK, the operator of the O2 brand, under which the operators will get access to Arqiva's 16,700 sites across the country, the newspaper said.

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MARKETS

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UK stocks are trading a little lower morning, with company updates driving the main stock movers. With little in the morning economic calendar, investor sentiment has been held back a little by the ongoing war of sanctions between the Russian and western economies, with Russia most recently imposing a "full embargo" on food imports from any country involved in the sanctions.

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FTSE 100: down 0.2% at 6623.81

FTSE 250: down 0.1% at 15244.94

AIM ALL-SHARE: down 0.2% at 749.72

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The pound and euro currently trade flat against the dollar ahead of the BoE and ECB interest rate decisions due at 1200 BST and 1245 BST, respectively.

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GBP-USD: flat at USD1.6843

EUR-USD: flat at USD1.3380



GOLD: down at USD1304.00 per ounce

OIL (Brent): down at USD104.27 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Germany's industrial production grew for the first time in four months in June, Destatis reported. Industrial output increased 0.3% month-on-month in June, reversing the revised 1.7% fall in May. June's rate of growth was slower than the expected 1.2% increase.

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France's trade deficit widened more-than-expected in June, data from the Customs Office showed. The trade deficit increased to EUR 5.380 billion in June, which was larger than the EUR 4.912 billion deficit expected by economists. The shortfall was EUR 4.864 billion in the corresponding month of the previous year. In May, a trade deficit of EUR 5.129 billion was recorded.

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The Russian ban on all imports of meat, milk products, fish, fruits and vegetables from the US, EU, Australia, Canada and Norway goes into immediate effect and will last a year, Prime Minister Dmitri Medvedev said. He described sanctions as a "dead-end track", but said Russia was forced to respond to the measures taken by Western countries. Medvedev said the year-long embargo will bolster domestic agriculture, according to the Itar-Tass news agency. Russia was also considering steps to close its airspace to flights by European and US airlines to and from the Asia-Pacific region, Medvedev told a cabinet meeting.

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Israel would respond to any rocket fire from Gaza after the expiry of the current ceasefire, the army said. "The army would then resume operations, and I think more decisively," Communications Minister Gilad Erdan told Israeli radio. "We are taking the threat seriously" of a resumption of rocket fire, Erdan said. Hamas spokesman Sami Abu Zuhri said Wednesday that extending the 72-hour ceasefire, due to expire early Friday, was not under discussion, despite earlier reports to the contrary. Israel sent a delegation to Cairo on Tuesday for indirect talks with the Palestinians through Egyptian and American mediators.

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The number of Ebola deaths in West Africa has risen to 932, the World Health Organisation said Wednesday, as the disease continues to spread across the region. The number of confirmed or suspected cases rose to 1,711, according to the WHO, which has said the current Ebola outbreak is the deadliest on record.

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