No-deal Brexit is nothing to fear, says Lord King of Lothbury. The former governor of the Bank of England Lord King of Lothbury has said that Britain should leave the European Union without a deal. The peer told the BBC Radio 4 Today programme: “My own personal preference would be to go back to Europe and say we have a clear strategy, which is we want to leave without a deal but we’d like to take six months to complete the preparations to avoid the dislocation.” There would be “short-run dislocation costs” if the UK left without a deal, he said, but added that predictions about the effect of Brexit on the economy had been proved to be wrong. “I don’t believe that with adequate preparation, or in the long term, that the economic cost of leaving would be very different from staying in the European Union,” he said, adding that it was matters of “politics and identity” that motivated people, rather than economics.
Boeing 737 MAX 8 safety crisis could cost Tui profits €300m. Fallout from the Boeing 737 MAX safety crisis caught TUI AG Reg Shs (DI) (TUI) in its crosshairs today as the FTSE 100 holiday company warned investors that the grounding of the aircraft would hit its profits by up to €300 million. The profit warning, its second in seven weeks after the earlier revelation of damaged margins, sent shares in the First Choice operator tumbling by 64¼p to 705½p, a fall of 8.3% and down more than 50% over the past 12 months. The safety of the Boeing 737 MAX has come under growing scrutiny after two of the aircraft crashed in only five months. A 737 Max 8 operated by Ethiopian Airlines crashed shortly after take-off from Addis Ababa this month, killing all 157 people on board, including nine Britons. The same model operated by Lion Air crashed off the coast of Indonesia in October, killing 189.
Astrazeneca signs $6.9bn cancer drug deal with Daiichi Sankyo. One of Britain’s biggest pharmaceutical companies has struck a $6.9 billion deal for access to a potentially “transformative” cancer drug from a Japanese rival and set up a share placing to help to fund the move. AstraZeneca (AZN) has reached a global development and commercialisation agreement with Daiichi Sankyo for trastuzumab deruxtecan, a treatment in development for multiple cancers, including breast and gastric. It is the latest in a wave of multibillion-dollar deals in the pharmaceuticals industry, particularly in oncology where companies are racing to bolster their pipelines. It follows a similar £3.2 billion cancer agreement between Glaxosmithkline, its UK rival, and Merck of Germany last month and a separate £4 billion takeover of Tesaro of the US towards the end of last year.
Retail industry is sidelined by government, says Tesco chief. The boss of Tesco (TSCO) has criticised those who look down on shop jobs, accusing ministers of sidelining the retail industry and prioritising car and steel manufacturers. Dave Lewis, who has led Britain’s largest supermarket chain since 2014, said the way people talked about his sector and the roles it created was “a source of anger”. The government was failing to “shepherd and help” retailers in the face of seismic challenges, he said, while providing support for “so-called traditional industries” such as automotive.
Ashley setback as Debenhams (DEB) paves way for £200m funding. Debenhams is poised to clinch £200 million of urgent funding in a move that rebuffs a takeover attempt by Mike Ashley, the Sports Direct retail tycoon. Bond investors in the department store group have agreed to changes to the terms of their notes that will allow the retailer to secure the refinancing and push on with a broader restructuring that could wipe out the shareholders. It deals a blow to , which stands to lose heavily from a restructuring because it owns a stake of almost 30% in Debenhams.
An explorer that has found large oil reserves west of Shetland is continuing its search for partners to help develop its assets. Hurricane Energy (HUR) reaffirmed yesterday that the Lancaster field should produce its first oil before the end of June. Commissioning work on the floating production storage and offloading vessel has started and output is forecast to climb steadily to 17,000 barrels of oil per day. The Surrey-based company, which reported an annual underlying loss of $12.7 million, compared with $14.6 million last year, was founded in 2005. The field is estimated to contain the equivalent of 2.6 billion barrels of crude.
Unilever seeks safe spaces for its online adverts. Unilever (ULVR) is to create a “white list” of publishers for its online marketing campaigns in the latest attempt by the owner of Lynx deodorant and Marmite to prevent its ads appearing alongside repugnant material. Unilever, the world’s second largest advertiser, wants to exercise more control over where its ads are placed amid growing scepticism over online digital marketing. The marketing industry is plagued by unscrupulous players who use computerised bots to generate fake online clicks, skimming off tens of million of dollars in ad revenue every month. Brands have been repeatedly caught unawares after seeing their ads run in parallel with extremist videos. Keith Weed, Unilever’s chief marketing officer, has described the industry as a “swamp”. Last year he threatened to pull spending from digital platforms, such as YouTube and Facebook, that fail to tackle the spread of disinformation and offensive content.
The owner of Britain’s third-biggest household energy supplier has said it will set out its preferred option for the business by May as it continues to assess whether it could be viable as an independent listed company. SSE (SSE) said it was reviewing options for its domestic supply division, SSE Energy Services, after the merger with Npower, another Big Six supplier, collapsed last year. It said it was making “progress on potential external collateral arrangements that may support the opportunities for a future [for the division] outside the SSE group” but may ultimately have to retain the supplier as a “ring-fenced business” within the company.
Secure Trust Bank (STB) may look for acquisitions if Brexit uncertainty eases and its shares recover lost ground, according to its chief executive. Paul Lynam said the specialist lender would be likely to benefit if fears of a hard Brexit receded and economic activity in the UK picked up. A re-rating of the shares, which have fallen 28% in the past year, would make things “easier in the context of deals”, Mr Lynam, 50, noted. In contrast, with a further fall in the shares, “someone could come along and buy us,” he added.
Metro Bank (MTRO) shares hit a fresh low yesterday after Barclays analysts warned investors to expect weaker-than-expected earnings and further equity injections. Metro Bank shares have more than halved in value this year, but Barclays thinks they have further to fall. The analysts said they see “significant risks” around future capital injections given the bank’s weak profitability and high-growth agenda. They warned that Metro may not be able to issue MREL (Minimum Required Eligible Liabilities) because it is “simply too expensive”. As well as the impending £350 million equity raising Metro announced last month, Barclays predicts it will seek to raise equity again in 2020. They noted that it could avoid an equity raise by selling other loans but getting a “good” price might be tricky and could take 10 to 15% off earnings. On the upside, they said the shares could rally if there was an unwinding of the short interest of almost 20% in Metro shares.
Imperial Brands (IMB) and British American Tobacco (BATS) were both higher after Citigroup upgraded both tobacco companies to “buy”. The analysts said they expect organic growth at both companies will pick up this year as sales of next generation products accelerate and they believe that the regulatory threat that has been hanging over the sector “will probably move away from cigarettes.”
Fevertree Drinks (FEVR) continued to rise following its results this week, when it reported a 34% jump in profit. RBC Capital Markets issued an “outperform” rating yesterday and raised its price target by 100p to £35.00. “We remain confident that Fevertree is expanding effectively in the US and Europe and that organic revenue growth from these regions will partly offset a slowdown in the UK,” RBC said.
easyJet (EZJ) fell 39p to £11.18 after Credit Suisse cut its full-year profit estimate for the budget airline. “We are conscious that UK consumer confidence has been impacted by ongoing Brexit uncertainty and taper our expectations for unit revenues,” the analysts said.
Northgate chairman resigns. Northgate (NTG) could become a bid target after the van hire company’s non-executive chairman resigned following a campaign by an activist investor. Andrew Page, 60, has left the company with immediate effect, Northgate said yesterday. His departure comes after Crystal Amber, which has a 6.3% stake, recently called for a shareholder meeting, tabling resolutions to remove Mr Page. Northgate said it would “respond in due course” to the requisition notice tabled this month. However, in an unscheduled market update yesterday, it said Mr Page had informed the board of his intention to leave. He was accused by Richard Bernstein, 56, founder of Crystal Amber, of presiding “over multiple profit warnings, a culture of inept communications with the market” and poor stewardship.
Tempus – Mitie Group (MTO): Avoid. This is a tricky sector, with clients who aren’t spending and investors following their own agenda
Tempus – Sabre Insurance Group (SBRE): Buy. A shift in the market could mean growth for this focused player long term
