Source - Alliance News

The following is a summary of top news stories Wednesday.

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COMPANIES

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Netflix late Tuesday reported a loss in subscribers for the first time in more than a decade as the streaming services provider’s stellar pandemic-inspired growth took a hit. Netflix posted first-quarter net income of $1.60 billion, or $3.53 diluted earnings per share, down from $1.71 billion, or $3.75 diluted EPS. For the three months ended March 31, revenue was up 9.9% to $7.87 billion from $7.16 billion in the first quarter last year. However, Netflix highlighted revenue growth had slowed considerably. The firm pointed to a large number of households sharing accounts, combined with rising competition from the likes of Hulu, Apple Inc and Walt Disney Co which has stifled revenue growth. Netflix reported a loss of 200,000 subscribers during the first quarter, having previously guided to add 2.5 million net subscribers during the period.

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Credit Suisse warned it expects to report a loss in its first quarter, as legal expenses and the war in Ukraine take a toll. The Zurich-headquartered bank said its first-quarter earnings will take a fr.600 million hit, around $631 million, as it increases litigation provisions for historic legal matters. Its total provision for litigation in the quarter will be fr.700 million. All the legal matters are previously disclosed and originated more than a decade ago, it said. Credit Suisse also warned of a further fr.200 million hit from Russia’s war in Ukraine. ‘With regard to our exposure to the impact of Russia‘s invasion of Ukraine both on our counterparties and on our credit risks, our results will be adversely affected,’ it said. The company also confirmed a fr.350 million loss to come in the period from a decrease in the value of its 8.6% holding in Allfunds Group, as outlined in last month’s annual report for 2021.

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Heineken reported a surge in sales in its first quarter, as it maintained guidance for its full-year. The Dutch beer brewer said revenue in the first quarter grew 36% year-on-year to €6.99 billion from €5.15 billion. Net revenue grew organically by 25% to €5.75 billion from €4.31 billion. Net revenue per hectolitre increased 18%, driven by ‘assertive pricing and premiumisation across all regions’ as well as a positive channel mix effect, the company said. Beer volume grew 5.2% organically year-on-year, and was 2.8% ahead of levels in the first quarter of 2019. Its premium beer offering grew 6.3% over the period, outperforming its portfolio in most markets. Heineken posted a net profit for the quarter of €417 million, over double that of €168 million a year before. However, it cautioned that the figure does not include impairment charges from the transfer of ownership of its Russian business as well as other non-cash exceptional charges that total some €400 million.

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ASML Holdings reported weaker results for its first quarter, but still anticipates substantial topline growth over the full year. The Eindhoven, Netherlands-based semiconductor firm focused on photolithography systems said net profit dropped 61% in the first quarter to €695 million from €1.77 billion in the fourth quarter of 2021, as earnings per share dropped from €4.39 to €1.73. Compared to a year ago, net profit halved from €1.33 billion. Net sales in the first quarter of 2022 were down 29% to €3.53 billion from €4.99 billion the immediately previous quarter. Sales also were down 19% year-on-year from €4.36 billion.

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Rio Tinto reported a ‘challenging’ quarter from its key Pilbara iron ore operations, though the miner left annual guidance unchanged. In the first three months of 2022, total iron ore shipments from the Western Australia-located asset fell 8% annually to 71.5 million tonnes. Quarter-on-quarter, shipments declined by 15%. Iron ore production from Pilbara fell 6% yearly and 15% from the fourth quarter of 2021. ‘Pilbara operations had a challenging first quarter, as expected, as ongoing mine depletion was not offset by mine replacement projects,’ Rio Tinto said. The miner also noted Covid-19 hit labour supply at Pilbara.

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IBM reported a drop in income in the first quarter - owing to its Kyndryl sale - but saw revenue rise on strong demand and has guided for further growth throughout 2022. In the three months to March 31, the New York-based technology firm recorded net income of $733 million, lower from $955 million in the same period a year prior. Discontinued operations saw $71 million net income in the first quarter, sharply lower from $552 million a year prior, due to IBM offloading its infrastructure services unit Kyndryl in November. Diluted earnings per share dropped to $0.81 from $1.06. For 2022, it expects constant currency revenue growth at the high end of the mid-single digit range.

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L’Oreal said its first quarter sales jumped nearly a fifth despite headwinds from the Ukraine war and pandemic disruptions in China as the French cosmetics giant pursued its luxury strategy. The 19% rise in sales to €9.06 billion beat analyst consensus of €8.8 billion established by Factset. ‘Against the backdrop of the invasion of Ukraine and strengthened sanitary measures in China, L’Oreal had a strong first quarter,’ said Chief Executive Nicolas Hieronimus. The company, which has been shifting its product portfolio towards the premium segment, said the luxury division posted the strongest sales growth of 25%. In recent quarters the luxury division has become the top-selling division for L’Oreal, and generated €3.46 billion in sales in the first three months of the year.

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Just Eat Takeaway.com said it is exploring a partial or full sale of its Grubhub US food delivery unit, which it had bought less than two years ago. The takeaway delivery company said it and its advisers are exploring options for Grubhub. This could include introducing a ‘strategic partner’ in order to sell a stake, or even all of its holding in Grubhub, which it agreed to purchase back in June 2020 for $7.3 billion. Also on Wednesday, the company said its fortunes at the start of 2022 stacked up well against the Covid-19 boosted first quarter of 2021, though it slightly tweaked annual guidance. The company added that it expects profitability to ‘gradually’ improve as the year progresses. The takeaway delivery company targets profit at an earnings before interest, tax, depreciation and amortisation level in 2023.

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Building materials firm CRH reported a good start to 2022 with first-quarter sales, earnings and margins ahead of a year ago. Sales growth has been supported by improved activity levels and ‘continued execution’ of its integrated solutions strategy. CRH expects sales, earnings before interest, tax, depreciation and amortisation, and margin for the first half of 2022 to be ahead of a year before, with the positive demand backdrop in North America to continue. ‘The continued delivery of our solutions strategy resulted in a good start to the year. Although a number of challenges and uncertainties continue, our demand backdrop remains favourable and absent any major dislocations in the macroeconomic environment, we expect first-half sales, Ebitda and margin to be ahead of the prior year period,’ said Chief Executive Albert Manifold.

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SSE Renewables has agreed to buy Siemens Gamesa Renewable Energy’s existing European renewable energy development platform for €580 million. The portfolio includes 3.9 gigawatts of onshore wind development projects with scope for up to 1 gigawatts of additional co-located solar development opportunities. The deal is likely to complete by the end of September this year, subject to foreign direct investment and regulatory approvals. Around half the portfolio is located in Spain with the remainder across France, Italy and Greece - with power utility SSE noting the transaction marks its entry into southern Europe.

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MARKETS

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European stock markets were trading higher as midday approached on Wednesday, despite a tentative start. Focus turned to company updates, which provided a mixed lead. Most negative was lockdown star Netflix, whose shares dropped in after-market activity in New York on Tuesday and were down 26% in the pre-market on Wednesday. The video streaming company reported a decline in user numbers, as households economise and competition grows. Investors were more pleased by the decision by Just Eat Takeaway.com to consider selling some or all of GrubHub, a US operation purchased less than two years ago. The stock was up 5.4% in London.

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CAC 40: up 1.1% at 6,603.11

DAX 40: up 0.7% at 14,247.41

FTSE 100: up 0.4% at 7,629.64

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Hang Seng: closed down 0.4% at 20,944.67

Nikkei 225: closed up 0.9% at 27,217.85

S&P/ASX 200: closed up 0.1% at 7,569.20

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DJIA: called down 0.1%

S&P 500: called down 0.3%

Nasdaq Composite: called down 0.5%

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EUR: up at $1.0838 ($1.0785)

GBP: up at $1.3027 ($1.2997)

USD: down at JP¥128.41 (JP¥128.77)

Gold: down at $1,946.90 per ounce ($1,953.33)

Oil (Brent): flat at $107.85 a barrel ($107.80)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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Annual German producer price growth was in excess of 30% last month amid a war-driven surge in energy prices. Year-on-year, producer prices soared 31% in March, which statistics body Destatis noted was the ‘highest increase ever compared to the corresponding month of the preceding year’. This marked a sharp acceleration from the already-elevated growth figures of 26% and 25% posted for February and January respectively. On a monthly basis, prices rose 4.9% in March after a rise of 1.4% in February. ‘These results should already contain first implications deriving from Russia’s attack on Ukraine,’ said Destatis. Energy prices were up 83% annually in March, largely due to natural gas prices.

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Eurozone industrial production returned to growth in February, data from Eurostat showed. Industrial output was up 0.7% month-on-month in February, reversing January’s 0.7% decline. This matched market forecasts, as cited by FXStreet. The result was driven by the production of durable consumer goods, which rose by 2.7%, while non-durable consumer goods increased 1.9%. On an annual basis, the bloc’s production grew 2.0%, again reversing a fall in January, of 1.5%, and beating forecasts for 1.5% growth. Separate data on Wednesday showed the euro area recorded a €7.6 billion deficit in trade in goods with the rest of the world in February, swinging from a surplus of €23.6 billion a year before.

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Italy’s trade deficit narrowed on a monthly basis in February, data from national statistics office Istat showed. Italy posted a trade deficit of €1.66 billion in February, trimmed from a deficit of €5.05 billion in January. However, February’s figure a marked reversal from a €4.75 billion trade surplus in February 2021. Imports surged by 45% on an annual basis to €48.80 billion, driven by purchases of energy, which multiplied. Exports rose by 23% to €47.20 billion.

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Four million more people in Shanghai have been allowed to leave their homes as Covid restrictions ease, a health official has said. A total of almost 12 million people in the city of 25 million are allowed to go outdoors following the first round of easing last week, health official Wu Ganyu said at a news conference, adding the virus was ‘under effective control’ for the first time in some parts of the city. Shanghai shut down businesses and confined most of its population to their homes starting March 28 after a spike in infections. That led to complaints about lack of access to supplies of food and medicine. People in Shanghai who test positive but have no symptoms have been ordered into quarantine centres set up in exhibition halls and other public buildings. The shutdown of Shanghai and other industrial centres to fight outbreaks has prompted fears global manufacturing and trade might be disrupted. Official data this week showed economic activity in the first three months of this year declined compared with the final quarter of 2021.

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Russia assaulted cities and towns along a boomerang-shaped front hundreds of miles long and poured more troops into Ukraine on Tuesday, in a potentially pivotal battle for control of the country’s eastern industrial heartland of coal mines and factories. If successful, the Russian offensive in what is known as the Donbas would essentially slice Ukraine in two and give Russian president Vladimir Putin a badly needed victory after the failed attempt by Moscow’s forces to storm the capital, Kyiv, and heavier-than-expected casualties nearly two months into the war. The cities of Kharkiv and Kramatorsk came under deadly attack, and Russia also said it struck areas around Zaporizhzhia and Dnipro west of the Donbas with missiles. Russian defence ministry spokesman Igor Konashenkov said air-launched missiles destroyed 13 Ukrainian troop and weapons locations, while the air force struck 60 other Ukrainian military facilities, including missile warhead storage depots. Russian artillery hit nearly 1,300 Ukrainian military facilities and more than 1,200 troop concentrations over the past 24 hours, he said. The claims could not be independently verified.

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Finland’s parliament will start debating whether to seek NATO membership, after Russia’s invasion of Ukraine sparked a surge in political and public support for joining the bloc. Despite Russia warning of a nuclear build-up in the Baltic should Finland and neighbouring Sweden join the military alliance, Finland’s prime minister said that her country would now decide quickly on whether to apply for membership. ‘I think it will happen quite fast. Within weeks, not within months,’ Prime Minister Sanna Marin said last week. Sweden is also discussing whether to submit a membership bid following Russia’s February 24 invasion.

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Finance officials from the world’s richest countries will meet on Wednesday to address global challenges like rising debt and a possible food crisis – if they can overcome boiling tensions over Russia’s invasion of Ukraine. Moscow’s attack on its neighbor is set to dominate the meeting of G20 finance ministers and central bank governors, the first since Russian President Vladimir Putin ordered the invasion in February. Western nations have retaliated for the bloody incursion with sanctions meant to harm Russia’s economy and turn it into a pariah state. And US Treasury Secretary Janet Yellen will boycott some sessions if Russian officials are present, according to a senior US official, a stance other countries have said they will follow. The G20, chaired by Indonesia this year, includes major economies like the US, China, India, Brazil, Japan and several countries in Europe. The officials will gather virtually on the sidelines of the World Bank and IMF’s spring meetings in Washington.

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The US is set to approve another $800 million in military aid for Ukraine, less than a week after announcing a package of the same amount, US media reported Tuesday. Details of the new package are still being worked out, according to CNN, which cited three senior officials in President Joe Biden’s administration. NBC News reported that the new assistance is expected to include more artillery and tens of thousands of shells to help Kyiv combat Russia’s invasion, as fighting escalates in the east of Ukraine. White House spokeswoman Jen Psaki said Tuesday that Biden and other world leaders had participated in a call during which they discussed providing additional ammunition and security aid to Ukraine. Biden on April 13 had unveiled an $800 million package of equipment for Kyiv, including helicopters, howitzers and armored personnel carriers. More than $3.2 billion in security assistance has been provided to Ukraine under Biden, not including the anticipated new package.

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French leader Emmanuel Macron and the far-right’s Marine Le Pen go head-to-head in a crunch TV debate on Wednesday, seeking to sway undecided voters with four days left until the presidential election’s decisive second round. Macron holds a solid poll lead, but his political allies have warned against any complacency in the prime-time duel – their only direct clash – which will be watched by millions. Some polls are predicting a lead of around 10 points for Macron over Le Pen in the run-off, a repeat of the 2017 election. But undecided voters and abstentions could yet swing the figures. Le Pen has cleared her diary to concentrate on preparing for the debate, hoping to avoid any repeat of the fiasco five years ago, when her ill-prepared performance contributed to her defeat at the hands of the centrist Macron. This year’s vote will mark the closest the far right has come to taking the Elysee presidential palace. Marine Le Pen’s father Jean-Marie was crushed by Jacques Chirac in the 2002 run-off election, and she was easily defeated by Macron in 2017.

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