Primark owner ABF looks to benefit from Brexit
Primark owner Associated British Foods said it should ultimately benefit from Brexit as it predicted rising profits despite a squeeze on its budget fashion chain from the plunging pound. AB Foods saw shares jump 6 per cent higher as it posted a 5 per cent rise in underlying pre-tax profits to £1.07bn for the year to 17 September and said it expected another rise in earnings for the coming year. The group confirmed like-for-like sales at its Primark business dropped 2 per cent in a “challenging” year and repeated warnings that the fall in the value of the pound since the Brexit vote would knock margins at the retailer over the coming year. AB Foods has already pledged not to raise Primark price tags, even though it is in line for a hit from the pound's fall this financial year, as it buys many of its clothes from Asia in US dollars.
Chief executive George Weston said the pound's fall brings “benefits and challenges” to the group. It is hoping for a boost to the value of overseas group earnings, which account for around half of the group's total, while the new financial year results will also be driven higher by a strong performance from its sugar business. AB Foods added it hoped to gain overall from Brexit in spite of uncertainties. It said: “Changes in legislation and trade agreements, particularly in the areas of trade tariffs and UK agricultural policy, have the potential to benefit the group, and the current level of sterling offers UK food producers significant opportunities to replace imported food and build export markets.”
Uber rival closes after raising $250m from investors
A car-hailing service armed with $250m of funding and ambitions to rival Uber said it is closing down less that two years after opening. The company, Karhoo, made a price-comparison app for car-hire services. It was operating in a number of UK cities, and had opened offices in London, New York, Singapore and Tel Aviv. Despite the startup’s ambition, customers never flocked to the service and the company said on Tuesday that it has now run out of money. The quick journey from launch to crash is notable even by the standards of high-risk technology startups. Founded by Daniel Ishag, the company announced before it had released a product that it had attracted $250m from high-profile investors and had plans to raise more than $1bn to take on Uber.
The company’s backers included Eric Daniels, the former chief executive officer of Lloyds Banking Group, who said his investment was “modest". Other reported backers include Nick Gatfield, the former chairman and chief executive of Sony Music Entertainment, Jonathan Feuer of the European private equity firm CVC Capital Partners and David Kowitz, the co-founder of US hedge fund Indus Capital Partners. Many employees were working without pay for six weeks as new management sought a fresh round of investment. “It was clear that the financial situation was pretty dire,” the company said in a statement. “Karhoo was not able to find a backer.”
American Apparel’s UK arm goes into administration
More than 180 jobs are at risk after American Apparel's UK business went into administration. The US fashion chain's 13 UK stores look set to close after falling foul of the tough trading conditions in Britain and America. While the group's US arm is in the process of being sold, its UK and European operations are not part of the deal, according to administrator KPMG. However, it stressed that no redundancies had been made and the stores remain open.
Jim Tucker, joint administrator and restructuring partner at KPMG, said: “The American Apparel group has been experiencing strong retail headwinds, which has culminated in the US parent deciding to stop inventory shipments to the UK. The UK business has experienced similar trading difficulties, resulting in the appointment of administrators. The 13 UK stores are well-stocked and will continue to trade as usual in the lead-up to the peak Christmas trading period. While the UK business is not part of the US sale, a number of the UK stores are in prime high street locations, and we will also aim to sell individual stores following the Christmas trading peak.”
Iran signs major gas deal with France's Total
Iran signed a deal with France's Total on Tuesday to develop a major offshore gas field, its first big contract with a Western energy firm since the lifting of sanctions. Total will lead a consortium also including China National Petroleum Corporation and Iran's Petropars to develop Phase 11 of the South Pars field. The firm's head of Middle East exploration and production, Stephane Michel, said there would be a total investment of $4.8bn (£3.5bn) – with the development and operation of the project due to last 20 years. The companies signed a memorandum of understanding in Tehran on Tuesday, and the final agreement will be signed early next year, Mr Michel said.
It is the first deal of its kind since most international sanctions were lifted in January under a nuclear deal with world powers. It marked Total's return to Iran, four years after the company pulled out when France joined European Union partners in imposing sanctions, including an oil embargo.
Adecco says economic situation uncertain
Adecco said the global economic situation remained uncertain despite appearing to brush off the impact of the Brexit vote, as the world's largest staffing company posted a weaker-than-expected third-quarter profit. Zurich-based Adecco said on Tuesday its earnings before interest, tax and amortisation for the three months ended 30 September fell 10 per cent to €294m, missing the average estimate of 313m in a Reuters poll. Revenue rose 2 per cent to €5.81bn (£5.18bn) from €5.67bn a year earlier, boosted by growth in France, Italy and Britain. Analysts polled by Reuters had on average expected an increase to €5.79bn. September is seen is as a crucial month for the hiring industry, with employers deciding how many new employees they may need after examining their order books on their return from the summer holidays.
Virgin boss to lead gender diversity campaign
A drive to tackle gender inequality in the workplace has been backed by more than 20 companies as the Treasury appoints an official Women in Finance champion. Virgin Money chief executive Jayne-Anne Gadhia is taking on the role in order to push the Women in Finance charter initiative. Almost 100 financial services firms have signed up for the scheme which is aimed at improving gender diversity at senior levels. The 22 new signatories include major organisations such as Zurich Insurance, Allied Irish Bank UK, the Financial Ombudsman Service and the trading arm of BP. They employ more than 20,000 people in the UK and bring the total number of charter signatories to 93.
Punch Taverns says pub reform hurting business
Punch Taverns, the second largest pub operator in Britain by number of pub estates, said pub reforms that came into effect in July are having a negative impact on letting activity in the first half of its new financial year. Publicans tied to Britain's big pub companies, such as Enterprise Inn and Punch Taverns, were given greater powers to challenge rent prices and have a new independent adjudicator to turn to in disputes, under the new pubs code that came into force on 21 July. Punch, which operates around 3,300 pubs across the country, said that the impact was on near-term trading, but expectations for the longer-term growth remain unchanged. Punch said average profit per pub across the entire estate for the full-year was up 4 per cent helped by disposal of non-core pubs.
Gold investment up in safe haven rush
Gold investment rose in the third quarter as political uncertainty around Brexit and the US presidential election sent investors running towards safe haven assets. Total investment demand rose 44 per cent to 336 tonnes in the three months to the end of September compared with the same period last year, the World Gold Council's latest report shows. Total gold demand – which takes jewellery and purchases by central banks into account – fell 10 per cent compared with a year earlier at 993 tonnes. Exchange-traded products (ETP), which track the price of a specific asset like gold and provide exposure without necessarily requiring a physical holding, accounted for a strong proportion of gold investments at 146 tonnes.
Strong yen sees Toyota's quarterly profit sink 36%
Toyota reported on Tuesday that its July-September profit sank 36 per cent as a stronger yen eroded its overseas earnings. Lagging sales also pinched the Japanese automaker's fiscal second quarter profit, which fell to 393.7bn yen (£3bn) from 611.7bn yen (£4.7bn) in the same period the previous year. Quarterly sales slipped nearly 9 per cent to 6.48 trillion yen (£50bn). The manufacturer of the Prius hybrid, Camry sedan and Lexus luxury models expects to sell 10.1m vehicles worldwide through March 2017, including sales by affiliates Hino Motors and Daihatsu.
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