Daily Mail - 01.08.2019

(Jacob Rumans) #1

Daily Mail, Thursday, August 1, 2019


Ryanair to


slash jobs


as 737 crisis


halts flights


RyanaiR boss Michael
O’Leary warned 900 jobs
could go at the airline just
a day after he pocketed a
£1m payrise.
O’Leary, 58, said the car-
rier would axe superfluous
staff in September and
after Christmas.
Ryanair this month said
it will cut 30,000 flights next
year after Boeing grounded
its 737 Max planes follow-
ing two fatal crashes.
it means Ryanair will fly
around 5m fewer passen-
gers than planned. O’Leary
said: ‘We will need about
600 less pilots and cabin
crew for summer 2020.
‘We already have a sur-
plus of over 500 pilots and
some 400 cabin crew,
because resignations have
dried up since January.’
Ryanair’s annual report
revealed that O’Leary
bagged a £1m pay rise last
year, taking home £3.1m.
O’Leary has agreed to a
50pc cut to his basic pay
and maximum bonus as
part of a five-year contract
signed earlier this year.
But he is in line for a £90m
share windfall if he man-
ages to increase Ryanair’s
share price to €25 over the
next five years.
Unions were angry when
the bonus was announced
amid a pay row between
O’Leary and pilots.


T


he United States has
gone through a whole
interest rate cycle in a
period when British rates
have done very little.
after ultra-low interest rates, follow-
ing the financial crisis the Federal
Reserve, the US central bank, began
moving them up in 2016 until they
reached a target of 2.25pc to 2.5pc.
With last night’s quarter point rates cut to
the 2pc to 2.5pc range borrowing costs are
now heading down again for the first time in
a decade.
What, one might ask, is the urgency? The
most recent international Monetary Fund
forecast actually upgraded the US output
forecast for this year by 0.3pc to 2.6pc. The
Fed itself reports a sturdy labour market.
The iMF expressed concern that weaken-
ing global growth from China to the euro-
zone and Brexit disruption, could lead to a
slowdown later in the year. The Fed has
joined in by citing global conditions.
ever since President Trump arrived in the
White house the Fed has been under
intense pressure to lower rates and under-
pin growth. Trump displaced former chair-
man Janet yellen with what he thought
would be a more compliant chairman in Jay
Powell. The noisier Trump became, the less


willing Powell became. Last night’s quarter
point cut will be seen as a rejection of
Trump hopes of something more bold.
historically, where the Fed went the Bank
of england would follow. Brexit uncertainty
and the present weakness of the pound
makes it highly unlikely that the Bank will
make any change when it sets rates at
today’s session

Retail therapy
SiMOn Wolfson’s next has demonstrated
that it is still possible to defy the pain on
the high street. next reported a 4pc rise in
full price sales over the last quarter (when
the weather was unhelpful) but has shown
the confidence to lift full year profits guid-

ance to £725m. The myth that the consumer
isn’t spending needs to be challenged. The
latest consumer confidence survey from
GfK shows widespread improvements
across the board in a poll conducted before
Boris Johnson’s boosterism.
it also shows the personal finances of con-
sumers strengthened in July as did the will-
ingness to make a big purchase.
One would be hard put to divine any of
this from the results of Trafford Park owner
intu. The company posted a loss of
£830m in the last six months, sagging
rental incomes of 7.7pc and the shares
tanked 30pc.
Fellow shopping centre operator
hammerson also is having a hard time. it
can be thankful that the hairbrained scheme
to merge with intu was shown a red card.
Can the shopping centre concept be
revived? Of course it can with a more mod-
ern approach to rents, entertainment and
tenants. no shopping centre today makes
any sense unless arrangements for online
purchases are part of the architecture.
Pain for intu is far from over as successful
retailers, such as Primark, demand the
same kind of breaks on rent as Topshop.
it is poor management, unsuitable rents
and failure to invest, not just business rates
and wrong weather, which has stymied the
high street.

Patient rights
aT the time it looked like a brilliant
wheeze.
aware that he was breaching rules about
holdings of unlisted stocks neil Woodford
turned to the international Stock exchange
in Guernsey for help.
he arranged that four unlisted companies
held in his troubled Woodford equity
income Fund be quoted in Guernsey. never
mind that the Guernsey exchange is virtu-
ally moribund.
On inspection Guernsey decided that first
two of the firms Benevolent ai and indus-
trial heat and then a third, Ombu, failed to
meet listing criteria and has returned them
to Woodford’s flagship fund.
a forth Sabina estates looks as if it does
conform. The return of the unlisted shares
is a new problem because it once again
means that the equity income fund holds
more than 10pc of its portfolio in unlisted
stocks breaching eU’s rules.
it is as if one Woodford’s eventing horses
has failed to clear the biggest fence.
imagine how much worse it could be if
investors in Woodford Patient Capital Trust
decided to retrospectively challenge the
terms under which five unlisted outfits held
in equity income were dumped into its
portfolio in March this year.
Stand well back and wait for the bang.

Fed offers Trump a bone


Alex


Brummer
CITY EDITOR

FaShiOn chain next went top of
the FTSe 100 after an online sales
boom as shares in shopping centre
owner intu were hammered.
next, which is considered a high
Street bellwether, now expects to
post higher full-year profits and
sales than expected following a
boost from its online business,
where sales rose 12pc.
Shares surged 8pc to 6064p, mak-
ing it the biggest riser among Brit-
ain’s 100 largest listed firms.
But shares in intu, which owns
the Trafford Centre in Greater
Manchester, the Metro Centre in
Gateshead and Lakeside in essex,
plunged 32pc to record-lows as it
racked up further losses and a fall
in rental income.
at 47.9p, the shares are down 87pc
since 2015, valuing the company at
just £678m. Rival hammerson was
also hit, falling 10.7pc to 214.3p.
analysts called intu’s results
‘awful’ and warned of further trou-
ble ahead.
Simon Wolfson, chief executive of
next, admitted trading on the high
Street continued to be challenging
and that competitors have been
slashing prices heavily as a result.
But next’s strong online perform-
ance helped offset a 4.2pc fall at its

stores during the 13 weeks to July
27, pushing total sales up 4pc.
next now expects to rake in prof-
its of £725m this year, £10m more
than previously predicted and
slightly higher than its £722.9m
earnings last year.
Wolfson said: ‘Our [summer] sale
didn’t do very well and we think
that was because promotional
activity into late June and July was
higher on the high Street than it
had been in previous years.’
intu’s losses widened to £856.4m
during the first six months of the

year compared with a loss of
£506.5m a year ago. The company
blamed rising retail failures for a
7.7pc drop in rental income.
The value of its shopping centres
and retail parks fell nearly 10pc in
the first six months to £8.4bn.
a string of intu’s key tenants such
as Topshop, house of Fraser and
Debenhams have embarked on
store closures in recent months.
Traditional retailers are suffering
as more customers go online.
Matthew Roberts, who took over
as chief executive at intu in april,

admitted that ‘radical transforma-
tion’ was needed as he announced a
five-year strategy to overhaul the
shopping centre operator.
The group has scrapped its divi-
dend to pay off its £4.7bn debt pile
and is also planning to sell off more
assets in the UK and Spain.
Roberts said: ‘The first half of
2019 has been challenging for intu.
‘With the pace of change acceler-
ating in our sector, radical transfor-
mation is required, and we have
tested our beliefs to develop a clear
five-year strategy to reshape.’

8pc 32pc


by Hannah Uttley

Countrywide rebuilds


COUnTRyWiDe estate
agents told investors its
turnaround was ‘bearing
fruit’ as losses fell – sending
shares up 9.9pc to 4.95p.
The firm, which owns
hamptons international,
Bairstow eves and Bridg-
fords, lost £40m in the six
months to June 30, down
from £243.5m a year earlier.
That was despite sales
falling from £297.9m to


£287.5m, which it blamed
on Brexit jitters and a cool-
ing market. The firm is
recovering from a restruc-
turing four years ago that
sparked profit warnings and
saw it discount shares.
Countrywide claims it is
regaining market share.
nationwide Building Soci-
ety said annual house price
growth is below 1pc for the
eighth month in a row.

SHARES in funeral firm
Dignity fell sharply after it
suspended the dividend
due to a fall in the number
of people dying in the UK.
The company made prof-
its of £14.9m in the first half
of this year, down 61pc on
the same period of 2018.
A 7.4pc decrease in
deaths to 300,000 over the
six-months sent shares

down 12.1pc, or 74.5p, to
540p. Dignity insisted it will
thrive in the longer term
because official forecasts
suggest there will be
700,000 deaths a year
by 2040.
The company warned a
shake-up of its funeral par-
lours in a bid to make them
more profitable will be
‘painstaking’.

BaRRaTT Developments’
boss has sold more than a
third of his shares for £3.3m.
David Thomas sold 500,000
shares for 660p each. he
still has 823,000 Barratt
shares worth £5.3m.
The move came just weeks
after Berkeley founder Tony
Pidgley cut his stake in his
company by a fifth – cash-
ing in £37.2m of shares.
The sales raise concerns

that housing bosses believe
the market has peaked.
and Taylor Wimpey
warned rising costs and ‘flat’
house prices were putting
pressure on its profits.
it reported first half sales
of £1.7bn, almost unchanged
from the previous year, and
said profits fell from £301m
to £299.8m. The firm has
proposed a 2019 dividend of
18.34p per share.

Dignity’s grave situation Barratt boss in sell-off


Page 75

Next bucks


High Street


gloom as


shopping


centre sinks

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