Asda considers stock market listing after blocked merger

(qlmbusinessnews.com via bbc.co.uk – – Wed, 15th May 2019) London, Uk – –

Asda could be listed on the stock market after its merger with supermarket rival Sainsbury's was blocked by the competition authorities.

Judith McKenna, chief executive of Asda's owner Walmart, has told staff such a listing is being considered.

But, she told managers at an event in Leeds – where Asda is based – any listing could “take years”.

It comes after the Competition and Markets Authority blocked its merger with rival Sainsbury's.

The CMA was concerned the tie-up would raise prices for consumers, raise prices at the supermarkets' petrol stations and lead to longer checkout queues.

It has left the giant US retailer Walmart looking at options for the supermarket chain it bought twenty years ago.

“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long-term success,” Ms McKenna said.

Walmart would have kept a 42% stake in the enlarged Sainbury's-Asda business if the £15bn tie-up had gone ahead.

The remarks by Ms McKenna are the first time that Walmart has spoken about the future of its UK operations since the CMA blocked the deal.

Asda is traditionally a value supermarket but had come under pressure from discounters Aldi and Lidl, which have rapidly expanded their market share in recent years.

Walmart, often described as the world's largest retailer, has already listed its Mexico operations and has been buying smaller companies, such as online shopping Jet.com, as well as brands such as Bonobos and Bare Necessities, to expand into new areas.

Price cuts loom

Ms McKenna told the 1,200 managers at the meeting: “Walmart does not have a one-size-fits-all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart”.

Even before the CMA formally blocked the deal, there had been reports that private equity house KKR could consider an offer for Asda and install former Asda chief executive Tony De Nunzio to run the operation.

The current Asda chief executive Roger Burnley also spoke to the managers at the meeting, which took place on Tuesday, and told them that there would be no change in strategy.

Asda, which calls its staff “colleagues”, intends to make £80m of price cuts during the rest of this year and trial new technology.

A “scan and go” initiative was launched in 25 stores last week and more “click and collect” towers will be installed in stores.

TUI reports widening half-year losses of £261m

(qlmbusinessnews.com via news.sky.com– Wed, 15th May 2019) London, Uk – –

The travel operator is counting the cost of a weak consumer environment as well as the grounding of Boeing 737 MAX aircraft.

Travel operator TUI has reported widening half-year losses and a fall in summer bookings as it counts the cost of weak consumer confidence and Brexit uncertainty.

The group reported an underlying loss of €301m (£261m) for the six months to the end of March, up from €170m (£148m) in the same period a year ago.

It has also been knocked by the grounding of Boeing's 737 MAX aircraft, which it has previously warned could cost up to €300m (£261m) as it leases more aircraft to cover its routes.

TUI said the decline in its first-half performance was partly due to the knock-on impact of last summer's heatwave holding back bookings and because it had too much capacity in Spain as holidaymakers opted for cheaper destinations such as Turkey.

For this summer, bookings in its package holiday and airlines business are down 3% while selling prices are up by only 1% amid a competitive market – not enough for TUI to cover rising costs.

TUI said that for this part of its business “weak demand environment persists”, putting pressure on profit margins.

“This is driven by a number of factors – reduced demand due to last year's extraordinary hot summer, slowdown of consumer confidence, Brexit uncertainty, shift in demand to the eastern Mediterranean coupled with overcapacity to Spain, as well as the 737 MAX grounding,” TUI said.

However, the group said its hotels and cruise ships business, where it has been investing in expansion over recent years, continued to perform well.

The results come after two profit warnings from TUI earlier this year – one blamed on the weak UK market and the other on the Boeing issue.

TUI's fleet of 150 aircraft includes 15 currently grounded 737 MAX aeroplanes, with a further eight scheduled for delivery after the lifting of the grounding.

It has warned investors that it faces a €200m (£174m) hit from the grounding of the aircraft, assuming flights resume by mid-July.

If it does not become clear by later this month that flying will re-start by that time, it will have to extend measures to cover for this until the end of the summer season, adding a further impact of up to €100m (£87m).

TUI chief executive Fritz Joussen said the company was “on track, both strategically and operationally” and that medium and long term growth forecasts were intact. Shares rose 3%.

The company is not the first travel firm to warn of a Brexit impact on demand, with easyJet saying last month that the uncertainty was having an impact.

Meanwhile, TUI's rival Thomas Cook has been seeking new debt funding from lenders and has been looking to sell its airline business.

By John-Paul Ford Rojas, business reporter

Barclays profits fell 10 percent in the first quarter, signaling further cuts if conditions persist


(qlmbusinessnews.com via uk.reuters.com — Thur, 25th April 2019) London, UK —

LONDON (Reuters) – Profit at Barclays fell 10 percent in the first quarter as its under-pressure investment bank struggled with tough markets, prompting it to signal further cost cuts if these conditions persist.

The poor investment banking performance comes at an awkward time for chief executive Jes Staley, who is locked in a public battle with activist investor Edward Bramson who wants to see the unit pared back to boost overall returns at Barclays.

Barclays said on Thursday returns in the investment banking business fell to 9.5 percent from 13.2 percent a year ago, while its overall profit was 1.54 billion pounds ($1.99 billion).

Although this was in line with the 1.57 billion forecast compiled from the average estimates of 13 analysts polled by the bank, shares in Barclays were down 1.43 percent at 0730 GMT.

“Despite a better than expected result in fixed income trading, today’s numbers will do little to take the pressure from activist Edward Bramson off the board,” said Nicholas Hyett, analyst at one of Britain’s biggest online investment platforms, Hargreaves Lansdown.

Barclays said that if the tough market conditions persist, it may have to cut annual costs in 2019 below the 13.6 billion to 13.9 billion pound range it earlier said it expected.

The bank said measures it took three years ago to ensure bonus pools in a given year are better aligned with that year’s performance, mean it has more discretion to cut bonuses when performance dips.

“What you see in the first quarter is Barclays using this discretion around variable compensation to manage our costs anddeliver expected profitability,” Staley said.

Staley last month ousted his lieutenant Tim Throsby, a fellow former JP Morgan banker who he had recruited in September 2016 to run the investment bank and who then embarked on a hiring spree in a bid to restore morale and performance.

Barclays said income from its equities business fell 21 percent and banking advisory fees were down 17 percent, although earnings from fixed income, currencies and commodity trading (FICC) rose 4 percent.

The drop in equities income follows similar announcements from U.S. rivals such as Goldman Sachs and JP Morgan which saw first quarter declines in trading revenues as client activity slumped.

Barclays’ core capital ratio fell to 13 percent from 13.2 percent at the end of the previous quarter, and its total income of 5.25 billion pounds fell short of analysts’ expectations.

Reporting by Lawrence White

JD Sports defies high street gloom reporting 15% rise in pre -tax profit

(qlmbusinessnews.com via news.sky.com– Tue, 16th April 2019) London, Uk – –

The rise in pre-tax profit and confidence in the face of Brexit uncertainty comes as many high street names are struggling.

JD Sports has defied high street gloom, reporting a 15% rise in pre-tax profit for the year.

Executive chairman Peter Cowgill said that the retailer of sports, fashion and outdoor brands had delivered a “record result” thanks to its “relentless focus” on providing a “compelling differentiated proposition to the consumer”.

Pre-tax profit was £339.9m in the year ending 2 February, compared with £294.5m the previous year.

The result comes as many high street names are struggling.

During the past week Debenhams has fallen into administration, LK Bennettannounced a third of its stores would close and Monsoon Accessorize has made preliminary moves towards a Company Voluntary Arrangement (CVA).

Mr Cowgill said: “JD is not immune to the widely reported challenges to physical retail in the UK with lower footfall on many high streets, malls and retail parks combined with cost challenges from increasing minimum wage rates and rises in business rates.


“Therefore, it is very pleasing that the core UK and Ireland Sports Fashion fascias, the most mature part of our group, have delivered a further increase in sales and profitability.


“This helps maintain our belief that the store base at its current scale continues to provide a positive influence on our future development as it raises brand awareness, provides consumers with an opportunity to physically see and try the product, and enables us to provide multiple delivery points.”

JD Sports said it had increased its store count by 39 across Europe and a further 34 stores had opened in the Asia Pacific region. In the previous year 56 stores were opened in Europe and nine in Asia/Pacific.

Its acquisition of Finish Line in the US had also “significantly” extended its global reach and was “delivering encouraging early results”, Mr Cowgill said.

He also said the group was confident about the future, despite Brexit uncertainty.

“While we recognise that there is uncertainty surrounding the nature and timing of the UK's exit from the European Union, we are cognisant of the potential consequences of a disorderly exit on supply chains, tariffs, exchange rates and consumer demand,” he said.

“Notwithstanding this uncertainty, the board remains confident in the international potential of the JD proposition.”

By Sharon Marris, business reporter

The world’s largest oil company Saudi Aramco’s bond sale sets record as orders top $100bn

(qlmbusinessnews.com via theguardian.com – – Wed, 10th April, 2019) London, Uk – –

Investors set aside concerns over Jamal Khashoggi murder to take up oil firm’s $10bn issue

Saudi Aramco, the world’s largest oil company, was massively oversubscribed for its multibillion dollar debut bond sale, in a further sign that investors have put aside concerns over doing business with Saudi Arabia following the murder of the journalist Jamal Khashoggi.

The state-owned firm is expected to raise more than $10bn (£8bn) through its first-ever bond issue. But a surge in demand meant the sale was oversubscribed, with orders exceeding $100bn.

It reportedly sets a record for emerging market bond demand, trumping orders worth $52bn for Qatar’s $12bn deal last year, $67bn bid for Saudi Arabia’s bond sale in 2016 and $69bn for Argentina’s $16.5bn trade that same year.

The stampede to pick up Aramco debt is seen as a vote of confidence by investors, just months after Khashoggi was killed in a Saudi consulate in Istanbul last October.

Saudi authorities spent weeks denying any knowledge of the journalist’s death before saying he was killed in an operation masterminded by former advisers to Mohammed bin Salman, but denying the crown prince’s involvement.

The journalist had written columns for the Washington Post criticising the crown prince before his death.

Some investors initially tried to distance themselves from the Gulf state amid global outrage, pulling out from a major finance conference in Riyadh in October.

Saudi Aramco last week emerged as the most profitable business in the world, with its 2018 profits of $111.1bn overtaking Apple at $59.5bn.

Documents from its bond offering revealed the company produced 10.3m barrels of crude oil per day, resulting in annual revenues of $355.9bn.

Proceeds from Saudi Aramco’s bond sale are expected to help fund its takeover of rival Sabic in a deal worth $69.1bn.Topics

By Kalyeena Makortoff

EU wine and cheese threatened as US opens fresh trade tension tariffs

(qlmbusinessnews.com via news.sky.com– Tue, 9th April 2019) London, Uk – –

Products from swordfish and stilton to motorcycles and large commercial aircraft could be targeted by the new import duties.

By John-Paul Ford Rojas, business reporter

The Trump administration has opened up fresh trade tensions with the EU after threatening to impose tariffs worth $11bn on goods ranging from helicopters to wine and cheese.

US trade representative (USTR) Robert Lightizer said the move was in retaliation for subsidies to European aeroplane manufacturer Airbus said to have caused “adverse effects” to the US.

The list of EU products that could face new levies runs from swordfish, stilton and wine to motorcycles and large commercial aircraft.

But Airbus said it saw no legal basis for the US move while EU sources told the Reuters news agency that it was preparing for possible retaliation.

The EU and US have been battling for more than a decade over parallel claims over billions in illegal subsidies to aviation giants Airbus and America's Boeing.

The latest move by the USTR marks an escalation of tensions, though Mr Lightizer said the ultimate goal was to reach an agreement with the EU to end all subsidies to large civil aircraft that do not comply with World Trade Organisation (WTO) rules.

“When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted,” he said.

The WTO said last year that it would evaluate a US request to slap billions of dollars worth of sanctions on European products, in response to a ruling on illegal subsidies.

The US has estimated the value of those subsidies as worth $11bn (£8.4bn) in trade, though that figure has been challenged by the EU.

The USTR said it would announce a final product list once the WTO had evaluated its claims, which it is expected to have done by this summer.

Airbus spokesman Rainer Ohler said the amount announced by the US was “largely exaggerated”.

He said a ruling last week by the WTO against tax breaks for Boeing should allow the EU to seek “even greater counter-measures”.

Mr Ohler added: “All this is leading to unnecessary trade tensions and shows the only reasonable solution in this long trade dispute is a settlement.”

The latest announcement comes after the US last year imposed tariffs on the EU's steel and aluminium products.

Europe has hit back with levies on American products such as bourbon whiskey, motorcycles and jeans.

Mr Trump has ramped up the use of tariffs or the threat of tariffs in relations with Washington's trade partners, including Europe, Mexico and China – a tactic that has left global markets jumpy about the impact on global growth.

10 Shark Tank Pitches That Went On To Make Millions Despite Being Rejected

Source: Star Show

10 Rejected Shark Tank Pitches That Made Millions… For that reason… I’m out. Shark tank statement is something no entrepreneur wants to hear on the show Shark Tank. But it does come with regret on the dealing end as well. The Sharks have passed on many deals, but they are some that made it big that didn't need them. The Sharks on Shark Tank are famous for their robust negotiating skills, and that extends to their salaries as well. Mark Cuban, Barbara Corcoran, Lori Greiner, Robert Herjavec, Daymond John, and Kevin O’Leary but they are human, and they will miss a business opportunity here and there. The show that gives entrepreneurs a chance to pitch celebrity investors depicts some business owners walking away with life-changing deals, and some are not so lucky. But for these people they didn't end up too bad.

UK economy came close to flatlining in February amid Brexit uncertainty

(qlmbusinessnews.com via theguardian.com – – Tue, 5th Mar 2019) London, Uk – –

Employment levels falling at fastest pace in almost nine years, survey finds

The UK economy came close to flatlining last month as Brexit uncertainty intensified and the global economy weakened, with employment levels falling at the fastest pace in almost nine years.

According to the latest snapshot of Britain’s services sector – which accounts for 80% of economic growth – businesses have begun to delay hiring staff against a backdrop of subdued demand and concerns about the economic outlook as the scheduled date of the UK’s departure from the EU draws nearer.

IHS Markit and the Chartered Institute of Procurement and Supply said that political uncertainty had encouraged delays to corporate spending in the largest sector of the UK economy, which includes financial firms, hotels, shops and restaurants.

Business optimism about the year ahead plunged to the lowest ever recorded by the survey of about 650 UK services firms, barring the height of the global financial crisis and the period immediately after the Brexit vote in July 2016.

The IHS Markit/Cips services purchasing managers’ index (PMI) registered 51.3 in February, up from a two-and-a-half-year low of 50.1 a month earlier, beating a gloomier forecast made by City economists for a reading of 49.9.

Although the reading was above the 50 mark separating growth from contraction, analysts warned the expansion in service sector activity was only marginal, with the biggest driver of UK growth heading for its weakest quarter since 2012.

Duncan Brock, the group director at Cips, said: “Once again this month, the lifeblood of the sector continued to leak away with Brexit indecision striking another blow to new orders and employment in February.

“Any hoped-for progress next month looks like it will be equally stifled, as services activity heads for its weakest quarter since late 2012.”

Theresa May’s further potential defeat over her Brexit plan amid the mounting political chaos in Westminster sapped companies’ confidence, with consequences for jobs and firms’ hiring plans.

Official figures have previously suggested that Brexit has done little to dent hiring, with employment rising to record highs last year and unemployment still at the lowest levels since the mid-1970s.

Economists believe companies have put on hold their capital investment – such as in new plant machinery or efficiency-boosting technology – to hire workers instead amid the political uncertainty.

The latest snapshot from the PMI, however, suggests that jobs growth has kicked into reverse. Private sector employment across the three biggest sectors of the economy – services, manufacturing and construction – fell at the fastest rate since September 2012. Firms said that a lack of new work to replace completed projects had contributed to more cautious recruitment strategies.

Thomas Pugh, a UK economist at the consultancy Capital Economics, said: “As long as Brexit uncertainty continues growth is unlikely to accelerate, but if a Brexit deal is agreed soon, growth will surely rise later this year.”

By Richard Partington

M&S and Ocado confirm deal to start home delivery service next year

(qlmbusinessnews.com via bbc.co.uk – – Wed, 27th Feb 2019) London, Uk – –

Marks & Spencer and Ocado have confirmed a deal which will give the High Street retailer a home delivery service for the first time.

M&S will buy a 50% share of Ocado's retail business for £750m.

The joint venture will be called Ocado and will deliver M&S products from September 2020 at the latest, when Ocado's deal with Waitrose expires.

Under the deal Ocado will also continue to supply its own-label products and big name branded goods.

M&S will fund the deal by selling £600m of shares and by cutting its dividend payout to shareholders by 40%.

“We think we've paid a fair price,” said Steve Rowe, M&S chief executive.

“It's the only way we could have gone online within an immediately scalable, profitable and sustainable business,” he said.

He added that one third of M&S business would be online in the future.

M&S shareholders were sceptical – shares fell 8% following the announcement, while Ocado rose by 8%.

Neil Wilson, chief markets analyst at Markets.com, questioned whether the value of a shop with M&S was big enough for online shopping.

“Basket sizes at M&S are extremely small relative to other larger supermarkets and significantly below the current Ocado minimum for delivery.

At the moment M&S shoppers spend an average of £13 on each shop, while Ocado average just over £100 per shop.

M&S said that part of the reason it has such a relatively low average spend was that customers could not access a wider range of products.

The company said the Ocado deal would offer their customers the ability to do a full shop online.

According to Mr Wilson, there is also a risk that shoppers will defect to Waitrose when the current arrangement with Ocado comes to an end.

“I would also query whether M&S can retain the current Ocado customer base who are used to getting Waitrose products. There is a high risk of customer leakage as consumers rotate to Waitrose's in-house delivery service,” he said.

However, Ocado founder and chief executive Tim Steiner brushed off that suggestion.

“Our customers have told us that they are looking forward to getting their M&S Percy Pig sweets', he said.

Mr Steiner told the BBC of the 50,000 products it currently sold, about 4,500 were Waitrose branded.

When the new joint venture is up and running these would be replaced by more than 4,500 M&S products, he added.

Mr Rowe claimed that current Ocado customers would benefit from the deal as Marks and Spencer products were on average cheaper than comparable Waitrose products.

The deal could also see some of Ocado's own brand products being stocked in M&S stores.

Commenting on the deal, Waitrose managing director Rob Collins said the supermarket chain had strengthened its own online business “significantly” and that it planned to double Waitrose.com within five years.


Analysis: By Dominic O'Connell, Today business presenter

The two companies' share price reactions give a succinct verdict.

M&S was down nearly 9% in early trading; Ocado up 4%. Retail experts – and professional investors – think there is a lot more in this for Ocado than for M&S.

The latter is paying £750m for a half share in a division of Ocado that last year made just over £80m of trading profit. Shareholders will have to find £600m of the purchase price from their own pockets.

The high price explains some of investor misgivings, but there are bigger questions about the fit between the two.

M&S is a (relatively) upmarket convenience store, where the average basket price is just £13.

Ocado, thanks to its tie-up with Waitrose and its wide-range of own-label products, is a full-service grocery store where most customers are doing their weekly shop, not topping up.

Will M&S be able to push enough of its products through Ocado to justify the price, and how will Ocado customers react when its relationship with Waitrose comes to an end next year?

Archie Norman, M&S's wily chairman and chief strategist, might judge these criticisms short-sighted, and typical of the City's lack of long-term vision.

Having lagged behind on online shopping for years, M&S has been catapulted into the front ranks at a stroke.

The cost of the deal, Norman might argue, should be judged against the cost of the alternatives, and the cost of doing nothing.

Bullring owner Hammerson report annual loss, plans to sell off assets to cut debts

(qlmbusinessnews.com via bbc.co.uk – – Mon, 25th Feb 2019) London, Uk – –

Shopping centre owner Hammerson, owner of Birmingham's Bullring, has reported an annual loss and says it will sell off more assets as it tries to cut its debt burden.

The firm, which also owns the Bicester Village designer outlet and London's Brent Cross centre, is targeting more than £500m of disposals for 2019.

The announcement came as it unveiled its 2018 results, showing a pre-tax loss of £266.7m.

In 2017, it made a £413m profit.

Contributing factors included a £79.9m loss on the sale of properties and a £161.4m loss on the revaluation of properties that it still holds.

Chief executive David Atkins said 2018 had been “a tough year, particularly in the UK”, after a number of high-profile retailers went into administration.

“Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values.”

Shareholder value

Hammerson said net rental income had fallen by 1.3% at its UK flagship destinations and by 4.3% at retail parks.

The value of its portfolio shrank by 5.9% to £9.94bn. Its properties fell in value by an average of 4% during 2018, including a reduction in UK values of 11%.

Its latest sell-off plan comes on the back of asset disposals worth £570m in 2018.

Hammerson said its board had been in discussion with key shareholders and had entered into a “relationship agreement” with activist investor Elliott Advisors, which holds a significant stake in the company.

Elliott issued a statement welcoming Hammerson's moves, which include a decision to recruit two additional independent non-executive directors.

Elliott said: “This increased focus on strategic disposals, as marked by updated targets for 2019 and a current pipeline of potential sales of over £900m, signals a positive development in the company's progress, and its ability to ensure that its portfolio of high-quality assets delivers compelling value for all shareholders.”

Analysts at Liberum Capital praised management's “open-minded” approach to increasing the level of sell-offs, but warned that getting a decent price for “non-core assets” might prove difficult in the current climate.

“The trading backdrop for retail remains challenging, with valuation declines accelerating, and this is likely to continue to weigh on Hammerson returns,” it added.

Centrica: British Gas owner’s shares down 12% after price cap warning

(qlmbusinessnews.com via news.sky.com– Thur, 21st Feb 2019) London, Uk – –

The FTSE 100 group spooked investors by admitting that cash flows for the year ahead were expected to miss targets.

Shares in British Gas owner Centrica have fallen sharply after it warned 2019 financial performance would be hit by factors including the energy price cap.

The FTSE 100-listed group was down 12% after it also revealed that it had shed 742,000 UK customer accounts last year in a “highly competitive” market.

Centrica said profits at its UK home energy supply division were down by 19% to £466m for 2018, though the overall group's headline measure of adjusted operating profit was up 12% to £1.39bn.

The group had said in November that the cap on default energy tariffs, introduced at the start of January, would have a one-off impact of £70m in the first quarter of 2019.

In its latest statement it said that the impact of the cap, together with a declining performance for its energy exploration and production division and nuclear arm, would see cash flow about £300m below target for the year as a whole.

The company also said it was selling its North American franchisee home services business Clockwork Inc for $300m after a slower than expected recovery for its operations in the region last year.

Chief executive Iain Conn said: “Centrica's financial performance in 2018 was mixed against a challenging backdrop.

“We are taking actions to strengthen the company in 2019 and improve underlying performance in 2020, including driving cost efficiency hard and delivering further divestments.”

The results come after regulator Ofgem introduced a cap on default energy prices following years of political pressure, which came into force on 1 January and promised to save customers a typical £76 a year.

It had an immediate impact on British Gas, the UK's biggest energy supplier, as the cap was set at a level £68 lower than its standard variable tariff (SVT).

However the regulator said just weeks later that the cap would rise on 1 April by an average £117, blamed on higher wholesale gas and electricity costs.

All of the UK's so-called “big six energy” suppliers including British Gas have now followed suit, lifting their own SVTs to the newly increased cap level.

Centrica reiterated in its latest results that it does not believe the price cap is a “sustainable solution for the market” and was “likely to have unintended consequences for customers and competition”.

Analysts pointed to fears that the group's dividend could be cut being behind its sharp share price fall.

George Salmon, equity analyst at Hargreaves Lansdown, said: “The bad news for Centrica is that the weaker outlook comes from a multitude of factors – the government's price cap, continued outages in the nuclear business and weak offshore production activity.

“This all means the dividend is starting to creak. We wouldn't be surprised if a cut was around the corner.”

By John-Paul Ford Rojas

HSBC profits fall below expectations in fourth quarter

(qlmbusinessnews.com via cityam.com – – Tue, 19th Feb, 2019) London, Uk – –

HSBC posted a 16 per cent annual profit rise but fell below expectations as market volatility hurt the bank in the final quarter.

Shares in the bank fell 3.3 per cent in early trading – the FTSE 100's sharpest faller – as it remained cautious on its outlook for 2019 due to Brexit uncertainty and the ongoing US-China trade war.

The figures

Pre-tax profit rose 16 per cent to $19.9bn (£15.4bn) for the full year, but was lower than analysts’ expectations of $22bn.

HSBC said revenue climbed to $53.8bn, a five per cent increase compared to 2017, driven by a rise in deposit revenue across its global businesses but particularly in Asia.

Return on tangible equity for shareholders rose to 8.6 per cent from 6.8 per cent the previous year.

But the bank’s adjusted jaws – a ratio measuring revenue against costs – was in the negative at -1.2 per cent.

Achieving positive jaws is seen as important for investors and banks as it shows that revenue growth is outpacing costs rates.

Why it’s interesting

HSBC blamed its failure to achieve “positive jaws” on market weakness in the fourth quarter – revenue fell eight per cent over the final three months of 2018 compared with the previous year.

The bank said: “Positive jaws remains an important discipline in delivering our financial targets and we remain committed to it in 2019.”

The world’s major banks have all so far been impacted by the volatility seen across global markets at the end of last year.

What HSBC said

Chief executive John Flint said: “These are good results that demonstrate progress against the plan that I outlined in June 2018.

“Profits and revenue were both up despite a challenging fourth quarter, and our return on tangible equity is significantly higher than in 2017.

“This is an encouraging first step towards meeting our return on tangible equity target of more than 11% by 2020.”

What analysts said

Head of markets at interactive investor, Richard Hunter said: “A tough fourth quarter took its toll on some of the numbers, while a slowing Chinese economy, partially fuelled by the ongoing trade spat with the US, has yet fully to wash through.

“As such, 2019 could begin to see some real impact in an Asian region whose reported profits contribute almost 90% of the group total.”

Steve Clayton, manager of Hargreaves Lansdown's select UK income shares fund, which holds a position in HSBC, said the results were “disappointing.”

He said: “HSBC has always been a bank built around facilitating international trade between Asia and the rest of the World.

“Today’s tariff spats between the US and China are hardly helpful and could begin to hurt the group’s customers in Asia and beyond.

He added: “These results are disappointing, but a bank that has just reported underlying annual profits of almost $22bn and grown income, controlled costs and raised its return on equity can hardly be described as in crisis.”

By Callum Keown

RBS reports second successive year of profits as dividend soars

QLM Image

(qlmbusinessnews.com via telegraph.co.uk – – Fri, 15th Feb 2019) London, Uk – –

Royal Bank of Scotland has reported its second successive year of profits and a higher than expected dividend, resulting in a near £1bn windfall for the taxpayer.

The lender, still 62% owned by the Government, said annual pre-tax profits more than doubled to £1.62bn, while pre-tax operating profit rose 50% to £3.4bn.

It marks the bank's second year in the black following a decade-long run of stinging losses, during a period marred by crisis-era legacy and conduct charges.

The Government will also pocket £977m as RBS paid only the second dividend since its £45bn bailout a decade ago.

The cash will be given to UK Government Investments, which manages the taxpayer's stake in the lender.

The bank on Friday paid out a 3.5p final dividend and a 7.5p special dividend, taking the total to 13p – 60pc higher than expected. It will return a total of £1.6bn to shareholders in the year.

Chief executive Ross McEwan said: “This is a good performance in the face of economic and political uncertainty, with bottom line profits more than double what we achieved the previous year.

“We are also announcing an intention to pay back more capital to shareholders and almost £1bn is set to be returned to UK taxpayers for 2018.

“With strong capital and liquidity levels, we are well positioned to support the UK economy. Our total lending to business and commercial customers reached over £100bn at the end of 2018.”

RBS begun paying dividends since August, when it reached a $4.9bn (£3.7bn) settlement with US authorities over claims that it mis-sold mortgages in the run-up to the financial crisis.

Friday's figures take into account conduct and litigation costs of £1.28bn.

The RBS annual report, published alongside the results, showed that Mr McEwan's total pay package rose by £100,000 to £3.6m last year. Bonuses to staff will total £335m.

Accounts show that RBS stripped out £278m in costs last year, and aims to slash another £300m this year.

The stellar figures will prompt the Government to consider when to recommence the next round of share sales.

Last week the lender gained shareholder approval that allows it to buy back up to £1.5bn worth of shares from the Treasury.

The move, which aims to speed up its privatisation and deploy excess capital, permits RBS to purchase up to 4.99% of the Government's stake in any one year.

RBS has been majority taxpayer owned since 2008, when it received a £45bn bailout at the height of the financial crisis.

The Treasury plans to sell its stake by 2024 but is expected to lose billions in the process.

The bank's shares have rallied since December and rose 1pc to 244p on Friday, but that remains less than half the bailout price of 502p a share.

By Associated Press

UK inflation in January fell to 1.8%, the lowest in two years

(qlmbusinessnews.com via bbc.co.uk – – Wed, 13th Feb 2019) London, Uk – –

UK inflation fell to 1.8% in January, the lowest in two years, the Office for National Statistics said.

This is down from 2.1% the previous month.

A fall in electricity, gas and other fuels drove the decline, the ONS said.

Head of Inflation Mike Hardie said: “The fall in inflation is due mainly to cheaper gas, electricity and petrol, partly offset by rising ferry ticket prices and air fares falling more slowly than this time last year”.

It means that rises in pay are now now outpacing inflation.

The rate of inflation is now below the Bank of England's 2% target and has fallen from the five-year peak of 3.1% in November 2017 in the wake of the Brexit referendum vote.

Energy prices fell because of Ofgem's energy price cap which came into effect from 1 January 2019, the ONS said.

UK economy stalls as Brexit nears, services sector report job cuts – PMI

(qlmbusinessnews.com via uk.reuters.com — Tue, 5th Feb 2019) London, UK —

LONDON (Reuters) – Britain’s economy risks stalling or contracting as Brexit nears and the global economy slows, with firms in the dominant services sector reporting job cuts for the first time in six years and falling orders, a survey showed on Tuesday.

A closely watched gauge of the world’s fifth-biggest economy, the IHS Markit/CIPS UK Services Purchasing Managers’ Index, fell to 50.1 in January from 51.2 in December — its lowest level since July 2016 and barely above the 50 mark that separates growth from contraction.

A Reuters poll of economists had expected a reading of 51.0.

Britain’s economy defied forecasts from some economists that it would go into recession after the 2016 referendum vote to leave the European Union. But growth slowed sharply in late 2018 as worries mounted about an abrupt, no-deal Brexit.

Overall, the survey suggested Britain’s economy is flat-lining after losing momentum late last year.

Tuesday’s figures are likely to worry Bank of England officials ahead of their latest interest rate decision announcement and new forecasts for the economy on Thursday.

“The latest PMI survey results indicate that the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wider slowdown in the global economy,” said Chris Williamson, chief business economist at survey compiler IHS Markit.

The report adds to other signs that Brexit, scheduled in less than two months’ time, is taking its toll on businesses and consumers.

Prime Minister Theresa May, under pressure from her own Conservative Party, wants to reopen her withdrawal agreement with the European Union to replace a contested Irish border arrangement, something Brussels has rejected.

Investors are urging the government to ensure an orderly exit from the club Britain joined in 1973.

On Monday, a Deloitte survey of chief financial officers showed appetite to take on financial risk had fallen to its lowest level in nearly a decade due to fears of “the hardest of Brexits” and rising U.S. protectionism.

That caution was evident in Tuesday’s survey, covering the bulk of Britain’s private sector economy.

New orders fell for only the second time since the financial crisis, while employers cut jobs for the first time since late 2012 — around the last time Britain flirted with recession.

“The survey results indicate that companies are becoming increasingly risk-averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty,” Williamson said.

New export orders contracted at the fastest pace since records for this part of the PMI began in September 2014.

The composite PMI for December, combining the manufacturing, construction and service sectors, fell to 50.3 from 51.5 in November, the lowest level since July 2016.

(The story corrects Reuters poll figure in 3rd paragraph to 51.0 from 51.1.)

Reporting by Andy Bruce

Ryanair post first quarterly loss since March 2014

(qlmbusinessnews.com via bbc.co.uk – – Mon, 4th Feb 2019) London, Uk – –

Ryanair posted a net loss of €19.6m (£17.2m) for the last three months of the year, its first quarterly loss since March 2014.

The airline carried 32.7 million passengers compared with 30.4 million for the same period a year earlier as revenue rose 9% to €1.53bn.

But the airline said “excess winter capacity in Europe” cut its profit.

Ryanair said chairman David Bonderman will leave in the summer of 2020.

While the company blamed too many airlines chasing too few passengers, costs may be the real problem, industry experts said.

The company's fuel bill leapt 32% and its staff costs rose 31%. In total, Ryanair's operating costs rose 20% to €1.54bn.

“The heart of the big drop in their profitability is that their fuel costs are very high this year,” HSBC transport analyst Andrew Lobbenberg told the Today programme.

Role shift

Chief Executive Michael O'Leary – who suggested last year that he could step down in the next five years – has agreed a new five-year contract, the firm said.

But his role will change slightly, in that Mr O'Leary will become group CEO and will manage chief executives for each airline brand: Ryanair, Laudamotion, Ryanair Sun and Ryanair UK.

In September, at the firm's annual meeting, almost 30% of shareholders voted against the re-election of Mr Bonderman as chairman after a summer of flight cancellations. He has spent 23 years in the job.


Who is Michael O'Leary?

Michael O'Leary, the outspoken boss of low-cost airline Ryanair, has been no stranger to controversy.

Mr O'Leary, who has agreed to stay on for another five years, is well-known for not being shy about expressing his views, famously excoriating his staff, his customers, competitors, regulators, governments, and groups such as environmentalists and scientists.

He once said of passengers looking for a refund: “We don't want to hear your sob stories. What part of ‘no refund' don't you understand?” and has said he doesn't believe in man-made climate change.


The new company structure is similar to that of IAG, the company that owns British Airways.

Mr O'Leary will oversee costs, aircraft purchases and buying rival airlines. It could be good for industrial relations after a series of strikes over the summer, said transport analyst Mr Lobbenberg.

“It puts more distance between him and the unions,” he said.

Mr O'Leary, who has been chief executive for 24 years, told September's annual meeting he had concerns about committing to a new five-year contract telling shareholders: “I'm not sure Mrs O'Leary would be happy.”

He said the airline's loss was “disappointing”, but “we take comfort that this was entirely due to weaker than expected air fares”.

While higher oil prices and lower fares reduced the firm's profitability, they were creating even bigger problems for rivals, Ryanair pointed out.

Firms like Wow, Flybe and Germania are seeking buyers.

UK’s consumer borrowing slows as Brexit nears

(qlmbusinessnews.com via uk.reuters.com — Wed, 30th Jan 2019) London, UK —

LONDON, Jan 30 (Reuters) – – Lending to British consumers grew at its slowest pace in four years in December, Bank of England data showed on Wednesday, underscoring the loss of momentum in the economy ahead of Brexit.

The annual growth rate in unsecured consumer lending weakened to 6.6 percent from 7.2 percent in November, the smallest increase since December 2014, the BoE figures showed.

There have been signs from many retailers that British households reined in their spending at the end of last year, faced with the possibility of the country leaving the European Union without a deal to smooth the economic shock.

Prime Minister Theresa May says she will seek changes to the Brexit deal she struck with other EU leaders last year but they have ruled out major alterations, leaving open the prospect of a no-deal Brexit in less than two months’ time.

The BoE said the number of mortgages approved for house purchase edged down to 63,793 in December, the lowest number since April but above a median forecast of 63,000 in a Reuters poll of economists.

Britain’s housing market stumbled in 2018 and the Royal Institution of Chartered Surveyors said earlier this month that its members had the most negative outlook for house sales over the coming three months since its records began in 1999.

BoE Governor Mark Carney has warned that in the event of a “disorderly” departure from the EU — which is not the central bank’s base-case scenario — house prices could slump by 30 percent as part of a broader economic shock.

The BoE data showed net mortgage lending, which tends to lag behind approvals, at 4.112 billion pounds in December, up from 3.631 billion pounds in November.

The figures also showed a 687 million-pound increase in unsecured lending, the weakest increase since March of last year and below economists’ forecasts of a rise of 800 million pounds.

Credit card lending rose by just 92 million pounds, the smallest increase since September 2014.

The BoE also said net gilt purchases by foreign investors totalled 11.960 billion pounds in December, compared with 2.418 billion pounds in November.

Reporting by William Schomberg and Huw Jones

Royal Mail shares fall to a record low

(qlmbusinessnews.com via news.sky.com– Tue, 29th Jan 2019) London, Uk – –

The company now expects group underlying earnings to decline to between £500m and £530m, compared with £694m last year.

Shares in Royal Mail have plummeted after the company warned that letter numbers by volume will be lower than expected next financial year.

Royal Mail said that letters by volume dropped 8% over the nine months to 23 December, with letter revenues down 6%.

It attributed the volume drop in part to the impact of the General Data Protection Regulation (GDPR) as well as “business uncertainty” in the run up to Brexit.

The company also confirmed that it expects group underlying earnings to decline to between £500m and £530m, compared with £694m last year.

This projected earnings fall comes after Royal Mail warned of a fall in annual profits last October.

The stock market reacted badly to Royal Mail's trading statement and shares fell by as as much as 13% on opening, making it the FTSE 250's worst performer at the start of business.

Shares rallied slightly within a hour to being down 8% on Monday's closing price of 301p.

Overall, Royal Mail reported a 2% rise in underlying revenues for the period, held up by an 8% revenue increase at its General Logistics Systems (GLS) division, which offset a 1% fall in its UK parcels and letters arm.

Royal Mail group chief executive Rico Back said: “We have had a busy Christmas season.

“In the UK we recruited 23,000 seasonal workers and opened six temporary parcel sorting centres to make sure we had the capacity to handle the high volumes of parcels and cards through our network.

“In the December trading period alone we handled 164 million parcels, up 10% compared with last year.”

Mr Back added: “Due to our letters performance to date, we expect addressed letter volume declines, excluding elections, to be in the range of 7% to 8% for 2018-19.

“While the rate of e-substitution remains in line with our expectations, business uncertainty is impacting letter volumes.

“As a result, addressed letter volume declines, excluding elections, are likely to be outside our forecast medium-term range next year.

“Otherwise, we are reconfirming the outlook and other guidance for 2018-19 provided in our half-year results.”

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown said: “The continuing collapse in letter volumes is the big news in these numbers.

“Royal Mail's gone out of its way to say that's down to wider uncertainty, and the introduction of new privacy laws under GDPR, rather an uptick in companies using email rather than paper.

“Whatever the cause, we suspect those mailings are gone for good.”

“News that the capital markets day has been pushed back to after full year results suggests to us that the all-important cost savings may also be proving harder to deliver than hoped.

“Those efficiency gains remain central to the Royal Mail investment story, and if they can't be delivered then there's nothing to protect the group from the pains of an economic downturn in the UK.”

Domino’s sells over 500,000 pizzas in UK record trading day

(qlmbusinessnews.com via theguardian.com – – Tue, 29th Jan 2019) London, Uk – –

Chain reports bumper sales on Friday before Christmas, but slow global growth cuts profits

Domino’s sold more than 535,000 pizzas in the UK on the Friday before Christmas – equivalent to 12 a second over a 12-hour trading day – but a weaker international performance has forced the company to slice its profit guidance.

The strong run-up to Christmas helped group sales to rise by 5.5% year on year to £339.5m in the 13 weeks to 30 December, it said in a trading update published on Tuesday. Sales growth was driven by its Republic of Ireland operations, where like-for-like sales rose by 7.5%.

However, Domino’s efforts to expand to new markets after fast UK growthstumbled during the quarter. International sales fell by 2% year on year to £26.6m.

David Wild, the Domino’s Pizza Group chief executive officer, said the international operation had experienced growing pains this year. The company suffered “business integration challenges” in Norway in particular, he said.

The weaker international performance prompted Domino’s to guide that its full-year underlying profit before tax will be at the lower end of analysts’ expectations of between £93.9m and £98.2m. The company also said that investment in central functions would dent short-term profitability.

Shares in Domino’s fell by more than 5% as trading opened on Tuesday.

Domino’s, originally an American brand, opened its first UK outlet in 1985, before the British and Irish franchise was bought out in 1993.

The company sold almost 90m pizzas last year in the UK, but its addition of 59 stores during the year to the more than 1,200 it already ran was significantly below its plans at the start of the year. Domino’s on Tuesday reaffirmed its long-term target of 1,600 stores in the UK, but did not give guidance on how many it expects to add in the coming year.

Competition is increasing rapidly in food delivery, with Domino’s facing pressure from companies such as Just Eat, Deliveroo and Uber Eats, all of which enable rival pizza restaurants to offer home delivery. However, Domino’s is betting that its brand and record of profitability will enable it to fend off some of its loss-making competitors.

Wild said: “The UK delivered food market is vibrant and we estimate that it will grow at a compound rate of 8% a year to 2022. We aim to maintain our share of this market.”

By Jasper Jolly

Ryanair issues profit warning blaming lower-than-expected air fares

(qlmbusinessnews.com via bbc.co.uk – – Fri, 18th Jan 2019) London, Uk – –

Ryanair has cut its profit forecast blaming lower-than-expected air fares.

The airline's chief executive, Michael O'Leary, said Ryanair could not rule out having to cut fares further. Fares are expected to fall 7% this winter.

He said the low fares were already causing problems for rivals, including Flybe which was rescued last week.

Full-year profits are now expected to be in a range of €1.0bn to €1.1bn (£880m to £970m), compared with its previous forecast of €1.1bn to €1.2bn.

The profit forecast has been cut despite Ryanair saying it expects to carry more passengers than forecast.

It had previously warned on profits in October.

Mr O'Leary said there was too much capacity on short-haul routes in Europe this winter, adding that customers were enjoying “record lower air fares”.

“We believe this lower fare environment will continue to shake out more loss making competitors, with WOW, Flybe, and reportedly Germania for example, all currently for sale,” he said.

The airline had previously expected air fares to fall by 2%, rather than 7%.

More cuts could be coming, Mr O'Leary added.

“While we have reasonable visibility over forward bookings [for the fourth quarter], we cannot rule out further cuts to air fares and/or slightly lower full year guidance if there are unexpected Brexit or security developments which adversely impact yields between now and the end of March,” he said.

The announcement follows last week's rescue of Flybe, which has received an offer from a consortium including Virgin Atlantic and Stobart Group.

It also comes after difficult period for Ryanair, which was named the UK's least-liked short-haul airline for the sixth year running in a survey carried out by consumer body Which?.

Strikes by staff during the summer season forced it to cancel hundreds of flights for which it has refused to offer passengers compensation, and Which? said “thousands of respondents” had said they would never fly with the airline again.

The impact of these strikes was reflected in Ryanair's half-year results in October, when it reported a 7% fall in profits, although the airline was also affected by industrial action by air traffic controllers.

Ryanair said the latest profits guidance excluded start-up losses in Austrian airline Lauda, which have been cut from €150m to €140m thanks to lower-than-expected costs.

Mr O'Leary said the airline was winning market share, citing plans by rival carrier Norwegian to close bases in Rome, Gran Canaria, Tenerife and Palma, where the airlines compete.

More detail will be provided with third quarter figures on 4 February, Ryanair said.