the times | Monday August 3 2020 1GM 35Business
The week ahead
Will they or won’t they? It’s decision
time for Bernard Looney and his
colleagues at BP as the oil major
updates the market tomorrow, with
all eyes on whether it follows the
example of Royal Dutch Shell, its
larger rival, in cutting its dividend.
The announcement comes
alongside what could be one of BP’s
worst set of quarterly results, after a
brutal second quarter in which the
price of Brent crude averaged only
under $30 a barrel — down from
$69 a barrel a year earlier, as global
lockdowns led to an unprecedented
drop in demand for oil. Analysts
expect a $6.8 billion underlying loss
driven by billions of dollars of
exploration cost write-offs after BP
concluded that some of its
discoveries may never be developed
in a greener, post-pandemic world.
Billions of dollars more of one-off
impairment charges — from BP
cutting its long-term view of the oil
price — could lift the loss close to
the $17 billion deficit it reported ten
years ago after the Gulf of Mexico
disaster.
Russ Mould, at AJ Bell, theinvestment platform, said that if BP
kept its 10.5 cents-a-share quarterly
dividend for the year, it would be
the “biggest dividend payer in the
FTSE 100, at around £6.7 billion”.
However, he said that with the
shares yielding more than 10 per
cent, an unchanged dividend might
be a bigger surprise than a cut.Bernard Looney and his team must
decide if BP’s dividend will be cutWorker protests
over joblessnessthursday friday
tomorrow
wednesday
Analysing Diageo’s full-year results
and its subsequent trading is likely
to mean picking through the
lockdowns in its global operations
and working out the impact market
by market on the world’s biggest
spirits company.
A week ago, Diageo’s 56 per cent-
owned Indian subsidiary reported
results for the quarter to the end of
June showing a halving of organic
sales and volumes in the face of tax
rises and lockdowns. United Spirits
accounts for 10 per cent of sales by
the Johnnie Walker and Smirnoff
maker, but only 3 per cent of profits.North America should show signs of
resilience and China is likely to be
on the up, but Africa and Latin
America look weak. In Europe,
rising off-sales will not match lost
on-trade sales.
Consensus forecasts have drifted
lower, but the FTSE 100 company is
expected to maintain the final
dividend at 42.47p.
Interims BP, Centamin, Direct Line,
IWG, Keller, Rotork, Spectris
Finals Diageo
AGM/EGM Babcock International
Trading statements Babcock,
Calisen, EasyjetSegro, the warehouse
developer that has
become Britain’s
biggest listed property
company, is well
placed to benefit from
trends caused by the
coronavirus outbreak.
Its share price, at
966¼p, is above pre-
pandemic levels.
Yet its half-year
results will not be
immune from thevirus. Segro said last
month that it had
collected 93 per cent of
the £37 million of rent
due for its portfolio in
the June quarter, after
adjusting for £9 million
of rent deferrals and
alternative payment
plans. It is exposed to
Heathrow airport and
to some retail and
manufacturing tenants.
There is likely to bea knock-on effect for
valuations, but it still
intends to declare a
2020 interim dividend
of 6.9p per share.
Interims Coca-Cola
HBC, Legal & General,
William Hill, Morgan
Sindall, Page Group,
Ferrexpo, Hastings, IP,
Metro Bank, Segro
AGM/EGM Big Yellow
Trading statement
UDG HealthcareThe Bank of England updates its
economic outlook in the monetary
policy report. Economists expect it
to hold interest rates at 0.1 per cent
and to leave quantitative easing
unchanged at £745 billion amid
signs that growth has fared better
than had been forecast in its May
update. The 14 per cent fall in GDP
this year modelled last time is likely
to be replaced with a shallower
recession. The Bank will update its
unemployment forecast, which it
said would peak at 10 per cent.
INTERIMS Aggreko, Aviva,
Glencore, Convatec, Evraz
Hammerson, Ibstock, ITV,
Mondi, Phoenix, Serco,
Spirent Comms,
Synthomer
AGM/EGM De La
Rue, Investec, Naked
WinesThe American labour market has
been recovering steadily since a
record 20 million jobs were lost in
April. Non-farm payrolls rose by
4.8 million last month. The July
figures are likely to show a smaller
increase of about 2.5 million jobs,
pulling the unemployment rate
down from 11.1 per cent to 10 per
cent. The July figures are likely to
chart another modest improvement,
but they cover the week to
July 12. In the past two
weeks, several American
states have had to re-
impose lockdown measures
amid a resurgence of
coronavirus cases. A jump in
jobless claims is likely to show in
August’s non-farm payroll
figures.
Interims Hikma Pharma,
TP Icap, Rightmove, Standard
Life Aberdeen
Finals Hargreaves Lansdown
Trading statement Synconamarker indicates that more consumers
are optimistic than pessimistic.
A high level of negativity over the
year ahead persists, however, with
82 per cent expecting a recession
within the coming 12 months. As the
Treasury begins to unravel its vast
furlough scheme, under which the state
has picked up the wages of more than
nine million workers, 92 per cent now
expect unemployment to rise over the
next year.
“The shape of the recovery is slowly
coalescing into a V, with the high street
waking from its slumber. But there is
still much to be wary of,” Oliver Rowe,
director of reputation research at You-
Gov, the polling organisation, said.
Kay Neufeld, head of macro-
economics at the CEBR, a think tank,
noted that amid “challenging economic
conditions” consumers were driving a
tentative economic recovery. “Never-
theless, the fact that 82 per cent of
consumers expect the economy to be in
recession within a year underlines that
Britons are aware of the challenge still
ahead of us.”Arm-wrestling in China poses
threat to $32bn American sale
Simon DukeThe mooted takeover of Britain’s most
valuable technology company by an
American rival could be complicated by
feuding at its Chinese subsidiary.
Nvidia, a $200 billion American
semiconductor maker, is in talks with
Softbank over acquiring Arm Holdings,
the Cambridge-based chip designer
that the Japanese technology investor
bought four years ago.
However, the sale, worth more than
$32 billion, could be disrupted by a row
at Arm China, which is threatening the
British company’s position in a market
that accounts for a fifth of its revenues.
Last week employees at Arm China
accused its parent company of trying to
cancel customers’ contracts. The alle-
gations were made in an open letter on
Wechat, the messaging app, and haveescalated the row between Arm and its
subsidiary.
In June, the Cambridge-based com-
pany tried to remove Allen Wu, head of
Arm China, alleging “serious irregular-
ities” and “conflicts of interest”. Mr Wu,
52, an American citizen, has refused to
stand down and the Chinese offshoot
has denied wrongdoing.
The British company owns 49 per
cent of the Chinese venture, with the
remainder in the hands of Chinese in-
vestors, including funds established by
Mr Wu. The Arm China boss retains
the company seal, which gives him the
power to authorise official documents,
to hire and fire staff and to sign cheques.
Arm has tried to recalim it from Mr Wu.
The impasse could take months to
resolve, insiders have said.
Arm and Softbank declined to
comment on the takeover talks.Hinkley Point plant
tion and control system remained one
of the biggest risks ahead for the
project.
Covid-19 clearly remains another big
risk, with EDF warning last week that
productivity at the site and in supply
chain factories were still being affected.
The company said that it had done
what it could to minimise delays, from
bringing in extra buses to transport
workers to sending contractors to
France to bring back parts from a fact-ory laid low by the pandemic. EDF be-
lieves that it can catch up on Covid-19
delays by the end of next year, so long as
operations and its supply chain are
back to normal by the end of 2020.
How confident was Mr Crooks that
the plant would start up in 2025 as
planned? “There’s a long way to go yet.
It is a big, complex project.”
In recent months a new threat has
loomed over Hinkley Point after Con-
servative backbenchers raised concernabout the continued involvement of
CGN amid rising tensions with China.
Mr Crooks said that the project could
continue without the 30 or so CGN
staff working on it, although they
brought “helpful” expertise from lead-
ing construction of the Taishan plant in
China — the first of this reactor type to
enter operation. If they were to leave,
“all I can control is building this power
station. What the government decides
to do or not to do is all speculation.”jfLeft, the
construction site
for the nuclear
reactor in
Somerset.
Casings for the
reactor are being
welded inside
huge cylindrical
temporary
buildings, or
bunkers, right176 hectare (435 acres)
construction site
208,000 tonnes of
steel reinforcement
(enough for 1,900km
railway tracks
stretching from
London to Rome)50,000 tonnes of
structural steel (enough
for five London Eyes)5.6m cubic metres
of ground works
excavated50m man hours of
work on the site
4,000km of
electrical cabling400km of pipework Elizabeth
Tower
96mOne Canada
Square 240mBig Carl
250m5,000
tonne lifting
capacity(50 blue
whales)Looking for a reaction
BudgetHinkley construction Big CarlPower generationOwnership Workers on site66.5% EDF
(France)33.5% CGN
(China)2016 £18bn
2017 £19.6bn + £700m if delayed
by 15 months
2019 £21.5bn - £22.5bn + £700m
if delayed by 15 monthsNow 4,500 in
two shifts5,000 Pre-covid
2,000 Peak
lockdown3.2 gigawatts capacity.
Enough to meet 7% of
UK electricity needs or
power six million homesEDF ENERGY