Corporate Reporting Module: FTSE 250 Earnings Announcement Report

This report analyzes the wealth effect of earnings announcements for ten top FTSE 250 companies between July 1, 2019, and December 31, 2019. The analysis includes both good and bad news announcements for each company, along with explanations for their classification. The companies span diverse sectors and represent significant entities within the UK's FTSE 250. The report examines announcements from Rio Tinto, Diageo, British American Tobacco, BHP, GlaxoSmithKline, and BP, among others. It details specific events like Rio Tinto's iron ore shipments, Diageo's sales figures, and BP's profit margins. The report explores how these announcements influenced share prices, providing insights into market reactions to corporate performance and financial news. The report uses sources such as IG, Seeking Alpha, and Reuters, to justify the announcements as good or bad news. The report's structure includes an introduction, discussion, and conclusion, with references and appendices to support the analysis.

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Conclusion................................................................................................................................17
References................................................................................................................................18
Appendix..................................................................................................................................22

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Introduction
The report consists top ten companies of FTSE 250 and evaluates the wealth effect of
earnings announcements that has been taken place between 1 July 2019 and 31 December
2019. The article reflects five good news announcement and five bad news announcement of
each of the company. Even reasons have been mentioned classifying why the announcement
is a good one or bad one. All the selected companies comes under the top ten FTSE 250 firms
of United Kingdom. The ten companies operates in different sectors and assumes to be the
largest British companies in the FTSE 250 firms.
Discussion
Rio Tinto (Metals and Mining Industry)
Good Announcements
“Rio Tinto share price: iron ore shipments hit 86.1mt in Q3”
The production and shipment activities of the company reflects positive outcomes in the third
quarter by rising to some 0.45% as the operational issues and weather condition improved to
some extent (IG, 2020).
“Rio Tinto investment in Pilbara haul truck automation proving to be successful”
By end of 2019, the company is expecting 50% of its iron ore truck fleet to be autonomous
(International Mining, 2020).
“The company reflects decline in H1 net profit however, declared $1B special dividend”
Surge in iron ore prices the firm pays $1B special dividend and even interim dividend raised
to $1.51 per share (Seeking Alpha, 2020).
“WA contractor saved $250m of Rio Tinto work”

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The progress of the West Angela’s will be profitable for the company, as it will sustain the
manufacturing of premium Pilbara Blend iron ore product (Australian Mining, 2020).
“The company provides extra $1bn”
In the first half of 2019, the firm handed out $1bn special dividend to shareholders despite
various issues in iron ore production (Investorschronicle.co.uk, 2020).
Bad Announcements
“Rio Tinto shares fall 6% as iron ore outlook grows gloomy”
Iron ore is an important element of steelmaking, reflects price rise to $120 from $70 due to
which the company has to bear a fall in share price more than 6% (IG, 2020).
“Rio Tinto shares drop 4.3% as a $1 billion special dividend is revealed”
The company failed to meet the interim dividend expectations due to specific reason one of
which is Trump’s tweet on increasing tariffs by additional 10% (IG, 2020).
“Rio Tinto addresses operational problems, delivers record pay-out”
Due to some micro-economic tensions in China, growth slows down and China is the biggest
iron-ore customer of the Rio. The manufacturing of Pilbara iron ore asset has been impacted
due to operational issues (REUTERS, 2020).
“The firm’s share slumps to 3 month low irrespective of highest earnings”
The operational activities of the company are getting affected due to unclear energy policy
and raising energy prices (The Sydney Morning Herald, 2020).
“Price falls and iron ore miners slammed”
Rio Tinto fell 4.2% and since July 3, the company is down by more than 10%.

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Diageo (Beverages, Wineries and Distilleries)
Good Announcements
“The Diageo gained 82% in its share price”
The company outperformed in the market and shareholders are expecting more profit.
“Diageo sales increases because of Games of Thrones inspired scotch”
The annual profit of company increases because of the popularity of scotch inspired by
Games of Thrones.
“Due to strong demand Diageo profit rises”
Production of innovative products such as Smirnoff vodka, Johnnie Walker Scotch Whisky,
and Guinness stout has increased the operating profit of the company by 10% (CNBC, 2020).
“White Walker proves to be profitable for Diageo”
Launching of this product increased the sales to 12.9 billion and even there is a rise in the
profit of the company.
“Diageo increased marketing investment by 8%”
The net sales increased that gives the opportunity to raise the marketing investment by 8% to
£2bn.
Bad Announcements
“The Diageo workers of Scottish denied the insulting pay offer”
The workers rejects the pay offer of increase in 2.5% and said it be insulting for the excellent
workers and could even go for a strike for this insulting offer.

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“Despite increase in sales and profit the outlook of the company disappoints the
shareholders”
The growth in operating profit is not as per the expectations and even the shares fell by 1.6%.
“Diageo resilient in face of tariffs threat from US”
US is the biggest exporter of scotch by value and it has given threat to slap tariffs in Scotch
whisky imports to the Diageo (Press and Journal, 2020).
“Distilleries disrupted because of strikes in Diageo”
The operational activities of the Scotch whisky activities will be affected due to various
strikes conducted by the workers over company’s insatiable corporate greed.
“Whisky production abrupt due to strike related to over pay dispute”
The union declared strikes related to over pay issues and because of this, the production of
whisky is disrupted.
British American Tobacco (Tobacco Industry)
Good Announcements
“BAT not out of puff just yet”
The use of e-cigarettes assumes to be less harmful than the traditional ones and the vaping
market has grown exponentially.
“FDA looking forward to ban flavoured e-cigarettes”
The Food and Drug Administration plans to ban flavoured e-cigarettes in US and this step
could be profitable for the BAT.
“BAT reflects rise in share prices”

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Shares in tobacco and cigarettes production were trading over 2% higher rate and even the
revenue is expected to increase to 5% in coming future.
“BAT reflecting profitable outcomes”
The firm is showing profitable results both in terms of growth in price and decline in net debt.
The overall performance of the company is strong in both traditional tobacco and new
category products of the business.
“Market supports BAT strategy to cut top staff”
BAT plans to form a simple structure and the reduction of staff would result in obtaining
reinvestment opportunity in growth of new products that includes tobacco heating products,
oral tobacco, and many more (Iol.co.za, 2020).
Bad Announcements
“2,300 jobs has been cut globally by British American Tobacco”
Increase in the demand for e-cigarettes has led to retrenchment of employees as the demand
for traditional tobacco declines.
“Nigerians may lose their jobs as mass sack looms at BTA”
To sustain in long-run and to drive more revenue the company has taken this big step. The
company wants to attract a sustainable return for the shareholders.
“Philip Morris-Altria Combo proves to be threat for BAT”
If the New York based Philip Morris-Altria combines with Richmond, Virginia-based Altria
then it will be a threat for BAT. Even the share price of BAT has fall to 6.5%
(Bloomberg.com, 2020).
“BAT -5% after trading update”

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The demand for cigarettes has fallen due to which the sales volume will approximately fall
around 3.5%. BAT is planning to invest in profitable portfolios that consists of Vype and
Vuse pens.
“Global sales dwindle that affects the BAT share price”
Demand for traditional cigarettes declines greatly affecting the sale of BAT products. The
shares of the company fell around 4%.
BHP (Industrial Metals and Mining)
Good Announcements
“BHP shows miners are turning to low carbon leaders”
The company is trying to use more resources to obtain low-carbon energy production.
“BHP CEO focuses on social licence and improving efficiencies”
The company CEO is trying to focus more on safety and social licence.
“The share price has gained 63% and shareholders are expecting more”
The EPS has changed within the last three years and it is extremely profitable for the
company.
“BHP reflects positive results in terms of annual profit, pays record dividend”
The company shows 2% rise in annual profit due to increase in iron ore prices.
“Despite challenges in the productivity process the company offers record return”
Even after facing productive challenges such as resource headwinds and unfavourable
climatic condition, the company delivers an impressive return.

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Bad Announcements
“BHP pays impressive dividends however, flags global growth headwinds”
BHP uses its most of the cash to face risks associated with global economic growth.
“Risk associated with iron ore demand can be unfavourable for the company”
Slowing global economy could affect the demand of iron ore and copper largely.
“Shares of BHP down on FY 2019”
Share prices falling to 0.8% - to A$35.96 per share. The resulted profit is below as per the
analyst expectation.
“BHP faces trade disruption even after paying record dividend”
Due to increase in nationalism and issues related to US-China trade tension, the company is
facing trade disruption.
“Share price falls as costs of iron ore falls”
As price of iron ore flirts with US$80 per ton level, the Australian miners share price
declines.
GlaxoSmithKline (Pharmaceuticals)
Good Announcements
“GSK forecasted rise in profit for the company”
The company is expecting to gain more revenue as more HIV treatments and even expects to
sell more in the coming time.
“Q3 proves to be profitable for the company”

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Sale of shingles vaccines resulted to raise its annual profit and giving a tough competition to
its rivals in the market.
“Sale of shingles vaccine outperform the market”
Shingles vaccine has upgrade the earnings of the GSK and helps the company for further
expansion in US.
“GSK rise in earnings for the second consecutive quarter”
There is an impressive performance in consumer health and vaccines by using the shingles
vaccine. Overall sales rose to 11% resulting in profitability for the company.
“Q1 net profit rises to 35% at Rs 113.54 crore”
The company rise in its standalone profit to Rs 113.54 crore in the first quarter.
Bad Announcements
“Slip of share price over 3% due to suspension of sale of ranitidine products”
The regulatory authorities do the detention of genotoxic nitrosamine in ranitidine products.
“Halt in supply of top selling acidity drug Zinetac”
There is substance that is found in the acidity drug Zinetac that can cause cancer and due to
this reason the GSK stops supplying the acidity drug.
“GSK halts distribution of ranitidine in India”
Upon the advice of the regulatory authority, GSK decided to suspend distribution of
ranitidine products, as there is a detection of NDMA in the products.
“Health alert on antacid ranitidine”

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GSK is one of the significant manufacturer of the antacid products and recently there is some
issue with the cancer causing substance found in the antacid products leading to loss for the
GSK.
“Impurity found in Sandoz ranitidine capsules”
Strict actions are being taken regarding all antacids products, as there has been some
substance that can cause cancer and hence GSK is halting supply of any such products, this is
affecting the sales revenue of the company.
BP (Oil and Gas Industry)
Good Announcements
“Despite lower oil prices, BP reflects positive results in second quarter”
The company maintains 10.25% share as quarterly dividend.
“BP beats the analyst estimates and gained profits”
BP beat the lower oil prices and reflects a strong operating cash flow and earnings.
“Dividend of BP rose to 6.6%”
Due to fall in stock, the dividend yield of BP raised to 6.6% and stand out in the market.
“BP ensures profitable operating cash flow”
The operating cash flow was 6.5 billion for the third quarter and even the company reflects a
positive strategic delivery.
“Positive momentum in BP share price”
The company is beating the broker expectations and outperforming the market in terms of
quality and value.

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Bad Announcements
“Oil prices slips and profit falls by 40%”
The lower oil prices lead to fall in profit in the third quarter by 40%.
“The hurricane impact led to BP profit tumble”
The underlying profit is reported to $2.3bn resulting sharp fall in BP profits.
“The company gets affected due to asset sales”
Over the period of three years, the company declares its first loss of $2.6 billion mainly
associated to large asset sales.
“Due to weaker upstream earnings BP swings to loss”
The company declared a non-cash and non-operating after-tax charge of $2.6 billion
regarding divestments.
“BP shares slumps 4.5% because of weak oil price”
Tension between China and US have affected the oil prices globally and hence its shares
slumped to 4.5%.
AstraZeneca (Pharmaceuticals)
Good Announcements
“Collaboration with Sun Pharma for a new cancer drugs in china”
This collaboration will led to bring cost effective and will ensure quality drugs to patients in
China.
“AstraZeneca and Sun Pharma shares rises to 5%”