TOP NEWS SUMMARY: Rolls-Royce To Axe 4,600 Jobs In New Restructuring

LONDON (Alliance News) - The following is a summary of top news stories ...

Alliance News 14 June, 2018 | 11:24AM
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LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Rolls-Royce Holdings said it will cut around 4,600 jobs, predominantly in the UK and mainly corporate and support roles, as part on a new business restructuring plan to save GBP400 million annually by end of 2020. The jet engine maker, which in January announced a plan separate the business into three different units, expects the new restructuring programme to deliver improved returns, higher margins and increased cash flow. Under the restructuring programme, the company aims to remove corporate management layers, complexity and duplication, including within its core engineering division, and replace a centralised decision and control structure by empowered business units having clearer accountabilities, and decision-making powers. The total cash cost of the restructuring programme is expected to be around GBP500 million, which will be incurred across 2018, 2019 and 2020.
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GlaxoSmithKline said its joint venture ViiV Healthcare reported positive results in its two-drug regimen for the treatment of HIV. The GEMINI studies are part of ViiV Healthcare clinical trial for a two-drug regiment, involving the combination of dolutegravir and lamivudine medicines to treat HIV, as opposed to the standardised three-drug regimen. The London-listed pharmaceutical giant said the studies met their primary endpoint demonstrating "the potency, safety and tolerability of the dolutegravir plus lamivudine combination" and showing similar efficacy to the three-drug regimen. The studies seek to address long-term toxicity in people living with HIV by reducing the number of medicines used in their treatment, the company said.
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PZ Cussons said its annual profit is expected to be "towards the bottom end" of its March estimate due to difficult trading conditions in Nigeria. Nigerian wages have continued to lag behind "significant cost inflation" in recent years, impacting most of PZ Cussons' Nigerian portfolio, PZ Cussons said. The company therefore expects pretax profit at the low end of its GBP80 million to GBP85 million guidance back in March. In financial 2017, pretax profit was GBP88.0 million. The company also struggled in the UK with product launches failing to make up for margin and volume shortfall. PZ Cussons's performance in the Australian, US and Indonesian markets was strong, however, it said. In response to challenging macroeconomic conditions, the company is embarking on a GBP10 million plan to reduce its overhead base and increase the speed at which new products are brought to market.
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AVEVA Group reported a 34% drop in annual profit on costs relating to its recent combination with the software arm of France's Schneider Electric and said that it is targeting to achieve GBP25 million in annualised cost savings by the end of the 2020 financial year. The engineering and industrial software provider also said that the combination with Schneider's software business will lead to material revenue synergies over the medium term. For the year ended March 31, AVEVA recorded a combined group pro forma pretax profit of GBP64.6 million, down from GBP98.3 million, on a revenue of GBP704.6 million and GBP648.7 million, respectively.
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N Brown Group said it is considering closing all 20 of its physical stores to become a purely online retailer. The clothing retailer said it has entered consultations with staff on the closure of its 20 stores, which it said are loss-making, as it plans to become a "global online retailer". Already 75% of total revenue is generated online. For the 13-week period to June 2, N Brown stores generated revenue of GBP15 million, representing just 2% of the group's revenue, and made an earnings before interest, taxes, depreciation and amortisation loss of GBP3 million. N Brown said that, if the decision to close the store is taken, it will incur exceptional costs of around GBP18 million to GBP22 million. In the 13-week period N Brown's group revenue increased 0.4%, with product revenue down 2.8% and financial services revenue up 9%. Online sales rose by 3%, however, and Power Brand online revenue by 9%.
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Rathbone Brothers said it will acquire Scottish wealth manager Speirs & Jeffrey and raise GBP60 million to part fund the deal. The London-headquartered wealth manager said the acquisition of Speirs & Jeffrey will increase its funds under management by 18% to GBP44.5 billion. Speirs & Jeffrey current manages GBP6.7 billion in funds, making it Scotland's largest independent wealth manager, according to Rathbone. Rathbone will pay an initial GBP104 million, comprising GBP79 million in cash and 1.0 million new Rathbone shares worth GBP25 million. The cash element will be funded by internal cash resources and a share placing to raise GBP60 million. The company will pay further consideration, earn-out payments and incentivisation awards of up to 5.8 million Rathbones shares depending, upon the achievement of synergies, it said.
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British Land said that it completed, in conjunction with GIC Private Ltd, the sale of London's 5 Broadgate building to a subsidiary of Hong Kong-based property developer CK Asset Holdings Ltd for GBP1 billion. The FTSE 100 listed property development company and its then joint venture partner committed to the development of 5 Broadgate in 2012 to house Swiss investment bank UBS Group AG, the company said. The building, which was completed in 2015, generated a total property return of 18% per year for British Land.
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MARKETS
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London shares were higher with Rolls-Royce the best blue chip performer up 2.8%. The pound was higher against the dollar after positive UK retail sales data. Ahead the European Central Bank will announce its interest rate decision at 1245 BST. Wall Street was pointed to a lower open after the US Federal Reserve hiked interest rates on Wednesday.
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FTSE 100: down 0.5% at 7,659.66
FTSE 250: down 0.4% at 21,153.93
AIM ALL-SHARE: flat at 1,101.83

GBP: up at USD1.3435 (USD1.3370)
EUR: up at USD1.1824 (USD1.1773)

GOLD: up at USD1,305.33 per ounce (USD1,297.35)
OIL (Brent): flat at USD76.54 a barrel (USD76.50)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK retail sales growth accelerated more than expected in May, figures from the Office for National Statistics revealed. Retail sales volume including auto fuel, grew 1.3% month-on-month, following April's 1.8% increase. This was the second consecutive rise in sales and much bigger than the expected 0.5%. Sales excluding auto fuel, climbed 1.3% versus 1.4% increase a month ago. Sales were expected to gain 0.3%. The ONS said feedback from retailers suggested that a sustained period of good weather and Royal Wedding celebrations encouraged spending in food and household goods stores in May.
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UK Prime Minister Theresa May won a crucial vote late Wednesday against an amendment to her Brexit legislation that would have required her to negotiate Britain's continued access to the EU customs union. Lawmakers in the Commons, parliament's elected main house, voted by 325 to 298 against the amendment, after May promised to seek a new "customs arrangement" in a compromise ahead of the vote. Following a second day of debate on her EU Withdrawal Bill, May also won votes against committing Britain to join the European Economic Area and against seeking full access to the EU single market after Brexit.
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The UK house price balance improved more than expected in May, reports said citing the Royal Institution of Chartered Surveyors. The house price balance rose to -3% in May from -7% in April. The expected level was -5%. The number of properties coming to the market turned positive for the first time in more than two years. Nonetheless, RICS said the house price balance is consistent with no change in prices.
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The US Federal Reserve raised its benchmark interest rate to a range of 1.75 to 2.00%, in line with expectations, as unemployment declines and inflation moves to the desired target. The vote of the Federal Open Market Committee was 8-0. The quarter-of-a-percentage-point hike is the second time this year the Fed has increased the rate and comes as the labour market continues to strengthen and economic activity rises at a solid rate. "The main takeaway is that the economy is doing very well. Most people who want to find jobs are finding them and unemployment and inflation are low," Chairman Jerome Powell said. In a surprise move, the central bank now projects four interest rate hikes in 2018, rather than three. As for economic growth, Powell said it appeared to have picked up in the current quarter largely reflecting a bounce back in US household spending, but he also credited current fiscal policy for boosting the economy, saying ongoing job gains are raising incomes and confidence.
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Industrial production in China was up 6.8% on year in May, the National Bureau of Statistics said. That was shy of expectations for 7.0%, which would have been unchanged from the April reading. The bureau also said that retail sales were up an annual 8.5% in May - also missing expectations for 9.6% and down from 9.4% in the previous month. Meanwhile, China's central bank retained borrowing costs after the US Fed decided to hike its rate for the second time this year. The People's Bank of China maintained the 7-day reverse repo at 2.55% and the rate on 14-day tenor at 2.70%. The benchmark one-year lending rate has been unchanged since October 2015.
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There will be no sanctions relief for North Korea until it has denuclearized in a way that is "complete, verifiable and irreversible," US Secretary of State Mike Pompeo said in Seoul. The US top diplomat was in South Korea to brief South Korean President Moon Jae In personally on this week's historic summit between US President Donald Trump and North Korean leader Kim Jong Un. Pyongyang understood the need for a "quick" denuclearization process which would be based on "conditions" and "sequencing," Pompeo told reporters at a joint press conference with his South Korean and Japanese counterparts, Kang Kyung Wha and Taro Kono.
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Germany's consumer price inflation accelerated, as initially estimated, on energy prices in May, final data from Destatis showed. Consumer prices climbed 2.2% year-on-year in May, faster than the 1.6% increase in April but in line with the estimate published on May 30. The last time the inflation rate reached this level was in February 2017. EU harmonized inflation also accelerated to 2.2% in May from 1.4% in April. This was in line with preliminary estimate. The rise in the inflation rate was mainly due to energy prices. Excluding energy prices, the inflation rate in May was 1.8%.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
Rolls-Royce Holdings PLC 940.20 GBX 1.53
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