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Seven Days: 7 February 2020

A round-up of the biggest business stories of the past week
February 6, 2020

Petrol and diesel vehicle ban

No sales after 2035

The UK is bringing forward the end of the sale of new petrol and diesel vehicles to 2035, instead of 2040. This was announced as part of the launch of the UK-hosted United Nations (UN) climate summit. Transport Secretary Grant Shapps said “this government’s £1.5bn strategy to make owning an electric vehicle as easy as possible is working” and “we want to go further than ever before”. Meanwhile, a group of aviation companies called ‘Sustainable Aviation’ has committed to achieve net zero carbon emissions by 2050.

 

UK new car market slows

Down 7.3 per cent

UK new car registrations fell 7.3 per cent in January, after declines in private and fleet demand – down by 13.9 per cent and 2.2 per cent, respectively, according to the Society of Motor Manufacturers and Traders. Registrations of battery electric cars continue to grow. SMMT chief executive Mike Hawes noted that “consumer confidence is not returning to the market and will not be helped by government’s decision to add further confusion and instability by moving the goalposts on the end of sale of internal combustion engine cars”. He added, “we want to deliver air quality and environmental improvements now but need a strong market to do so”.

 

Jupiter pushes Sirius to consider alternatives

A top shareholder

One of Sirius Minerals’ (SXX) largest shareholders has come out against the Anglo American (AAL) takeover deal, saying that the Yorkshire company should “pursue any alternative options”. The focus of this statement by Jupiter Asset Management’s Steve Davies is the £519m loan offer from a group of investors that Sirius dismissed as unfeasible. “We would like to be able to consider a standalone financing proposal that would enable shareholders to remain invested in the project,” Mr Davies said.

 

Construction downturn bottoming

PMI data

The IHS Markit/CIPS UK Construction Purchasing Managers Index (PMI) rebounded from 44.4 in December to 48.4 in January. A reading of 50 marks the ‘no change’ threshold, while anything below 50 signifies a contraction. Still, this signalled the slowest fall in overall construction output for eight months. Housebuilding was the best-performing area of construction activity, with output dipping slightly last month. Residential work fell at its slowest pace since May 2019. Commercial work dropped at the slowest pace since the beginning of 2019, benefiting from lessening political uncertainty.

 

UK plc profits fall

Share Centre analysis

UK companies’ profits fell by 10.4 per cent during the fourth quarter of 2019, according to the most recent ‘Profit Watch UK’ analysis from The Share Centre. This marked the third quarter in a row in which more than half of companies reported lower profits. Revenues also fell, for the first time in over three years – down by 0.6 per cent year on year. Market consensus for 2020 profit growth has fallen, with analysts expecting median profit growth of 7.5 per cent, down from 8.6 per cent three months ago. The report posits that this is possibly still too high.

 

CMA serves initial enforcement order

Takeaway.com and Just Eat

The Competition and Markets Authority (CMA), the regulator reviewing the merger of Just Eat with Takeaway.com, has issued an initial enforcement order. This means that the businesses must not integrate, and remain separate until its decision has been made. The CMA's investigation was initially announced on 23 January, delaying the deal's completion by a week. Just Eat suspended trading in its shares on 3 February. Shares in Just Eat Takeaway.com (JET) commenced trading on the same day.

 

M&C and FCA

Investigation started

Beleaguered advertising company M&C Saatchi (SAA) has been notified by the Financial Conduct Authority (FCA) that it has started an investigation following the accounting adjustments announced by the company – most recently on 4 December – and after the completion of the independent forensic review commissioned by M&C’s management. The group says that it will cooperate fully with the FCA. Its shares closed the day (31 January) down by around 9 per cent – and are now down by more than two-thirds over the past year.