(qlmbusinessnews.com via uk.reuters.com — Thur, 18th July 2019) London, UK —
LONDON (Reuters) – Britain might be entering a full-blown recession and a no-deal Brexit could more than double the country’s budget deficit next year, the watchdog for public finances said on Thursday.
The Office for Budget Responsibility said the world’s fifth-biggest economy appeared to have flat-lined or possibly contracted in the second quarter, some of which was probably “pay-back” after Brexit-related stock building in early 2019.
“But surveys were particularly weak in June, suggesting that the pace of growth is likely to remain weak. This raises the risk that the economy may be entering a full-blown recession,” it said in a report on the outlook for the public finances.
A no-deal Brexit would hurt confidence and deter investment and lead to higher trade barriers with the European Union, pushing down the value of the pound and causing the economy to contract by 2% by the end of 2020, the OBR said, referring to forecasts by the International Monetary Fund.
A no-deal Brexit – something the two contenders seeking to be Britain’s next prime minister say they are prepared to do if necessary – could add 30 billion pounds ($37.4 billion) a year to public borrowing by the 2020/21 financial year, the OBR said.
The OBR said the spending and tax cut promises made by Boris Johnson and Jeremy Hunt, one of whom is due to become prime minister next week, would put a strain on the budget.
“The spending control framework seems to be under pressure, with major announcements being made outside fiscal events, and the Conservative leadership making pledges that would prove expensive if pursued,” it said.
(qlmbusinessnews.com via theguardian.com – – Tue, 2nd July, 2019) London, Uk – –
Cryptocurrency climbed to nearly $14,000 on news social network was launching rival
The price of bitcoin has fallen back below $10,000, down 30% from last week’s peak of nearly $14,000.
Continuing its wild ride, the digital currency dropped to $9,717 on Tuesday, down 8.1% on the day. Last Wednesday, the cryptocurrency shot up to $13,879, breaking through the $12,000 and $13,000 levels in less than two hours.
Bitcoin had languished below $6,000 for months, but was galvanised by Facebook’s plans to create a cryptocurrency called Libra next year.Q&A
What is bitcoin and is it a bad investment?
Other digital currencies have also fallen back. Reports that an investor placed a large short order on Sunday, betting that the bitcoin price would go down in coming days, sparked panic among investors.
Bitcoin has seen wild swings in the past, and some analysts say it could rise back to $20,000 again – or fall as low as $3,000. In late 2017, it rose to close to $20,000, before a spectacular collapse in 2018.
The cryptocurrency’s latest gyrations prompted the US economist Nouriel Roubini, a long-time critic, to say that the bitcoin price would eventually fall to zero. He tweeted: “Its true value is negative, not zero, given its toxic externalities! It will get to zero in due time.”
Simon Peters, an analyst at global investment platform eToro, said: “We appear to be in a period of indecision, where the market is figuring out where to go next after its heavy surge and sell-off.”
Investors hope Facebook’s entry into digital currencies will bring greater legitimacy to the sector. Regulators around the world have warned that the move could lead to greater controls and tougher regulation to protect consumers.
Mark Carney, the governor of the Bank of England, cautiously welcomed Libra. He said the central bank would support new entrants into the UK financial system, but warned that Facebook would need to meet the highest regulatory standards.
Bloomberg reported last week that Henry Kravis, the co-founder of the US private equity firm KKR, had become the latest financier to bet on cryptocurrencies. He is investing in a cryptocurrency fund provided by ParaFi Capital. Other high-profile investors include British hedge fund manager Alan Howard, PayPal co-founder Peter Thiel and US hedge fund manager Louis Bacon.
(qlmbusinessnews.com via news.sky.com– Mon, 1st July 2019) London, Uk – –
The FTSE 100 rose by about 1% to reach a two-month high following developments at the G20 summit over the weekend.
Stock markets have rallied after the US and China agreed to restart trade talks, easing fears over the escalation of a damaging dispute between the world's two biggest economies.
The FTSE 100 was around 1% higher, taking the index above the 7,500-mark to its highest level since late April, while European bourses also made strong advances.
That followed gains for Asian markets overnight, after a meeting between Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 meeting over the weekend.
Mr Trump offered concessions including not imposing any new trade tariffs and easing restrictions on Chinese tech company Huawei – which has recently been placed on a US blacklist.
China agreed to make unspecified new purchases of US farm products and to return to the negotiating table.
The developments helped the FTSE turn higher when trading resumed on Monday, led by industrial group Melrose – up by more than 3% – while Asia-focused financial powerhouses Prudential and HSBC also made gains.
An upturn in the oil price – with Brent crude rising 3% to nearly $67 a barrel – also lifted stocks.
The rise came after OPEC and other oil-producing countries looked set to extend supply cuts at a meeting in Vienna.
That helped boost UK-listed BP, up 2%, and Royal Dutch Shell, more than 1% higher.
In Germany – an exporting giant especially susceptible to global trade tensions – the Dax rose by 1.6% in early trading.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: “Trump and Xi gave investors what they wanted at the G20 meeting in Osaka this Saturday: hope.
“A deal is not sealed just yet, but the two countries showed mutual willpower to end the deadlock and move on with the talks.”
(qlmbusinessnews.com via news.sky.com– Thur, 27th June 2019) London, Uk – –
The rise in numbers of £1m homes was seen in Scotland, Wales, the Midlands and in the north of England – but London saw a fall
The number of homes worth a million pounds or more that have been sold nationally has reached a record high – despite a fall in London.
In total, the number of sales of houses valued at £1m or more increased by 1% in 2018 to a new high of 14,638 – which is the highest number recorded, according to Lloyds Bank.
The number of homes sold for more than £2m was down though, from 2,530 in 2017 to 2,501 in 2018.
The rise in numbers of £1m homes was seen in Scotland, Wales, the Midlands and in the north of England, according to Lloyds, which analysed Land Registry and Registers of Scotland figures.
However, sales in London and the South East remained relatively flat, despite making up around 80% of the sales for homes worth over £1m.
8,267 million pound homes were sold in London in 2018 – down from 8,308 in 2017.
The capital also saw a 3% fall in the sales of homes worth more than £2m, from 1,946 to 1,886 over the course of a year.
The South East showed no major growth in the sale of million pound homes, with 3,390 being sold, which is only 13 more than than the year before.
In Yorkshire and the Humber, the number of million pound homes sold dramatically fell by 23% year-on-year in 2018, with only 103 sales made.
The south-west of England saw a 1% fall from 676 homes in 2017 to 668 in 2018.
Louise Santaana from Lloyds Bank said: “The high-value property boom the country has experienced over the last decade has decelerated in the past 12 months, which is in line with expectations.
“However, while growth across London and the South East has slowed, there are still a number of property hotspots across the country that would create some value for investors, particularly in the East Midlands.”Sponsored Links
(qlmbusinessnews.com via bbc.co.uk – – Fri, 31st May 2019) London, Uk – –
Uber has posted a $1bn (£790m) loss as the ride-hailing firm delivered its first figures since a disappointing flotation earlier this month.
The quarterly loss came despite a 20% rise in revenues to $3.1bn and increase in monthly active users to 93 million.
The results were in line with many analysts' forecasts and may provide reassurance about the company's future profitability.
Uber shares have sunk almost 11% since it listed on Wall Street on 10 May.
The company is the biggest of a group of Silicon Valley start-ups that have gone public this year against the backdrop of a global stock market sell-off sparked by renewed US-China trade tensions.
But Uber has also faced strong competition in the smartphone ride-hailing business, and incurred extra costs for signing up new drivers and establishing the Uber Eats delivery service.
Finance Chief Nelson Chai said he had recently seen some less aggressive pricing by competitors, which include arch rival Lyft.
He added that Uber was prepared to keep spending. “We will not hesitate to invest to defend our market position globally.”
The company has ambitions to move into electric scooters, e-bikes, and even aircraft, allowing people to hail rides via their smartphones.
During a conference call after publication of the results, Uber boss Dara Khosrowshahi said the company's disappointing start as a public business was just a step on “the long journey of making Uber a platform for the movement of people and transport of commerce around the world at a massive scale”.
The share price was almost flat in after-hours trading immediately following release of the numbers, but then jumped 1.6% higher before falling back.
Some analysts have expressed unease about the company ever making a profit. The number of investors betting that Uber's share price will fall – called short-selling – has risen during the past two weeks.
One analyst, Atlantic Equities' James Cordwell, said a lack of any forward guidance in Thursday's statement “is a little disappointing”.
(qlmbusinessnews.com via uk.reuters.com — Thur, 30th May 2019) London, UK —
LONDON (Reuters) – Britain’s economy is likely to grow less than the Bank of England forecast earlier this month as Brexit uncertainty hurts investment and productivity, Deputy Governor Dave Ramsden said on Thursday.
Ramsden, who voted against the BoE’s first post-crisis interest rate increase in November 2017, said rates would need to rise if Brexit went smoothly, but a disruptive Brexit would make the right path for monetary policy an open question.
Even if Brexit does go smoothly, it would be unlikely to dispel all business uncertainty, he said, so investment might pick up less than the BoE had forecast, hurting short-run growth and the economy’s longer-run productive capacity.
“Relative to the best collective judgment expressed in the MPC’s central forecast I am … a little more pessimistic on GDP growth than my colleagues on the MPC,” he told businesses during a visit to Inverness in northeastern Scotland.
The BoE forecast this month that the economy would grow by 1.5% this year and 1.6% in 2020 if Brexit goes smoothly.
Ramsden said his outlook for inflation and how fast to raise interest rates was similar to that of his colleagues, because weaker productivity growth was likely to push up on inflation, cancelling out the drag on inflation from slower growth.
Brexit uncertainty is leading businesses to use extra workers rather than invest in improving productivity, he said, something that was likely to weigh on productivity over the coming years.
“We are unlikely to achieve full certainty until the final outcome of (Brexit) negotiations is known, and there is a risk that more persistent uncertainty could push out the pick-up in investment and continue to drag on growth,” he said.
Figures earlier on Thursday showed the biggest annual fall in car production since the financial crisis, after carmakers temporarily halted work last month because they were unable to reverse closures planned before the scheduled March 29 Brexit.
At the start of this month, BoE Governor Mark Carney said investors were underestimating how much interest rates could rise, even as the British central bank kept borrowing costs on hold due to Brexit uncertainty.
At the time, markets only priced in one quarter-point rate rise over the next three years, and short-term interest rate expectations have fallen back since and markets now think a rate cut is more likely than an increase over the coming year.
Ramsden, a former chief economist at Britain’s finance ministry, said a no-deal Brexit with no transition period beforehand would have “large negative economic effects”.
But that would not automatically mean interest rates should be cut, he said, because of the inflationary impact of a weaker pound and a further reduction in productivity.
(qlmbusinessnews.com via bbc.co.uk – – Wed, 15th May 2019) London, Uk – –
Asda could be listed on the stock market after its merger with supermarket rival Sainsbury's was blocked by the competition authorities.
Judith McKenna, chief executive of Asda's owner Walmart, has told staff such a listing is being considered.
But, she told managers at an event in Leeds – where Asda is based – any listing could “take years”.
It comes after the Competition and Markets Authority blocked its merger with rival Sainsbury's.
The CMA was concerned the tie-up would raise prices for consumers, raise prices at the supermarkets' petrol stations and lead to longer checkout queues.
It has left the giant US retailer Walmart looking at options for the supermarket chain it bought twenty years ago.
“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long-term success,” Ms McKenna said.
Walmart would have kept a 42% stake in the enlarged Sainbury's-Asda business if the £15bn tie-up had gone ahead.
The remarks by Ms McKenna are the first time that Walmart has spoken about the future of its UK operations since the CMA blocked the deal.
Asda is traditionally a value supermarket but had come under pressure from discounters Aldi and Lidl, which have rapidly expanded their market share in recent years.
Walmart, often described as the world's largest retailer, has already listed its Mexico operations and has been buying smaller companies, such as online shopping Jet.com, as well as brands such as Bonobos and Bare Necessities, to expand into new areas.
Price cuts loom
Ms McKenna told the 1,200 managers at the meeting: “Walmart does not have a one-size-fits-all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart”.
Even before the CMA formally blocked the deal, there had been reports that private equity house KKR could consider an offer for Asda and install former Asda chief executive Tony De Nunzio to run the operation.
The current Asda chief executive Roger Burnley also spoke to the managers at the meeting, which took place on Tuesday, and told them that there would be no change in strategy.
Asda, which calls its staff “colleagues”, intends to make £80m of price cuts during the rest of this year and trial new technology.
A “scan and go” initiative was launched in 25 stores last week and more “click and collect” towers will be installed in stores.
(qlmbusinessnews.com via news.sky.com– Wed, 15th May 2019) London, Uk – –
The travel operator is counting the cost of a weak consumer environment as well as the grounding of Boeing 737 MAX aircraft.
Travel operator TUI has reported widening half-year losses and a fall in summer bookings as it counts the cost of weak consumer confidence and Brexit uncertainty.
The group reported an underlying loss of €301m (£261m) for the six months to the end of March, up from €170m (£148m) in the same period a year ago.
It has also been knocked by the grounding of Boeing's 737 MAX aircraft, which it has previously warned could cost up to €300m (£261m) as it leases more aircraft to cover its routes.
TUI said the decline in its first-half performance was partly due to the knock-on impact of last summer's heatwave holding back bookings and because it had too much capacity in Spain as holidaymakers opted for cheaper destinations such as Turkey.
For this summer, bookings in its package holiday and airlines business are down 3% while selling prices are up by only 1% amid a competitive market – not enough for TUI to cover rising costs.
TUI said that for this part of its business “weak demand environment persists”, putting pressure on profit margins.
“This is driven by a number of factors – reduced demand due to last year's extraordinary hot summer, slowdown of consumer confidence, Brexit uncertainty, shift in demand to the eastern Mediterranean coupled with overcapacity to Spain, as well as the 737 MAX grounding,” TUI said.
However, the group said its hotels and cruise ships business, where it has been investing in expansion over recent years, continued to perform well.
The results come after two profit warnings from TUI earlier this year – one blamed on the weak UK market and the other on the Boeing issue.
TUI's fleet of 150 aircraft includes 15 currently grounded 737 MAX aeroplanes, with a further eight scheduled for delivery after the lifting of the grounding.
It has warned investors that it faces a €200m (£174m) hit from the grounding of the aircraft, assuming flights resume by mid-July.
If it does not become clear by later this month that flying will re-start by that time, it will have to extend measures to cover for this until the end of the summer season, adding a further impact of up to €100m (£87m).
TUI chief executive Fritz Joussen said the company was “on track, both strategically and operationally” and that medium and long term growth forecasts were intact. Shares rose 3%.
The company is not the first travel firm to warn of a Brexit impact on demand, with easyJet saying last month that the uncertainty was having an impact.
Meanwhile, TUI's rival Thomas Cook has been seeking new debt funding from lenders and has been looking to sell its airline business.
(qlmbusinessnews.com via uk.reuters.com — Thur, 25th April 2019) London, UK —
LONDON (Reuters) – Profit at Barclays fell 10 percent in the first quarter as its under-pressure investment bank struggled with tough markets, prompting it to signal further cost cuts if these conditions persist.
The poor investment banking performance comes at an awkward time for chief executive Jes Staley, who is locked in a public battle with activist investor Edward Bramson who wants to see the unit pared back to boost overall returns at Barclays.
Barclays said on Thursday returns in the investment banking business fell to 9.5 percent from 13.2 percent a year ago, while its overall profit was 1.54 billion pounds ($1.99 billion).
Although this was in line with the 1.57 billion forecast compiled from the average estimates of 13 analysts polled by the bank, shares in Barclays were down 1.43 percent at 0730 GMT.
“Despite a better than expected result in fixed income trading, today’s numbers will do little to take the pressure from activist Edward Bramson off the board,” said Nicholas Hyett, analyst at one of Britain’s biggest online investment platforms, Hargreaves Lansdown.
Barclays said that if the tough market conditions persist, it may have to cut annual costs in 2019 below the 13.6 billion to 13.9 billion pound range it earlier said it expected.
The bank said measures it took three years ago to ensure bonus pools in a given year are better aligned with that year’s performance, mean it has more discretion to cut bonuses when performance dips.
“What you see in the first quarter is Barclays using this discretion around variable compensation to manage our costs anddeliver expected profitability,” Staley said.
Staley last month ousted his lieutenant Tim Throsby, a fellow former JP Morgan banker who he had recruited in September 2016 to run the investment bank and who then embarked on a hiring spree in a bid to restore morale and performance.
Barclays said income from its equities business fell 21 percent and banking advisory fees were down 17 percent, although earnings from fixed income, currencies and commodity trading (FICC) rose 4 percent.
The drop in equities income follows similar announcements from U.S. rivals such as Goldman Sachs and JP Morgan which saw first quarter declines in trading revenues as client activity slumped.
Barclays’ core capital ratio fell to 13 percent from 13.2 percent at the end of the previous quarter, and its total income of 5.25 billion pounds fell short of analysts’ expectations.
(qlmbusinessnews.com via news.sky.com– Tue, 16th April 2019) London, Uk – –
The rise in pre-tax profit and confidence in the face of Brexit uncertainty comes as many high street names are struggling.
JD Sports has defied high street gloom, reporting a 15% rise in pre-tax profit for the year.
Executive chairman Peter Cowgill said that the retailer of sports, fashion and outdoor brands had delivered a “record result” thanks to its “relentless focus” on providing a “compelling differentiated proposition to the consumer”.
Pre-tax profit was £339.9m in the year ending 2 February, compared with £294.5m the previous year.
The result comes as many high street names are struggling.
During the past week Debenhams has fallen into administration, LK Bennettannounced a third of its stores would close and Monsoon Accessorize has made preliminary moves towards a Company Voluntary Arrangement (CVA).
Mr Cowgill said: “JD is not immune to the widely reported challenges to physical retail in the UK with lower footfall on many high streets, malls and retail parks combined with cost challenges from increasing minimum wage rates and rises in business rates.
“Therefore, it is very pleasing that the core UK and Ireland Sports Fashion fascias, the most mature part of our group, have delivered a further increase in sales and profitability.
“This helps maintain our belief that the store base at its current scale continues to provide a positive influence on our future development as it raises brand awareness, provides consumers with an opportunity to physically see and try the product, and enables us to provide multiple delivery points.”
JD Sports said it had increased its store count by 39 across Europe and a further 34 stores had opened in the Asia Pacific region. In the previous year 56 stores were opened in Europe and nine in Asia/Pacific.
Its acquisition of Finish Line in the US had also “significantly” extended its global reach and was “delivering encouraging early results”, Mr Cowgill said.
He also said the group was confident about the future, despite Brexit uncertainty.
“While we recognise that there is uncertainty surrounding the nature and timing of the UK's exit from the European Union, we are cognisant of the potential consequences of a disorderly exit on supply chains, tariffs, exchange rates and consumer demand,” he said.
“Notwithstanding this uncertainty, the board remains confident in the international potential of the JD proposition.”
(qlmbusinessnews.com via theguardian.com – – Wed, 10th April, 2019) London, Uk – –
Investors set aside concerns over Jamal Khashoggi murder to take up oil firm’s $10bn issue
Saudi Aramco, the world’s largest oil company, was massively oversubscribed for its multibillion dollar debut bond sale, in a further sign that investors have put aside concerns over doing business with Saudi Arabia following the murder of the journalist Jamal Khashoggi.
The state-owned firm is expected to raise more than $10bn (£8bn) through its first-ever bond issue. But a surge in demand meant the sale was oversubscribed, with orders exceeding $100bn.
It reportedly sets a record for emerging market bond demand, trumping orders worth $52bn for Qatar’s $12bn deal last year, $67bn bid for Saudi Arabia’s bond sale in 2016 and $69bn for Argentina’s $16.5bn trade that same year.
The stampede to pick up Aramco debt is seen as a vote of confidence by investors, just months after Khashoggi was killed in a Saudi consulate in Istanbul last October.
Saudi authorities spent weeks denying any knowledge of the journalist’s death before saying he was killed in an operation masterminded by former advisers to Mohammed bin Salman, but denying the crown prince’s involvement.
The journalist had written columns for the Washington Post criticising the crown prince before his death.
Some investors initially tried to distance themselves from the Gulf state amid global outrage, pulling out from a major finance conference in Riyadh in October.
Saudi Aramco last week emerged as the most profitable business in the world, with its 2018 profits of $111.1bn overtaking Apple at $59.5bn.
Documents from its bond offering revealed the company produced 10.3m barrels of crude oil per day, resulting in annual revenues of $355.9bn.
Proceeds from Saudi Aramco’s bond sale are expected to help fund its takeover of rival Sabic in a deal worth $69.1bn.Topics
(qlmbusinessnews.com via news.sky.com– Tue, 9th April 2019) London, Uk – –
Products from swordfish and stilton to motorcycles and large commercial aircraft could be targeted by the new import duties.
By John-Paul Ford Rojas, business reporter
The Trump administration has opened up fresh trade tensions with the EU after threatening to impose tariffs worth $11bn on goods ranging from helicopters to wine and cheese.
US trade representative (USTR) Robert Lightizer said the move was in retaliation for subsidies to European aeroplane manufacturer Airbus said to have caused “adverse effects” to the US.
The list of EU products that could face new levies runs from swordfish, stilton and wine to motorcycles and large commercial aircraft.
But Airbus said it saw no legal basis for the US move while EU sources told the Reuters news agency that it was preparing for possible retaliation.
The EU and US have been battling for more than a decade over parallel claims over billions in illegal subsidies to aviation giants Airbus and America's Boeing.
The latest move by the USTR marks an escalation of tensions, though Mr Lightizer said the ultimate goal was to reach an agreement with the EU to end all subsidies to large civil aircraft that do not comply with World Trade Organisation (WTO) rules.
“When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted,” he said.
The WTO said last year that it would evaluate a US request to slap billions of dollars worth of sanctions on European products, in response to a ruling on illegal subsidies.
The US has estimated the value of those subsidies as worth $11bn (£8.4bn) in trade, though that figure has been challenged by the EU.
The USTR said it would announce a final product list once the WTO had evaluated its claims, which it is expected to have done by this summer.
Airbus spokesman Rainer Ohler said the amount announced by the US was “largely exaggerated”.
He said a ruling last week by the WTO against tax breaks for Boeing should allow the EU to seek “even greater counter-measures”.
Mr Ohler added: “All this is leading to unnecessary trade tensions and shows the only reasonable solution in this long trade dispute is a settlement.”
The latest announcement comes after the US last year imposed tariffs on the EU's steel and aluminium products.
Europe has hit back with levies on American products such as bourbon whiskey, motorcycles and jeans.
Mr Trump has ramped up the use of tariffs or the threat of tariffs in relations with Washington's trade partners, including Europe, Mexico and China – a tactic that has left global markets jumpy about the impact on global growth.
10 Rejected Shark Tank Pitches That Made Millions… For that reason… I’m out. Shark tank statement is something no entrepreneur wants to hear on the show Shark Tank. But it does come with regret on the dealing end as well. The Sharks have passed on many deals, but they are some that made it big that didn't need them. The Sharks on Shark Tank are famous for their robust negotiating skills, and that extends to their salaries as well. Mark Cuban, Barbara Corcoran, Lori Greiner, Robert Herjavec, Daymond John, and Kevin O’Leary but they are human, and they will miss a business opportunity here and there. The show that gives entrepreneurs a chance to pitch celebrity investors depicts some business owners walking away with life-changing deals, and some are not so lucky. But for these people they didn't end up too bad.
(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.”
(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.
(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.”
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.
(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.”
(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.
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.”