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Seven days: 22 November 2019

A round-up of the biggest business stories of the past week
November 21, 2019 & Lauren Almeida

Tata Steel cuts jobs

Tata Steel will cut 3,000 jobs across its European operations as the company deals with severe market headwinds. The group said that it expects about two-thirds of the cuts to be office-based roles. The company is aiming for positive cash flow by the end of its financial year in March 2021. Henrik Adam, who became chief executive of Tata Steel in Europe earlier this year, said: “Today we are highlighting important proposals towards building a financially strong and sustainable European business.” In July, a merger between Tata and German conglomerate Thyssenkrupp was blocked by Brussels on competition grounds.

 

Tesla’s big battery gets bigger

50 per cent increase in 2020

French renewables company Neoen said on Tuesday that it had contracted Tesla to expand capacity at its Hornsdale Power Reserve in South Australia, also known as the world’s largest battery. The lithium-ion battery will be increased by 50 per cent to 150 megawatts. The expansion is expected to be completed in the first half of 2020. The battery was built in 2017 in 100 days after Tesla founder Elon Musk bet that he could fix the Australian energy crisis. Dan van Holst Pellekaan, South Australian minister for Energy and Mining, said the increased capacity would reduce spot price volatility and protect the network.

 

PM drops corporation tax cut

Would remain at 19 per cent 

Prime Minister Boris Johnson said that he is ‘postponing’ the Tory proposal to cut corporation tax in order to retain £6bn for spending on public services. Mr Johnson told the annual conference at the CBI business lobby group that corporation tax would not fall to 17 per cent next year as the government had initially stated. The current rate is 19 per cent. The corporation tax rate is 30 per cent in Germany and 29 per cent in Belgium. The prime minister said that he would have to disappoint businesses “because the NHS is the nation’s priority and because we believe emphatically in fiscal prudence”.

 

Coty bets on Kylie

$600m stake in Kylie Cosmetics

Coty, the American beauty giant, is buying a controlling stake in Kylie Jenner’s cosmetics company for $600m. JAB Holdings, which owns Coty, will hold a 61 per cent stake in Kylie Cosmetics once the deal closes later this year. Ms Jenner, the youngest sister in the Kardashian-Jenner clan, will sell a chunk of her four-year old company at a rough valuation of $1.2bn. Coty expects the move to boost its equity per share after one year.  The company recently put its haircare and professional beauty businesses up for sale, which account for almost a third of its $8.6bn annual revenue. 

 

Aston Martin SUV arrives

New DBX is £158,000

Aston Martin has launched its first sports utility vehicle, the DBX, in a move designed to ease its financial difficulties since it went public last year. The carmaker hopes that the £158,000 SUV will attract buyers outside of the UK, especially in China. The company’s share price has fallen 76 per cent since October 2018, as it grapples with a slowdown in the automotive market. Chief executive Andy Palmer said that the SUV represents “the promised expansion” of Aston Martin’s portfolio and the beginning of production at its second manufacturing plant.

Taylor Wimpey CEO sells down

Personal finance

Taylor Wimpey (TW.) chief executive Pete Redfern sold almost £4m in shares in the housebuilder, just one week after the group revealed that full-year operating margins would be slightly lower than guided to at the half-year stage in July. A spokesperson for the housebuilder said the sale was part of Mr Redfern’s “personal financial planning” and that he retained shares equivalent to three times his annual salary, above a minimum requirement for a multiple of two. There are no plans for Mr Redfern to leave the business, the spokesperson added.

 

Labour plans shake-up

Party cautioned

John McDonnell, Labour’s shadow chancellor, set out a series of plans on Tuesday to reform British corporate governance and company law. Among the proposals, Mr McDonnell suggested that companies that do not take “adequate steps” to tackle climate change would be de-listed from the London Stock Exchange. The British Chambers of Commerce said that it would be “misguided to impose a rigid, one-size fits all approach”. It cautioned that “extensive government interference” could deter investors. Mr McDonnell also confirmed that Labour would continue with its plan to seize 10 per cent of the shares of companies with more than 250 staff in the UK and hand them over to staff. 

 

Hong Kong’s traders held their nerve as clashes between anti-government protesters and police raged in the streets, as the Hang Seng index climbed several percentage points this week in a sign that markets are unperturbed by the threat of an escalation in unrest. Bullish traders may be reassured by the imminent secondary listing of Chinese e-commerce giant Alibaba on the Hong Kong exchange later this month. Protests began in June over the introduction of the Fugitive Offenders amendment bill by the Hong Kong government.