BHP earnings surge in first half, HSBC announces business overhaul
By Josh White
Date: Tuesday 18 Feb 2020
(Sharecast News) - London open
The FTSE 100 is expected to open 58 points lower on Tuesday, having closed up 0.33% at 7,433.25 on Monday.
Stocks to watch
First half earnings at BHP surged 29% on the back of higher iron ore prices as the dividend payout was tempered by short term caution over the coronavirus. Underlying earnings at the world's biggest miner rose to $5.2bn from $4.03bn a year earlier. The interim dividend was increased 18% to 65 cents a share, reflecting "caution due to near term market volatility driven by the 2019 coronavirus disease outbreak, trade policy and geopolitics", BHP said on Tuesday.
HSBC announced a radical overhaul of its business to increase returns as the global bank reported a one-third fall in annual profit and wrote down more than $7bn (?5.4bn) of goodwill. Pretax profit for the year to the end of December fell 33% to $13.3bn as revenue rose to $56.1bn from $53.8bn. HSBC's $7.3bn goodwill writedown included $4bn at its investment bank. The FTSE 100 bank said it would cut $100bn of risk-weighted assets by the end of 2022 and reduce costs by $4.5bn. It targeted a return on tangible equity of 10-12% in 2022. The dividend will be sustained but there will be no share buybacks in 2020 or 2021.
Intercontinental Hotels Group reported an 8% rise in reported revenue in its full-year results on Tuesday, to $2.08bn (?1.6bn). The FTSE 100 accommodation operator said its operating profit was up 4% at $865m, while adjusted earnings per share were ahead 3% at 303.3 US cents for the year ended 31 December. It said it saw net system size growth of 5.6%, or 5.0% excluding its Sands partnership in Macau, which was the strongest in more than a decade, with 65,000 room additions.
Newspaper round-up
Apple has warned of global "iPhone supply shortages" resulting from its Chinese factories being shut because of the coronavirus outbreak. The Californian company told investors on Monday night it would fail to meet its quarterly revenue target of $63-67bn (?48-52bn) because of the "temporarily constrained" supply of iPhones and a dramatic drop in Chinese shoppers during the virus crisis. Apple did not provide a new forecast for its second-quarter revenue. - Guardian
BT is to scrap its traditional pay-TV packages and allow customers to pay for prime content such as Premier League football on a monthly basis, as it aims to keep pace with the flexibility offered by streaming services such as Netflix and Disney+. BT has traditionally used its multibillion pound portfolio of rights, from Champions League to Premiership Rugby and boxing, to lock consumers into long-term contracts bundling TV packages with broadband and phone services. - Guardian
Brexit is an opportunity for "economic competition" that should benefit everyone in Europe, Boris Johnson's chief negotiator has said. In his first speech, David Frost said that if Britain were to continue following EU rules, it would betray the point of the referendum. But he stressed Brexit would not mean a race to lower standards. Speaking at a Brussels university, Mr Frost said he would set out the shape of Britain's preferred trade deal next week. Negotiations are expected to begin in March. - Telegraph
The Chinese economy is on course to suffer its worst quarterly performance since the Tiananmen Square protests in 1989 because of the coronavirus outbreak, economists have said. Chinese officials cut a key medium-term interest rate yesterday, pumping more liquidity into the system and raising hopes of further stimulus to curb the economic impact of Covid-19, the official name for the latest coronavirus. The move helped to lift stock markets across Europe and Asia. - The Times
Tesla's plans to build a "gigafactory" in the forests east of Berlin are in jeopardy after a German court ordered the electric car manufacturer to stop cutting down trees without planning permission. Elon Musk, the company's founder and chief executive, had hoped that the ?3 billion complex - Tesla's first serious beachhead in Europe - would be built from scratch in less than 18 months and would turn out 150,000 vehicles in its first year, eventually rising to 500,000 a year. - The Times
US close
Wall Street trading was closed on Monday, for the Presidents' Day holiday.
On Friday, markets there finishined mixed, with the Dow Jones Industrial Average ending the session down 0.09% at 29,398.08.
At the same time, the S&P 500 was up 0.18% at 3,380.16, and the Nasdaq Composite rose 0.2% to 9,731.18.
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