Two companies with substantial interests in Hong Kong have announced figures that underline the damage being inflicted on the economy by the continuing anti-government protests. Burberry Group (BRBY) said its sales were down more than 10% and it had slashed £14m off the value of its 12 stores in the territory. Separately, the airline Cathay Pacific said it expected second-half profits to be significantly below its first half, after a 35% decline in the number of passengers arriving in Hong Kong in October. It is the second time in a month the company has cut its profits guidance. Cathay Pacific is delaying the delivery of four new Airbus A320 aircraft due to “significant pressure” on its earnings. In August, the chief executive, Rupert Hogg, resigned after the company came under pressure from Chinese authorities to rein in employees who were supporting the pro-democracy demonstrators. Burberry’s underlying operating profits slipped 4% in the first half after the one-off £14m charge. Julie Brown, the chief operating and financial officer, said Hong Kong now accounted for 5% of Burberry’s sales, down from 8%. The company temporarily closed some stores during the protests.Gross profit margins for the group will also fall – by 0.5 percentage points more than expected – due to the poor Hong Kong sales, because the company rings up some of its most profitable transactions in the former UK colony. Lower sales affect the value of the group’s properties.
National Grid (NG.) has ploughed a record of almost £2bn into its booming US-based business this year as increasing political pressure raises questions over the multinational’s future in the UK. The energy network provider spent nearly £1.6bn growing its regulated US business over the first six months of the year, and also invested £200m into its US-based renewables company Geronimo. Over the same period, National Grid spent less than £650m running the gas and electricity networks in the UK, where policymakers are squeezing energy company profits and proposals to renationalise utilities have won public support. The London-listed company has built its US presence in recent years amid growing calls for UK utilities to be renationalised. It distributes gas and electricity to businesses and homes in New York, Rhode Island and Massachusetts. John Pettigrew, National Grid’s chief executive, said the record spending was in response to strong demand from north-eastern US states to transform their energy system to run on renewables. There was also healthy investor appetite for infrastructure projects, he said.
Norway’s sovereign wealth fund has blacklisted shares in British security company G4S (GFS) because of the risk of human rights violations against its workforce in Qatar and the United Arab Emirates. Norway’s Council of Ethics, which monitors investments in the country’s £860bn Government Pension Fund Global (GPFG), said there was an “unacceptable risk of the company contributing to systematic human rights violations”. Up to 30,000 staff, mostly working in security and construction, could be affected. The council said it had not officially considered whether G4S had used forced labour – a form of modern slavery – but it said “the company’s practice – in the worse cases – could place workers under constraint”. At the end of 2018, the GPFG owned 2.33% of G4S’s shares, worth around £66m, but has since sold most of them.
