Second MPC member, Silvana Tenreyro, backs rate cut after no-deal Brexit. Splits are emerging among Bank of England ratesetters after a second member of the monetary policy committee said that they were likely to cut rates in a no-deal Brexit. Silvana Tenreyro, one of four external members of the nine-strong MPC, has joined Gertjan Vlieghe, another external, in signalling that she would loosen policy. Their preferences contradict the Bank’s official stance that rates are as likely to rise as fall in a disorderly Brexit despite the economic shock predicted, although Mark Carney, the governor, has begun to soften the line.
John Lewis cuts staff bonus to 3% after profits slump. Profits at the John Lewis Partnership slumped by almost half last year and the prized annual staff bonus has been cut to its lowest since 1953. The business behind the Waitrose grocery chain and John Lewis department stores posted profits before tax and exceptional items of £160 million in the year to January 26, down 45.4% from a year earlier. Although revenue was broadly flat, up 1% at £10.3 billion, a stronger performance from Waitrose was offset by pressure on John Lewis where it suffered from one of the most aggressive promotional markets “for at least a decade”; softer discretionary consumer spending particularly in homewares; and higher IT costs.
Melrose climbs despite losses from GKN takeover. The industrial turnaround specialist that bought GKN has cheered shareholders despite slumping to a £550 million loss after the acrimonious £8 billion takeover of the British engineer. Shares in Melrose Industries (MRO) climbed 5.45p to 185.5p in early trading after the FTSE 100 company posted its first set of results since the GKN deal, which showed that it had generated adjusted pre-tax profits of £703 million on revenues of £9.1 billion. On a statutory basis pre-tax losses widened to £550 million from £28 million a year earlier as a result of costs linked to the deal, despite revenues more than quadrupling to £8.6 billion.
New Aviva chief seeks to simplify the insurer. The new chief executive of Aviva (AV.) has pledged to speed up the pace of change and cut complexity at the insurer as it unveiled a 2% rise in annual profit. Maurice Tulloch, appointed on Monday as Aviva’s boss after a five-month long search, said it was “far too complex and this is holding us back”. Mr Tulloch, 49, has worked in various parts of the insurer for 26 years, most recently as head of its international business. “I plan to leave no stone unturned to drive better underlying operational performance,” Mr Tulloch said today. There would be a “relentless focus on the fundamentals of being a great insurance company”, Mr Tulloch said as he unveiled annual results four days after taking on the top job.
Mike Turner quits in shake-up by Barclays’ new chief. The industrialist who previously led BAE Systems, the defence group, is to resign as a director of Barclays (BARC) after only 16 months on the board as part of an overhaul by the bank’s incoming chairman. Mike Turner, 70, formerly chairman of GKN, the engineering group, will leave at the lender’s annual meeting on May 2 after an unusually brief tenure as a non-executive, having started the role in January last year. The announcement of Mr Turner’s exit comes after Nigel Higgins, 59, became a director last Friday in preparation to take over as chairman of Barclays after the AGM.
Barclays (BARC) executive Richard Boath ‘felt sick’ over Qatar deal. A Barclays executive told in-house lawyers that he felt sick when he heard the bank could be challenged by criminal authorities over side-deals with Qatar during a 2008 emergency fundraising, a court was told yesterday. Richard Boath told investigators in 2016 that he also thought Qatar should have been told to “f*** off” when it demanded additional fees when helping to bail out the bank.
Legal & General breaks through £1 trillion fund manager barrier. Legal & General Group (LGEN) has become Britain’s first £1 trillion fund manager after unveiling a 10% rise in profits and as sales of annuities soared to record levels. The FTSE 100 insurer is the largest manager of people’s savings and investments in the UK, managing money on behalf of millions of savers and pension funds. It has a market value of about £16.3 billion. Nigel Wilson, 62, chief executive, said that international expansion had helped it to increase its assets by 3% last year to achieve the trillion-pound milestone. Legal & General has lifted its assets from about £200 billion 12 years ago. “No one thought we would be the first to cross the line,” Mr Wilson said. “Twelve years ago we were a provider of defined-benefit pensions. Today we’re a massive business with a much broader range of solutions.”
Lenders trade insults in Provident Financial takeover battle. The battle for Provident Financial (PFG) erupted into a war of words yesterday after the doorstep lender set out its defence against the £1.3 billion hostile bid from its smaller rival. In a ten-page document, Provident sought to convince its investors that they should spurn the takeover offer from Non-Standard Finance (NSF), which it said had “significant flaws”. Provident’s comments drew a swift response from its would-be buyer. John van Kuffeler, founder and chief executive of NSF, said that Provident’s defence “consists of nothing more than empty promises and hollow words”. Mr van Kuffeler previously was chief executive and chairman of Provident.
Power game generates profit rise at Aggreko. Providing power for sporting events such as the Ryder Cup and the Winter Olympic Games has helped to lift underlying profit at Aggreko (AGK). The generator supplier unveiled a 4% rise in revenue to £1.76 billion, but left its dividend for 2018 flat at 27.4p. However, it reported a 4% fall in pre-tax profit to £183 million, mainly because of a £24 million hit from currency movements.
Plumb job is not for me after all, says Just Eat’s interim boss. The interim chief executive of Just Eat (JE.) has decided not to go for the job on a permanent basis, only three weeks after the takeaway delivery group had indicated that he was a candidate for the role. The change of mind by Peter Duffy, the chief customer officer who has had the post on a temporary basis since the abrupt exit of Peter Plumb in January, comes after criticism of his lack of experience in the takeaway sector by Cat Rock Capital Management, the American investment firm. The activist investor, which owns 1.9 per cent of the company, has been calling for Just Eat to pursue a merger with a well-managed rival such as Takeaway.com, a Dutch group in which Cat Rock has a 4.9% stake, as an alternative to appointing another chief executive without relevant experience.
Brewer Shepherd Neame has not lost thirst for business. The head of Shepherd Neame (SHEP), the 321-year-old Kent brewer, says he will not sell up. Jonathan Neame, chief executive of the family company, said that he believed the £250 million sale by Fuller’s of its beer business, including London Pride ale and its Griffin brewery in west London, to Asahi, of Japan, was “very much a one-off deal”. Mr Neame, 55, said that Shepherd Neame would not be selling its plant in Faversham, where it makes beers such as Spitfire and Bishops Finger.
IWG planning big property sell-off as market tightens. The world’s biggest serviced offices group is considering selling large parts of its business as it faces stiffer competition and new accounting rules. IWG (IWG) has instructed Rothschild, the investment bank, to advise on the possible sale of operations in its international portfolio of 3,306 sites. Mark Dixon, the group’s chief executive, said: “This is a very exciting sector and there’s lots of interest in it and so . . . there will be more corporate activity in this year and next year.” He confirmed that the company had received approaches this year for Spaces, which offers co-working space aimed at creative businesses. It is the closest direct competitor to Wework, an American rival. However, he said that the business was not actively considering approaches.
Record profits at Page Group despite UK fall. A decline in operations in Britain was offset by international growth as Pagegroup (PAGE) reported record annual profits. The recruiter made a pre-tax profit of £142.3 million last year, up 20% from £118.2 million, as its revenue rose by 13% to £1.5 billion. Since it was founded in London in 1976, Page has become one of Europe’s largest recruitment services. Steve Ingham, chief executive, said that it was “mindful of the macroeconomic uncertainties that exist”, including Brexit. Revenues in Britain grew by 0.2% to £313.5 million, but operating profit fell 16% to £13.4 million. The British business was the only section to report lower profits. In Europe, the Middle East and Africa they were up to £85.6 million. In Asia-Pacific and the Americas they rose to £26.8 million and £16.7 million, respectively.
Paddy Power Betfair to change name to Flutter Entertainment. Barely two years after was introduced to Britain’s punters, the name is set to be put out to grass. The FTSE 100 bookmaker plans to call itself Flutter Entertainment, a switch, it said yesterday, intended to reflect the “increased diversity of our brands and operations”. Shareholders will vote on the change at the company’s annual meeting in May. The new name has not been plucked out of thin air. Peter Jackson, 43, the group’s chief executive, said yesterday: “We already had the Flutter name, which meant we avoided a gravy train for branding consultants.” He said that the rights to the name had been acquired in 2001 and thus the cost of registering it with authorities had been smaller than if it had done it more recently.
Tobacco stocks surged in London yesterday after the surprise resignation of a US Food and Drug Administration commissioner who had backed a curb on the use of e-cigarettes and a ban on menthol cigarettes. Scott Gottlieb is due to step down in about a month to spend more time with his family, The Washington Post reported. Wells Fargo analysts said that his resignation “calls into question” whether or not the FDA would enforce harsher regulations intended to reduce the number of young people using e-cigarettes, along with cigarette nicotine limits and a cigarette menthol ban — all initiatives that the commissioner had backed. They also said that his resignation could have positive implications for the FDA’s approval of heated tobacco and vape products. Barclays’ analysts noted: “US nicotine gross profit growth has accelerated due to e-cigarettes and ultimately a rising tide lifts all boats . . . Lessening regulatory risks are likely to now bring this new US nicotine normal to the fore.” The announcement sent shares in British American Tobacco (BATS) up 149½p, or 5.2%, to £30.50, while those of Imperial Brands (IMB), its FTSE 100 rival, added 36p, or 1.4%, to £26.12½.
Burberry Group (BRBY) tumbled 79p to £18.74½ after Goldman Sachs’ analysts downgraded the fashion house to “sell”. They liked the “long-term equity story” at Burberry, but expected higher investment to be needed to revive sales, which would put pressure on earnings per share. “Peer analysis shows periods of brand acceleration typically attract higher spend,” they told clients. “With new product now entering stores, we see this as the time for Burberry to focus on capturing share in a competitive market.”
Intertek Group (ITRK) edged down 96p to £49 after Barclays downgraded the FTSE 100 quality assurance company to “underweight” from “equal weight” based on its growth potential. “With Intertek now a finely tuned machine, we wonder whether it has much more to give,” its analysts’ said.
John Laing Group (JLG) fell 10½p to 377½p after HSBC downgraded the infrastructure specialist’s stock to “hold”, citing valuation grounds, after it had enjoyed a 30% rise since mid-December.
Frontier Developments (FDEV), Britain’s largest listed games developer, added 14p to 960p after it said that it had signed a “major global IP licence to develop and publish a future game”. The Cambridge-based company behind Jurassic World Evolution did not reveal further details of the game.
Vivo Energy (VVO), an Africa-focused fuel retailer, slipped 3½p, or 2.7%, to 130p after its full-year results pointed to operational challenges.
Amigo Holdings (AMGO) fell 8¾p, or 3.9%, to 218p after The Times reported that a senior Financial Conduct Authority official had said that guarantor loans were “in our sights”.
Tempus – Smith (DS) (SMDS): Buy. The company is hooked into long-term growth and the shares are undervalued
Tempus – Breedon Group (BREE): Hold long term. Shares are not overpriced and should generate value over time
