UK TOP NEWS SUMMARY: Wetherspoon, Tui And Whitbread Warn Of Job Cuts

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

Alliance News 22 September, 2020 | 11:19AM
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(Alliance News) - The following is a summary of top news stories Tuesday.

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COMPANIES

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Premier Inn owner Whitbread said it is looking to shed up to 6,000 jobs after reporting a slump in half-year sales due to the closure of its hotels and restaurants because of the Covid-19 pandemic. Total sales were "significantly" down year-on-year in the six months ended August 27, due to the closure of the vast majority of hotels and restaurants for a large chunk of that period, the FTSE 100-listed company explained. First half UK like-for-like sales were down 78%, with total sales down 77%. The majority of hotels and restaurants were reopened by the first week of August, the company said, and a total of 801 hotels, representing 98% of total UK capacity, were open by the end of August. Since reopening, UK accommodation sales performance has been ahead of the market, Whitbread said. August UK total sales - including both accommodation and food & beverage - were down 39% year-on-year.

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Pub chain Wetherspoon has announced plans that could see it cut up to half of its jobs at pubs in six UK airports. The company said it had written to its 1,000 airport staff to warn them that between 400 and 450 of their jobs are at risk of redundancy. "The decision is mainly a result of a downturn in trade in these pubs, linked with the large reduction in passenger numbers using the airports," said John Hutson, the company's chief executive. "We should emphasise that no firm decisions have been made at this stage," he added, saying that Wetherspoon will listen to its staff to reduce the number of compulsory redundancies. The job cuts will take place at Gatwick, Heathrow, Stansted, Birmingham, Edinburgh and Glasgow airports. Less than two months ago the company announced that it was planning to make between 110 to 130 head office workers redundant.

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Tui said it is undertaking a business restructuring programme to save cash in the face of the Covid-19 pandemic and is evaluating options to achieve the "optimal balance sheet structure". Under the so-called Global Realignment programme, the Anglo-German tour operator plans to reduce overhead costs by 30% across the entire company, which will potentially impact 8,000 jobs. It is targeting permanent annual savings of more than EUR300 million, with the first benefits expected to be delivered from the year ending September 30 and full benefits to be delivered by financial 2023. Tui said it has reduced its capacity for the fourth quarter to 25% from 30% and is focussing on low-risk destinations, enabling customers to continue their holidays as planned. Bookings for summer season are currently 83% down versus prior year and average selling prices are down 19%, the company said, adding that winter bookings are down 59% and selling prices are up 3%. Tui said it is more positive about summer 2021 season, when it expects to operate 80% adjusted capacity. Bookings for the season are up 84% and average selling prices up 10% versus prior year period.

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Kingfisher posted a significant increase in profit for the first half of financial 2021, crediting the improvement to a strong sales recovery in the second quarter and a decrease in expenses. For the six months ended July 31, the B&Q and Screwfix stores operator said sales for the six months to July 31 fell 1.3% to GBP5.92 billion, representing a fall of 1.6% on a like-for-like basis. However, pretax profit surged 62% to GBP398 million amid a decrease in selling & distribution expenses to GBP1.33 billion from GBP1.51 billion. Administrative costs also were reduced to GBP380 million from GBP396 million. Adjusted pretax profit was up 23% at GBP415 million. Looking ahead, Kingfisher said it has seen an "encouraging" start to the second half of the financial year, with third quarter like-for-like sales up 17% up to September 19. However, continued uncertainty over Covid-19 limits visibility on the sales outlook for the remainder of the year, it said.

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Insurer Beazley said its total estimate for first-party Covid-19 claims has doubled to USD340 million from USD170 million anticipated previously. Almost all of this increase cost of Covid-19 claims stems from further event cancellation losses, the company said. "This revised figure assumes a resumption to some form of normality in the second half of 2021. Were this not to be the case, we estimate that we would have another USD50 million of further claims net of reinsurance," said Beazley. "Conferences that were postponed earlier in the year are now being cancelled as are ones due to take place in the final quarter of this year which means our loss estimates have increased. In addition, we anticipate further claims based on our exposure for events in 2021," the London-based insurer explained.

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Unilever said its Dutch investors approved a plan to combine the Anglo-Dutch consumer goods company into one single London-based company. The company's unification proposal was approved by 99.42% shareholders at an extraordinary general meeting, according to Unilever, marking the first step towards ending the company's dual-headed structure. British shareholders of the Dove soap maker must now back the unification plan at a meeting on October 12 for the unification to go ahead. The High Court in London must also approve the plan, the company said. In June, the company announced its plan to combine its dual-headed structure into one single London-based entity. Unilever, however, said it would retain its stock listings in London and Amsterdam. Unilever in 2018 had tried to move the company's corporate base to Rotterdam from London but faced significant opposition from UK-based shareholders and eventually had to abandon the plans.

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MARKETS

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European markets were stabilising on Tuesday after the previous session's sharp sell-off, driven by concerns that the continent is facing a second wave of Covid-19 infections. England's pubs and restaurants are set to see fresh restrictions as the government attempts to curb the spread of the virus. Wall Street is called for a mixed start, with the Dow Jones pointed down 2.1% but the S&P 500 seen up 0.1% and the Nasdaq up 0.6%.

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FTSE 100: up 0.4% at 5,824.54

FTSE 250: down 0.4% at 16,810.13

AIM ALL-SHARE: up 0.1% at 945.52

GBP: flat at USD1.2791 (USD1.2795)

EUR: soft at USD1.1737 (USD1.1745)

GOLD: soft at USD1,903.50 per ounce (USD1,904.24)

OIL (Brent): higher at USD42.04 a barrel (USD41.50)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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The UK government will on Tuesday announce new measures to curb rising coronavirus cases across England, hours after upgrading the virus alert level with top advisers warning of a surging death toll within two months without immediate action. Under new rules to come into force on Thursday, English pubs, bars and other hospitality venues will be required to close at 2100 GMT while food and drink outlets will be restricted to table service only. "We know this won't be easy, but we must take further action to control the resurgence in cases of the virus," a Downing Street spokesperson said. Similar restrictions are already in place across swathes of northern and central England. Devolved administrations in Scotland, Wales and Northern Ireland are expected to unveil their own nationwide rules imminently. The ramped-up response follows warnings on Monday that the country could see up to 50,000 cases a day by mid-October, and a month later exceed 200 deaths every day. Chief medical officer Chris Whitty said rates of infection were replicating the strong resurgence seen in France and Spain, roughly doubling every seven days.

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Ireland's Foreign Affairs Minister Simon Coveney said the EU-UK Brexit negotiations have been challenging in recent weeks and that the EU has his full support. Coveney made the comments ahead of meeting with chief Brexit negotiator Michel Barnier in Brussels on Tuesday. The remark comes amid recent controversy over the UK Government's bid to use domestic legislation to override elements of the Brexit divorce deal, in particular the Northern Ireland protocol on post-Brexit trading arrangements. Ahead of the meeting, Coveney said: "We will discuss the current state of play on Brexit and hear Michel Barnier's assessment of where we currently stand on the most important issues. "The last few weeks have been challenging – Michel and his team have our full confidence and support as we find a way forward." Under the protocol, Northern Ireland will remain in the EU single market for goods and administer the EU's customs code at its ports.

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Germany's economy is expected to slump for the year as a whole, albeit at a milder rate than initially expected, the ifo Institute said. For all of 2020, Germany's gross domestic product is expected to fall by 5.2%, even though in the summer ifo researchers anticipated a 6.7% drop. Germany is expected to recover from then on, with GDP set to rise by 5.1% in 2021, and by 1.7% in 2022. The number of unemployed is set to rise to an average of 2.7 million in 2020 from 2.3 million in 2019. In 2021, it is expected to improve to 2.6 million and then to 2.5 million in 2022. Meanwhile, the German government anticipates a current account surplus of EUR215.4 billion, down from EUR244 billion in 2019, as exports decline at a much faster pace than imports in 2020.

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The US economy will only recover from the coronavirus downturn when people feel safe to resume their normal activities, Federal Reserve Chair Jerome Powell said in remarks released Monday ahead of congressional testimony. The central bank chief is set for three days of testimony before House and Senate committees starting Tuesday on the response to the coronavirus downturn, which has caused tens of millions of job losses and a record plunge in annualized GDP in the second quarter due to business shutdowns to stop the virus's spread. Though some sectors of the economy, such as retail sales and housing, have seen sharp rebounds, viral infections remain rife and Congress is deadlocked on additional spending to help the recovery. "A full recovery is likely to come only when people are confident that it is safe to re-engage in a broad range of activities," Powell will tell House Financial Services committee members on Tuesday in an appearance with Treasury Secretary Steven Mnuchin, according to the prepared remarks.

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