Royal Bank of Scotland blames competition and Brexit uncertainty for fall in profits. Royal Bank of Scotland Group (RBS) has warned that uncertainty about Brexit and strong competition is hampering its growth as it reported a drop in first-quarter profits. The state-owned bank said that some business customers were delaying borrowing decisions until the UK’s relationship with the European Union was more settled. Net profits for the first three months of this year fell to £707 million, down from £808 million in the same period last year. This was ahead of market expectations, analysts having pencilled in a figure of £546 million for the January to March period.
Deloitte quits as Ferrexpo (FXPO) auditor over charity payments. The auditor of a London-listed mining firm has resigned with immediate effect in a rare move after it questioned payments made to a charity in Ukraine. Deloitte’s decision comes days after it issued a qualified opinion on Ferrexpo’s accounts and the company said that funds donated to the charity Blooming Land may have been misappropriated. The move caused shares in the FTSE 250 company to drop by more than a fifth, or 55p, to 214p.
New drugs give a boost to AstraZeneca (AZN) revenues. The creation of new medicines and growth in China helped Astrazeneca to post strong first-quarter trading above the City’s forecasts. The Anglo-Swedish company said that total revenue rose 11% to $5.49 billion in the three months to the end of March, on a constant currency basis, as product sales rose 14% to $5.47 billion. Analysts had forecast $5.29 billion. Reported operating profit rose 68% to $1.1 billion.
Sainsbury’s £50m bill for failed Asda tie-up. Deal bad for customers, says competition watchdog. Sainsbury (J) (SBRY) faces a hit of about £50 million after the competition regulator blocked its £12 billion merger with rival supermarket Asda over fears that the deal would lead to price rises. The FTSE 100 grocer, which is led by Mike Coupe, has spent millions in fees to bankers and lawyers for their work on the proposed tie-up. Britain’s second and third biggest supermarkets were forced to abandon the merger yesterday after the Competition and Markets Authority said it had no choice but to block the deal.
RBS could pick Rose to replace McEwan by end of the summer. Ross McEwan could be replaced as chief executive of Royal Bank of Scotland Group (RBS) as early as this summer after the bank announced his intention to stand down yesterday. Mr McEwan, 61, is ready to serve a 12-month notice period before leaving RBS while it searches for his successor. However, industry sources believe that RBS could name the internal favourite, Alison Rose, 49, as the successor to Mr McEwan swiftly and have her in place by the end of the summer.
Senior (SNR) feels pinch from slowdown. One of Britain’s leading aerospace components companies says that it will suffer from the slowdown in manufacturing of the Boeing 787 Max. Hertfordshire-based Senior’s AMT business in Seattle makes wing and wheel well components for the troubled aircraft. Yesterday it admitted it was “unlikely to be able to fully mitigate” the cost of Boeing cutting its production rate on the 737 Max to 42 from a planned 57.
Taylor Wimpey warning on costs knocks builders. Britain’s third-biggest housebuilder has warned that higher build costs are hitting margins, sending shares lower across the sector. Taylor Wimpey (TW.) said in a trading update yesterday that it now expected building costs to rise by 5% this year, compared with its earlier assumption of a rise of 3 to 4%. The increases were coming from Brexit-related stockpiling, with builders seeking to have a five-week supply of stock compared with three-weeks. Taylor Wimpey blamed underlying inflation and the impact of exchange rates on the cost base of suppliers. The increase in costs meant margins would be “slightly lower” than expected this year, the company said.
Lord Rothschild steps down after 30 years at RIT Capital Partners (RCP). Lord Rothschild has announced plans to stand down after more than three decades as chairman of RIT Capital Partners. The City grandee, 82, insisted yesterday that he would continue to play an “ongoing and active” role at the £3.2 billion investment trust when he assumes the new role of president in September. With his family’s 21% stake worth about £672 million, he said he would remain “a committed, engaged and proud shareholder”. Lord Rothschild will be succeeded as chairman by Sir James Leigh-Pemberton, 62, the former chief executive of Credit Suisse in Britain and chairman of UK Financial Investments, the body that oversaw the taxpayer’s stakes in Royal Bank of Scotland and Lloyds Banking Group.
Barclays bankers suffer pay cut after 29% fall in profits. Barclays (BARC) has cut bankers’ pay after suffering a weak performance in its investment bank in the first three months of the year and said it could slash remuneration further. Profits fell by 29% at Barclays’ corporate and investment bank in the quarter, while its closely watched return on equity also deteriorated compared with a year ago. Barclays has reduced the pay it has set aside for investment bankers for the period by about 11%, the same amount as its revenue fell. It said that if the “challenging” conditions of the first quarter continued, it expected to reduce its annual costs below the £13.6 billion to £13.9 billion that it had earmarked.
Ladbrokes and Coral owner GVC Holdings (GVC) in ‘self-serving’ call for total advertising ban. Britain’s biggest bookmaker has faced questions over its motives after calling for an end to broadcast advertising and football shirt sponsorship by sports betting companies. GVC Holdings, which owns the Ladbrokes and Coral chains, claimed that its proposals for a round-the-clock broadcast advertising ban for all sports except horse racing and greyhound racing would “help tackle the issue of gambling-related harm head-on”. Its proposals go much further than the industry’s voluntary “whistle-to-whistle” ban on advertising in live sports broadcasts before the watershed, which is to be introduced at the start of the next football season in August.
Laura Ashley plunges to a low after new warning. Ashley (Laura) Holding (ALY) has warned investors to brace for a significant decline in its annual results after poor trading at the quintessentially English fashion and homewares brand. Shares in the struggling retailer dropped by as much as a fifth yesterday after the profit warning, which some analysts forecast put it on track for a full-year loss. Laura Ashley is in the process of closing about a quarter of its 160 stores in the face of rising business rates, a shift to online shopping and the waning popularity of the high street. It said trading conditions in the third quarter of its financial year had been “very demanding”, causing its board to revise down forecasts for its annual results, which will be announced on August 22. The final figures will be “significantly below market expectations”, Laura Ashley said.
Investors rebel at Meggitt (MGGT) chairman’s outside roles. Significant numbers of investors have rebelled for a third year against the employment of Sir Nigel Rudd as chairman of Meggitt, the aerospace group. Many shareholders at Meggitt believe that Sir Nigel, 72, cannot have time to head the company because of his outside appointments. He is paid £355,000 a year to do the part-time job. At Meggitt’s annual meeting yesterday, investors speaking for 27% of shares voted against his re-election. Last year 31% were voted against him, up from 12% in 2017. Including those who abstained, only 61% supported Sir Nigel, compared with 69% last year.
Carpetright restructuring on a roll. Shares in Carpetright (CPR) rose by 75% yesterday after it reported rising sales, suggesting that its restructuring programme was on track. The company, which sells everything from carpets to artificial grass, said that its overall performance for the 12 weeks to April 20 was in line with expectations. Sales in the UK had improved significantly as “customer confidence in the business started to return”. Carpetright lost about 90% of its value last year as it negotiated an emergency restructuring deal to close shops and reduce its rents, including raising about £65 million from investors to strengthen its finances. It carried out a company voluntary arrangement to close 79 underperforming shops which it said would save £19 million.
Tullow hit by technical difficulties. Tullow Oil (TLW) has cut its production guidance due to “technical” problems at its Ghana fields. The FTSE 250 oil and gas explorer and producer said first-quarter production averaged 84,600 barrels of oil a day, which was below expectations. This led it to lower its full-year forecasts to between 90,000 and 98,000 bpd, down from previous expectations of between 93,000 and 101,000 bpd. Tullow said the drop was “due to gas compression constraints on Jubilee [field] during February and a delay in completing the Enyenra-10 production well at the TEN field”, but said both issues had been resolved.
Glencore (GLEN) is under investigation by the US Commodity Futures Trading Commission (CFTC) over possible violations of laws governing corrupt practices involving commodities. The £44 billion commodities trader made the disclosure yesterday, saying that it understands that investigations are “at an early stage and have a similar scope in terms of subject matter as the current ongoing investigation by the US Department of Justice”.
Stagecoach Group (SGC) shares climbed more than 5% yesterday after the bus and train group unveiled a share buyback programme worth up to £60 million over the next year. The FTSE 250 company said the buyback was a response to the Department for Transport’s recent announcement that it would disqualify Stagecoach from bidding for three major UK rail franchises. “The Stagecoach board believes that following the recent announcements regarding UK Rail coupled with the completion of the sale of the North America business, it is an appropriate use of our cash at this time to buy back our own equity,” the company said in a statement.
Funding Circle (FCH) fell sharply for a second day after cutting its anticipated returns for its UK retail investors on the back of higher estimates of defaults on US and UK loans made in 2017 and 2018. In a blog update to investors, the peer-to-peer lender said returns for investors were now expected to be between 4.5% and 6.5%, down from the February forecast of between 5.5% and 6.5%.
Sirius Minerals (SXX), the FTSE 250 miner digging for fertiliser beneath the North York Moors national park, added almost 1p to just under 22p after it announced a 10-year supply deal with a subsidiary of Baywa AG, a European agribusiness group.
FDM Group (Holdings) (FDM), the IT services business, rose 30p to 994p, after it said it was confident of meeting full-year expectations, with revenue for the first quarter 16 per cent higher than the same period last year.
Kaz Minerals (KAZ) dipped almost 3% after reporting a lower quarterly copper, gold and silver production. The FTSE 250 miner produced 70,000 tonnes of copper in the first three months of the year, down 10% on the previous quarter but up 4% year-on-year. Despite the quarterly fall, it said it was confident of achieving its copper production guidance for 2019. Silver production was 33% lower than the previous quarter and down 27% on the previous year. Gold production fell 10% on the previous quarter to 43,400 ounces, a 13% decline year on year.
Tanzania troubles afflict Acacia Mining (ACA). Profits at Acacia Mining fell in the first quarter after it suffered renewed difficulties in Tanzania. Acacia said gold production declined by 13% to 104,899 ounces after a collapse of the pit wall at its North Mara Gokona underground mine. This prevented access to higher-grade areas. Acacia also struggled with an excavator breakdown in the Nyabirama open pit mine. The production issues in the three months to the end of March meant revenue fell 12% to $138 million. Earnings before interest, tax, depreciation and amortisation fell by 72% to $24 million.
Tempus – SEGRO (SGRO): Buy. Plugged into growing demand for warehouses and with a healthy development pipeline
Tempus – Hill & Smith Holdings (HILS): Buy. Well placed to benefit from spending on infrastructure and security
