EU plans tariffs on $20bn of American goods in Boeing row. Brussels is planning to impose tariffs on $20 billion of American exports, the latest salvo in a long-running battle over subsidies at the world’s two largest aerospace manufacturers. In a move which risks intensifying transatlantic tensions over trade, the European Union published a preliminary list of US products, from suitcases and tractors to video games consoles and ketchup, which could face duties. Cecilia Malmström, the bloc’s trade commissioner, insisted that officials “do not want a tit-for-tat” dispute with the White House as they escalated a 14-year-old dispute over illegal subsidies. She said that the EU must “defend a level-playing field” for its companies after the World Trade Organisation confirmed earlier this month that US subsidies to Boeing, the Chicago-based plane maker, “continue to cause significant harm” to Airbus, its European rival.
Internet shopping boom is a boon for Segro. The boom in online shopping has sustained demand for warehouses, leading SEGRO (SGRO) to secure more than £20 million of additional rental income in the first quarter. The FTSE 100 property company has 11 million sq ft of industrial property under construction, or approved for development, of which 72% has already been leased to tenants before completion. The additional £21 million in annual rent secured since the start of the year came from a combination of new lettings, uplifts from rent reviews and renewals, and development activity. It compares with an additional £27 million of rent secured in the first quarter of last year.
Shares crash after Pendragon (PDG) falls into the red. Cutting prices to keep people buying cars or even getting them serviced has shunted one of Britain’s leading motor dealers in to the red. Four months after the surprise announcement that Trevor Finn would quit as chief executive after 30 years, Pendragon said that its profit margins — which are usually wafer thin — had tumbled and that the company had slumped to a loss of £2.8 million in the first quarter of the year. The car dealer had previously briefed the City that it expected to record a profit of at least £7.2 million. Pendragon trades as Stratstone and Evans Halshaw, operating from about 200 outlets. Last year it had revenues of £4.6 billion. Operating profits were down 9% to £76 million on margins of just 1.6%. At a pre-tax level, after factoring in borrowing costs and write-downs in the future value of the business, Pendragon crashed to a £50 million loss.
Slowing demand from the US grocery and retail sectors has hit growth at Bunzl (BNZL), sending shares in the FTSE 100 goods supplier down more than 8% this morning. In a trading update for the first quarter, the company said that underlying growth had slowed to about 1% in North America, which accounts for about 60% of total revenue. “It is a highly rare event to see a disappointing Bunzl trading update and is therefore likely to lead to some share price weakness,” Paul Checketts, a Barclays analyst, said. He added that the company’s organic group revenue growth of 1.5% was the slowest in at least nine quarters, and was lower than Barclays’ expectation of 2%.
Asda accused of disguised pay cut for 3,000 staff. Britain’s second biggest supermarket chain has been accused of trying to disguise a pay cut for thousands of staff, as the campaign against its proposed changes to contracts escalates. Siobhain McDonagh, the Labour MP, has claimed that 3,000 staff at Asda will be financially worse off under the proposals released by the grocer last week. The MP for Mitcham and Morden, 59, who previously has campaigned against changes at J Sainsbury, wrote to Roger Burnley, Asda’s chief executive, raising concerns.
Provident Financial and Non-Standard Finance (NSF) trade blows in takeover fight. The battle between Provident Financial (PFG) and the rival doorstep lender that is trying to buy it erupted yesterday into one of the bitterest City battles of recent years, with the two sides attacking each other in an attempt to win over undecided investors. Patrick Snowball, Provident’s chairman and a former British Army tank commander, told shareholders that Non-Standard Finance’s unwanted £1.2 billion all-share offer was “more of a coup d’état than a hostile takeover”. He said that it had been “facilitated by two powerful shareholders”, referring to Woodford Investment Management and Invesco, Provident’s two biggest investors, which are also large NSF shareholders and are backing the bid. That prompted John van Kuffeler, Non-Standard Finance’s chief executive, to accuse Provident of appearing “to take the frankly astonishing step of attacking its major shareholders”.
Galliford Try’s bridge of sighs sparks profit alert. Cost overruns at the £1.34 billion Queensferry Crossing in Scotland have forced Galliford Try (GFRD) to announce a profit warning and plans to shrink its civil construction business. The building group said yesterday that it expected its annual profit before tax to be between £30 million and £40 million lower than analysts’ previous forecasts of £156 million. That, and the announcement of a sweeping review of the construction unit, came as a nasty surprise to the stock market, which sent Galliford Try’s shares tumbling by 20%, or 149p, to 576½p last night, making the stock the biggest faller in the FTSE 250.
JD defies high street gloom with record results. The boss of JD Sports Fashion (JD.) has insisted that it will crack the American market, despite a string of failures there by other British retailers. The sports fashion chain has embarked on an expansion drive in the United States, having bought Finish Line, one of America’s biggest footwear and clothing chains, for £400 million last year. The business has managed to shrug off the problems faced by rival high street chains in recent years and the City has been keen to discover how it fares in America. Peter Cowgill, 66, its executive chairman, said yesterday that he was quietly confident, adding: “The early signs are pretty good.” Unveiling record full-year results yesterday, JD said that Finish Line had generated £24.6 million of pre-tax profit and revenue of £956.6 million in the year to February 2, beating analysts’ forecasts of about £15.6 million. The acquisition helped to boost JD’s group results, with revenue up 49.2% to £4.7 billion and profits up 15.4% to £339.9 million. Four years ago it was generating £100 million profit.
G4S secures rise in revenues with Canadian bidder on the doorstep. The troubled government contractor G4S (GFS) announced a rise in revenues yesterday in a surprise trading update rushed out before a possible bid from a Canadian rival. Shares in the support services company rose by nearly 4p, or 1.7%, to 233.90p after it reported a 4.8% year-on-year rise in revenues in the three months to the end of March, with growth in all its regions and divisions. Speculation has been growing about G4S’s future since Garda World, based in Montreal, disclosed last week that it was considering a bid for all or part of the British company. A deal would create a giant multinational security services provider.
Insurer invests in housing for homeless. A leading insurance group has agreed to invest almost £50 million in providing accommodation for homeless families in a deal said to be a potential blueprint for solving Britain’s housing crisis. Legal & General Group (LGEN) has bought 167 homes in Croydon, south London, and has leased them over 40 years to the local council, which will pay the company rent that is expected to save Croydon about £20 million. After the 40-year term ends, the properties will belong to the council. L&G said that the agreement offered a model for how institutions and the public sector could help to provide for the more than 1.3 million people on waiting lists for social housing in the UK. In Croydon, there are more than 2,000 families seeking support for homelessness.
Confidence in emerging market boosts Ashmore. Ashmore Group (ASHM) surprised the market yesterday with a jump in funds under management boosted by new money from clients and investment gains. Its shares rose by more than 6% — closing 28¾p up at 484¼p — after it said that assets had increased by 11% in the three months to March 31 to $85.3 billion. It came after a tough period for the emerging markets specialist, when inflows from investors’ slowed owing to factors such as China’s slowdown and turmoil in other countries.
German weakness applies brake to growth at Hays (HAS). Growth at Britain’s largest recruitment company has slowed on the back of weaker economic growth in Germany, its biggest market. In a trading update yesterday, Hays said that net fees had risen by 6% on a like-for-like basis in the three months to the end of March, compared with the same period last year. This was lower than the growth of 9% reported in the previous six months and was below market expectations of 7%. Shares in the company, which had hit a five-month high of 163½ p on Monday, fell by 4¼p, or 2.6%, to close at 158¾p yesterday.
Card Factory drop isn’t taken personally. Higher costs and weak demand for Card Factory (CARD) online personalisation service hit profits last year. The retailer yesterday reported an 8% drop in pre-tax profits in the year to January 31 to £67 million. However, shares in the company rose by 10% as investors breathed a sigh of relief that the figures were not worse amid dwindling shopper visits to Britain’s high streets. Card Factory said that like-for-like sales in its shops had fallen by 0.1% year-on-year, compared with growth of 2.9% the previous year. However, it had a record Valentine’s Day and Mother’s Day since the end of its financial year.
Zalando has good news for dedicated followers of fashion. Europe’s biggest online fashion retailer was a trend-setter on the stock market yesterday, sending shares in its UK-listed peers higher after forecasting an unexpected first-quarter operating profit. The online fashion retail sector has come under pressure from increased competition as well as the costs of investing in logistics and technology. Adam Tomlinson, analyst at Liberum, said: “This is clearly a positive short-term development. Zalando has built an infrastructure that is uniquely placed to fend off competition and has a logistics network that is looking increasingly superior to Amazon.” The surprise update sent the Frankfurt-listed shares in the company up by €2.64 to €41.49, and triggered a positive response from its European peers. Boohoo.com (BOO), the British online seller of affordable fashions, closed up 8¾p at 208¾p; ASOS (ASC) rose 92p to £37.61.
UK-listed airlines shrugged off disappointing results from Lufthansa, which blamed rising fuel costs and overcapacity in Europe as the German carrier reported an operating loss for the first quarter. Investors were encouraged by its outlook for positive revenues in the second quarter, supported by bookings levels and a slowing of market-wide capacity. easyJet (EZJ) closed up 28½p at £12.05; Wizz Air Holdings (WIZZ) rose 118p to £34.47; and International Consolidated Airlines Group SA (CDI) (IAG) added 9½p to 553p.
Premier Oil (PMO) edged up ¼p to 101¾p after a report of a positive oilfield drill test in Mexico at the Zama block in which it holds a 25% stake. Tony Durrant, its chief executive, said: “We continue to collect further evidence that Zama has a world-class reservoir with excellent quality and well-connected sands.”
Shares in CAP-XX Limited (CPX), which makes energy management systems for electronic devices, dropped 1¼p to a shade over 4p after the company said that it was in the process of litigation with two counterparties in the United States. It also said that it had experienced weaker demand from manufacturers of wearable technologies.
DX (Group) (DX.), the delivery and logistics group that is undergoing a business turnaround plan after a series of profit warnings, was boosted by the purchase of stock in the company worth about £40,000 at 14p per share by Russell Back, a non-executive director.
Tempus – QinetiQ Group (QQ.): Hold. Increasingly diverse group whose expertise is getting it into new markets
Tempus – McColl’s Retail Group (MCLS): Avoid for now. Trading under pressure with costs on the up
