Tesla to cut more than 3,000 jobs because cars ‘still too expensive’. Elon Musk says he has no choice but to reduce electric car manufacturer’s headcount. Tesla is cutting more than 3,000 jobs, or 7% of its workforce, after experiencing a year its founder, Elon Musk, said was both its most challenging and most successful. The chief executive of the electric car manufacturer told staff on Friday that “the road ahead is very difficult” because its products were not yet affordable for most people and it was up against a big incumbent industry. The California-based company had a torrid 2018 as it struggled through production problems with its mass market” Model 3 car and had to pay out $40m over tweets Musk made about taking the firm into private ownership. Musk said it had also been a good year because Tesla had sold almost as many cars in 2018 as it had in its entire history and the firm had made its first profit.
Scottish shopping centre up for sale with reserve price of £1. Plight of the Postings in Kirkcaldy shows crisis facing bricks-and-mortar retailers. It’s the kind of price tag usually associated with discount stores such as Poundland, but an entire Scottish shopping centre is to go under the hammer with a reserve price of just £1. The Postings mall in Kirkcaldy, in which 14 of the 21 shops currently lie empty, is being auctioned by its City pension fund owner next month, according to the auctioneer’s website. That a shopping centre could change hands for less than the cost of a short stay in its rooftop car park underlines the current high street crisis. While locals may worry about the growing number of empty stores in their town centre, the other side of the coin is the devastating impact on retail property values. When it opened in 1981 the Postings, which cost £4.25m to build, promised to be a magnet for shoppers. Each store opening prompted local news, with 1980s TV celebrity and Generation Game presenter Isla St Clair even dropping in to cut the ribbon at the William Low store (a supermarket chain bought by Tesco in 1994) when it opened.
Ryanair issues profit warning as winter fares fall. Lower-fare environment will shake out more loss-making rivals, says Michael O’Leary. Ryanair Holdings (RYA) has issued its second profit warning in four months, blaming intense competition over the winter that prompted the Irish budget airline to cut fares. Profits for the year ending 31 March will be €100m (£88m) lower than previous expectations, at between €1bn to €1.1bn, the company said in a statement to the stock market. That was down from the €1.1bn to €1.2bn range previously expected. Ryanair’s chief executive, Michael O’Leary, said he was disappointed to cut the company’s profit guidance and said the airline could be forced to further reduce fares and guidance. “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.” Ryanair shares fell 5% after the profit warning, which was the result of lower than expected air fares in the second half of the company’s financial year, which includes the Christmas holiday period. Average fares from November onwards fell by 7%, considerably lower than the 2% fall the company had expected.
Debenhams rating cut raises fears of creditors going unpaid. Moody’s downgrade adds to department store chain’s debt refinancing worries. The credit agency Moody’s has said Debenhams (DEB) will struggle to refinance its debts without raising new funds from shareholders as it warned creditors of a higher risk they would not be paid back by the retailer. The department store chain, which last week said it had net debt of £286m, is battling to reach a new deal with its banks this month after a difficult Christmas capped off a lacklustre 2018 during which it issued three profit warnings. In a note explaining its decision to cut Debenhams’ credit outlook to negative from stable, which will make it harder for the company to borrow money, Moody’s said the action by two key shareholders after a dive in the company’s share price was a mark of dissatisfaction among investors that could hinder access to fresh capital. It added that the purchase of House of Fraser out of administration by Sports Direct had only ramped up pressure on Debenhams because it had resulted in the rival chain’s stores continuing to trade with heavy discounts. “Today’s change in outlook reflects our view that there is a risk that refinancing negotiations may not result in a timely and cost-effective solution and thus the process could ultimately culminate in losses for financial creditors,” said David Beadle, a Moody’s vice-president.
ITV shares fall as broadcasters are warned not to underestimate Netflix. The market underappreciates the pace of the decline in TV consumption, say analysts. Shares in ITV (ITV) fell by nearly 6% on Thursday after investors took fright at a report warning that the market is underestimating the decline of traditional TV viewing and the disruptive impact of of services such as Netflix and YouTube. ITV was the biggest faller in the FTSE 100 by late afternoon trading – down 5.9% at 129p – following a bleak assessment of the prospects of traditional TV broadcasters by analysts at Bank of America Merrill Lynch. “We think the market underappreciates the pace of the decline in TV consumption and concurrent rise of online video,” the note on European TV companies said. “The UK is the European TV market most ripe for disruption and where we expect the share of TV to fall first.” The report says that while Britons still watch more than three hours of TV a day, its “edge is eroding quickly”, especially among the under-35s – or “digital natives” – whose traditional TV watching has declined by 30% since 2012. “TV is quickly losing its reach and scale advantage,” the note said. By 2020, digital natives will account for 50% of the labour force, making them invaluable targets for advertisers. They will only be light TV users, however.
RBS seeks to buy government shares worth up to £1.4bn. Bank hopes to obtain shareholder approval to purchase stake of up to 4.99%. Royal Bank of Scotland Group (RBS) is looking to buy up to £1.4bn worth of shares from the government as part of efforts to cut the publicly owned stake in the lender, following its 2008 bailout. The bank is seeking shareholder approval to buy a stake of up to 4.99% from the Treasury, in a move that would reduce the government holding from about 62.3% to 60.3%. Shares bought by RBS would be cancelled, resulting in a smaller cut in the government’s total stake because there would be fewer shares in circulation. The move follows months of speculation about how the bank will use its excess cash, having already spent £240m on its first shareholder dividend in a decade last October. About £150m of that total was pocketed by the Treasury.