(MENAFN- Gulf Times) Standard Chartered has no plans to tap shareholders for cash, it said yesterday, despite reporting a 25% drop in profits last year on the back of soaring bad loans.
The Asia-focused bank said it would not take "knee-jerk actions" and vowed instead to cut costs and shrink its loan book in an effort to quell concerns about its capital strength, the main task facing its new chief executive Bill Winters.
The bank is already braced for a fundamental overhaul when the former investment banker takes over as chief executive in June, with analysts and investors expecting him to launch a multibn pound rights issue to reboot capital after a prolonged slump in profits.
"It's themn-dollar question: has Bill Winters signed up for these targets?" said Mike Trippitt, analyst at brokerage Numis Securities.
"You can't sit there waiting for the cavalry to arrive and you've got to get on and run the business ... but he (Winters) is going to go through business unit by business unit and decide which ones to keep, what to grow and what to sell."
The bank's share price was up 3.7% at 1010 pence by 1245 GMT, still down by 25% since the start of last year.
However, the price has rallied by 9% since Winters' appointment was announced last week, part of an investor-led purge of top brass including veteran chief executive Peter Sands, three non-executive directors and the bank's head of Asia, Jaspal Bindra.
Chairman John Peace will also step down amid disquiet at management's failure to deal quickly with concerns about strategy and rising bad loans.
After a one-third rise in losses from bad loans last year to $2.1bn, mainly due to problems in China, India and among commodities firms, the bank admitted: "With hindsight, there were clients and situations we should have avoided."
That dragged down underlying pretax profit last year to $5.2bn, the second successive annual fall after a decade-long run of record profits came to a screeching halt in 2013 as Asia's credit binge turned sour. Sands described 2014 as a perfect storm of falling commodity prices, persistent low interest rates and negative sentiment towards emerging markets.
Areva
French nuclear group Areva will cut spending and improve cooperation with utility EDF and its Chinese partners in an attempt to turn around the loss-making company, but it has postponed a financial restructuring to the end of July.
State-controlled Areva, which posted its fourth consecutive annual loss, said its 2015-2017 financing plan would include "partnerships with an equity component". Chief executive Philippe Knoche did not rule out talks about an equity alliance with EDF.
"Today, talks with EDF focus on operating issues ... talks about a capital stake will come later, if necessary," he said.
French Industry Minister Emmanuel Macron, asked about a possible EDF capital investment in Areva, told Le Figaro newspaper it could be "more industrial cooperation, but could go as far as an alliance, including in terms of capital".
Macron noted in particular Areva's reactors activity, from engineering to maintenance.
EDF shares fell 2.7% on the prospect of closer ties to a company caught out by a nuclear industry slump and a series of failed investments. Areva shares were up 0.5%.
Areva remains strategically and politically important to its 87% owner, the French state. It is key to France's nuclear industry, which generates 75% of the country's electricity, the highest level in the world.
"Areva's paradox is that it is a world leader in its sector and a company in crisis," Areva Chairman Philippe Varin, appointed with Knoche in January, told reporters.
He said the crisis was due to deficient management of big reactor projects and Areva's failure to adapt to a weaker global market following the 2011 Fukushima disaster when a massive earthquake and tsunami caused meltdowns at Japanese reactors.
Areva plans to boost competitiveness with annual cost savings of 1bn
euros by 2017 and aims to reach profit levels comparable to those of its main competitors within three years.
Areva's 2014 loss soared to ‚¬4.83bn, dragged down by charges including ‚¬720mn of new provisions on Olkiluoto. It lost ‚¬494mn in 2013, ‚¬99mn in 2012, and ‚¬2.42bn in 2011.
Gerdau
Brazilian steelmaker Gerdau yesterday posted quarterly earnings that beat economists' estimates, sending its shares rallying more than 4% on the Sao Paulo stock exchange.
Gerdau, the largest long-steel producer in the Americas, reported fourth-quarter net income of 393mn reais ($132mn), a 20% drop from the previous year but above the 210mn real estimate by economists in a Reuters poll.
Shares of the company jumped 4.6%, leading gains in Brazil's benchmark Bovespa index.
Gerdau's sales dropped in line with an economic slowdown in Brazil and other Latin American countries, but a weaker real boosted foreign currency revenue from Gerdau's US operations and from exports. "The year of 2014 was challenging for Gerdau and the steel industry, mainly due to excess global capacity and lower demand in key markets such as Brazil and other Latin American countries," Chief Executive Andre Gerdau Johannpeter said in a statement.
ITV
The British broadcaster ITV declared victory in its transformation plan yesterday, returning cash to shareholders after strong international growth and new revenue streams helped it to beat 2014 profit forecasts. Adam Crozier took over the top job at ITV in 2010 when Britain's biggest listed free-to-air broadcaster was on its knees, buffeted by the fluctuations of advertising markets and haemorrhaging viewers to the higher quality programming coming from the publicly owned BBC.
Asked to restore the company to its glory days of the 1990s, Crozier set about expanding its production business, developing new online platforms and improving the quality of its programming.
Of ITV's various revenue streams, the online, pay and interactive division was up 30% to £153mn and the ITV Studios business grew by 9% to £933mn, with almost half the revenues from that division coming from outside Britain.
Total net advertising revenue was up 6% to £1.6bn, while revenue from non-advertising sources rose 10% to make up 45% of total revenue. ITV's total external revenue for 2014 was £2.59bn.
ITV also said it had started 2015 well, with net advertising revenue forecast to be up 11% in the first quarter, and up 4-7% in April.
Legal & General
Legal & General yesterday became the latest insurer to report a drop in demand for personal annuities and growing reliance on sales to companies, as full-year profits just lagged forecasts to send its shares lower. The UK life insurance industry has been shaken by pension reforms to be implemented next month, which allow retirees to use their pension pots as they choose rather than being compelled to buy an annuity giving an income for life.
L&G said sales of individual annuities fell 54% last year and it expected a further halving in 2015. But sales doubled of "bulk" annuities, which transfer the risk of defined benefit, or final salary, pension schemes from companies to insurers.
L&G Chief Executive Nigel Wilson said he expected more to follow. "You never meet a CFO who says 'boy, I'd like some more pension risk' - there's plenty of demand," he told reporters.
Annuity providers Just Retirement and Partnership Assurance have also seen an increase in bulk annuity sales. Ultra-low interest rates have led to record deficits in defined benefit schemes, which as a whole are only 78% funded. Some industry specialists say more than 1tn pounds in UK defined benefit assets are ripe for transfer to insurers, if the schemes can afford the insurance costs.
Globally, around $10tn worth of liabilities could be subject to the same trend over the next couple of decades, L&G said, citing industry estimates.
L&G's yearly operating profit rose 10% to £1.28bn ($2bn), short of the £1.31bn average forecast in a company-supplied poll of analysts.
Henkel
German consumer chemicals group Henkel, maker of Persil washing powder, said yesterday it eyed growth again this year despite a "challenging and very volatile" climate after meeting its 2014 targets.
The group posted a nominal 0.4% increase in sales for 2014, of ‚¬16.4bn ($18.3bn), adjusted for negative foreign exchange effects.
Net profit grew by 2.4% to ‚¬1.6bn, it added.
"2014 was a successful year for Henkel," chief executive Kasper Rorsted said, adding that all three of the group's business units had helped contribute to the organic growth. Emerging markets again proved to be the main growth drivers, he said.
Looking ahead to the 2015 fiscal year, Rorsted said the group foresaw an impact from the ongoing crisis in Ukraine. "The economic environment remains challenging and very volatile.
"Due to the continuing conflict between Russia and Ukraine, we expect stagnation in eastern Europe in 2015 as well as further pressure on the Russian economy and currency," he added.
Henkel, which is undergoing a restructuring programme to reduce its brand portfolio, forecasts sales growth of three to five%, excluding acquisitions and exchange effects.
Rosneft
Rosneft, Russia's top oil producer, said yesterday that its 2014 net profit was 350bn roubles ($5.7bn), down 10% year-on-year, due to unfavourable economic conditions.
Rosneft said its 2014 revenues were 5.5tn roubles, up 17%, while earnings before interest, taxes, depreciation and amortisation (EBITDA) were 1.06tn roubles, up 11.6% from 2013, the company said.
In its presentation, Rosneft said its oil production was at 205mn tonnes last year (4.1mn barrels per day). In its 2013 results presentation last year, Rosneft said its oil production was at 4.2mn bpd.
Rosneft's net debt was at $43.8bn at the end of last year, down from $57.4bn at the end of 2013. This year, the company has to repay $23.5bn, Rosneft said in the presentation on its website.
Rosneft, which changed the way it accounts for foreign exchange fluctuations, a move that avoids the cost ofbns of dollars of debt hitting profits, said its management recommended its board paying 8.2 roubles per share in 2014 dividends.
CEO Igor Sechin said in a statement: "Despite negative changes in macroeconomic environment dividend payout ratio remains 25% of net income."
The state-controlled company, along with Gazprom, is one of two key contributors to the Russian budget. Russian economy, including Rosneft and its CEO Sechin, were hit by Western sanctions over Moscow's role in the Ukraine's crisis.
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