11th Jun 2020 11:26
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Unilever is once again making an attempt on consolidate its legal structure into a single parent company, two years after being prevented from becoming a solely Dutch entity by dissenting UK shareholders. This time, the Anglo-Dutch consumer goods manufacturer will unify itself under its London-listed firm Unilever PLC, which will be implemented through a cross-border merger between Unilever PLC and Unilever NV. Under the merger, Unilever NV shareholders will receive one new Unilever PLC share in exchange for each Unilever NV share held. The new restructuring plan is subject to shareholder approval, consultations with employee representative bodies and other regulatory consents. Unilever will remain listed in London, Amsterdam, and New York, and the legal restructuring will not affect its operations, staffing levels or the manufacture and supply of products in both countries, the company emphasised. However, the group will be incorporated in the UK alone, with one class of shares and one market capitalisation. The move revisits in reverse a plan by Unilever in 2018 to simplify under a Dutch entity and move its headquarters to Rotterdam from London. That plan was withdrawn after opposition from UK shareholders, as it would have meant the stock dropping out of the FTSE 100 index.
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Anglo-Dutch meal delivery firm Just Eat Takeaway.com agreed to acquire US peer Grubhub for USD7.3 billion to form the world's largest online food delivery company outside of China, they announced Wednesday. The combined company will have a major presence in four key markets – the US, the UK, Germany and the Netherlands – and position the enterprise for greater growth in the US, they said in a news release. Grubhub has been effective in navigating the "fragmented" US market – but "the US remains an under-penetrated market" that is "nowhere near its end-state," the companies said.
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Centrica said it is planning a "significant" restructure, leading to a reduction of around 5,000 roles, to create a simpler, leaner company, focused on delivering for its customers. The energy services provider said it intends to have fewer customer-facing business units, all of which will report directly to the chief executive. "Three management layers will be removed to create a flatter, less bureaucratic organisation which is closer to, and focused on, the customer," Centrica said. As a result, the company said around half of the current 40 senior leadership team members will leave the company by the end of August. As part of this restructuring, Sarwjit Sambhi, chief executive of Centrica Consumer and Richard Hookway, CEO of Centrica Business will step down from the board immediately and will leave the company by the end of July.
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Johnson Matthey said it is planning to implement cost savings, leading to job cuts, amid current market uncertainty and a 38% reduction in profit in its recently-ended financial year. The chemicals company reported pretax profit of GBP305 million for the year to the end of March compared to GBP488 million a year earlier, as it booked GBP140 million of major impairment and restructuring charges. In addition, the company recorded a GBP60 million impact related to Covid-19. Of the Covid-19 hit, around GBP30 million reflected lower demand in Clean Air and the remainder was due to higher trade debtor provisions across the group and delayed sales due to logistical challenges in its other businesses. Johnson Matthey proposed a final dividend of 31.125 pence, half the level of the year before. This took the total dividend for the financial year to 55.625p, down 35% from 85.5p the year prior.
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Ocado said it raised GBP1.01 billion from its placing, retail offer and bond offer. Ocado placed 33.2 million shares at a price of 1,960 pence each, with retail investors subscribing via the PrimaryBid platform for another 362,000 shares at the same price. Together, the fundraise comprised 33.5 million shares, generating gross proceeds of GBP657 million. The placing price represents a 5.7% discount to the company's closing price of 2,079p on Wednesday in London. On top of the placing, Ocado has priced a GBP350 million bond offer of guaranteed senior unsecured convertible bonds due 2027 at 0.75% per annum. The online grocer said the bonds will be converted into shares at GBP26.46 each, representing a 35% premium to the placing price.
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TalkTalk Telecom said it expects its earnings to remain stable going forward after profit decreased in its most recently ended financial year. The pay television, telecommunications, internet access, and mobile network services provider reported pretax profit of GBP131 million for the year to the end of March, down 105 from GBP146 million a year prior, as revenue declined 3.7% to GBP1.57 billion from GBP1.63 billion. London-headquartered TalkTalk explained that its revenue fell mainly due to declining Carrier revenue and lower non-headline mobile virtual network operator revenue, as the company winds down this business. TalkTalk declared a final payout of 1.50 pence a share, taking the total payout to 2.50p, unchanged year-on-year.
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Babcock International reported a loss for financial 2020 as the company recorded "good" growth in its Defence unit but saw "weakness" in its Aviation unit - resulting in over GBP500 million of impairment charges. For the year ended March 31, the FTSE 250-listed defence contractor sunk to a pretax loss of GBP178.2 million compared to a GBP235.2 million profit the year before. Babcock's exceptional items rose sharply to GBP502.9 million from GBP160.8 million. The dramatic rise includes a GBP395 million goodwill impairment in its Aviation unit and GBP143 million in charges from oil and gas write-downs, an anti-trust fine in Italy, and restructuring - all also within the Aviation unit. London-headquartered Babcock's revenue was flat at GBP4.45 billion versus GBP4.47 billion the year before.
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MARKETS
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Shares were lower following sobering comments from US Federal Reserve Chair Jerome Powell on the outlook for the global economic recovery late Wednesday. Unilever and Just Eat Takeaway.com both were down 0.1%. Gold rose sharply as demand for the safe-haven asset increased, amid a risk-off mood. US futures dropped sharply on Thursday as coronavirus cases in the US topped 2 million.
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FTSE 100: down 2.2% at 6,190.77
FTSE 250: down 2.5% at 17.159.68
AIM ALL-SHARE: down 1.6% at 873.50
GBP: down at USD1.2697 (USD1.2760)
EUR: up at USD1.1385 (USD1.1343)
GOLD: up at USD1,733.26 per ounce (USD1,716.28)
OIL (Brent): down at USD40.58 a barrel (USD40.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson is considering reducing the two-metre social-distancing restriction to allow schools in England to reopen fully by September. Labour leader Keir Starmer criticised the government's efforts to get pupils back into class, using an article in The Daily Telegraph to claim "mismanagement" was putting at risk both the welfare and education of children. The newspaper reported Johnson is looking at following World Health Organisation advice and cutting the distance people should remain apart from two metres to one - guidance already followed by countries including France, Denmark and Singapore. At Prime Minister's Questions on Wednesday, he promised to "keep that two-metre rule under constant review".
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The Federal Reserve on Wednesday projected a solid rebound for the US economy next year amid optimism that the worst of the coronavirus pandemic's disruptions has passed. Fed Chair Jerome Powell however cautioned that the outlook remains highly uncertain, and both the central bank and Congress may have to do more to boost the recovery. At the conclusion of its two-day meeting, the Fed's policy-setting Federal Open Markets Committee confirmed it will keep the benchmark interest rate at zero until the recovery is underway. The Fed also released economic projections of FOMC members for the first time since December. Their median forecast is for the economy to contract by 6.5% this year, with unemployment falling to 9.3% by the end of the year from its current 13%.
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The number of confirmed coronavirus infections in the US topped two million on Wednesday, according to a tally by Johns Hopkins University. The pandemic has claimed the lives of more than 112,900 people in the US, which leads the world in the number of confirmed infections with 2,000,464, according to the Baltimore-based school's latest count. Meanwhile, in Latin America, the death toll passed the grim milestone of 70,000 fatalities even as Europe planned to reopen its external borders to foreigners in July. EU member states have the final say on border measures. But Brussels is suggesting a "gradual and partial" reopening of external frontiers to travellers outside the bloc from July 1, diplomatic chief Josep Borrell said Wednesday.
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Eurogroup finance ministers are due to grapple with the economic consequences of the coronavirus pandemic again on Thursday. The 19 finance ministers of the countries that use the euro are examining the effects on Cyprus, Spain and Greece, which were saved years ago during the financial crisis, and which now have to cope with a setback due to the pandemic. The eurozone countries also want to discuss the current gloomy economic forecasts and plans for the economic recovery after the pandemic together with the other EU partners. The videoconference is also expected to deal with one important personnel question: Eurogroup leader Mario Centeno plans to step down from his position and will officially ask for applications to succeed him. His mandate ends on July 13.
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