WPP forecasts challenging future after losing big clients. WPP (WPP) is braced for a further drop in revenues as the world’s largest advertising agency counts the cost of a number of high-profile client losses in north America. The marketing and ad conglomerate signalled that like-for-like revenues would fall by between 1.5% and 2% this year after Ford took its creative account to a rival. Glaxosmithkline, United Airlines and American Express are among a number of longstanding customers that cancelled contracts last year. However, shares in the marketing conglomerate behind Ogilvy & Mather and GroupM rose by as much as 9% this morning after it signalled that trading could improve towards the end of the year.
Shell to face charges over $1.3bn Nigerian oil deal. Dutch prosecutors have warned Royal Dutch Shell ‘B’ (RDSB) that they are preparing to bring charges against it over a $1.3 billion Nigerian oil deal. The Anglo-Dutch energy giant is already on trial in Milan alongside the Italian company Eni for alleged corruption in the 2011 deal for the rights to explore off the Nigerian coast in a licence known as OPL 245. Most of the money Shell and Eni paid the Nigerian government for OPL 245 was transferred on to a company controlled by a former oil minister and convicted money launderer and is alleged to have been paid in bribes and kickbacks. In a brief announcement this morning Shell said that it had been “informed by the Dutch Public Prosecutor’s Office that they are nearing the conclusion of their investigation and are preparing to prosecute Royal Dutch Shell plc for criminal charges directly or indirectly related to the 2011 settlement of disputes over Oil Prospecting Licence 245 in Nigeria”.
Rightmove (RMV) shares were in need of some renovation this morning after the online property website reported a dip in the number of estate agency branches using it and flat membership figures for its latest financial year. Shares fell more than 5% at one point, the biggest drop in more than 12 months, after Rightmove listed its agency branch network at 17,328, down 2% from last year’s 17,626. It said that its total membership at the end of last year stood at 20,454, barely higher than the previous year’s 20,427. Pre-tax profits rose 11.25 per cent to £198.2 million on revenues up from £243.3 million to £267.8 million.
The high-end luxury retailer Burberry Group (BRBY) was also in demand and the shares gained 46½p to £19.36, a rise of 2.5% that was prompted by strong results from its rival, the Italian group Moncler.
Relx plc (REL) fell 74p, or 4.2%, to £16.56, after the University of California cancelled its subscription for scientific titles as part of a wider row about who should pay to publish.
In the mid-cap shares Jupiter Fund Management (JUP) was on course for the biggest gain in five years, helped by its high annual dividend payout and a promise that costs this year would be lower. The shares added 22½p to 361¼p, a rise that will have caused some pain for the short sellers that have been betting against the fund manager in recent months.
Industrial thread manufacturer Coats Group (COA) shares fell 4¾p, or more than 5%, to 84p, after it reported a 5% drop in annual operating profit to $147 million as a result of higher
Aston Martin skids into red over £136m costs. Payouts to managers send shares down by 21%. Aston Martin Holdings (AML) fraught start to life as a public company has worsened after it fell into the red on the back of a £61 million management payout and other flotation costs, sending its stock down 21.4%. A total of £136 million in payments to shareholders and advisers and to lock in executives reversed what would have been a £68 million pre-tax profit for the UK’s only quoted motor manufacturer into a £68 million loss. With Aston Martin also setting aside £30 million for expected Brexit-related supply chain disruption, the equivalent of about one fifth of its 2018 operating profits, shares in the Warwickshire-based carmaker dipped sharply.
Merlin Entertainments has eye on city hotels. The operator of Legoland and Alton Towers is to step up the expansion of its theme parks into short-break destinations by adding accommodation and is considering themed hotels in cities where it operates “clusters” of attractions. Merlin Entertainments (MERL) opened 644 new rooms last year, with a 28% rise in hotel revenues, and will open 372 rooms this year. These will range from the Gardaland Magic Hotel, in Italy, to the Alton Towers Stargazing Pods, a glamping experience. Merlin, which has about 4,100 rooms, is the world’s second biggest attractions operator, running 120 attractions, 18 hotels and six holiday villages in 25 countries. Its Midway brands include Madame Tussauds, Sea Life and the Dungeons while its theme parks include Warwick Castle and Chessington World of Adventures.
I had to delegate, former Barclays boss John Varley said. The former chief executive of Barclays (BARC) admitted to fraud investigators that he had to delegate responsibility for decisions made by the bank at the height of the financial crisis when it was forced to raise more than £11 billion to survive. John Varley, 62, who is accused of fraud over the actions he took to rescue the bank amid the crash in 2008, told the Serious Fraud Office in 2014 that he had to place heavy reliance on others to run a bank the size of Barclays. The contents of a meeting between Mr Varley and the Serious Fraud Office five years ago were revealed at Southwark crown court in London yesterday.
Rolls-Royce’s £790m Dreamliner nightmare. Rolls-Royce Holdings (RR.) has taken a £790 million hit over the grounding of scores of Boeing 787 Dreamliners that run on its engines, helping to send the company deep into the red. Chastened by failings of the Trent 1000 engine for the Dreamliner, Rolls also announced that it has withdrawn from the competition to provide next-generation, ultra-efficient engines for Boeing’s new mid-sized aircraft made from lightweight composites, which the American manufacturer is planning to use from 2025. Rolls conceded that its new Ultrafan, multi-geared, low fuel-burning jet engine, the biggest advancement in the aeroengine since the 1960s, will not be ready until the second half of the next decade.
BHP promotes women to top roles. The world’s biggest mining company has promoted three female managers to its executive leadership team, giving a rare boost to gender diversity in the male-dominated industry. said that Geraldine Slattery, a 25-year company veteran, would lead its petroleum business after Steve Pastor decided to leave following the sale of its US unconventional oil division to BP. She already runs its conventional oil assets. Vandita Pant, group treasurer, will step up to chief commercial officer as Arnoud Balhuizen leaves after 25 years, while Laura Tyler will rejoin the executive team as chief geoscientist. BHP said that it had promoted Jonathan Price to the board as chief transformation officer. The appointments will leave the group with an 11-strong executive leadership team of whom five will be female, a proportion unrivalled among its peers.
Summer bugs bring out best in Rentokil. Infestations of bed bugs, wasps and flies because of the heatwave last summer have helped Rentokil Initial (RTO) to forecast-beating profits. Shares in the pest control and washroom supplies business shot to the top of the FTSE 100 leaderboard yesterday as it reported a 7 increase in adjusted pre-tax profits to £308 million in 2018. The company’s policy of aggressively scooping up family-owned pest control businesses around the world was paying off, it said, revealing it spent £298 million on 47 acquisitions during the year and had earmarked £200-250 million in the current year for further purchases.
Record year but International Consolidated Airlines Group SA (CDI) (IAG) flies into pay row. The parent company of British Airways could be flying into a storm despite posting record profits of €3.23 billion and proposing a €700 million special dividend to shareholders. Trade unions representing pilots, cabin crew and terminal workers yesterday united to question why their 25,000 members within BA have been offered a pay rise no greater than inflation given the financial performance of the company.
Putting accent on quality paying off for Bovis after home scandal. The chief executive of said that sales got off to a strong start in the early part of the year as the housebuilder battling to recover from sharp criticism over the quality of its work notched up record annual profits for 2018. As he hinted that shareholders can look forward to another bumper year, Greg Fitzgerald, 54, said: “We’ve started 2019 strongly. We recorded the highest sales rates in January and February we’ve seen in many, many years.” Its properties range from one-bedroom flats to six-bedroom detached houses and its average selling price is £273,200. Previously owned by the P&O shipping and logistics group, has been listed since 1997 and 38% of its sales are supported by the government’s Help to Buy scheme, which helps first-time buyers get on the property ladder.
Site delays hit profits for Telford Homes (TEF). A London property group has warned that its profits would fall by at least a fifth this year as a new strategy hit margins and several of its developments suffered delays. Telford Homes said that it expected profits before tax of about £40 million for the year to April, lower than its earlier forecast of more than £50 million. It was also affected by slower-than-expected sales because of the depressed state of the capital’s property market. Two contracts in Finsbury Park in north London and Bethnal Green in the East End were delayed by planning issues, which it said would cut 2019 profits by about £5 million.
Beast from the East brings a chill to RSA’s bottom line. Bad weather in Britain and Canada and losses in big-ticket shipping and property underwriting led to disappointing results from the insurer RSA Insurance Group (RSA) last year. Stephen Hester, its chief executive, pledged to show a “bounce-back” this year, having embarked on a plan to cut RSA’s complex insurance lines through the Lloyd’s of London market by half, and changed the management of its largest division, UK and International. Shares in RSA fell 15½p, to 511p after operating profit fell by a fifth in 2018 to £517 million, although pre-tax profit rose by 7% to £480 million.
BAT keeps cool as vaping target is pushed back. One of the world’s biggest tobacco companies has talked down growth concerns in its emerging vaping and heating products, despite pushing back a headline revenue target. British American Tobacco (BATS) yesterday forecast that sales from its new products would hit £5 billion by 2023-24, rather than by 2022. Nicandro Durante, 62, the outgoing chief executive of BAT, which has been investing heavily in e-cigarettes and products that heat rather than burn tobacco, said it was “not a problem” and suggested the targets had been aggressive.
Edward Bramson took $1.4bn from Barclays (BARC) rival to buy stake. The activist investment firm that is agitating for a shake-up of Barclays has used a $1.4 billion loan from a rival bank to help fund its stakebuilding in the British lender. Sherborne Investors, the vehicle of activist Edward Bramson, took a loan from Bank of America to help it acquire about half of its 5.5% stake. The New York-based activist also bought derivatives from the US bank, restricting the gains Sherborne could enjoy from its position in Barclays, but also limiting any losses the fund could suffer if the investment goes awry. The arrangements, which are known as a funded equity collar, were first reported by the Financial Times.
Group behind Provident bid lose majority shareholding. Shareholders backing a bid for Provident Financial (PFG) from its rival Non-Standard Finance (NSF) have fallen below 50% after Neil Woodford cut his holding in Provident. Woodford Investment Management disclosed to the stock exchange yesterday that it had sold 1.5 million shares in Provident. The sale slightly reduces the percentage of shareholdings backing NSF’s hostile bid from 50% to 49.41%.
Lloyds new overdraft fees ‘fly in the face’ of reforms. Lloyds Banking Group (LLOY) has been criticised by the chairwoman of the Treasury select committee for introducing a tiered system of overdraft charges a month after the City regulator proposed a ban on such schemes. Nicky Morgan wrote to António Horta-Osório, Lloyds chief executive, asking what effect the charges would have on vulnerable customers. In January, Lloyds began moving customers at Lloyds, Halifax and Bank of Scotland over to a more complicated tariff with higher fees for those borrowing less than £4,100 on an overdraft. The City regulator said that the majority of overdrafts were under £250. The Financial Conduct Authority estimates banks made £2.4 billion from overdraft charges in 2017.
The paper and packaging company Mondi (MNDI) spooked investors by delivering a cautious outlook for the year ahead. Its shares fell 116½p or 6.3% to £17.28½ after assurances that it could weather “macro-economic uncertainties” fell flat.
Reports that Inmarsat (ISAT) could be the subject of a takeover bid in a matter of months boosted Britain’s biggest satellite operator. Shares in the FTSE 250 business rose after CTFN, the mergers and acquisition-focused news website, said a US rival was set to renew its interest “very soon”. Echostar, a Colorado-based satellite telecoms provider led by Charlie Ergen, 65, will make a new approach in no more than six months, it said. Inmarsat rejected an offer worth $3.2 billion (£2.4 billion) last summer, claiming Echostar’s bid “very significantly undervalued” its network of satellites.
Tempus – Mondi (MNDI): Buy. Rounded player well positioned for structural changes whose shares have been oversold
Tempus – Hunting (HTG): Hold. High quality business but the yield is low
