RBS reports second successive year of profits as dividend soars

QLM Image

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Associated Press

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

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

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

This is down from 2.1% the previous month.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reporting by Andy Bruce

Ryanair post first quarterly loss since March 2014

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

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

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

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

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

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

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

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

Role shift

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

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

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


Who is Michael O'Leary?

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

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

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


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

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

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

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

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

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

Firms like Wow, Flybe and Germania are seeking buyers.

UK’s consumer borrowing slows as Brexit nears

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

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

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

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

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

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

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

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

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

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

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

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

Reporting by William Schomberg and Huw Jones

Royal Mail shares fall to a record low

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Jasper Jolly

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

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

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

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

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

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

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

It had previously warned on profits in October.

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

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

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

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

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

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

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

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

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

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

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

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

Uk businesses express impatience, anger and frustration over Brexit

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

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

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

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

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

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

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

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

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

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

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

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

Carolyn Fairbairn, CBI director-general, said:

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

Miles Celic, chief executive of TheCityUK, said:

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

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

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

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

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

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

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

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

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

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

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

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

The firm kept its guidance for the financial year unchanged.

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Sarah Butler

Uk new car sales see biggest downturn since 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reporting by Muvija M and Shashwat Awasthi in Bengaluru

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

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

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

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

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

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

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

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

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

By James Sillars, business reporter

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By James Sillars

Theresa May, Tory win of confidence vote pushes Pound Sterling up

QLM Image

(qlmbusinessnews.com via news.sky.com– Thur, 13th Dec, 2018) London, Uk – –

Sterling recovers some ground as investors see the vote by Tory MPs bolstering the chances of a soft Brexit or even no Brexit.

The pound has reacted positively after Theresa May saw off a Tory vote of confidence in her leadership – but wobbled when the size of her majority became clear.

Sterling has had a rocky ride this week amid the growing political crisis over Brexit, with sharp falls first focused on the delayed parliamentary vote on the PM's Brexit deal with Brussels.

It later fell further – to fresh 20-month lows of $1.2475 – when confirmation came early on Wednesday that there was enough support among Conservative MPs to secure the confidence ballot.

But the currency rallied against both the dollar and euro later as it became clear Mrs May would see off that challenge to her authority.

It was trading at $1.2652 in the wake of the announcement that she had secured a majority – but that value briefly slipped back to just below $1.26 when it emerged that majority consisted of 83 backbenchers.

It suggested investors were less than convinced by that level of support.

The pound was also up 0.6% versus the euro on the day – representing a slight pull-back on the day's high.

The result means the PM can not face a fresh Tory confidence vote for at least another year, though she had earlier told backbenchers her time at the helm would be limited as she would not fight the next election as Conservative leader.

Traders said it left investors asking themselves what the Tory turmoil meant for the Brexit process, including whether Mrs May's victory over the hard Brexiteers in her party bolstered the chances of a ‘no Brexit' scenario.

:: Bosses ‘tearing their hair out' over confidence vote'

Commenting on the possibilities as the vote loomed Ranko Berich, head of market analysis at Monex Europe, said: “If she does survive, her situation will be marginally improved as she will be in a stronger position to argue that Parliament's options are her deal or no deal.”

He added: “Although the prospect of a marginally strengthened May removes some downside risk for sterling, any relief rally will be limited unless tonight's vote demonstrates a sudden increase in Tory support for May's deal.”

The PM had to postpone a visit to Dublin on Wednesday during which she was due to discuss “reassurances” over the backstop element of her agreement with Brussels.

While MPs were on course to reject the plan before the parliamentary vote was dramatically pulled, it had secured the tentative backing of business groups including the CBI.

They have since urged Mrs May to get on with it as the clock ticks down to 29 March when the UK is due to leave the EU.

However, there remains dissent within UK plc.

A 28-strong group of Brexit-supporting business leaders — including Sir Rocco Forte and JD Wetherspoon boss Tim Martin – signed an open letter on Wednesday night urging the PM to preside over a “managed” no-deal Brexit.

They argued that leaving without a deal would “give us the flexibility to embrace global opportunities, extend global trade and focus outwards.

“It would give the government the chance to run our economy and country in a way that operates in the best interests of us all,” the document said.

By James Sillars

Bank of England Governor Mark Carney defend warnings of Brexit scenarios

(qlmbusinessnews.com via uk.reuters.com — Tue, 4th Dec 2018) London, UK —

LONDON (Reuters) – Bank of England Governor Mark Carney defended the central bank’s warnings of a potentially major economic hit from Brexit which angered lawmakers opposed to Prime Minister Theresa May’s plans for leaving the European Union.

The BoE said last week that under a worst-case exit from the European Union, Britain could suffer greater damage to its economy than during the global financial crisis.

Carney told lawmakers on Tuesday that the scenarios set out by the BoE were based on detailed preparatory work to ensure banks and other lenders were ready for Brexit, and were not off-the-cuff forecasts.

“There’s no exam crisis. We didn’t just stay up all night and write a letter to the Treasury Committee,” Carney said at a committee hearing in parliament. “You asked for something that we had, and we brought it, and we gave it to you.”

Less than four months before Brexit, it remains unclear whether Britain will leave the EU with a transition deal to smooth the shock for the economy.

May agreed a plan with EU leaders last month but it faces deep opposition in parliament including from within May’s own Conservative Party. The plan faces a key vote on Dec. 11.

Pro-Brexit critics of Carney, who have long accused him of political meddling in the debate about Britain’s relationship with the EU, dismissed last week’s BoE report as scare-mongering.

Former BoE Governor Mervyn King joined the criticism on Tuesday when he lamented the central bank’s involvement in what he said was an attempt to frighten the country about Brexit.

“It saddens me to see the Bank of England unnecessarily drawn into this project,” King said in an article published on Bloomberg.

BREXIT SHOCKS
Carney stressed the worst-case scenarios were “low-probability events in the context of Brexit” which the central bank needed to consider to make sure Britain’s banking system could withstand any Brexit shocks.

“We’re already sleeping soundly at night, because we have the financial sector, the core of the financial sector, in a position that it needs to be for a tough scenario.”

But he told lawmakers that the price of food could go up by 10 percent if Britain left the EU with no deal and no mitigating arrangements to avoid chaos at the country’s ports.

He said Britain’s ports were not ready for even a managed shift to World Trade Organization rules for the country’s exports and imports with the EU.

“Don’t assert what is not correct,” he snapped at one lawmaker who said the BoE had not considered the possibility of substituting trade with the EU for other markets.

Carney reiterated his opposition to ceding decision-making over rules for the banking sector to the EU after Brexit, given the scale of Britain’s financial services sector.

US, China offer differing takes on trade ceasefire
“We would not be comfortable…outsourcing supervision of this incredibly complex, incredibly important financial sector,” he said.

Deputy Governor Jon Cunliffe said a Norway-style Brexit — in which Britain would stay in the EU’s single market and follow the bloc’s rules without any say on them — was undesirable given Britain’s finance industry was 20 times the size of Norway’s.

Some lawmakers have suggested a Norway-style Brexit could be a temporary solution for Britain as it struggles to find a way to strike a new long-term relationship with the EU.

Additional reporting by Sarah Young, Andy Bruce and Amy O'Brien,; Writing by William Schomberg, editing by Ed Osmond

By David Milliken and Huw Jones

 

 

How Baird & Co. UK’s Only Gold Refinery Processes 10 Tons A Year

Source: Business Insider

Baird & Co. is the only gold refinery in the UK. The company goes through over 10 tons of gold a year. The smallest gold bar that Baird & Co. makes is a 1-gram bar that’s worth about $41. The most expensive one is a 5-kilograms bar worth about $212,350.

 

Pound falls as Prime Minister Theresa May struggles to broker an agreement on Brexit

(qlmbusinessnews.com via bbc.co.uk – – Mon, 12th Nov 2018) London, Uk – –

The pound has fallen against the dollar amid political uncertainty as Prime Minister Theresa May struggles to broker an agreement on Brexit with her cabinet.

In early trading, sterling fell nearly 1% against the dollar to $1.2845.

Against the euro, it was down 0.2% at €1.1422.

Analysts said the fall was partly a reaction to the latest news concerning Brexit talks, but also reflected a stronger dollar.

Mrs May is trying to rally support among cabinet ministers for her Brexit proposal in time for a hoped-for summit in Brussels later this month.

However, media reports suggest that her efforts have been delayed by increasing disarray in her cabinet over the issue.

On Friday, Transport Minister Jo Johnson became the latest government figure to quit his post over Brexit, arguing that UK was “on the brink of the greatest crisis” since World War Two.

Simon Derrick, head of currency research at Bank of New York Mellon, said the pound's drop was “obviously related to the uncertainty over the weekend”, but noted that sterling had largely “held its own” against the euro.

He told the BBC: “At least half of it is actually about dollar strength and the expectation that the Federal Reserve will hike interest rates in December.”

Connor Campbell, financial analyst at Spreadex, said: “Sterling's early November rebound continued to unravel on Monday, the currency coming down with a nasty case of the Brexit blues.

“With her most ardent anti-EU MPs opposed to her customs arrangement plans, and a potential Remain rebellion brewing following the resignation of Jo Johnson, Theresa May appears to have been forced to abandon the emergency cabinet meeting that was pencilled in, after a supposed breakthrough last week.”

 

 

Takeda Pharmaceutical set to hold investor votes on its $62 billion acquisition of Shire

(qlmbusinessnews.com via uk.reuters.com — Mon, 12th Nov 2018) London, UK —

LONDON (Reuters) – Japan’s Takeda Pharmaceutical (4502.T) will hold an investor vote on its $62 billion acquisition of Shire (SHP.L) next month and aims to close the deal on Jan. 8, signaling its confidence in securing the required support.

Shares in London-listed Shire rose 3 percent on the news, hitting their highest level since Takeda first disclosed its interest in buying the rare diseases specialist in March.

The deal would be the biggest-ever overseas acquisition by a Japanese company – but it needs two-thirds support from shareholders, some of whom are worried about the enlarged company’s resulting debt burden.

Takeda said on Monday it would hold an extraordinary general meeting (EGM) of shareholders to vote on the transaction on Dec. 5.

Previously, Takeda had said it hoped to hold the EGM early in 2019, leaving uncertain the level of backing for the deal, which has been opposed by some members of the founding Takeda family.

“With the date of our extraordinary general meeting of shareholders now set, we are looking forward to continue our dialogue with shareholders regarding the compelling strategic and financial benefits of this transaction,” Chief Executive Christophe Weber said.

Weber — a Frenchman and the first non-Japanese CEO of the company — believes that buying Shire will accelerate Takeda’s growth and increase its international reach, boosting earnings.

The transaction is still awaiting approval from European regulators, although two people familiar with the matter told Reuters last week that Takeda was set to win conditional EU antitrust approval.

Takeda has offered to divest Shire’s experimental drug SHP647 to address concerns about overlap in inflammatory bowel disease treatments.

The takeover has already secured clearance from regulators in the United States, Japan, China and Brazil.

Weber said last week he was confident of securing investor backing for the purchase of Shire, but until now it has not been clear when exactly Takeda would call its EGM.

Takeda, which has a market value of around $32 billion, has secured a $30.9 billion bridge loan to help finance the Shire acquisition and some investors are concerned as to how well it will cope with debt repayments.

The Japanese company struck its agreement to take over Shire in May, in a deal that will propel it into the top 10 rankings of global drugmakers by sales.

However, the enlarged group faces significant challenges, particularly in hemophilia, where a new drug from Roche (ROG.S) and the prospect of new gene therapies now in development threaten a key part of Shire’s existing business.

Reporting by Ben Hirschler