Morning Financial Press Review
Paul Kettle
AM Press Round-Up -3 min read
07:45, 8th February 2019

Below are the key morning headlines from today’s papers, featuring the Financial Times, The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

Jaguar stutters to £3.4bn loss after demand stalls. Financial problems blamed on diesel woes and China slowdown. Jaguar Land Rover slumped to a loss of £3.4 billion in the last three months of 2018 after writing down the net value of its assets by a third on the back of a collapse in sales of diesel vehicles and falling demand in China. The extent of the financial problems besetting Britain’s largest automotive manufacturer and employer has been laid bare less than a month after it announced 4,500 job cuts across its UK facilities, mainly in the West Midlands. JLR, which is owned by India’s Tata Motors, posted a pre-tax loss of £3.4 billion for the three months to the end of December after booking a writedown of £3.1 billion. This compares with a profit of £190 million in the same period last year.

Shaftesbury’s largest shareholder to vote against bosses in latest attack. The biggest shareholder in West End landlord Shaftesbury (SHB) FOLLOWhas stepped up his attack on its board, vowing to vote against the re-appointment of senior bosses at its AGM on Friday. Sammy Tak Lee, the billionaire Hong Kong property investor, has accused Shaftesbury of deliberately trying to dilute his stake through a £265m fundraising in 2017. He claims to have only been made aware of the placing on the morning it was announced to the public, leaving him with just hours to raise capital to buy new shares or else face having his stake cut.

Tui shares plunge and Thomas Cook puts airline up for sale as travel woes mount. TUI AG Reg Shs (DI) (TUI) FOLLOWhas shocked investors with a profit downgrade and Thomas Cook Group (TCG) FOLLOWhas put its airline up for sale, underlining the pressures being felt by travel operators this year. Shares in the FTSE 100 firm plunged close to a fifth on Thursday after Tui ditched double-digit growth targets and warned profits would be flat this year in a shock announcement late on Wednesday night. Tui, whose brands include First Choice, had been expected to update the market on trading next Tuesday. Smaller rival Thomas Cook said selling its airline would provide “greater financial flexibility and increased resources”.

Former Petrofac executive pleads guilty to bribery. A former senior executive at Petrofac Ltd. (PFC) FOLLOWhas admitted bribery over payments that the oil services group made to secure almost $4.5 billion of work in Saudi Arabia and Iraq. Shares in the company fell by more than a quarter after the Serious Fraud Office said that David Lufkin, the former global head of sales, had admitted 11 charges of bribery in connection with its investigation into the company. Petrofac said that “a number of individuals and entities” were alleged to have acted together with Mr Lufkin, 51, but that none had been charged and that “no current board member” was alleged to have been involved. The admission relates to bribes of more than $50 million that the group allegedly paid “to influence the award of contracts worth $730 million in Iraq and in excess of $3.5 billion in Saudi Arabia”, the fraud office said.

Superdry sales slump sparks fresh attack from founder. Superdry (SDRY) FOLLOWhas come under a fresh attack from founder Julian Dunkerton after blaming warm weather and issues with its winter fashion ranges for another slide in sales. The retailer, which has issued a string of profit warnings, revealed an 8.5% slide in shop sales to £126.8m in the last three months. Online sales – which have been the one glimmer of growth for most retailers – also fell by 0.7% as Superdry struggled to shift its hoodies and puffa jackets. Total sales fell by 1.5%, which the company said was “driven by ongoing legacy product issues and continued unseasonably warm weather throughout the quarter”.

Investors pull billions out of funds. Private investors in Britain cashed in their investment funds for the third successive month in December, inflicting a final blow in what has been a punishing year for the asset management industry. Investors pulled out £1.65 billion in December, following outflows of more than £2 billion in both October and November. Total net retail sales — which are gross sales less redemptions — slumped from £48.5 billion in 2017 to just £7.2 billion in 2018, according to the Investment Association. The average per year over the past decade has been more than £19 billion. The trade body represents 200 members who collectively manage more than £7.7 trillion on behalf of clients. Every month last year, private investors were net sellers of UK equity funds, redeeming a net £4.9 billion in 2018. A flood of money was also pulled from bond funds late in the year as investors reacted to expectations of rate rises or monetary policy tightening in the US and Europe.

Government watchdog warns ‘flawed’ planning system holding back housebuilding. The UK’s planning system is in need of urgent reform if ministers want to hit their target of building more than 300,000 new homes a year, the public spending watchdog has warned. The National Audit Office attacked the Government’s “flawed” approach to assessing where homes need to be built and said house builders were not contributing enough towards local roads, schools and other public services. It also highlighted cuts to planning departments, where funding has fallen by 15% in real terms since 2011, and a 13% fall in the number of staff at the Planning Inspectorate, which deals with major national projects and appeals.

Housebuilder Bellway (BWY) FOLLOWposts soaring sales but warns of uncertainty ahead. Low interest rates and the Help to Buy scheme helped Bellway post another set of surging sales but the housebuilder warned trading could be hit by uncertainty in the run-up to next month’s Brexit deadline. The FTSE 250 company sold 5,000 homes in the six months to January, up 6% on the year before, which combined with a rise in selling prices led to a 12% hike in revenues to £1.5bn. Like most of its rivals, Bellway has grown rapidly over the past five years, buoyed by booming demand from first-time buyers fuelled partly by Help to Buy, which offers financial support to those struggling to save a deposit.

Ocado Group (OCDO) FOLLOWfeels heat after devastating fire. The Ocado warehouse where fire broke out on Tuesday has been completely destroyed, dealing a blow to the online grocer. The company said in a statement yesterday that the fire was under control at its robotic warehouse in Andover, in Hampshire, and that potentially explosive pressurised refrigerants had been removed so that residents of the town who had to evacuate could return. An exclusion zone has been lifted but firefighters may take another few days to extinguish the blaze fully. Ocado’s shares have fallen more than 15% since Tuesday as the extent of the fire became known. The fire has also raised questions about the longer-term impact for Ocado. More than 200 firefighters and 20 fire engines have battled the blaze at the centre where 600 robots pick groceries for 30,000 deliveries a week. The fire was thought to have been contained on Wednesday before it took hold much more seriously, leading to a partial collapse of the roof

Gamble on Interserve loses £22m. The New York hedge fund attempting to derail the £905 million rescue plan at Interserve (IRV) FOLLOWis nursing losses of nearly 90% on a £25 million bet that the public services contractor could recover without falling into the hands of its lenders. Interserve this week announced proposals for the issue of £480 million of new shares to lenders and bondholders in a debt-for-equity swap, the loading up of £350 million of existing debt into RMD Kwikform, its profitable construction subsidiary, and the raising of a further £75 million of borrowing facilities. However, its largest shareholder, Coltrane Asset Management, is attempting to derail that by requisitioning an extraordinary general meeting to remove Glyn Barker, 65, Interserve’s chairman, and most of the rest of the board.

Government ‘betraying UK shipbuilding’ as 150 jobs go. The government has been accused of betraying the shipbuilding industry after Babcock International Group (BAB) FOLLOWsaid that it would be cutting 150 staff. Unite, the trade union, said that putting contracts for the Royal Navy fleet out to international tender and uncertainty over the Type 31e frigate programme were putting at risk thousands of jobs in this country. The Ministry of Defence said in December that it had shortlisted three consortiums to build the five new frigates for £1.25 billion and wanted the first ship delivered by 2023. BAE Systems (BA.)FOLLOW, Babcock and Atlas Elektronik UK were the three lead partners in the groups that will be competing for the contract. Babcock, the London-listed engineering group, said yesterday it was shedding staff at its yard in Rosyth, Fife, where about 1,700 people are employed. Up to 150 jobs are to go as the company’s work on the Queen Elizabeth aircraft carriers starts to wind down.

Mitie leads way as outsourcers cash in on collapse of Carillion. Mitie Group (MTO)FOLLOW and Capita (CPI)FOLLOW have emerged as the big winners from the demise of Carillion but public sector spending and activity appears to have slowed, according to analysis of the public sector contracting market. Interserve, the latest outsourcing group to suffer a run on its shares because of fears over its future, appears to be holding its own in the market for public sector support services. A report by Tussell, a data analytics firm specialising in government contracting, found that there was a £2.4 billion, or 36%, slump in the value of contracts awarded to the 30 designated “strategic suppliers” to the Cabinet Office. “The public sector marketplace is diversifying, with the top firms, including the strategic suppliers, seeing their market share start to diminish,” Tussell said.

Cranswick plant costs unnerve investors. More than £190 million has been wiped off the value of Cranswick (CWK) FOLLOWas investors took fright at a warning that the costs of the meat supplier’s new £60 million chicken factory and tough trading conditions would hit profits next year. Shares fell by 374p, or 12.6%, to £25.90 after Cranswick cautioned that the start-up costs for the plant and the “potentially challenging commercial landscape” were expected to push its operating margin lower in 2020. City analysts cut their forecasts for the business, with Nicola Mallard at Investec, Cranswick’s house broker, lowering her 2020 pre-tax profit estimate to £85 million from £100million.

Advertising company WPP (WPP)FOLLOW fell more than 8% yesterday as a revenue miss from Publicis, its French rival, sent shivers across the sector. Publicis shares tumbled 15% after weaker than expected fourth-quarter revenues, which raised concerns over the company’s ability to offset a decline in its traditional advertising business with new consultancy work. After the update worries resurfaced about the ability of traditional advertising companies to fight back against Google and Facebook, which have dominated the digital advertising industry. WPP has lost more than half its value in the past two years and has announced plans to merge some of its biggest agencies.

Loss of a partner proves painful. Oxford Biomedica (OXB) FOLLOWshares tumbled more than 6% after the cell therapy group said that Sanofi, the French pharmaceutical company, will find a new partner for two of its gene therapies. The gene therapies affected relate to Stargardt disease and Usher’s syndrome, which are both eye disorders. Oxford Biomedica said that the decision had “no short or medium-term material financial impact on the group”. It added that its $105 million haemophilia gene therapy collaboration with Bioverativ, a Sanofi company, was unaffected by the decision. John Dawson, chief executive of Oxford Biomedica, said the gene therapies affected by Sanofi’s decision had the potential to treat “unmet medical needs” and the company was “ready to support” Sanofi’s transition to their new partner.

The Bank of England is prepared to intervene if corporate raider Ed Bramson destabilises Barclays (BARC) FOLLOW, governor Mark Carney has warned. Bramson is trying to force his way onto the Barclays board through a shareholder vote, and has hinted he will seek a radical change of direction if he succeeds, including major cutbacks. But to sit on the board the 68-year-old will need approval from the Prudential Regulation Authority, part of the Bank of England responsible for the stability of major lenders. And while he did not mention London-born Bramson by name, Carney, 53, indicated that the Bank of England was watching developments at Barclays closely.

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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