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.

Uk businesses express impatience, anger and frustration over Brexit

(qlmbusinessnews.com via news.sky.com– Wed, 16th Jan 2019) London, Uk – –

The PM's commons defeat has angered business leaders who fear they are looking “down the barrel” of a no deal Brexit.

Business leaders have expressed their “frustration” over the political turmoil and lack of a Brexit deal after Prime Minister Theresa May's defeat in the Commons.

Sky's City editor Mark Kleinman reported executives from some of the biggest companies rounded on cabinet ministers after they refused to rule out a no-deal Brexit.

Here's the response to Mrs May's defeat from some of UK's leading business groups.

Adam Marshall, director general of the British Chambers of Commerce, said:

“There are no more words to describe the frustration, impatience, and growing anger amongst business after two and a half years on a high-stakes political rollercoaster ride that shows no sign of stopping.

“Basic questions on real-world operational issues remain unanswered, and firms now find themselves facing the unwelcome prospect of a messy and disorderly exit from the EU on March 29th.”

Stephen Martin, director general of the Institute of Directors, said:

“It is the collective failure of our political leaders that, with only a few weeks to go, we are staring down the barrel of no deal.

“As things stand, UK law says we will leave on 29th March, with or without a withdrawal agreement, and yet MPs are behaving as though they have all the time in the world – how are businesses meant to prepare in this fog of confusion?

“The clock is still ticking, and whatever the outcome of tomorrow's no confidence vote, the reality is that MPs will still need to find a way to put aside their differences and come to an agreement.”

Carolyn Fairbairn, CBI director-general, said:

“Every business will feel no deal is hurtling closer. A new plan is needed immediately. This is now a time for our politicians to make history as leaders. All MPs need to reflect on the need for compromise and to act at speed to protect the UK's economy.”

Miles Celic, chief executive of TheCityUK, said:

“The outcome of today's vote prolongs uncertainty and will continue to depress business confidence.

“The lack of clarity on the path to an orderly Brexit risks disruption and financial instability on both sides of the Channel. We urge the government and MPs to carefully consider the options without delay and put forward an economically sensible way ahead.

“A no deal outcome is not in the best interests of customers in the UK or the EU.”

Catherine McGuinness, policy chair at the City of London Corporation, said:

“Parliament's decision to reject the Government's deal means businesses across the UK will continue to face uncertainty regarding our relationship with the European Union.

“The Government must now urgently set out its ‘Plan B' to ensure we can secure a deal locking in a legally binding transition before 29 March.

“Financial stability must not be jeopardised in a game of high-stakes political poker. Politicians across all parties should work together pragmatically to avoid a no-deal Brexit, which would be a hugely damaging outcome for households and businesses on both sides of the Channel.”

Mothercare Uk sales fall in the third quarter amid “difficult consumer backdrop”

(qlmbusinessnews.com via bbc.co.uk – – Wed, 9th Jan 2019) London, Uk – –

Mother and baby retailer Mothercare has blamed a “difficult consumer backdrop” for a fall in sales in the UK in its last quarter.

Sales fell 11.4% and online sales dropped more, by 16.3%, the firm said.

The business is in the throes of a UK store closure programme, with 36 currently in closing-down mode. By the end of March, there will be 79 stores, down from 137 in May 2018.

The firm kept its guidance for the financial year unchanged.

Chief executive Mark Newton-Jones said: “Whilst the UK continues to be challenging, in part as a result of our planned restructuring, we are still on course to deliver the necessary transformation.”

Last year, Mothercare underwent a company voluntary arrangement (CVA), which allowed it to shut loss-making shops and reduce rents. It also raised £28m through issuing new shares.

Mr Newton-Jones left in March last year, but then returned in May.

As well as the difficult consumer backdrop, the company said the fall in sales had also been affected by “aggressive discounting” in the previous year, which had inflated sales in that period.

The figures – which are like-for-like, stripping out changes to stores – are for the 13 weeks to 5 January.

The company – which in November had blamed “negative press coverage” for a fall in sales – said that online sales had dropped because of fewer visits to its website, while the store closures had hit sales ordered on iPads in its shops. There had also been fewer toys on sale and less discounting.

The international business was showing signs of recovery, Mr Newton-Jones said, with sales down 1.1%.

In total, sales were down 18% in the third quarter and down 14.8% in the year to date.

The shares, which a year ago were trading at 40p, rose 1% to 15p in early trading.

Mr Newton-Jones said that while market conditions in the UK would “remain challenging with further disruption until April from our store closure programme”, the company expected its full-year profits to be in line with expectations.

Analysts are expecting a pre-tax loss of about £13m for the full year.


Aldi or Lidl visited by two-thirds of UK shoppers over Christmas

(qlmbusinessnews.com via theguardian.com – – Tue, 8th Jan 2019) London, Uk – –

Major supermarkets lose market share in festive period amid Brexit spending squeeze

Two-thirds of UK households visited a discounter over Christmas, handing Aldiand Lidl their biggest ever slice of spending as political uncertainty prompted shoppers to keep a tight hold on their wallets.

All the major supermarkets lost market share in the 12 weeks to 30 December as Aldi’s sales jumped 10.4%, according to the latest data from Kantar Worldpanel, and Lidl’s by 9.4%. This took their combined market share to a record 12.8%, up from 11.4% the previous year. Homegrown discounter Iceland’s sales rose 1.8%, increasing its share of the market to 2.3%.

“The discounters have continued to make their mark over Christmas: two-thirds of all households shopped at either Aldi or Lidl over the 12-week period, culminating in a highest-ever combined Christmas market share of 12.8%,” said Fraser McKevitt, the head of retail and consumer insight at Kantar.

Asda was the strongest performer of the big four food retailers, with sales growth of 0.7% according to Kantar, followed by Tesco and Morrisons. Sainsbury’s had the most difficult period with sales falling by 0.4%.

Overall, supermarket sales growth slowed to 1.6% over Christmas, the poorest performance in more than a year, as shoppers reined in spending amid political uncertainty. While shoppers spent £450m more than in 2017, growth in 2018 was tempered by lower inflation of 1.3%, less than half the level seen the previous year.

McKevitt said supermarkets had not been affected by the shift to the web that has hit high street retailers. Online sales rose just 3.9%, with all of that growth coming from existing shoppers. McKevitt said Amazon would be a force to watch this year as its grocery sales rose 16% over the three-month period.

The industry figures were released as Morrisons reported a slowdown in sales growth over Christmas as it said shoppers had become “more cautious and careful” amid the political uncertainty around Brexit.

Sales at its established supermarkets rose 0.6%, including a 0.4% contribution from online sales, in the nine weeks to 6 January. Wholesale sales were up 3% and Morrisons said it had held the price of 100 key Christmas goods, such as mince pies, at the same level as last year.

The figures were slightly behind some City expectations and were down on the strong Christmas enjoyed by the group in 2017, as well as on the 1.3% in stores and 4.3% via wholesale reported for the three months to 4 November.

David Potts, the Morrisons chief executive, said: “Going into November there was a sense that customers were a bit more cautious, a bit more careful with their spending and there was a feeling of uncertainty in the country that may have led to that [cautiousness].”

He said both affluent and price conscious shoppers had been concerned to keep a limit on the total amount they spent over Christmas.

“People became increasingly savvy and conscious of the macro political situation in the country and how it may influence 2019 and how it may affect them.”

He said he expected consumers would continue to be price-conscious through 2019 and said retailers would have to “trade hard and offer great value” in order to win over shoppers.

Morrisons recently announced it was slashing the price of more than 900 productsby an average 20% and Tesco has also revealed price cuts on hundreds of items in the annual attempt to win over shoppers who find their finances squeezed after the Christmas blowout.

Potts said: “This is Morrisons’ fourth consecutive Christmas of like-for-like sales growth during the turnaround. Our performance shows colleagues are listening hard and responding to customers, providing consistently great value and good quality when it matters most.”

Sainsbury’s, Tesco and Waitrose will report their festive trading figures later this week.

By Sarah Butler

Uk new car sales see biggest downturn since 2008

(qlmbusinessnews.com via news.sky.com– Mon, 7th Jan 2019) London, Uk – –

Plummeting diesel sales, new emissions rules, and a Brexit-linked hit to consumer confidence were all blamed for the downturn.

New car sales fell by nearly 7% last year in the biggest annual drop since 2008, according to industry figures.

A slump in demand for diesel, stricter emissions rules, and falling consumer confidence ahead of Brexit were blamed for the decline.

Figures from the Society of Motor Manufacturers and Traders (SMMT) showed 2.37 million new cars were sold in 2018, down more than 174,000 on the previous year.

The 6.8% fall was the second year in a row of decline and the largest drop since demand fell by 11.3% during the financial crisis a decade ago.

SMMT chief executive Mike Hawes described the challenges facing the industry as a “perfect storm”. The trade body is forecasting a further 2% decline in 2019.

Mr Hawes said: “A second year of substantial decline is a major concern, as falling consumer confidence, confusing fiscal and policy messages and shortages due to regulatory changes have combined to create a highly turbulent market.

“The industry is facing ever tougher environmental targets against a backdrop of political and economic uncertainty that is weakening demand so these figures should act as a wake-up call for policy makers.”

The key factor in the decline for last year was a 29.6% drop in diesel sales – with the SMMT blaming a “lingering sense of uncertainty” over how diesel cars will be taxed and treated after the Volkswagen emissions cheating scandal in 2015.

Petrol car sales were up by 8.7% while alternatively-fuelled vehicles such as plug-in hybrids or electric cars were up 20.9%.

Another factor affecting car sales was the implementation of a new EU emissions testing procedure which came into force in September and was blamed for a supply shortage in the autumn.

Mr Hawes said it would be unfair to attribute too much significance to concerns over Brexit when explaining the fall in new car sales.

But he said that falling consumer confidence had reduced consumers' appetite for a “big ticket purchase”.

The SMMT, like other business bodies, is calling for MPs to back Theresa May's Brexit agreement and avoid a no-deal scenario.

It says that crashing out of the EU without an agreement risked destroying the car manufacturing industry, which employs more than 850,000 people in the UK.

UK shares fall in poor start to 2019 after disappointing data from China

(qlmbusinessnews.com via uk.reuters.com — Wed, 2nd Jan, 2019) London, UK —

(Reuters) – UK shares were lower on Wednesday as investors returned from New Year celebrations to more disappointing data from China that deepened concerns about the health of the global economy and sparked a global sell-off.

London's blue-chip bourse .FTSE dropped 0.9 percent and the mid-cap index .FTMCdipped 0.3 percent by 1018 GMT.

Most sectors were still in the red, setting a bleak tone for 2019’s first trading day after both indexes recorded their worst yearly drop since the 2008 financial crisis last year.

Positive domestic PMI data due to Brexit-induced stockpiling provided some respite, but investors were focussed on Chinese data that showed manufacturing activity in the world’s second-largest economy contracted for the first time in 19 months.

It followed a poor official survey on factory output on Monday. Data also revealed that euro zone manufacturing activity barely expanded in December.

Continued concerns that the prospect of a global cyclical downturn will likely cap the upside of UK’s blue-chip shares, said CMC Markets analyst Margaret Yang.

“A string of missing PMIs from China’s official and private sector suggest that Asia’s largest economy is still cooling off due to weaker external demand and trade uncertainties,” Yang added.

“It is still too early to say markets have bottomed out yet.”

UK-listed companies with more exposure to the Asian market were the most hit with HSBC (HSBA.L) edging 1.8 percent lower and Standard Chartered (STAN.L) down 3 percent.

Fellow financial heavyweights Prudential (PRU.L), Lloyds (LLOY.L) and Royal Bank of Scotland (RBS.L) also fell over 3 percent.

Global miners were also weak with copper prices lower amid concerns over growth in top metals consumer China. Antofagasta (ANTO.L), BHP (BHPB.L), Anglo American (AAL.L), Rio Tinto (RIO.L) and Glencore (GLEN.L) were down between 3.2 percent and 4.3 percent.

Blue-chip medical products maker Smith & Nephew (SN.L) tumbled 2.5 percent, with traders citing a rating cut by brokerage JPMorgan.

Among the midcaps, Energean Oil & Gas (ENOG.L) added 5.1 percent to top the gainers after signing a gas supply agreement with independent power producer I.P.M. Beer Tuvia.

Elsewhere in corporate news, Ophir Energy (OPHR.L) shares outperformed the small-cap index .FTSC and soared over 33 percent after the oil and gas producer said it was in takeover talks.

Gambling software company Playtech (PTEC.L) gave up losses to turn positive. It said it would pay 28 million euros under a settlement with Israeli tax authorities following an audit of its annual accounts.

Real estate investment trust Hammerson (HMSO.L) was 3.9 percent lower as it said its share buyback programme will be paused ahead of the release of 2018 results.

Reporting by Muvija M and Shashwat Awasthi in Bengaluru

GlaxoSmithKline to merge with rival Pfizer in agree £10bn healthcare deal

(qlmbusinessnews.com via news.sky.com– Wed,  19thDec 2018) London, Uk – –

The UK drug firm behind the Aquafresh toothpaste and Beechams flu remedies is to be effectively broken up under its Pfizer deal.

GlaxoSmithKline (GSK) is to merge its consumer healthcare unit with that of rival Pfizer, to create a new business with almost £10bn in annual sales.

The UK pharmaceutical firm – behind many well-known brands including Aquafresh toothpaste, Panadol and Beechams cold and flu remedies – said it would control 68% of the joint venture.

Pfizer – best known for Viagra and Anadin painkillers – would own the rest, though GSK added that the all-equity deal “lays the foundation” for it to spin off the healthcare arm – as shareholders had demanded of the company.

Its stock was 5% up when the FTSE 100 opened.

GSK said it planned to create two separate UK-based companies – one focused on pharmaceuticals and vaccines and the other on consumer healthcare – within three years of completing the tie-up.

GSK said the merger was set to deliver cost savings of £500m by 2022 and admitted there would be job losses under the programme.

By James Sillars, business reporter

ASOS online fashion retailer sales suffering in the run-up to Christmas

(qlmbusinessnews.com via news.sky.com– Mon, 17th Dec, 2018) London, Uk – –

A major online fashion retailer has caught the high street's cold with sales suffering in the run-up to Christmas.

ASOS has reported a “significant deterioration” in sales growth – with heavy discounting ahead of Christmas now expected to take a toll on profits.

The online fashion retailer said in an unscheduled trading update it had been forced to join a markdown frenzy at a time when the wider high street is already suffering the effects of weaker consumer confidence in the run-up to Brexit.

Shoppers were also more cautious in many of its other major EU markets, ASOS said, including Germany.

France, which has suffered five consecutive weekends of sales disruption because of riots, was also hit by tougher trading.

ASOS reported a 14% rise in total retail sales for the three months to 30 November – with UK sales up 19%.

However the company said that its sales growth had come at a cost to profit margins and was sharply down on its earlier expectations.

The chain said it was now forecasting sales growth of 15% for the year to August, down from 20% to 25%.

Its anticipated earnings margin was revised down from 4% to 2%.

Shares fell by almost 40% when the market opened while other fashion retailers, including Next and M&S, were leading the fallers on the FTSE 100.

The ASOS statement read: “Whilst trading in September and October was broadly in line with our expectations, November, a very material month for us from both a sales and cash margin perspective, was significantly behind expectations.

“The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years.

“We have recalibrated our expectations for the current year accordingly.”

The company's trading update suggests few are immune to the trading troubles.

Primark – like ASOS – has been a consistent performer in recent years but the high street fashion favourite warned investors 10 days ago that November sales had proved “challenging”.

Sports Direct and House of Fraser boss Mike Ashley is another to have spoken extensively on the high street's struggles.

ASOS had delighted the market when, in October, it announced a 28% surge in annual pre-tax profits despite demand headwinds and had predicted even better things to come.

Chief executive Nick Beighton said on Monday: “We achieved 14% sales growth in a difficult market, but in the light of a significant downturn in November, we think it's prudent to recalibrate our expectations for the full year.

“We are taking all appropriate actions and our ambitions for ASOS have not changed”.

By James Sillars