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| Thursday July 20 2017 |
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By Richard Fletcher
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Markets snap: The Nikkei closed up 0.62 per cent at 20,144.59. The FTSE 100, which closed at 7,430.91, is forecast to open 22 points higher when trading begins shortly. At 6.53am Brent crude was trading at $49.66 a barrel and the pound was trading at $1.302 against the dollar and at €1.131 against the euro. For the latest market-moving news follow me on Twitter @fletcherr.
Good morning: Twelve years ago this week I wrote a profile of a little known, secretive, publicity-shy entrepreneur called Mike Ashley for The Sunday Times. There were no photographs of the then private retailer to go with the piece — the best we could dig up was a teenage Ashley playing squash — and no comment from the man himself. Despite ranking 96th on the Rich List with an estimated £500 million fortune he had, at that point, never uttered a public word. We dubbed him retail's “quiet man”.
It is not a sobriquet you would append to Mr Ashley today. The Sports Direct founder is now the poster boy for much that is (perceived) to be wrong with capitalism. A convenient whipping boy for MPs, the business establishment and corporate governance wonks. There is no shortage of photos: from shirtless shots of him downing pints with fellow Newcastle football fans to the staged pictures of him holding his fists aloft that accompanied an interview about his relationship with the City and shareholders.
Sports Direct has announced full-year results this morning. Like those photos, it is not pretty. Pre-tax profits are down 22 per cent at £281 million, despite an 11.7 per cent increase in revenue. On an underlying basis profits fell by 58.7 per cent to £113.7 million.
Nevertheless Mr Ashley is upbeat: “Sports Direct is on course to become the ‘Selfridges’ of sport by migrating to a new generation of stores to showcase the very best products from our third-party brand partners. We have invested over £300 million in property over the last year, and I am pleased to report that early indications show that trading in our new flagship stores is exceeding expectations.”
Alongside the results Sports Direct has announced the appointment of Jon Kempster as chief financial officer after a three-year search. We’ll have a story from our retail editor, Deirdre Hipwell, shortly on thetimes.co.uk/business.
FTSE 100 stalwart Unilever has posted interim results this morning. Underlying sales growth has come in at 3 per cent, up from 2.9 per cent in the first quarter but a fraction below City expectations and at the bottom of Unilever’s 3 to 5 per cent target range. Nevertheless Unilever has reaffirmed its full-year target.
Its chief executive, Paul Polman, says: “Our first-half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment.”
Dame Carolyn McCall, chief executive of Easyjet, is bowing out on a high. Alongside an upbeat trading update the airline has nudged up full-year profit forecasts and expects to make a headline profit of between £380 million and £420 million this year. It was announced this week that Dame Carolyn is to join broadcaster ITV as chief executive.
We have interim results this morning from Moneysupermarket.com and Howden Joinery and trading updates from Premier Foods, Anglo American and SSE among others. In the US Microsoft will update investors after the bell tonight.
On the economics front we get the latest rate decision from the European Central Bank at lunchtime. It is widely expected to hold interest rates steady but may lay the groundwork to announce a reduction in its bond-buying programme in September.
We get the official UK retail sales data for June at 9.30am. A Reuters poll of City economists suggests that year-on-year sales have risen by 2.5 per cent.
Leading business figures will meet the prime minister later today in an attempt to build bridges between companies and Downing Street as part of preparations for Brexit. Among them are Sir Roger Carr, chairman of BAE Systems, Dave Lewis, chief executive of Tesco, and John Pettigrew, chief executive of the National Grid. Philip Aldrick, our economics editor, has a preview of the meeting here.
Finally, if you get a chance make time to read today’s obituary for Lord Bagri, who rose from a teenager working in the Calcutta docks to become chairman of the London Metal Exchange.
Please do keep sending me your thoughts, comments and observations — richard.fletcher@thetimes.co.uk.
Have a great day.
Richard
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| Richard Fletcher |
| Business Editor |
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Ten things you need to know
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1 Mark Carne, head of the taxpayer-funded Network Rail, is to receive a £50,000 bonus, taking his package to £820,000, despite a sharp increase in late and cancelled trains.
2 Having done her best to soothe tension between Google and Brussels and then extinguish a series of fires at Uber, Rachel Whetstone, the former Tory adviser, is heading for Facebook.
3 Glaxosmithkline is selling its Horlicks business in Britain and has scrapped a planned £350 million investment in Cumbria.
4 CH2M, the engineering consultant at the heart of a host of Britain’s most important infrastructure projects, is understood to be in advanced negotiations to be taken over by Jacobs, an American rival.
5 Cathryn Ross, the highly regarded head of Ofwat, has quit the water regulator for a better-paid job with BT, plunging the water industry into uncertainty.
6 Ratesetter, the peer-to-peer platform, made £36 million of loans using its own capital to Vehicle Trading Group, a sub-prime car financing and used car business, to prevent a default.
7 Leading business figures will meet the prime minister in an attempt to build bridges as part of preparations for Brexit.
8 Postal workers have reacted angrily to the news that Moya Greene, the £1.8 million-a-year chief executive of Royal Mail, is to take a part-time job as a non-executive director of Easyjet, which will pay her £60,000 a year for nine days’ work.
9 Generating less electricity did not stop Drax making more money from its North Yorkshire power plant as it started to reap the rewards of a biomass subsidy.
10 The need for repair work at its production plants in Russia and Canada could not have come at a worse time for Evraz.
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| Market Snap |
The $4.2 billion sale of Reckitt Benckiser’s food division helped to boost the consumer goods sector and push up the FTSE 100, which closed up 40.69 points at 7,430.91. The broader FTSE 250 rose 80.55 points to 19.693.93. More on yesterday’s market action here.
On Wall Street the Dow Jones Industrial Average ended up 66.02 points at 21,640. The S&P 500 hit a record high, rising 0.54 per cent to 2,473.83.
Jitters among investors over the eurozone huge monetary stimulus package in advance of the European Central Bank’s meeting today pushed sterling up 0.3 per cent against the euro to €1.1316. The pound struggled to make headway against the dollar despite the political deadlock in America, finishing the day at $1.3034.
Concerns about a lingering global oil glut were eased after US government data showed a decline in US crude oil inventories for the third week in a row. Brent crude for September delivery gained to close up 1.8 per cent at $49.70 a barrel.
The price gained by Reckitt Benckiser for its foods division is getting on for twice what the market thought it could be worth, says Tempus, such was the queue of potential customers. Where now for the consumer health business? Severn Trent could hardly have surprised the market with its latest trading statement, because water companies are predictable to a fault. Shares in RPC Group have been undermined by some hostile coverage and the packaging group is plainly intent on proving the bears wrong. Read the Tempus share tips here.
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The day’s front pages
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The Times
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Glaxosmithkline is selling its Horlicks business in Britain and has abandoned a planned £350 million investment in Cumbria as part of a wide-ranging restructuring.
The water industry has been plunged into uncertainty after the head of Ofwat announced that she was leaving the regulator to join BT.
CH2M, an engineering consultant at the heart of a host of Britain's key infrastructure projects, is understood to be in advanced talks to be taken over by Jacobs, an American rival.
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Read the full update
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The Wall Street Journal
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Morgan Stanley said that second- quarter profits rose to $1.76 billion, beating forecasts, as the firm’s traders delivered strong results.
Frankfurt is taking an early lead in attracting banking business in anticipation of Britain exiting the EU.
A federal appeals court panel in the United States has overturned the convictions of two former Rabobank traders in the scandal over attempted Libor manipulation, , saying that the men’s fifth-amendment right against self-incrimination had been violated. .
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Read the full update
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Financial Times
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Theresa May called on the BBC to pay men and women equally after the corporation published the names of its 96 employees paid more than £150,000 a year, exposing a stark gap between male and female broadcasters.
Vince Cable has called for pro-EU MPs to “rally round” Philip Hammond, saying that the chancellor was “one of the few voices of sanity” left in the government.
Morgan Stanley reported a 4 per cent drop in fixed income trading revenues during the second quarter, reflecting the low volatility in global markets in recent months.
The head of the CIA warned the UK in the 1960s against developing Concorde with France, saying that the technical obstacles to producing a supersonic aircraft were formidable and that Britain did not fully appreciate the risks.
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Read the full update
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The Daily Telegraph
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Elliott Advisers, the activist investor. has attacked BHP Billiton's plans to develop a giant potash mine in Canada, warning that it could be as "disastrous" as its foray into US shale.
BT has hired the chief executive of Britain's water industry watchdog to lead it into battle with Ofcom, following a series of heavy blows from the regulator.
Sir Philip Green has poached Burberry's merchandising director to run Topshop, one of the most high-profile jobs in retail.
GSK is to sell its Horlicks malted drinks business in the UK and slash 320 jobs over the next four years.
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Read the full update
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The Sun
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Reckitt Benckiser, the UK maker of Durex and Dettol,has sold its sauces business to a US spice maker for £3.2 billion.
Talktalk got 20,000 new broadband customers in three months but income fell because its services cost less.
Insurer Aviva has sold its loss-making Friends Provident business for £340 million.
The number of UK builders registered as self-employed has jumped by nearly a quarter in recent years. There were 1.158 million in the 2016/17 tax year, up from 950,000 in 2012/13.
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Read the full update
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richard.fletcher@thetimes.co.uk
@fletcherr
