IAG fourth quarter profits fly lower, RBS clambers back into the black
London open
The FTSE 100 is expected to open flat on Friday, having closed down 0.4% at 7,252.39 on Thursday.
Stocks to watch
British Airways owner International Consolidated Airlines Group presented its group consolidated results for the year ended 31 December on Friday, reporting a fall in fourth quarter operating profit to €585m before exceptional items, from €620m a year earlier. The FTSE 100 firm, which also owns Iberia, Aer Lingus and Vueling, said passenger unit revenue for the quarter was ahead 0.4%, or 2.4% at constant currency. For the year as a whole, operating profit before exceptional items grew 18.9% to €3.02bn.
Royal Bank of Scotland clambered back into the black in 2017 for the first time in a decade, even though the taxpayer-owned bank took a hit in the fourth quarter from restructuring, litigation and conduct charges. Total income of £13.1bn for 2017 was stronger than the £12.96bn City analysts expected and the fourth-quarter loss of £583m led to a full year operating profit of £2.2bn and a profit attributable to shareholders of £752m.
Educational publisher Pearson said full year adjusted operating profit was 9% lower at £576m - at the top end of its upwardly-revised October 2017 guidance range, adjusting for currency movements. Total underlying revenues declined 2% to £4.5bn due to a decline of 4% in North America partly offset by stabilisation in the core and growth division. The final dividend was cut to 12p a share from 34p, making a total of 17p a share.
Newspaper round-up
The Treasury is threatening digital companies such as Facebook and Google with a new tax, as it pushes for global agreement on a fairer system for ensuring digital businesses pay their way. The chancellor, Philip Hammond, is expected to use next month’s spring statement to announce the results of a consultation launched by the Treasury in November, on how to update the tax system to reflect the nature of online businesses. – Guardian
Jeremy Corbyn could use a key Brexit speech on Monday to pave the way for Labour to inflict a Commons defeat on the government, by backing a rebel Tory amendment seeking to keep Britain in “a customs union”. With Theresa May expected to unveil her vision for departure from the EU next week, following eight hours of talks with key ministers at the prime minister’s Chequers country retreat, she now faces the prospect of Labour sabotaging the carefully choreographed process. – Guardian
Evan Spiegel, the co-founder and chief executive of Snapchat, was awarded a $638m (£458m) payout for 2017, a sum which is likely to make him among the best paid US executives for the year. It comes after he received a $636.6m stock award when Snap went public last year, and despite him having slashed his salary down to $1 from $500,000 in March, around the time of the photo messaging app's initial public offering. – Telegraph
Standard Life Aberdeen has pressed the firing gun on its search for a new chairman as Sir Gerry Grimstone prepares to step down from the group. Sir Gerry plans to leave the firm's board in the second half of 2019, one person said, triggering the search for his successor barely a year after the £11bn merger between Standard Life and Aberdeen Asset Management. – Telegraph
Lazard, Morgan Stanley and the stockbroker Stifel have been drawn into the parliamentary investigation into the collapse of Carillion after it emerged that there could have been a false market in the shares for at least six weeks before the construction company’s blockbuster profit warning last summer. It also emerged yesterday that Carillion directors could yet be forced to use millions of pounds of their own money to plug the hole in its pension funds. – The Times
One of the country’s leading private providers of public services has warned the government about its treatment of outsourcing contractors, telling ministers that without reform Whitehall officials might create another Carillion. Rupert Soames, chief executive of Serco, said in an unprecedented intervention that the government needed to commit to transparency and co-operation if private sector companies were to continue delivering services in cleaning, catering and maintaining public buildings. – The Times
US close
Stocks rose across the board in the US on Thursday, after positive data on the labour market offset investor concerns surrounding potential interest rate hikes coming from the Federal Reserve's most recent meeting.
The Dow Jones Industrial Average rose 0.66% to 24,962.48, the S&P 500 was ahead 0.1% at 2,703.96 and the Nasdaq 100 eked out gains of 0.04% to 6,761.85.
Released late on Wednesday, the latest Fed minutes revealed that officials at the central bank saw an increased economic growth outlook and a rise in inflation as justification to keep lifting rates gradually.
"A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate," the minutes stated.
Previously, the policy statement said that gradual increases in the federal funds rate were likely to be appropriate but the use of the word "further" this time was what seemed to rattle investors.