Demand gap
BAE Systems (BA.) announced almost 2,000 aerospace and maritime job losses in the UK, as part of a business restructuring in response to increased competition and an order gap. Chief executive Charles Woodburn said in a statement that it was attempting to align its capacity more closely with near-term demand and enhance its competitive position to win new business. Country-based business units will also be abolished in favour of four divisions – air, land, maritime and applied intelligence – reporting directly to Mr Woodburn. Management also acknowledged that rates of production of its Typhoon and Hawk jets would slow to take into the account the uncertainty of the level of future orders.
BNP out of shale
Withdraws new financing
BNP Paribas will cease financing new shale or tar sands projects and will no longer do business with companies focused mainly on the exploration, production, distribution, marketing or trading of oil and gas from these sources. However, it will still work with energy companies “undertaking considerable efforts to re-orient their business model”. It has also ruled out financing oil and gas exploration or production projects in the Arctic region. Chief executive Jean-Laurent Bonnafe said the rules were designed to support “the transition to a more sustainable world”. However, BNP has limited exposure to the North American shale industry, with the real impact coming if other banks decide to follow suit.
Nuclear fallout
NAO criticisms
The National Audit Office (NAO) has accused the Nuclear Decommissioning Authority of “fundamental failures” in its handling of a contract to dismantle 12 Magnox nuclear sites. In March the government announced that the contract – awarded to Cavendish Fluor Partnership – would be terminated nine years earlier than planned, in 2019, due to higher-than-expected costs. The public spending watchdog estimated the cost to the taxpayer of winding the contract up early was around £122m and said officials at the business department had been slow to raise concerns with ministers.
No let-up in Reits
Targeting 6.5 per cent
Yet another Reit is planning to come to the London market. M7 Multi-Let Reit plans to raise £300m to invest in a portfolio of UK regional multi-let industrial and office space. Management has already agreed to acquire 93 assets across two portfolios for £120m. It has also identified a pipeline of around 100 assets worth more than £400m. It aims to deploy all the capital raised within nine months of admission to the premium segment of the main market. With an issue price of 100p a share, management is targeting quarterly dividends equating to an annual yield of 6.5 per cent. The offer is open to retail investors via intermediaries and closes on 7 November.
Capita's saviour?
New CEO appointed
In the latest of many updates on its recovery strategy following a series of profit warnings, Capita (CPI) has named its new chief executive. Former Amec Foster Wheeler boss Jonathan Lewis will take over from finance director Nick Greatorex, who has been acting as interim chief executive at the support services group, in December. The shares tanked in October last year when management issued a profit warning for the full year, caused by problems at its IT enterprise services division and referendum-induced contract delays. Shares in the troubled group rose 3 per cent on the announcement.
Co-Op goes convenience
Nisa backs takeover
The Co-Operative’s bid for Nisa moved a step closer to becoming a reality after the convenience store’s board unanimously recommended the offer. Members will vote on the offer in November. Under the terms of the £143m deal Nisa members would receive an equal initial payment, a deferred share payment payable over three years, as well as additional rebates payable over four years. The Co-Op said it intends to maintain Nisa as a standalone brand, but will give members the opportunity to apply to become a Co-Op franchise. The deal echoes rival Tesco’s (TSCO) attempt to build a presence in the convenience grocery market, via its bid for Londis and Budgens-owner Booker (BOK).
UK growth cut
Cited inflation
The International Monetary Fund (IMF) confirmed a cut to its growth forecast for the UK to below the average growth rate in other advanced economies. In its latest global outlook report, the IMF forecast an increase in UK economic output of 1.7 per cent this year, down from 1.8 per cent in 2016. That’s against an average 2.2 per cent forecast for developed economies – which includes Japan, Germany and the US – following a 0.2 per cent upgrade. In April, the fund had predicted output growth of 2 per cent for the UK. It cited weaker private consumption as price inflation subdued household income.
Risers and fallers
| Millennium & Copthorne Hotels | 27.16 |
| Allied Minds | 25.93 |
| Lonmin | 12.46 |
| Telecom Plus | 10.78 |
| Xp Power | 10.62 |
| Petra Diamonds | -10 |
| Ferrexpo | -9.3 |
| Pets At Home | -9.25 |
| Mccoll’s Retail | -9.03 |
| IP Group | -8.63 |
Hurricane Harvey’s effect on the Gulf of Mexico’s oil industry was laid bare this week, as the total US rig count fell month on month for the first time in 2017. Hardest hit was Texas, where active onshore rigs fell by 4 per cent, while three of the 11 rigs located in inland waters came offline, according to data compiled by S&P. The stall in rig expansion and US output has been cited as the driver of higher oil prices in recent weeks, with Brent crude remaining above $55 a barrel since the second week of September. However, S&P analyst Trey Cowan said he “would not be surprised” if this month’s count returned to levels seen in August, “as producers play a little catch-up”.
