Section:OBS 2N PaGe:49 Edition Date:190804 Edition:01 Zone: Sent at 3/8/2019 9:32 cYanmaGentaYellowblac
49
Centrica crisis
Can the British Gas owner
get itself out of this mess?With the government
fi lled with Brexit
hardliners, boss
War ren East may see
no point in making
himself unpopular
Rolls-Royce braced
for rough ride amid
no-deal turbulence
Concern about the effects of a no-deal
Brexit on the economy is increasing.
The pound fell again last week, the
Bank of England warned about the
threat of recession, and manufactur-
ing activity contracted for the third
month running.
Rolls-Royce, which reports fi rst-
half results on Tuesday, is bound
to face questions about how it will
fare if Britain dumps itself out of
the EU on 31 October. With opera-
tions in nine EU countries, the aero-
space company’s business is highly
integrated with the single market. It
makes engines for Airbus’s planes,
produced in Toulouse , and has a fac-
tory in Dahlewitz , near Berlin, that
employs about 10,000 people.
Rolls-Royce has some advantages
over other manufacturers under a
no-deal Brexit. First, the aerospaceindustry already operates under
World Trade Organisation rules, so
there will be no extra tariffs. Second,
it works at a steadier pace than the car
industry and doesn’t rely on just-in-
time deliveries of parts hurtling back
and for th across the Channel.
But Rolls-Royce has warned that
Brexit could upset its supply chain
and constrain it from hiring the best-
qualifi ed people. It has spent up to
£100m stockpiling parts at its main
Derby plant and at Dahlewitz to mini-
mise disruption. It has also discussed
using Airbus’s giant Beluga trans-
porter planes to deliver engines made
in Derby to France and Germany.
Those plans, however thorough,
still rely on the companies in Rolls-
Royce’s supply chain getting their
parts delivered smoothly.
Rolls-Royce’s boss, Warren East ,
supported staying in the EU at the
2016 referendum and urged MPs to
vote for Theresa May’s agreement
before the now-abandoned March
deadline. More recently, East has been
less vocal, describing Brexit as a has-
sle that had to be dealt with. “I’m not
sure we’re going to spend as much
preparing for some deadline that
might never happen,” he said in June.
“It’s just an unnecessary distraction
for businesses.”
Like many people, East may simply
be fed up with discussing Brexit. Then
again, with the government filled
with Brexit hardliners, he may see no
point in making himself unpopular
with the new regime.
East, who has run Rolls-Royce for
four years, has got plenty of other
things to keep him busy as he seeks
to restore the company’s place as the
standard bearer for UK engineer-
ing. A series of profi t warnings anda Serious Fraud Offi ce investigation,
now resolved, had damaged Rolls-
Royce’s reputation.
East found a lumbering bureau-
cracy unable to respond quickly
enough to changes in the industry.
He chopped 600 senior manager
posts and is in the middle of cutting
another 4,600 jobs from the compa-
ny’s workforce of 54,500.
Rolls-Royce has had to set aside£1.5bn to fi x faults with its Trent 1000
engines, whose turbine blades were
wearing out too quickly, grounding
customers’ planes. East has said Trent
1000 orders are on the increase after
a grim patch last year.
David Perry, an analyst at JP
Morgan Cazenove, argues there are
problems ahead because the com-
pany has underestimated the cost
of developing electric engines inresponse to pressure on the industry
over emissions.
Last year, Rolls-Royce swung to
an £803m loss, excluding fi nancing
costs, from a £1.2bn profi t the year
before, as it spent £790m fi xing the
Trent 1000’s faults. For the fi rst half
of 2019 analysts expect the under-
lying pre-tax profi t, which excludes
Trent 1000 costs and other one-offs,
to rise to £95m from £81m.The aerospace giant
is ex pected to revea l a
modest half-year profi t
this week, but there are
still dark skies ahead,
writes Sean FarrellAgenda
Postscript Vital statistics
Royal Dutch Shell blamed the
slowing global economy as its
quarterly profi t missed estimates by
more than $1bn. The oil company’s
profi t in the three months to the end
of June fell by a quarter to $3.5bn
(£2.9bn). The US-China trade war
suppressed Asian economic growth,
sending gas prices down. Weaker
economic and trade activity also hit
Shell’s chemicals business.Apple said it would launch its own
credit card this month as iPhone
sales fell to less than half of its quar-
terly revenue. The company is seek-
ing to diversify away from mobile
phone sales to grow in services, such
as payments and music stream-
ing, along with wearable products
including the Apple Watch. Apple’s
third-quarter earnings per share fell
7% to $2.18, beating expectations.Intu shares dropped to a record low
when the shopping centre company
said it might need to raise funds
to cut its £4.7bn of debts. Laying
bare the crisis in bricks-and-mor-
tar retail, the owner of Manchester’s
Trafford Centre reported a bigger
fi rst-half loss, scrapped its dividend,
and warned that rent from shop
space would drop this year and in- The shares fell 31% to 40p.
The Bank of England cut its growth
forecast and warned that there was
a one-in-three chance of a recession
in early 2020, even if the UK avoided
a no-deal Brexit. Keeping interest
rates unchanged at 0.75%, the Bank
reduced its growth estimate for this
year to 1.3% from 1.5%. Governor
Mark Carney said crashing out of
the EU would cause an “instantane-
ous shock” to the economy.Shell blames global
slump as profi ts fall
Apple to branch out
with credit card plan
Intu’s share tumble
lays retail crisis bare
Bank makes bleak
forecast for 2020
$1.208
The level the pound dropped to
as Brexit concerns mounted, its
lowest point since January 2017.£1.1bn
Aston Martin’s market value after
reporting a fi rst-half loss – down
from £4.3bn at its fl otation in
October 2018.Rolls-Royce has
already spent
£790m of the
£1.5bn it set
aside to fi x faults
on the Trent
1000 engine, left.РЕЛИЗ
ПОДГОТОВИЛАГРУППА"What's News"VK.COM/WSNWSРЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS