Royal Bank of Scotland Group (RBS) said profits declined in the first quarter and reiterated that Brexit uncertainty was having a negative impact on business. The FTSE 100-listed lender, which is still 62% owned by the taxpayer, held firm to its forecasts for the year, but warned that Brexit was likely to make growth more challenging as firms put off making large capital commitments. ‘We recognise that the ongoing impact of Brexit uncertainty on the economy, and associated delay in business borrowing decisions, is likely to make income growth more challenging in the near term,’ the bank said. Bottom line profits, although above expectations, came in at £707million – down 12.5% on last year’s £808million. Revenues in the first three months of the year were flat at £3billion, missing estimates of £3.3billion. RBS blamed competition in the mortgage market.
Just Eat (JE.) shares slumped into the red in early trading on Friday after the online takeaway firm served up lacklustre UK growth. The company, which just made it back into the FTSE 100 after a short-lived relegation, said unusually warm weather in February was partially to blame for a significant slowdown in the UK. UK orders grew by 7.4% growth to 32 million in the first three months of 2019, compared with a 24% spike in the same period last year. Just Eat pointed out that it was up against tough comparables and said the numbers were skewed by the later timing of Easter this year. It said it expects an improvement in UK order numbers during the remainder of the year, but its assurances weren’t enough to prevent a 3% slide in its shares to £7.11.
Sainsbury (J) (SBRY) boss Mike Coupe is fighting for his job after the collapse of the supermarket’s £12billion merger with Asda. The 58-year-old was the mastermind of the tie-up and laboured on it for two years before the plans were made public. He was caught singing 42nd Street tune We’re In The Money between television interviews when it was finally announced a year ago. But yesterday the Competition and Markets Authority (CMA) delivered a fatal blow to his ambitions, saying Sainsbury’s and Asda could do nothing to address concerns the deal would lead to higher grocery and petrol prices. A red-faced Coupe lashed out at the regulator and accused it of ignoring the supermarkets’ promises to hand shoppers price cuts of more than £1bn. But the debacle is a humiliation for the Sainsbury’s chief executive and immediately prompted questions about his future. Analysts accused the company of ‘arrogance and naivety’ for pursuing the deal.
The boss of taxpayer-backed Royal Bank of Scotland Group (RBS) is standing down – paving the way for the High Street lender to get its first female head. Ross McEwan is leaving after six years in charge of RBS. The favourite to succeed him is Alison Rose, its 49-year-old commercial and private banking chief. If Rose wins the leadership battle she would be the first woman to run a so-called Big Four lender in a landmark moment for the industry. She would serve alongside current finance director Katie Murray, making them the first all-female team at the head of of a global bank.
Barclays (BARC) has warned it may be forced to cut costs further after posting a 10% drop in first quarter profits. The bank reported underlying pre-tax profits of £1.5billion for the first three months of this year, down from £1.7billion a year ago, after suffering a tough quarter for investment banking. Returns in the lender’s investment banking business fell due to a slowdown in trading, but this was partly offset by falling costs as the bank cut bonuses. The weaker 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. Mr Bramson has a 5.5% stake in Barclays, making him the lender’s third biggest shareholder, and he is seeking to gain a place on the board at the group’s annual general meeting next Thursday.
Shares in NetScientific (NSCI) tumbled as it announced its experienced boss was stepping down to help cut costs. Francois Martelet, who received total pay of £321,000 in 2017, is leaving at the end of April, and Netscientific’s finance head Ian Postlethwaite will combine the chief executive’s role with his own. The firm, which invests in healthcare technologies to turn them into businesses, also terminated the lease on its City of London headquarters.
Carpetright (CPR) has managed to scoop itself off the floor after reassuring investors that sales are finally on the rise. Shares in the flooring retailer jumped by 83%, or 12.7p, to 28p as it said same-store sales ‘improved significantly’ in the fourth quarter of its financial year, between February and April. After almost two years of gloom, in which investors’ patience with Carpetright has worn thin, the 355-store company said its turnaround is moving forward and should achieve its target of saving £19million in costs per year. Chief executive Wilf Walsh said: ‘This has been a transitional year for Carpetright and we remain on track both with our recovery plan and our strategic initiatives.’ Analysts at Peel Hunt said they expect Carpetright to close more of its weaker stores over the year ahead, and see the business move closer to becoming profitable again.
Sirius Minerals (SXX), the fertiliser company boring a massive tunnel underneath the North York Moors, was celebrating a ‘major’ supply and distribution agreement with European agricultural business Baywa. Shares climbed 0.92p, to 21.9p as Sirius said the deal should give it the best price for its polyhalite fertiliser of any distribution agreement it has struck so far.
A warning about climbing costs from Taylor Wimpey (TW.) rattled investors in housebuilders. Ahead of the firm’s annual shareholder meeting, chief executive Pete Redfern said it had seen higher inflation than expected in the cost of building materials. Even though Taylor Wimpey was confident the market for new-build houses had remained stable so far in 2019, and customer demand was robust, shares fell 10.3p, to 181.95p. Its FTSE 100 peers followed suit. Persimmon (PSN) dipped by 61p, to 2270p, and Barratt Developments (BDEV) by 14.6p, to 602.6p. On the FTSE 250, Crest Nicholson Holdings (CRST) fell by 13.6p, to 387p, Redrow (RDW) by 21p, to 610p, and .
Funding Circle (FCH), which matches investors who want to lend with small businesses looking for a loan, was by far the biggest drag on the FTSE 250. Shares plummeted 37.5p, to 242.5p, continuing a week-long decline which has wiped more than £300million off the value of the company. The lender was one of the biggest stock market floats of last year, when it listed for £1.5billion. But Funding Circle now is worth just £970.2million. It seems that shareholders who invested through the initial public offering, or already owned part of Funding Circle before it floated, are beginning to sell up, flooding the market with shares and pushing down their price. Investors were prevented from selling any of their shares under stock market rules until the beginning of this month, but after Funding Circle gave its first-quarter update last week – which briefly saw shares tick up by 5% – some have decided to cash in.
Stagecoach Group (SGC) shareholders are also in line for a payout, after the transport company said it would buy back up to £60million worth of shares. Just weeks ago the firm was disqualified from bidding for three UK rail franchises in a row over rail staff pensions. Following that debacle and the sale of its North America business, Stagecoach said it was an ‘appropriate use’ of its cash to buy back stock.
