China blames U.S. for ‘largest-scale trade war’ in month long conflict

(qlmbusinessnews.com via uk.reuters.com — Fri, 6th July 2018) London, UK —

BEIJING/WASHINGTON (Reuters) – The United States and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday, with Beijing accusing Washington of triggering the “largest-scale trade war” ever in a sharp escalation of their months-long conflict.

Hours before Washington’s deadline for the tariffs to take effect, U.S. President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year.

China’s commerce ministry, in a statement shortly after the U.S. deadline passed at 0401 GMT on Friday, said that it was forced to retaliate, meaning $34 billion worth of imported U.S. goods including autos and agricultural products also faced 25 percent tariffs.

However, an ensuing three-plus hour delay before Beijing confirmed that it had implemented retaliatory tariffs sowed confusion in markets.

“After the United States unfairly raised tariffs against China, China immediately put into effect raised tariffs on some U.S. goods,” foreign ministry spokesman Lu Kang told a daily media briefing on Friday afternoon.

China’s soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses, amid market uncertainty over whether China had implemented tariffs on a list of U.S. goods, including soybeans.

Some Chinese ports had delayed clearing goods from the United States, four sources said on Friday. There did not appear to be any direct instructions to hold up cargoes, but some customs departments were waiting for official guidance on imposing added tariffs, the sources said.

Ford Motor Co said on Thursday that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China.

An analysis of over four dozen imported U.S products facing higher duties showed that prices were little changed on Friday afternoon versus earlier in the week. The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.

While Chinese state media have slammed Trump’s protectionism and on Friday likened his administration to a “gang of hoodlums,” the trade conflict has gained little traction on China’s tightly controlled social media, not cracking the 50 top-searched topics on the Twitter-like Weibo platform.

The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks.

Chinese shares, which have been battered in the run-up to the tariff deadline, reversed earlier losses to close higher, but the yuan remained weaker against the dollar. Asian equities wobbled but also managed to end up.

In the run-up to Friday’s tariff implementation, there was no sign of renewed negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.

“We can probably say that the trade war has officially started,” said Chen Feixiang, professor of applied economics at Shanghai Jiaotong University’s Antai Colege of Economics and Management.

“If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said then it’s going to have a big impact for both countries,” Chen said.

‘GANG OF HOODLUMS’
China’s commerce ministry called the U.S. actions “a violation of world trade rules” and said that it had “initiated the largest-scale trade war in economic history.”

Trump has railed against Beijing for intellectual property theft and barriers to entry for U.S. businesses and a $375 billion U.S. trade deficit with China.

“You have another 16 (billion dollars) in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300,” Trump told reporters aboard Air Force One on Thursday.

Throughout the escalating conflict, China has sought to take the high road, positioning itself as a champion of free trade, but state media ramped-up criticism of Trump on Friday.

“In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China,” the state-run China Daily newspaper said in an English language editorial on Friday.

“Its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it.”

While the initial volley of tariffs was not expected to have major immediate economic impact, the fear is that a prolonged battle would disrupt makers and importers of affected goods in a blow to global trade, investment and growth.

“For companies with supply exposure to tariffs, they will move sourcing country of origin if they can; if they can’t, they’ll pass on as much of the tariff cost as they can, or see a cut in margins,” said Jacob Parker, vice president of China operations at the U.S.-China Business Council in Beijing.

A China central bank adviser said the planned U.S. import tariffs on $50 billion worth of Chinese goods – $34 billion plus a planned follow-on list worth $16 billion – will cut China’s economic growth by 0.2 percentage points, although the overall impact would be limited, the official Xinhua news agency reported Friday.

“This is not economic Armageddon. We will not have to hunt our food with pointy sticks. But it is applying the brakes to a global economy that has less durable momentum than appears to be the case,” Rob Carnell, chief economist at ING, said in a note.

U.S. Customs and Border Protection officials were due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

China’s tariffs on hundreds of U.S. goods include top exports such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.

By Adam Jourdan in SHANGHAI, Michael Martina, Christian Shepherd, Dominique Patton and Elias Glenn in BEIJING, David Lawder and Jeff Mason WASHINGTON; Writing by Tony Munroe;

 

 

Tesco planning “strategic alliance” with French retail giant Carrefour

 

(qlmbusinessnews.com via bbc.co.uk – – Mon, 2 July 2018) London, Uk – –

Tesco says it is planning a “strategic alliance” with French retail giant Carrefour, as the two try to use their joint buying power to cut costs and offer lower prices to customers.

The two plan a “strategic relationship” when dealing with global suppliers, and the tie-up will also mean joint purchasing of their own-brand products.

The move comes as retailers face an increasingly competitive environment.

Tesco is the UK's largest retailer while Carrefour is Europe's largest.

Last year, Tesco – which employs 440,000 people – reported profits of £1.3bn with sales of £57.5bn.

Carrefour operates 12,300 stores across more than 30 countries, employing about 375,000 people worldwide. Last year, it had sales of €88.2bn (£78bn).

The two have been talking for two years and, although no formal agreement has yet been signed, they said they were hoping to confirm a deal in the next two months.

Retail shake-up
Tesco chief executive Dave Lewis said: “By working together and making the most of our collective product expertise and sourcing capability, we will be able to serve our customers even better, further improving choice, quality and value.”

The grocery sector is currently going through a period of rapid change. Tesco itself recently completed the purchase of wholesaler Booker, and in April, Sainsbury's said that it was in advanced talks to buy Asda from US retail giant Walmart.

The traditional big four UK supermarket chains – Tesco, Sainsbury's, Asda and Morrisons – have faced increasing competition from the rapidly-expanding budget chains Lidl and Aldi over the past few years, and there is now the added threat of internet giant Amazon moving into the sector.

Last year, Amazon bought upmarket grocer Whole Foods. In the UK, Amazon offers food sales through its Amazon Fresh service, although currently that is still focused on Greater London and parts of the South East.

“Another price war is now looming in the UK supermarket sector,” said Laith Khalaf, senior analyst at Hargreaves Lansdown. “The latest Tesco partnership looks like a direct response to the threat posed by the proposed merger of Sainsbury's and Asda, who will have access to the global buying power of Walmart as a result.

“The sector is already fiercely competitive, in no small part thanks to the emergence of the discounters Aldi and Lidl, and that comes against a background of shifting shopping habits.

“Challenging trading conditions have sparked a wave of re-invention in the UK supermarket sector, and this new partnership between Tesco and Carrefour is yet another stage in that process.'

‘Great opportunity'
Tesco's performance has gradually improved since 2014, when it reported the worst results in its history with a record pre-tax loss of £6.4bn. However, it recently recorded its 10th consecutive quarter of rising sales and said its growth plans were on track.

In January, Carrefour announced a major transformation plan that involved making cost cuts of €2bn by 2020, and investing €2.8bn in e-commerce by 2022.

Announcing the planned tie-up with Tesco, Carrefour Group chief executive Alexandre Bompard said the agreement was, “a great opportunity to develop our two brands at the service of our customers”.

“This international alliance further strengthens Carrefour allowing it to reach a key milestone in the implementation of its strategy.”

 

 

China shares sink amid Trump’s latest trade war threat

(qlmbusinessnews.com via news.sky.com– Tue, 19 June, 2018) London, Uk – –

Stock markets react to the latest threats following last week's tit-for-tat imposition of tariffs between the two countries.

Investors are reacting nervously to a potential escalation in President Trump's trade war with China, with stock markets falling sharply in Asia.

China's Shanghai Composite lost up to 5% of its value at one stage after the US president asked officials to identify $200bn of Chinese goods to be subject to a 10% tariff.

It prompted Beijing to accuse Washington of “blackmail” – warning it would respond to any such measures.

That followed last Friday's decision to impose 25% tariffs on $50bn of Chinese products.

Then, Beijing immediately retaliated by matching the US levy, which prompted Mr Trump to up the ante once more in what he regards as an unfair balance in trade between the two superpowers.

In a statement he said: “This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376bn trade imbalance in goods. This is unacceptable.

“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States.

“Therefore, today, I directed the United States Trade Representative to identify $200bn worth of Chinese goods for additional tariffs at a rate of 10%.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.

“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods. The trade relationship between the United States and China must be much more equitable.”

The increasingly bitter trading relationship between the US and China comes less than a fortnight after a fractious G7 summit where Mr Trump's use of tariffs, both against China and on steel and aluminium imports from the EU, Canada and Mexico, was roundly criticised.

The latest escalation was reflected in the value of shares in both Asia and Europe.

The Shanghai Composite closed almost 4% down while Hong Kong's Hang Seng lost 3%.

All major European markets were also trading lower – the FTSE 100 faring better than most with just a 1% decline in early trading.

Commenting on President Trump's latest threat, head of Asia-Pacific trading at OANDA Stephen Innes, said: “That was quick and sudden, reminding us just how quickly things can get right out of hand.

“Indeed, this is moving beyond ‘tit-for-tat' levels and, predictably, investors are running for cover under the haven umbrellas as global equity indices are crumbling under the weight of an escalating trade war.

“Buckle up as this could get messy,” he concluded.

 

 

Virgin Money sold for £1.7bn

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(qlmbusinessnews.com via bbc.co.uk – – Mon, 18 June 2018) London, Uk – –

The owner of Clydesdale Bank and Yorkshire Bank, CYBG, has agreed to buy Virgin Money for £1.7bn.

Under the deal, all the group's retail customers will be moved to Virgin Money over the next three years.

It will be the UK's sixth-largest bank, with about six million customers, but 1,500 jobs are likely to go.

CYBG said it had agreed with Sir Richard Branson's Virgin Group to license the Virgin Money brand for £12m a year, rising to £15m later.

Virgin Group is Virgin Money's biggest shareholder with a 34.8% stake in the business.

Under the terms of the deal, Virgin Money shareholders will get 1.2125 new CYBG shares for every Virgin Money share they hold, and will end up owning about 38% of the combined business.

CYBG said the combined group would have about 9,500 employees, but it intended to reduce that total by about one-sixth, suggesting about 1,500 jobs would go.

It said some of those job losses would be achieved “via natural attrition”.

Virgin Money, which was founded in 1995, expanded its business in 2011 when it bought the remnants of Northern Rock for about £747m.

Analysis:
By Kevin Peachey, personal finance reporter

Nimbleness and the ability to attract customers through new technology have been seen as challenger banks' main attributes.

That is why the Open Banking scheme – opening traditional accounts to specialist services from smaller players – appeared to be a potential game changer for fintechs and banking upstarts.

But the TSB fiasco may well have damaged consumer confidence in these companies being able to provide more customer-friendly tech than the big banks.

With this deal, the focus shifts to a more traditional form of competition – growing a business to a sufficient size to take on the incumbents at their own game.

Key figures

CYBG

2.8 million customers
169 branches
£2.6bn market capitalisation
Virgin Money

3.3 million customers
74 branches
£1.5bn market capitalisation

Competitor of scale'
CYBG said the takeover would “bring together the complementary strengths of two successful challenger banks to create the UK's first true national competitor to the large incumbent banks”.

Its chief executive, David Duffy, told the BBC's Today programme: “We're going to become a competitor of scale.”

He added that “technology and agility” were the factors that would decide the future of banking.

“I think we have sufficient scale – the brands, the product and the technology,” he said.

“We can be agile enough to deliver a much better deal for the customer.”

Mr Duffy will retain his current position in the combined group, as will CYBG chairman Jim Pettigrew.

Virgin Money chief executive Jayne-Anne Gadhia has agreed in principle to stay on as a consultant for a limited time after the deal goes through.

 

 

Trump imposes steel tariffs as trade war looms

(qlmbusinessnews.com via bbc.co.uk – – Fri, 1 June 2018) London, Uk – –

Europe, Canada and Mexico are planning retaliatory moves after President Trump imposed tariffs on steel and aluminium imports to the US.

The European Union issued a 10-page list of tariffs on US goods ranging from Harley-Davidson motorcycles to food products.

It also plans to challenge the move at the World Trade Organization.

Mr Trump claimed the tariffs would protect US steelmakers, which were vital to national security.

French President Emmanuel Macron called Mr Trump to tell him the tariffs were “illegal” – a term echoed by Bernd Lange, chair of the European Parliament's international trade committee.

The MEP hoped a trade war could be avoided but warned that Mr Trump's action demonstrated the US president was “not willing to stick to the rules”.

Germany's Economy Minister, Peter Altmaier, hoped a decisive EU response would make Mr Trump reconsider his decision.

UK International Trade Secretary Liam Fox said the 25% levy on steel was “patently absurd”, adding: “It would be a great pity if we ended up in a tit-for-tat trade dispute with our closest allies.”

Barry Gardiner, the Labour shadow trade secretary, told the BBC's Today programme the US measures were “based on a lie”, adding the UK should not be “bullied by the president … we believe in a rules-based system and Trump doesn't”.

Gareth Stace, head of trade body UK Steel, said the tariffs were “no way to treat your friend” and called on the government to safeguard the industry's 31,000 jobs.

Justin Trudeau, the Canadian Prime Minister, said the US move was “totally unacceptable” and rejected the claim that his country posed a national security threat to America.

Canada plans to impose tariffs of up to 25% on about $13bn worth of US exports from 1 July. Goods affected will include some American steel, as well as consumer products such as yoghurt, whiskey and coffee.

Mexican Foreign Minister Luis Videgaray said his country was planning new duties for imports of steel, pork, apples, grapes, blueberries and cheese from the US.

Opposition to the tariffs was also voiced by prominent Republicans. House Speaker Paul Ryan, the most influential Republican in Congress, said the move “targets America's allies when we should be working with them to address the unfair trading practices of countries like China”.

What do the US tariffs mean?

Mr Trump first announced plans for the tariffs in March, but granted some exemptions while countries negotiated.

On Thursday, US Commerce Secretary Wilbur Ross said talks with the EU, Canada and Mexico had not made enough progress to warrant a further reprieve, meaning tariffs of 25% on steel and 10% on aluminium have now come into effect.

They apply to items such as plated steel, slabs, coil, rolls of aluminium and tubes – raw materials that are used extensively across US manufacturing, construction and the oil industry.

Mr Ross said the president had the authority to lift the tariffs or alter them at any time, leaving room for “flexibility”.

“We continue to be quite willing and indeed eager to have discussions with all those parties,” he said.

Canada, Mexico and the EU together exported $23bn (£17bn) worth of steel and aluminium to the US in 2017 – nearly half of the $48bn of total steel and aluminium imports last year.

European firms have said they fear lower US demand for foreign steel will divert shipments to Europe.

Analysts at IHS Markit expect the effects to be distributed across a wide range of markets, limiting the effect on steel prices outside the US.

That leaves America to bear the brunt of the economic impact, which economists say will appear in the form of higher prices and job losses – as many as 470,000 by one estimate.

Steel prices in the US have already risen due to the uncertainty and may increase as the tariffs hit imports.

Consumers outside the US could see prices of some goods fall, while those in America may end up paying more.

 

 

Vodafone to pay €18.4bn in Liberty Global cable networks deal

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(qlmbusinessnews.com via bbc.co.uk – – Wed, 9 May 2018) London, Uk – –

Vodafone will pay €18.4bn (£16.1bn) for cable networks in Germany and eastern Europe owned by US firm Liberty Global.

The deal will allow Vodafone to expand its mobile, TV and broadband services in Hungary, Romania and Czech Republic.

It will also create a stronger “quad play” competitor for Deutsche Telekom in Germany.

The long-expected deal with Liberty Global, which also owns Virgin Media, is Vodafone's biggest since its £112bn takeover of Mannesmann in 2000.

Vodafone said the transaction, which includes Unitymedia in Germany, would create a “converged national challenger” in the country.

Deutsche Telekom, which is Europe's biggest telecoms operator by revenue and owns T-Mobile, has voiced strong objections to the move.

Its chief executive, Timotheus Höttges, said it would distort competition: “I personally will fight for fair competition for our customers, to ensure that we do not face a disadvantage.”

He has also questioned whether regulators would approve the tie-up.

However, Vodafone chief executive Vittorio Colao said that deal “creates a strong competitor to Deutsche”.

Vodafone already owns the largest cable business in Germany after it acquired Kabel Deutschland for €7.7bn five years ago.

Unitymedia is the second-largest cable network, operating in the three of Germany's 16 states that Vodafone does not already cover.

Mr Colao said that there was “no geographical overlap” between the two businesses.

Mike Fries, chief executive of Liberty Global, said: “Even together, Liberty Global and Vodafone, whose cable networks don't compete or overlap, will be half the size of the incumbent operator. It's time to alter market dynamics by unleashing greater investment and competition.”

Vodafone offers only mobile services in Hungary, Romania and the Czech Republic, but buying Liberty's cable business will allow to expand into TV and broadband in those markets.

As part of the deal, the company will pay Liberty Global €10.6bn in cash, which the US business said would “provide significant additional flexibility to optimise growth and shareholder returns”.

Vodafone has also agreed to a €250m break fee if the acquisition does not complete.

Shares in Vodafone rose 1.2% to 210.1p in morning trading in London.

 

 

BP annual profits soar to £4.4bn on higher oil prices

 

BP/Wikimedia

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 6 Feb 2018 London, Uk – –

BP has unveiled the clearest sign yet that the oil major is emerging from the gloom of the Deepwater Horizon disaster and the global market downturn, with a $6.2bn (£4.4bn) profit boom for 2017.

The FTSE 100 energy giant’s better than expected full-year results revealed strong operating cash flows, which were driven higher by the recovery in global oil prices and a 12pc growth in BP’s oil and gas business.

BP made $6.2bn in replacement cost profits, its standard measure of profitability, for the full year compared to just $2.6bn in 2016 when oil prices were at their lowest ebb. In the final quarter of last year alone BP made $2.1bn, up from just $400m in the last quarter of 2016.

BP boss Bob Dudley said last year was “one of the strongest years in BP’s recent history”, which will accelerate the momentum of the the group’s five-year plan as it enters its second year.

Brian Gilvary, BP’s chief financial officer, added that the group’s cash flows were now “back in balance” as it undertakes the start of its programme to buy back the shares it paid out to shareholders in lieu of dividends during the oil market rout.

BP spent $343m on share buy backs in the final quarter, which Mr Gilvary said more than offset the scrip dividends offered in September.

The group’s rigorous discipline on spending has brought BP’s costs down from $60 a barrel to $53 a barrel and will remain in place for 2018 to allow further buybacks, Mr Gilvary added.

But the tight reign on spending has nonetheless driven “the most activity we’ve seen in recent years if not in the history of the company”, he said.

BP is working hard to grow its production portfolio after years of austerity. It will start up five new oil and gas projects this year and also undertake “measured” investments in new energies including biofuels and electricity.

By 

 

 

Tate & Lyle’s New Boss to be former Pepsico executive Nick Hampton

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 16 Jan 2018) London, Uk –

Tate & Lyle’s chief financial officer Nick Hampton, a former Pepsico executive, is set to take over as boss of the UK ingredients giant when its current chief executive Javed Ahmed steps down in April.

The company, a member of the FTSE 250, is best known as a sugar producer, despite spinning off that division in 2010. It is now focused on producing other ingredients including sweeteners, starches and fibres and has been boosted in recent years by growing demand for sugar-free alternatives.

Gerry Murphy, the firm’s chairman, today thanked Mr Ahmed for his “exceptional leadership” of the business since 2009.

He said: “During his tenure, Tate & Lyle has been through a very significant strategic, operational and organisational transformation from a largely commodity business into the high-quality global food ingredients business it is today.”

Mr Hampton joined Tate & Lyle in 2014 after a 20-year career a Pepsico, which owns hundreds of food and drink brands including Walkers Crisps, Quaker Oats and Tropicana juice.

He said: “As global demand for healthier and tastier food continues to grow, this business has the opportunity to deliver meaningful benefits for our customers, employees, shareholders, and society at large, in the years ahead.”

Mr Murphy added: “Nick has been an outstanding chief financial officer with a strong track record of driving performance, building teams and capabilities, and focusing on key customers and markets. We are confident he has the experience, energy and vision to lead Tate & Lyle through the next phase of its development.”

Tate & Lyle’s shares were flat at 691p in morning trade.

By 

 

 

Uk’s booming craft beer industry helped delivery firm APC boost profits overnight

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(qlmbusinessnews.com via telegraph.co.uk – – Fri, 25 Nov, 2017) London, Uk – –

Britain’s booming craft beer industry helped delivery firm APC Overnight post a 30pc growth in pre-tax profits to £3m last year.

Revenues at APC, which has 112 sites around the UK, crept up 0.8pc to £103m in the year to March 31 as the company moved away from so-called “heavy traffic” like white goods and carpets towards smaller parcels and packets, shipments of which have increased as online shopping has boomed.

Chief executive Jonathan Smith told The Daily Telegraph the company had seen particularly strong growth in the food and drink market.

Mr Smith said: “We’ve seen a real growth in niche beers from micro breweries. There’s more breweries in the UK than any time in the last 50 years, and lots of them have got online businesses now, which we serve.”

The number of UK breweries has soared 64pc to almost 2,000 since 2012, according to figures released by accountants UHY Hacker Young, as punters have ditched mass-produced lagers in favour of more unusual tipples.

Founded in 1994, APC is owned by 33 of its network members, local delivery companies for which it provides transportation and sorting services.

Larger logistics firms are gearing up to cope with the annual online shopping rush on Black Friday later this week, but Mr Smith said APC, which caters mostly to SMEs, does not anticipate such a large surge.

“There is a peak definitely, but lots of SMEs say do you know what, we’ve got a great service, a great product, we don’t take part in that,” Mr Smith said.

Delivery companies face an increasing struggle to cater to customers in large cities, and particularly in London, he added, as industrial space previously occupied by warehouses is converted into homes.

Mr Smith said: “We’re fairly well placed [to deal with it] but we can’t pretend conditions aren’t getting worse year-on-year.”

The industry has come under fire for its reliance on self-employed casual workers in recent years, but Mr Smith says APC and its members predominantly use employed drivers “where they can”.

By Jack Torrance

Sainsbury’s report a 9% dip in half-year profits

Elliott Brown/Flickr

(qlmbusinessnews.com via news.sky.com– Thur, 9 Nov 2017) London, Uk – –
The supermarket chain, which also owns Argos, says keeping price rises down has contributed to a fall in profits.

Sainsbury's has reported a 9% dip in half-year profits to £251m despite a 17% rise in total group sales.

The group said losses at Argos, which it bought last year and has been integrating into its supermarket offering, higher wages and investment in price at its stores took their toll on underlying performance in the six months to 23 September.

Shares were down almost 3% in early trading.

The company admitted shoppers were currently very “value conscious” but said customer growth in the period showed that efforts to tackle the challenge posed by discounters were bearing fruit ahead of the crucial Christmas trading period.

Recent figures have shown the grocery sector largely escaping sales damage in wider retail – with those operating primarily in fashion facing strong headwinds from the Brexit-linked squeeze on household budgets.

Next and M&S were two other big names reporting tougher times this month.

Sainsbury's chief executive Mike Coupe said: “We have delivered a good performance across the group in the last six months, with more customers choosing to shop at Sainsbury's in the first half than ever before.”

He added: “We continue to focus on offering our customers great value, supported by our removal of multibuys.

“Customers can shop at Sainsbury's knowing they get good value every day without having to wait for products to be on promotion.

“We are also collaborating with suppliers and working hard within our own business to reduce our costs and limit the impact of price inflation on our customers.”

 

SSE UK’s second-largest energy supplier confirms merger with Npower

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(qlmbusinessnews.com via bbc.co.uk – – Wed, 8 Nov 2017) London, Uk – –

SSE has confirmed it is merging its British domestic business with Npower to form a new energy company.

SSE, the UK's second-largest energy supplier, which also reported a big fall in its adjusted pre-tax profits of 13.9% in the six months to September, revealed the merger talks on Tuesday.

The deal knocks the country's “Big Six” energy firms down to five.

“We are very proud of what we've delivered over many years,” said chief executive Alistair Phillips-Davies.

He said the merger would allow both to “focus more acutely on pursuing their own dedicated strategies”.

The new firm is expected to be roughly the size of market leader British Gas and to serve about 11.5 million customers.

‘Innovative'

The news comes less than a month after the government published draft legislation to lower the cost of energy bills.

However, SSE retail's chief operating officer, Tony Keeling, denied that was the reason for the merger.

“We've been looking for well over a year about what we should do,” he told BBC Radio 4's Today programme. “We've listened to government regulators and customers and understand that the market needs to transform and we're absolutely committed to doing that.

“By merging SSE's retail business with Npower's retail business to form a new organisation, we think we can be more efficient, more agile and more innovative for customers.”

The deal could fall under the jurisdiction of the Competition and Markets Authority if it progresses beyond its current stage, but Mr Keeling added: “We think it is very good for competition and customers. There are over 60 people competing in the market and if you look back to 2011, there were only eight.”

Break fee

SSE's shareholders will hold 65.6% of the new company, with Innogy, which owns Npower, holding the rest.

Innogy will also receive a break fee of £60m if SSE's shareholders fail to approve the deal by 31 July 2018.

In a statement, SSE said the new firm was expected “to deliver enhanced value” and that savings in costs and combined IT platforms would “ultimately enable the company to be an efficient competitor in its markets”.

It added that no final decision on the implications for employees would be taken without talks with their representative bodies.

Mr Keeling added: “We're proud of our track record in customer service and have plenty to build on.

“But there is a huge amount of competition and we need to do more than ever to compete by providing value for money and excellent experiences for customers.

“We have an exciting opportunity to create a major new independent supplier with a single-minded focus on customers.”

Meanwhile, regulator Ofgem has welcomed SSE's announcement that its electricity networks division will make a voluntary contribution of £65.1m to consumers.

 

Arqiva and Bakkavor pull IPO plans blaming market volatility

(qlmbusinessnews.com via telegraph.co.uk – – Fri, 3 Nov, 2017) London, Uk – –

Mobile mast provider Arqiva and food producer Bakkavor have both pulled their initial public offerings on the London Stock Exchange, blaming “volatility” in the market.

Arqiva's potential £6bn float, which would have been London's biggest IPO of the year, was announced just two weeks ago.

Bakkavor, which supplies ready meals to a host of high-street retailers, revealed plans for a £1bn float last month.

In a brief statement this morning Arqiva said: “The board and shareholders have decided that pursuing a listing in this period of IPO market uncertainty is not in the interests of the company and its stakeholders, and will revisit the listing once IPO market conditions improve.”

Bakkavor said that while it has received enough interest from investors, it had decided “that proceeding with the transaction would not be in the best interests of the company, or its shareholders, given the current volatility in the IPO market”.

Arqiva has a monopoly on television and radio broadcast masts, and is Britain’s biggest independent provider of infrastructure for mobile operators, who are expected to need more and more masts as demand for data rockets.

The Telegraph reported earlier this year that Arqiva – currently owned by Macquarie and the Canada Pension Plan Investment Board (CPPIB) – was being eyed by at least half a dozen buyers.

However when this process resulted in just one offer, the company decided to opt for an IPO instead.

Despite the shift to on-demand viewing over the internet, Arqiva has reported growth in its broadcast unit because its digital terrestrial television signals are used by hybrid services such as BT TV, which combines internet-based pay-TV with Freeview. However some analysts had suggested it might struggle to convince investors that there is a long-term future in broadcast TV.

Bakkavor, owned by its Icelandic founders Agust and Lydur Gudmundsson and US hedge fund Baupost, had intended to raise £100m to pay down debt.

The Gudmundsson siblings had borrowed to fund Bakkavor’s expansion and came unstuck when the financial crisis hit Iceland’s banking system in 2008. They were forced into a debt-for-equity swap in 2010 that shrank their stake in the firm, only to team up with Baupost last year to take back control

The London IPO market appeared to getting into its stride after a lacklustre 2016 and an underwhelming start to the year. In recent months TI Fluid Systems, and Russian power producer and metals company En+ have unveiled large London IPOs.

However Dutch business outsourcer TMF announced a £1bn float and then cancelled it last month, opting instead to sell itself to private equity firm CVC.

By Jon Yeomans

BP to restart share buybacks as third quarter profits growth exceed expectations

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 31 Oct 2017) London, Uk – –

BP investors sent shares in the oil major to its highest price this year after the supermajor more than doubled its profits in the last three months, driven by a five-year high in earnings for its fuels, petrochemicals and refining businesses.

The company said the profit bonanza would trigger the start of a share buyback scheme to ease the irritation of a scrip dividend put in place to help protect its balance sheet during the oil market downturn.

Bob Dudley, BP’s chief executive, said that the group had benefited from the ramp-up of three new projects in its oil production or “upstream” arm, in Australia, Trinidad and Oman.

It also enjoyed the highest earnings in five years in its oil refining, or “downstream”, business, helping to generate “healthy” earnings and cash flow, he said.

“There is still room for further improvement and we will keep striving to increase sustainable free cash flow and distributions to shareholders,” Mr Dudley added.

The return of cash payouts to BP’s patient investors caused shares to rocket higher, opening up 3pc at 522p, its highest price in seven years. The shares have since slipped to 517p, narrowly below the highest price for 2017 so far.

Brian Gilvary, BP’s chief financial officer, said the company had made strong progress in adapting to lower oil prices. BP’s finances, including the full dividend, are back into balance at an oil price just below $50 a barrel, he said.

“Given the momentum we see across our businesses and our confidence in the outlook for the group’s finances, we will be recommencing a share buyback programme this quarter. We intend to offset the ongoing dilution from the scrip dividend over time,” he added.

BP’s underlying replacement cost profit – its preferred measure of profit – more than doubled from the quarter before to $1.9bn (£1.4bn), well ahead of analyst forecasts of $1.58bn. In the second quarter of this year BP’s profits were just $684m, and in the same quarter last year they were $933m.

The better than expected results were supported by strong earnings growth in fuel and lubricant sales as well as a doubling in earnings from its petrochemicals business. Oil majors are increasingly focusing on refining crude to create the chemical building blocks used in manufacturing plastics, where demand is expected to boom in the coming years, as opposed to declining demand for petrol in cars.

On a pre-tax basis BP’s profits reached $1.56bn, again more than double that of the previous quarter’s $710m, and a swing from a pre-tax loss of $224m for the third quarter in 2016.

But Biraj Borkhataria, an analyst at RBC Capital, said the better than expected earnings had failed to translate to cash flow growth.

BP’s underlying cash flow was $5.2bn, excluding a $564m charge for the Deepwater Horizon disaster, compared to forecasts for cashflow over $6bn.

At the same time BP’s net debt at the end of September climbed to $39.8bn, compared to $32.4bn a year ago. This drove the overall ratio of net debt to earnings up to 28.4pc from 25.9pc a year ago.

Mr Borkhataria added that the share buyback could be viewed “as a sign of confidence” in BP's longer term cash generation.

By Jillian Ambrose

UK’s growth figures increase likelihood of rate rise

(qlmbusinessnews.com via bbc.co.uk – – Wed, 25 Oct 2017) London, Uk – –

The UK's economy had higher than expected growth in the three months to September – increasing the chances of a rise in interest rates in November.

Gross domestic product (GDP) for the quarter rose by 0.4%, compared with 0.3% in each of 2017's first two quarters, according to latest Office for National Statistics figures.

Economists said the figures were a green light for a rate rise next week.

If it happens, it will be the first rise since 5 July 2007.

The financial markets are now indicating an 84% probability that rates will rise from their current record low of 0.25% when the Bank of England's Monetary Policy Committee (MPC) meets on 2 November.

Governor Mark Carney indicated to the BBC last month that rates could rise in the “relatively near term”.

UK economist Ruth Gregory, of research company Capital Economics, said the figures “have probably sealed the deal on an interest rate hike next week”.

While many economists echo that view, some think the Bank of England will keep rates where they are.

“If all we can muster… is an acceleration in economic growth that's so small you could blink and miss it, the Bank of England could still think better of a rate rise next week,” said Ross Andrews from Minerva Lending.

Will interest rates rise next week? Analysis by economics editor Kamal Ahmed

The slightly better growth figures will strengthen the arguments of the interest rate hawks on the Bank of England's monetary policy committee.

Next Thursday, the Bank's rate setting committee meets to decide whether to raise interest rates for the first time in more than a decade.

With inflation at 3%, Mark Carney, the governor, has signalled that an increase is on the cards.

And with economic growth more robust than many economists expected, those who support that direction of travel on the MPC will be emboldened.

To be clear, any rate rise will be small. And future rate rises will be gradual.

But the Bank is sending a clear message – slowly, eventually, the period of historically low interest rates is coming to an end.

The pound rose more than a cent against the dollar and nearly a cent against the euro in the first couple of hours of trading after the announcement.

Chancellor Philip Hammond said: “We have a successful and resilient economy which is supporting a record number of people in employment.

“My focus now, and going into the Budget, is on boosting productivity so that we can deliver higher-wage jobs and a better standard of living.”

Shadow chancellor John McDonnell said: “The UK is not growing as fast as many of our trading partners in the EU or the USA.

“The Chancellor cannot keep hiding from the facts, as his approach of carrying on as usual is seriously putting working people's living standards at risk.”

The biggest contributor to growth in the third quarter was the service sector, which expanded by 0.4%.

In particular, computer programming, motor traders and retailers were the businesses that showed the strongest performance.

Manufacturing expanded by 1% during the quarter – a return to growth after a weak second quarter.

However, construction contracted by 0.7% in the quarter, accelerating from the 0.5% decline recorded in the previous three months.

City investors overjoyed after dividends reached a record £28.5bn in the first quarter

(qlmbusinessnews.com via telegraph.co.uk – – Mon, 23 Oct 2017) London, Uk – –

City investors are enjoying a bumper payday after dividends reached a record £28.5bn during the third quarter of this year.

Despite some currency gains fading in the third quarter, which boosted British blue-chips earlier this year, dividends still rose by 14.3pc in the third quarter, said Capita Asset Services.

The surge in payouts has meant that this year is comfortably on track to smash the previous annual record for dividends set in 2014.

Capita has upgraded its forecasts by £3bn and now expects dividends to reach £94bn in 2017, a 11pc rise on last year.

The level has been partly boosted by a £1.5bn hike in special dividends, which were two-fifths higher than the year. Catering company Compass helped lift that figure by awarding £960m to shareholders.

The sizeable special dividend came after Capita announced it would return 61p-a-share to investors in May after being unable to find large-scale deals on which to spend its excess cash. Recruitment business Hays also issued its first-ever special dividend in August on the back of strong international fees, despite a steep fall in the UK market.

Special dividends have become increasingly common as companies seek to reward investors but still want financial flexibility given the uncertain economic backdrop.

Awarding special dividends means that companies are not under pressure to continue increasing normal dividend payments should their financial performance worsen. Underlying dividends reached £17bn during the third quarter, with two-thirds of payouts coming from the mining sector, which has enjoyed a return to growth after a sustained commodity slump.

“We had high hopes for 2017, but the dividend seam is proving even richer than we expected, as the mining sector finds its footing again,” said Justin Cooper, chief executive of Capita’s shareholder solutions.

By 

UK Fintech firms set for a record breaking year of investments

(qlmbusinessnews.com via cityam.com – – Thur, 19 Oct2017) London, Uk – –

Fintech startups in the UK are on track to attract a record amount of investment in 2017 new figures reveal, bucking concerns that Brexit could derail the star sector.

More than $1bn (£760m) has already been ploughed into technology firms hoping to disrupt finance this year by venture capital investors, more than double the amount this time last year according to fresh data from London and Partners and Pitchbook.

Read more: City calls for fintech sector deal to ensure UK remains leader after Brexit

Investment is set to smash 2015 when $1.16bn was invested in UK fintech, cementing London's position as the fintech capital of Europe and a global hub. It hit a five quarter high in the third quarter, with 37 deals worth $358m separate figures published by CB Insights show.

The data also predicts that investment across Europe could break the $2bn barrier for the first time in 2017, having already hit a record of $1.8bn across 216 deals in the first three quarters of the year.

The already bumper year has been largely driven by the UK, accounting for around half of investment and eight of the 10 biggest deals of third quarter. They include $66m for digital challenger bank Revolut, $50m for accountancy software firm Receipt Bank and $40m for lending platform Prodigy Finance.

Along with investment in China expected to hit new highs, it puts fintech investment globally on track for a record year. So far this year, firms around the world have raised $12.2bn across 818 deals. However, analysts believe the cash going into fintech in the US will be off record highs for a second year in a row. The country's still expected to grab the lion's share of cash, followed by China and the UK.

Meanwhile, a separate soon-to-be published report from Investec has noted increasing interest from new investors. “Reaffirming the global appeal of London’s fintech sector, in 2017 we have seen a large number of international investors invest in London fintechs who have not invested in London previously,” said co-head of emerging companies Kevin Chong.

Read more: Open Banking comes another step closer: Fintechs can apply for FCA approval

Deputy mayor for business Rajesh Agrawal said the figures were “yet more proof that global investors believe London will remain a leading fintech hub for many years to come”.

“Clearly, Brexit poses major challenges – but London’s position as a global financial centre and world-class technology hub is built on strong foundations which cannot be replicated anywhere else: access to more software developers than Stockholm, Berlin and Dublin combined, Europe’s largest fintech accelerator Level 39, and the continent’s only truly global financial market.”

He added: “This highlights the need for a Brexit which enables London to maintain its place at the heart of the single market, as Europe’s financial capital.”

By Lynsey Barber

FTSE edges down, Merlin Entertainments suffers collapse on poor summer trading

(qlmbusinessnews.com via uk.reuters.com — Tue, 17 Oct, 2017) London, UK —

LONDON (Reuters) – UK shares edged lower on Tuesday, with a flurry of trading updates animating early deals, such as tourist attractions operator Merlin Entertainments, which saw its shares collapse on disappointing summer sales.

The FTSE .FTSE had retreated 0.20 percent by 0839 GMT, barely moved by fresh data which showed British inflation rose to its highest level in more than five years and could make the Bank of England more likely to raise interest rates next month.

Shares in Merlin (MERL.L) plunged as much as 21 percent, its biggest fall ever, after the operator of Madame Tussauds waxworks blamed a series of attacks in Britain and unfavourable weather for a dip in trading in its key summer period.

“Given all this additional uncertainty we see less and less reasons to own the shares,” Liberum analysts said as the shares, trading at about 355p, touched three years low levels.

Mediclinic (MDCM.L) retreated 3.5 percent after a trading update and there was no bounce back for Convatec, still down 0.8 percent, after a profit warning triggered a sell-off on Monday and a 26.6 percent fall.

“While the market may be quiet, it is currently extremely intolerant of any company that dares to miss forecasts”, Chris Beauchamp, an IG market analyst, wrote about the slump of Convatec on Monday.

British education group Pearson (PSON.L) on the other hand was the FTSE 100 top performer, with a 5.2 percent rise, after it said it expected full-year operating profit to come in at the top half of its forecast range.

British challenger bank Virgin Money (VM.L) also shone after reporting gross mortgage lending of 6.5 billion pounds to the end of the third quarter and said it had seen robust customer demand due to low unemployment and a resilient housing market.

Investec analyst Ian Gordon said he expected the “stunning performance” to lead to new consensus upgrades on the stock.

Golba miner Rio Tinto (RIO.L) was up 0.3 percent after it said it lifted third quarter iron ore shipments by 6 percent after modernising its haulage railway in Australia’s outback.

British online fashion retailer ASOS (ASOS.L) which increased its outlook for sales growth in its 2018 financial year, saw its shares rise by 1 percent.

By Julien Ponthus

CEO of UK wealth management firm warns bond markets creating the biggest financial crisis of our life time

(qlmbusinessnews.com via cnbc.com – – Wed, 11 Oct 2017) London, Uk – –

The CEO of a U.K.-based wealth management firm has warned that an unruly end to monetary stimulus from global central banks could lead to pensioners and retail customers suffering the biggest financial crisis of their lifetimes.

Brian Raven, group chief executive at Tavistock Investments, believes that bond markets will be the source of the problem and are primed for a sharp reversal.

“This is the biggest financial crisis of our lifetime, because it affects the average person,” Raven told CNBC over the phone. Tavistock is focused on the U.K. but Raven said the problem could be felt more broadly around the world. He argued that bond markets are in a state “never seen before” which could soon trigger a financial shock bigger than in 2008.

Bonds — pieces of paper that companies, governments and banks sell to raise money — have seen three decades of price gains and are perceived to be a safe haven in times of economic stress. They also traditionally perform poorly in times of rising inflation. In the last 10 years, central banks have been busy buying up bonds in an effort to boost the global economy and increase lending. This has further accentuated the move higher for bond prices and many economists now believe the market has become distorted.

With central banks preparing to put an end to ultra-loose monetary stimulus, and with inflation recently seeing a pickup, there are concerns that bonds could lose value quickly in a market that is not very liquid. There are also concerns that bondholders aren't fully aware of the risks.

“The more conservative central banks ( e.g. Bundesbank ) that have been skeptical of quantitative easing have long warned that long periods of low interest rates can sow the seeds of the next crisis by smothering relative prices in the financial markets — but it is difficult to tell where ahead of time because of the ‘fog' created,” Jan Randolph, director of sovereign risk at IHS Markit, told CNBC via email.

“There is a risk of a sharp rebound in prices as monetary policies tighten and liquidity problems if investors stampede out these more risky markets when risks start to crystallize,” he added.

While there's been many gloomy forecasts for the bond market, not everyone agrees that they'll definitely see significant losses as central banks reduce their bond-buying programs. Mike Bell, a global market strategist at JPMorgan Asset Management, told CNBC Monday that this monetary tightening creates a risk but believes that the recent economic recovery should be enough to offset the impacts of lower bond prices.

“Eventually tighter monetary policy could tip the U.S. economy into recession, but we believe that the economy and equity markets can withstand at least the next year's worth of monetary policy tightening,” he said.

“We certainly don't expect the next bear (negative) market to be as bad as the financial crisis in 2008 as banks are much better capitalized than they were in 2008. We therefore expect the next bear market to be a more classic recession rather than a full-blown financial crisis,” he added.

Central banks are unlikely to change their strategy and so investors will be likely face higher interest rates and higher inflation. Therefore, Tavistock's Raven told CNBC that investors should adapt and diversify their investments. Bonds with short durations, high-yielding bonds and emerging market bonds are all potential options for investors, according to Raven.

By Silvia Amaro

“Angry Birds” Finnish company’s shares got off to a flying start

qlmbusinessnews.com via uk.reuters.com — Tue, 3 Oct 2017) London, UK —

HELSINKI (Reuters) – Rovio (ROVIO.HE), the maker of hit mobile game “Angry Birds,” will look to buy up other players in the gaming industry following its listing on Friday, its main owner Kaj Hed said.

The Finnish company’s shares got off to a flying start on their stock market debut, trading up as much as 7 percent from their initial public offering price (IPO) of 11.50 euros.

Hed, who cut his stake from 69 percent to 37 percent in the IPO, said Rovio now had more muscle to do deals in a gaming sector he believes is ripe for consolidation.

“We have a clear will to be a consolidator, and we are in a very good position to do that,” he told Reuters at Rovio’s headquarters by the Baltic Sea.

“Many good (gaming industry) players face the question of whether they should go public, or whether they should consolidate. Going public is expensive and requires hard work, so finding a partner could be easier.”

Analysts have long urged Rovio to do more to reduce its reliance on the “Angry Birds” franchise.

Hed, the uncle of Rovio’s co-founder Niklas Hed, said he remained strongly committed to the company.

“The reason that I sold shares was to give the company the liquidity, because that is very important. My intention is to remain as a long-term investor in the company.”

Rovio saw rapid growth after the 2009 launch of the original “Angry Birds” game, but it plunged to an operating loss and cut a third of its staff in 2015 due to a pick up in competition and a shift among consumers to freely available games.

But the 2016 release of 3D Hollywood movie “Angry Birds”, together with new games, have revived the brand and helped sales recover.

In the first half of this year, Rovio’s sales almost doubled from a year earlier to 153 million euros, while core profit increased to 42 million euros from 11 million.

Rovio’s market valuation of around 950 million euros ($1.12 billion), looks high based on Rovio’s historical profit, said Atte Riikola, an analyst at research firm Inderes.

“There seems to be initial demand for (the stock). But given that the IPO was multiple times oversubscribed, the share price reaction is not too dramatic,” he added.

“Profit growth is priced in, so they need to keep up the good performance which they had in the first half of the year.”

At 1135 GMT, Rovio shares were trading at 11.77 euros, off a high of 12.34 euros/

By Jussi Rosendahl

Additional reporting by Tuomas Forsell

Lloyd’s of London to expect net losses of $4.5 billion from hurricanes Harvey and Irma

Phil Holker/flickr

(qlmbusinessnews.com via uk.reuters.com — Thur, 28 Sept 2017) London, UK —

LONDON (Reuters) – Lloyd’s of London SOLYD.UL expects net losses of $4.5 billion from hurricanes Harvey and Irma, which analysts said would eat into the insurer’s capital and hit its profitability.

Although losses from natural catastrophes have been low in recent years, including in the first half, that is set to change in the second half of the year, Lloyd’s chief executive Inga Beale said following Thursday’s results.

“There was limited major claim activity in the first half. There’s a very different second half emerging – it’s not only the hurricanes but we’ve got the Mexican earthquakes, floods in Asia, typhoons in Asia,” Beale told Reuters.

“The hurricane season is still in play, earthquakes can happen at any time,” Beale said as Lloyd’s reported a 16 percent profit fall in the first half of 2017.

Lloyd’s 80-plus syndicates have already paid out more than $160 million in claims from Harvey and more than $240 million from Irma, Beale said. The $4.5 billion net loss estimate was based on modeling of “known exposures”, she added.

“Given that the Lloyd’s of London market typically produces earnings of 2.1-3.5 billion pounds, it is highly likely that the market faces a capital loss,” Jefferies analysts said in a note.

Modeling firm RMS estimates total insured losses from Harvey and Irma of up to $80 billion.

Meanwhile, Beale said it was too early to assess losses from Hurricane Maria, which devastated Puerto Rico last week and which some analysts have predicted will lead to greater insurance losses than Harvey and Irma.

Lloyd’s made 1.22 billion pounds ($1.63 billion) in profit before tax in the six months to the end of June, down from 1.46 billion pounds a year earlier, although Beale said part of the drop in profit was related to currency fluctuations.

Insurance rates have been falling for the world’s largest specialist insurance market and other insurers for several years due to strong competition.

Lloyd’s return on capital worsened to 8.9 pct from 11.7 pct, due to pressure on returns from low interest rates.

Gross premiums rose to 18.9 billion pounds from 16.3 billion pounds last year, and its combined ratio improved to 96.9 pct from 98 pct in 2016. A combined ratio is a measure of underwriting profitability, with a level below 100 percent indicating a profit.

Jefferies said recent natural catastrophes meant that a combined ratio for the year of 112.5 percent for Lloyd’s “is now a possibility”, indicating higher underwriting losses than 2011, which it said was “the last major catastrophe year”.

Lloyd’s was on track to open its planned EU subsidiary in Brussels by the middle of next year, Beale said, adding the new hub would employ “tens” of people and the firm would be submitting its formal license application “very shortly”.

More than 20 insurers have announced plans for EU hubs in the event that Britain loses access to the single market as a result of its departure from the European Union.

By Emma Rumney and  Carolyn Cohn