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What to watch: Aviva exits Italy, Melrose beats estimates, William Hill and Ladbrokes hit by closures

·Contributor
·4-min read
The FTSE 100 firm said it will realise over €1.3bn in cash from its Italian exit, including the previous sale of Aviva Vita to UBI Banca. Photo: Simon Dawson/Reuters
The FTSE 100 firm said it will realise over €1.3bn in cash from its Italian exit, including the previous sale of Aviva Vita to UBI Banca. Photo: Simon Dawson/Reuters

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

Aviva exits Italy

Insurer Aviva (AV.L) has announced the sale of its Italian business for €873m (£754m, $1bn).

Its Italian life insurance business was sold to CNP Assurances for €543m, while its general insurance business went to Allianz for €330m. The sales are expected to complete in the second half of the year, pending regulatory approvals.

The FTSE 100 firm said it will realise over €1.3bn in cash from its Italian exit, including the previous sale of Aviva Vita to UBI Banca.

The move continues a series of divestments aimed at strengthening its UK focus.

Amanda Blanc, chief executive of Aviva, said: "Since I announced our new strategy in August last year, we have announced seven divestments that will generate over £5bn ($6.97bn) of cash proceeds. This rapid progress allows us to focus on transforming and growing our already strong businesses in the UK, Ireland and Canada."

It came as the company reported a full year underlying operating profit of £3.2bn, broadly in line with last year. The group’s core businesses saw operating profits fall 2.6% to £2.5bn as the pandemic hit profits in the UK & Ireland and Aviva Investors.

The group announced a final dividend of 14p per share, taking the full year total to 21p. Shares climbed 1.25% higher on the back of the news.

Aviva shares climbed on Thursday on the back of the news. Chart: Yahoo Finance
Aviva shares climbed on Thursday on the back of the news. Chart: Yahoo Finance

Melrose beats estimates

Melrose Industries (MRO.L) climbed higher on Thursday after beating expectations in its full-year results despite swinging into the red.

The company posted a statutory loss before tax of £523m for 2020, compared to a £55m profit the year before.

It said trading was at the “top end” of management expectations during the second half of last year, with non-aerospace divisions seeing revenue growth pick up during the six month to the end of December.

Melrose, which bought GKN in 2018, warned that no recovery has been seen in the civil aerospace market, adding that this “is not expected to change in 2021”. Sales in the division sales tumbled 27% last year.

The company also announced it was looking to sell Nortek Air, with no expectation that a sale would take place, even though the business is performing well.

On a positive note, a 0.75p dividend was announced.

Mark Fielding of Royal Bank of Canada said Melrose had made a “strong finish” to 2020, saying the group appeared to have “good momentum” outside of aerospace.

European markets downbeat

European stocks fell at the open on Thursday as the EU vowed legal response after the British government unilaterally extended a grace period for checks on food imports to Northern Ireland.

The FTSE 100 (^FTSE) fell 0.49% after the bell, while the CAC (^FCHI) tumbled 0.20% and the DAX (^GDAXI) was 0.37% lower.

The UK government extended a grace period for some checks on agricultural and food products imported by retailers to Northern Ireland until 1 October in a bid to ensure the free flow of goods to the British region.

However, Brussels said the move violated terms of Britain's divorce deal.

READ MORE: UK and EU 'very far' from solving Brexit disruption in Northern Ireland

"This is the second time that the UK government is set to breach international law," the European Union said in a statement.

Since the UK left the bloc, both sides have accused the other of acting in bad faith in relation to part of their Brexit agreement that covers goods movements to Northern Ireland.

William Hill and Ladbrokes hit by closures

Bookmakers Ladbrokes and William Hill (WMH.L) reported slumping revenues at their betting shops on Thursday due to the COVID-19 pandemic.

The rival bookmakers published contrasting sets of full-year results on Thursday, with William Hill suffering a slump in profits while Ladbrokes managed to grow earning. Both saw sales at their betting shops slump as the pandemic forced them close and led to the cancellation of live sports.

William Hill's betting shop business slumped to a £29.5m loss, largely offsetting growth of 3% in online revenues. The group made a pre-tax profit of just £9.1m in 2020 as a result, down 91% on 2019.

READ MORE: Paddy Power-owner's profits wiped out by mega-merger costs

"Retail has undergone regional disruption although where stores did re-open, they quickly traded towards pre-COVID levels," chief executive Ulrik Bengtsson said. He pointed to strong growing in online and said the company's strategy was "bearing fruit."

Ladbrokes, meanwhile, fared better thanks to its US joint venture. Entain (ENT.L), Ladbrokes parent company, reported a pre-tax profit of £174.7m compared to a loss in 2019. Underlying profits rose by 2%.

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