GKN Warns On Claims, Aviva Exits Taiwan Venture

LONDON (Alliance News) - FTSE 100-listed aerospace engineering firm GKN on Friday warned its results will be hit by claims made against the company, and now expects its profit for 2017 will be "slightly above" that of 2016.

GKN reported a pretax profit of GBP292.0 million in 2016. When it released its interim results, GKN has said 2017 was expected to be "another year of growth".

The company said it had been made aware of two probable claims which are expected to result in a charge of around GBP40 million in the fourth quarter of 2017. One relates to GKN Aerospace and the other GKN Driveline. Both claims are commercially sensitive with no additional information disclosable at this time, it said.

For the third quarter of the year, GKN reported good sales growth, with the Driveline segment outperforming its market and Aerospace ending up higher in sales than the year before, despite operational challenges for the division in North America, which is expected to incur a GBP15.0 million charge related to revised assumptions on programme inventory and receivables balances.

The group's trading margin in the third quarter was lower than the same period the prior year, as a result of programme transitions and on-going challenges in the US.

Meanwhile, insurer Aviva said it had agreed to exit its Taiwan business through a sales to its joint venture partner. Aviva holds a 49% shareholding in First Aviva Life with the remainder held by First Financial Holding. Aviva said it will sell its entire stake to First Financial without offering details with regards to price.

The sale, expected to complete in 2018, comes after a strategic review of its Taiwan business at the FTSE 100 insurer in which it concluded that the business was not a "central" part of the company's strategy and that it should "focus on markets where it can achieve scale and profitability or have a distinct competitive advantage".

In the mid-cap index, subprime lender Provident Financial confirmed shareholders will see no dividend this year, as it said a recovery plan for its home credit business has been developed under new leadership to "re-establish relationships with customers, stabilise the operation of the business and improve collections performance."

That comes after Provident reduced its pretax profit guidance for its Consumer Credit division earlier this year, to a pre-exceptional loss of between GBP80 million to GBP120 million in 2017, from previous forecasts of a GBP60 million profit - as a result of the unsuccessful transition of its home credit sales force from part-time self-employed agents to full time employees.

Provident said the search for a new chief executive is underway, after Peter Crook resigned in August following the withdrawal of the interim dividend and the profit warning issued mid-way through the year.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: to open 14.5 points lower at 7,541.74
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Hang Seng: slightly lower at 28,456.17
Nikkei 225: closed up 1.0% at 21,155.18
DJIA: closed down 0.1% at 22,841.01
S&P 500: closed 0.2% at 2,550.93
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GBP: up at USD1.3273 (USD1.3166)
EUR: firm at USD1.1839 (USD1.1843)

GOLD: firm at USD1,297.79 per ounce (USD1,292.32)
OIL (Brent): up at USD56.55 a barrel (USD55.90)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come

1000 CET Italy consumer price index

0830 EDT US real earnings
0830 EDT US consumer price index
1000 EDT US manufacturing & trade: inventories & sales
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The EU could begin preparing for post-Brexit trade negotiations while refusing to discuss with Britain the nature of the future relationship. A document seen by reporters in Brussels suggests EU leaders and chief negotiator Michel Barnier could begin "internal preparatory discussions" on a future trade relationship and a transition deal in a move which could offer Prime Minister Theresa May hope for talks. The draft conclusions for next week's European Council summit of EU leaders, which are subject to change, calls for work to continue to achieve "sufficient progress" on withdrawal issues of a financial settlement, the Irish border and citizens' rights, to unlock the second stage of talks to focus on trade. But it warns that Britain has not made a "firm and concrete" commitment on what Brussels sees as its financial obligations, echoing Barnier's concerns that a "disturbing" deadlock over the size of Britain's exit bill means he cannot recommend moving on from divorce talks to discussions about future trade relations when leaders of the 27 remaining EU states meet in Brussels on October 19.
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US President Donald Trump will announce his strategy on Iran and the international agreement on Tehran's nuclear programme on Friday, the White House said. The president is to make the announcement in remarks at 1645 GMT, spokeswoman Sarah Sanders said. Trump is expected to distance his administration from the international deal on Iran's nuclear programme by taking steps to inform Congress he does not believe Tehran is in compliance with the spirit of the agreement. Trump will say the agreement, reached in 2015 after years of negotiations between Iran and six world powers, is not in the national interest of the US, according to reports. The decision would stop short of the US completely scrapping the deal, and would put the deal into the hands of Congress, which could choose to reimpose sanctions that were lifted under the international agreement.
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The US House of Representatives on Thursday approved legislation that includes assistance for hurricane-hit Puerto Rico after Trump said the US aid agencies and military can't stay there "forever." The bill, which passed 353-69, also includes disaster aid funding for people in Texas and Florida, which also were struck by hurricanes in recent weeks, and for California, where disaster relief efforts are just getting started in the midst of deadly wildfires. The bill, which passed the Senate last month, provides an additional USD36 billion for disaster relief. It appropriates an additional USD18.7 billion to the US Disaster Relief Fund, of which up to USD4.9 is to be made available as loans to local governments, including Puerto Rico.
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Trump will end government subsidies to health insurers designed to help cover the costs of providing insurance under Obamacare, the White House said late Thursday. The Department of Health and Human Services and the Justice Department had determined there was no money set aside by Congress for the payments, White House spokeswoman Sarah Sanders said. "In light of this analysis, the government cannot lawfully make the cost-sharing reduction payments," she said. "The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system. Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people."
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Italy's lower house on Thursday approved an electoral reform bill, despite fierce opposition from the country's populist, anti-establishment Five Star Movement. Prime Minister Paolo Gentiloni had tied the vote to a confidence motion in order to move the bill more quickly through the Chamber of Deputies. The legislation still needs to be approved by the Senate. The Five Star Movement has objected to the law because it promotes coalitions, to which the party fundamentally objects. Italy must hold elections by early next year and the government has hurried to pass the legislation before then, as the current electoral system is different for the lower and upper houses, increasing chances of inconclusive results. The new legislation, known as the "Rosatellum" law, is backed by the ruling Democratic Party as well as the right-wing populist party Lega Nord and the conservative Forza Italia party.
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Germany's inflation held steady, as initially estimated, in September, final data from Destatis showed Friday.
Consumer prices advanced 1.8% year-on-year in September, the same rate as seen in August. The rate also matched the estimate published on September 28. The inflation rate was the highest since April, when it was 2%. On a monthly basis, the CPI edged up 0.1% for the second straight month. Monthly inflation also matched flash estimate. The harmonized index of consumer prices, or HICP, also rose 1.8% year-on-year in September, same as in the previous month. Month-on-month, the HICP remained unchanged in September. This confirmed the HICP estimates of September 28.
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China's exports grew at a slower-than-expected pace in September, data from the General Administration of Customs showed Friday. In dollar terms, exports climbed 8.1% year-over-year in September, below economists' forecast for an increase of 10.0%. At the same time, imports surged 18.7% in September from a year ago, faster than the expected growth of 15.0%. The trade surplus totaled USD28.47 billion in September versus the expected surplus of USD38.0 billion.
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The M2 money stock in Japan was up 4.1% on year in September, the Bank of Japan said on Friday - coming in at 979.3 trillion yen. That beat forecasts for an increase of 4.0%, which would have been unchanged from the August reading. The M3 money stock was up an annual 3.4% to 1,305.9 trillion yen - unchanged an in line with expectations. The L money stock gained 4.3% on year to 1,716.1 trillion yen. For the third quarter of 2017, M2 was up 4.0% on year, while M3 added 3.4% and L gained 5.0%.
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BROKER RATING CHANGES
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DEUTSCHE BANK RAISES ANGLO AMERICAN PRICE TARGET TO 1300 (1270) PENCE - 'SELL'

DEUTSCHE BANK RAISES BHP BILLITON PRICE TARGET TO 1650 (1600) PENCE - 'BUY'

DEUTSCHE BANK RAISES GLENCORE PRICE TARGET TO 430 (420) PENCE - 'BUY'

DEUTSCHE BANK RAISES RIO TINTO PRICE TARGET TO 4500 (4300) PENCE - 'BUY'

HSBC RAISES SHELL B PRICE TARGET TO 2550 (2475) PENCE - 'BUY'

HSBC RAISES SHELL PRICE TARGET TO 2500 (2450) PENCE - 'BUY'

JPM RAISES HARGREAVES LANSDOWN PRICE TARGET TO 1500 (1470) PENCE - 'NEUTRAL'

RBC RAISES HARGREAVES LANSDOWN PRICE TARGET TO 1500 (1450) P - 'SECTOR PERFORM'
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COMPANIES - FTSE 100
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The chairman of British bank Standard Chartered has called on US policymakers to preserve a key post-crisis power that allows bank regulators to wind down a failing lender, even as the Trump administration looks to slash red tape across the financial sector, Reuters reported on Thursday. The comments by Jose Vinals, one of the industry's most senior and influential bankers, will add to growing pressure on the US Treasury to support preserving special bank liquidation powers introduced after the 2007-09 global financial crisis, Reuters said. The Treasury is expected to release a widely anticipated review of the policy in the coming weeks, which was ordered by President Trump in April.
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Shire New ONCASPAR Formulation Gets Positive CHMP Opinion In Europe.
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COMPANIES - FTSE 250
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Man Group said funds under management at the end of September had climbed to USD103.5 billion from USD95.90 billion at the end of June, up 28% in the year-to-date, and said it intends to repurchase up to USD100 million of shares, while continuing to review further potential acquisition opportunities.
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Specialist emerging markets asset manager Ashmore Group said it had USD65.00 billion worth of assets under management at the end of September compared to USD58.70 billion at the end of June, up 11%. The rise was down to its positive investment performance of and higher net inflows. "Investors are increasingly focusing on emerging markets and it is encouraging to see strong inflows this quarter. Emerging markets are continuing to outperform as we would expect at this point in the cycle, with perceived challenges such as rising US interest rates having been anticipated and priced in," said Chief Executive Mark Coombs.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Ryanair Holdings is set to challenge a Deutsche Lufthansa deal to acquire parts of its failed German peer Air Berlin, after calling it a "stitch-up", reported BBC News on Friday. Lufthansa, the largest airline in Germany, signed a EUR210.0 million deal to buy assets from the insolvent Air Berlin on Thursday in order to quickly expands its own budget business, Eurowings. The deal would see Lufthansa pick up Austrian leisure travel airline Niki, LG Walter regional airline, and 20 further aircraft from Air Berlin which filed for bankruptcy in August after its largest shareholders, Etihad, refused to offer additional financial support. Air Berlin flights have continued courtesy of a EUR150.0 million loan from the German government.
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Ryanair resisted moves by pilots to unionise on Thursday, after one demanded the Irish airline adopts a new approach to industrial relations, Reuters reported. The European Cockpit Association, which represents pilot unions, said the demand by Imelda Comer represented the view of pilots in the majority of Ryanair's 86 bases, who are in the process of setting up a pan-European representative body. After the airline said it would not respond to anonymous letters, Comer became the first Ryanair captain to speak publicly in a letter to Ryanair boss Michael O'Leary, Reuters said. Ryanair, which does not recognise trade unions, dismissed Comer's letter as "disingenuous" and said it would not correspond with any newly formed pilot group. It said Comer had already resigned and was due to leave Ryanair on October 31, Reuters reported.
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The second-largest investor in Johnston Press, the owner of The Scotsman and i newspapers, will next week ignite a battle for control of its board by demanding a shareholder meeting to oust its chairman, Sky News reported Friday. Sky News has learnt that Christen Ager-Hanssen, a Norwegian businessman whose investment vehicle Custos owns 12.6% of the British media group, plans to write to Johnston Press's board in the coming days to requisition an extraordinary general meeting. Sources said that Ager-Hanssen was expected to seek the removal of Camilla Rhodes, the company's interim chairman, and to try to install himself in her place. He is also thought likely to demand other changes to the composition of Johnston Press' board.
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COMPANIES - INTERNATIONAL
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Tesla is recalling about 11,000 Model X sport utility vehicles due to possible issues with their second-row fold-flat seats. Only about 3% of the electric SUVs being recalled are expected to have issues, which the carmaker said it can correct in about 10 minutes with its mobile service operators. The problem, which was discovered in internal testing, involves incorrectly adjusted seat cables. Tesla said it has not received reports of any issues or accidents relating to the problem.
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Walt Disney's ABC TV Group will lay off as many as 200 employees, according to reports. The reports noted that the division will part ways with somewhere between 100-200 employees. The largest cuts will come from non-content and operational functions. The layoffs will impact all of the division's teams: ABC Entertainment, ABC Studios, Disney Channel, Disney XD, Disney Junior and Freeform.
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Amazon.com Inc put Roy Price, the head of its film and TV unit, on a leave of absence, in the wake of allegations of mismanagement, sexual harassment and a close business relationship with Harvey Weinstein. Price's Leave of absence comes soon after a female producer went public about a 2015 sexual-harassment complaint she made against him and after actress Rose McGowan unleashed a storm of criticism at the company for being in business with Harvey Weinstein, the former Weinstein Co co-chairman who was ousted over the weekend amid numerous allegations of sexual harassment.
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HP said that it expects GAAP net earnings per share from continuing operations to be in the range of USD1.69 to USD1.79 and estimates non-GAAP net earnings per share to be in the range of USD1.74 to USD1.84 for fiscal 2018. Analysts polled by Thomson Reuters expected the company to report earnings of USD1.76 per share for fiscal 2018. Analysts' estimates typically exclude special items. Based on the current environment, HP anticipates generating free cash flow of at least USD3.0 billion for fiscal 2018. HP expects to return 50%-75% of annual free cash flow to shareholders. In fiscal 2018, the company indicated that it expects to be towards the higher end of that range, with a 5% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases.
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Samsung Electronics said that Vice Chairman Oh-Hyun Kwon plans to resign as the company's head of the Device Solutions Business and will not seek re-election as a member of the board of directors and the chairman of the board when his term ends in March, 2018. Vice Chairman Kwon will also resign as the chief executive officer of Samsung Display. In a letter to employees, Vice Chairman Kwon said that announcing his retirement was the most difficult thing for him to do, but now was the right time and that he believes his decision is in the best interest of the company. Vice Chairman Kwon said "As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry." Earlier, Samsung had said it expected another record quarterly operating earnings on booming demand for displays and memory chips. The technology giant estimated operating profit for the third-quarter almost tripled to KRW14.50 trillion or USD12.8 billion from KRW5.20 trillion last year. That was marked a new record for the company, which reported a KRW14.1 trillion won operating profit in the second quarter.
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Friday's Shareholder Meetings

no events scheduled