BUSINESS LIVE: NatWest posts £3.6bn profit; BA-owner smashes forecasts

AstraZeneca’s rare disease division has agreed to buy an early-stage gene therapy portfolio from drugmaking rival Pfizer for up to $1billion.

The deal’s announcement came as the group’s first-half operating profit jumped more than threefold to $5billion on the back of higher sales margins, lower sales costs and modest growth in research development expenses.

Under the deal, expected to close in the third quarter, Alexion Pharmaceuticals will gain access to novel adeno-associated virus (AAV) capsids that are shown to be vital tools in gene therapy and gene editing.

Mark Crouch, analyst at eToro:

‘On the surface AstraZeneca’s high-level sales figures look fairly uninspiring, with sales virtually flat in the second quarter and down slightly year-on-year in the first half of the year.

‘However, strip out its shrinking Covid-19 medicine sales, and total revenue increased by a far more respectable 16% year-on-year, with oncology sales contributing significantly to that growth.

‘A major positive is that revenue from China is expected to grow faster-than-expected, which will help the full-year bottom line.

‘But while growth remains decent, it’s clear that Astra’s sales are growing at a slower pace than they were a year ago. That has contributed to its stuttering share price over the past six months or so.’

Rightmove clocked up its highest first-half revenue since 2018, despite a troubled mortgage market putting pressure on house prices.

The property webiste said revenue was up 10 per cent to £179.5million in the six months to the end of June, while pre-tax profit rose 7.5 per cent to £130million.

And it forecast that its annual average revenue per advertiser (ARPA) will be at the top-end of its outlook of between £95-£105 for the full-year.

The group told shareholders:

The strength and resilience of Rightmove’s business has remained apparent throughout the first half of 2023.

Agents and developers have continued to use our products to win new mandates and to drive their businesses forward, and home-movers have continued to trust our sites to allow them to see the whole of the property market, helping them to make informed decisions.

This has allowed us to deliver strong results, despite the backdrop of higher mortgage rates and the increased cost of living.

NatWest profits surged by nearly £1billion in the first half of 2023 as the crisis-hit bank was boosted by interest rate hikes.

Earnings surged 37 per cent to £3.6billion in the six months to the end of June, beating analyst expectations of £3.3billion.

NatWest’s latest profit boost has enabled it to announce another investor returns, including a fresh £500million share buyback and an increase to the interim dividend to 5.5p. During the first half, the bank returned some £2.5billion to investors.

Six thousand shops have closed down across Britain in the last five years, according to the British Retail Consortium.

‘Crippling’ business rates and the fallout from Covid lockdowns were driving forces behind the closures and are prompting many retailers to ‘think twice’ about new openings, Helen Dickinson, chief executive of the BRC, said.

In the second quarter of this year, the overall shop vacancy rate increased to 13.9 per cent, fractionally worse than in the first quarter, but slightly better than the same period last year.

The FTSE 100 has ticked higher in early trading thanks to strong gains in the pharmaceutical sector, driven by upbeat quarterly results from AstraZeneca, offseting concerns about the impact of higher interest rates on economic growth.

The pharmaceutical sector is up 1.9 per cent after AstraZeneca beat expectations for its second-quarter profit, with its shares climbing 3 per cent.

Rate-sensitive real estate stocks are off 0.9 per cent as UK 10-year gilt yield rose to 4.392 per cent, its highest since 18 July in early trade, after Bank of Japan tweaked its yield control policy during its monetary policy review.

Standard Chartered is up 5 per cent after the Asia-focussed lender upgraded its annual profit forecast and set a new $1billion share buyback after a strong first-half performance.

British Airways operator IAG has gained 2 per cent as its quarterly profit beat analyst forecasts by 40 per cent and it said it was encouraged by the outlook for the summer.

Soaring rents have offset a slump in house sales at Foxtons.

The London estate agency posted profits of £6.1m for the first six months of the year, up 41 per cent on the same period of 2022.

Foxtons said it was seeing demand among tenants looking for houses to rent outstrip supply, pushing up those rents.

AstraZeneca’s Alexion unit has agreed to buy Pfizer’s early-stage rare disease gene therapy portfolio for up to $1billion, plus royalties on sales.

Alexion, which AZN bought in in 2021, focuses on rare diseases and plans to close the deal in the third quarter.

The deal will bring a number of novel adeno-associated virus (AAV) capsids to Alexion and help build on Alexion and AstraZeneca’s capabilities in genomic medicine, it said.

It comes as AZN delivered better-than-expected profits and sales in the second quarter as a strong performance of its blockbuster cancer drugs helped offset the loss of Covid-19 vaccine sales.

The Anglo-Swedish drugmaker posted an adjusted profit of $2.15 per share, up 25 per cent and exceeding the $1.98 per share expected in company-compiled consensus estimates.

Aston Martin has appointed the chief executive of its third largest shareholder Geely’s to its board.

Geely International in May made a £234million investment in the British firm, giving it the right to one board seat.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘IAG is trading well, as the post-Covid holiday boom continues. The airline group has been relatively unaffected by the circumstances that have impacted some of its peers, and the return of more long-haul travel – particularly China’s reopening – has been a major boost to the likes of British Airways and Iberia.

‘IAG’s share price remains two-thirds below where it was pre-pandemic – today’s results could be a much-needed boost.

‘But there is potential turbulence ahead in terms of weaker demand and industrial action, which may continue to weigh on sentiment towards the sector in general.’

The Government must be prepared to ramp-up investment in Britain if the private sector is to back the country and the economy is to thrive, the chief executive of Aviva Investors has told This is Money in an exclusive interview.

Mark Versey, who has led the insurer’s £223billion asset management unit since 2021, also highlighted the importance of rebuilding market confidence in certainty of UK policy after a volatile few years, particularly if the country is to successfully transition to net zero by 2050.

IAG’s quarterly profit beat analyst forecasts by 40 per cent and the British Airways-owner has said it was encouraged by the outlook for the summer as demand for leisure travel remains strong.

The airline group posted an operating profit before exceptional items of €1.25billion (£1.1billion), compared to the €895 million euros analysts were on average expecting.

Luis Gallego, International Airlines Group’s CEO, said:

‘Our strong profits since the start of the year are helping to fund investment for our customers, and to improve our balance sheet by reducing debt.  We are aiming to be back to pre-pandemic capacity at the end of this year.

‘These results are thanks to a strong performance from all companies across the Group, and we would like to thank our teams for their hard work during the year so far.

‘Customer demand remains strong across the Group, particularly for leisure travel, with around 80% of passenger revenue for the third quarter already booked. And our airlines have put in place plans to support operations during the busy summer period.’

The European Central Bank (ECB) raised interest rates to a joint record high – but hinted borrowing costs in the eurozone may now have peaked.

As it continued its fight against inflation, the Frankfurt-based bank pushed rates up by 0.25 percentage points to 3.75 per cent.

That was the joint highest level on record, and on a par with the rate hit in 2001 when it was trying to boost the value of the newly launched euro. The move followed a rise by the Federal Reserve in the US on Wednesday, with the Bank of England set to follow suit next week.

NatWest has posted a pre-tax profit of £3.6billion for the first half of 2023 as the embattled bank, which is currently embroiled in crisis amid the row over Nigel Farage’s Coutts account, benefited from interest rate hikes.

This compared to £2.6billion at the same time last year and beat forecasts of £3.3billion.

NatWest also announced an interim dividend of 5.5p per share and a share buyback of up to £500million for the second half of 2023.