BP shares dive to 25-year low amid climate crisis fears
Shares at BP plc (LON:BP) have plunged to their lowest level since 1995, reaching a mere £2.10 on Wednesday and falling from its £5-a-share value at the start of 2020, just weeks after new CEO Bernard Looney warned of a major restructuring drive amid mounting fears about the role of the oil industry in the climate crisis.
Oil is currently experiencing one of its most tumultuous years on record, after prices sank to their lowest level since 1982 during the coronavirus lockdown due to a worldwide slump in demand.
Its value has since rallied, but WTI crude oil is still sitting significantly lower than its annual high of $63.27 in the first week of January, now a mere $39.71 as of Thursday afternoon.
Similarly, Brent crude stands at $42.24, down from $68.91 at the start of the year.
BP was forced to cut its dividend in August for the first time since the Deepwater Horizon oil spill in the Gulf in 2020, which National Geographic researchers reported was continuing to harm resident wildlife even a decade on.
Market analysts told The Guardian that BP currently faces a double risk due to its “potentially expensive and financially risky transition into low-carbon energy” along with the “uncertain outlook” for the oil industry as a whole.
CEO Looney announced in February that BP would be committing to a net-zero carbon emission scheme by 2050, but with its share price consistently low over the past few months and numerous countries considering secondary lockdowns, investors have been understandably apprehensive.
BP’s share price is down 4.47% to 203.15p as of 13:15 15/10/20, with a dividend yield of 0.14%.
AO World shares surge 20% thanks to strong UK & German trading
AO World shares (LON: AO) jumped over 20% as sales surged by 57% in the six months till the end of September.
The European online electrical retailer revenue in Germany increase by 87% whilst UK revenue grew by 54%.
AO World said they saw a significant shift to online sales over the course of the pandemic. Most brick-and-mortar stores reopened in July but the group saw continued from Q1 throughout Q2.
John Roberts, the chief executive, said: “The last six months of trading have been like no other during my two decades in the business. AO was in good shape coming into this financial year and the global, structural shift in customer behaviour to online, accelerated by Covid, emphasised our strengths.
“The progress that we’ve made in Germany gives us the platform and confidence to grow. We remain excited by the opportunities ahead and ambitious to realise them.
“Whilst we remain mindful of the uncertain economic climate caused by the pandemic and Brexit, we are on track with plans and well set for our biggest ever peak trading period in the UK and Germany.”
The Group will announce its interim results for the six months ended 30 September 2020 on 24 November.
AO World shares (LON: AO) are trading +21.17% at 280,50 (1222GMT).
Countryside Properties shares down 5% after disrupted year
Countryside Properties shares (LON: CSP) fell almost 5% on Thursday after house completions fell from 5,733 to 4,053.
The property group released a trading update for the period between 1 October 2019 to 30 September 2020, revealing an adjusted operating profit of £54m once final numbers are calculated.
Due to the disruption caused by the pandemic, the number of houses was completed significantly reduced. The number of “affordable” homes built fell from 2,179 in 2019 to 1,691, whilst private homes delivered fell to 1,454 from 2,177 a year earlier.
Despite the slowing down over the past year, trading has picked up thanks to a number of government initiatives. The total forward order book at the end of September rose by 17% to £1.4bn – up from £1.2bn.
Iain McPherson, the Countryside Properties chief executive, commented: “We have seen significant disruption to our business this year as a result of COVID-19 and I would like to thank all our staff for the way they have adapted to new ways of working in these unprecedented times.
“We have been pleased by robust customer demand throughout the second half and our mixed tenure model continues to prove resilient, positioning us well in the current market. We are focused on delivering our enhanced growth plan, building on our strong pipeline of work and our relationships to further expand our geographical footprint. We will continue to work with our partners to deliver sustainable communities across the country.”
The property group remains positive by the improving performance seen in the second half of the year. Whilst the broader economic outlook is still very much uncertain, Countryside Properties ensure they are well positioned for the current financial year thanks to a strong forward order book.
Countryside Properties shares (LON: CSP) are currently trading 4.45% down at 330,60 (1158GMT).
Distil shares soar 12% as group swings to profit
Distil shares (LON: DIS) surged 12% on Thursday morning as the group swung to a profit in the six months ending 30 September 2020.
The owner of premium drinks brands including RedLeg Spiced Rum revealed a 128% increase in revenue from £824,000 to £1.9m.
Pre-tax profit during that period grew from a £1,000 loss to £154,000.
Distil saw exports surge to 165% and UK sales increase by 121%.
“Our team responded well to both demand volatility and supply chain challenges during the first six months of this pandemic. We focused on providing customer support, and increased marketing investment together with greater flexibility,” said Don Goulding, the executive chairman.
“This has allowed us to adapt rapidly to market changes, customer needs, and ensure continuity of product supply throughout. Increased headcount and investment in new product development enabled the launch of new lines with more to follow.
“Lockdowns and imposed restrictions, particularly on the hospitality sector and international travel, means we have seen a significant short term shift in product mix and source of business away from the On Trade and Travel Retail toward Grocery and online retail channels as consumers stayed home.
“While the nature and speed of market recovery is uncertain we will remain responsive, flexible and efficient to ensure we exit this year in a stronger position,” he added.
Distil said that they expect to emerge from 2020 in a stronger position, however amid the travel restrictions and other uncertainties, the group will not be providing market guidance for the full financial year until March 2021.
Distil shares (LON: DIS) are trading +10.21% at 1,38 (1014GMT).
FTSE 100 falls as Europe implements tighter restrictions
The FTSE 100 opened 1.6% soon after Thursday’s opening bell as Europe braces itself for tighter Coronavirus restrictions.
The blue-chip index fell as concerns that London would have tighter restrictions introduced as soon as this week.
Across Europe, Paris, Amsterdam, and Berlin have introduced curfews in a bid to fight rising infection rates.
Northern Ireland is also under a stricter lockdown as pubs and restaurants shut.
Connor Campbell, from Spreadex, commented on this mornings fall: “A series of tougher covid-19 restrictions across Europe sent the markets spiralling on Thursday, one of investors’ regular reminders that, however much they try and deny it, the pandemic is still very much a thing.
“It was a sharp and loud wake-up call, the kind the market often seems to sleep through, but one that was hard to ignore this Thursday. The DAX tanked 2.1%., or 280 points, as it dropped to a 2-week low of 12,750. The CAC was a smidge better, though that still translated to a 1.6% decline.
“There was no escaping for the FTSE 100, either. Fearful that such restrictions could well be on their way – especially since there is more and more support, if outside the Cabinet, for a 2 to 3-week ‘circuit breaker’ – the UK index sank 2%, leaving it just above 5820 for the first time in a month and a half,” Campbell added.
Asian shares also fell overnight as investors shared concerns of rising infection rates. The Hang Seng in Hong Kong fell by 1.79%. Shanghai’s composite fell 0.26% whilst Japan’s Nikkei 225 also slipped 0.51%. On more positive news, traders expressed optimism over a Brexit a trade deal being agreed on between the UK and EU. Negotiations are likely to continue until the end of the year.Heineken fined £2m by PCA
Heineken’s pubs business has been fined £2m for repeatedly breached the legally binding Pubs Code over nearly three years.
Star Pubs and Bars, which operates the pub estate business of Heineken in the UK, had forcing pub tenants to sell 100% Heineken beers and ciders.
Pubs Code adjudicator Fiona Dickie said: “The report of my investigation is a game changer. It demonstrates that the regulator can and will act robustly to protect the rights that Parliament has given to tied tenants.
“I will be holding discussions with all the companies I regulate following my findings about how they will ensure they are Code compliant. My message is that if anyone previously had any doubts about my resolution to act when I find breaches, they can have no doubt now.”
The Pubs Code Adjudicator found a total of 12 repeat breaches. “It failed to heed statutory advice, the PCA’s regulatory engagement and learnings from arbitration awards. It did not engage frankly and transparently with its tenants or meet the standards required of a regulated business when engaging with the PCA,” said Dickie. “Where it did change its approach, the efforts it made to comply were for the most part inadequate and not credible.” “The company must change its mindset and become proactive in its approach to compliance.” The Pubs Code Adjudicator has given the pub group six weeks to provide a detailed response to how it will implement the suggested recommendations.Lagarde considers using environmental risk to guide ECB bond buying
ECB President, Christine Lagarde, announced on Wednesday evening that the central bank would consider dropping the neutrality principle it uses to guide its corporate bond purchases.
The reason for this change of heart is that the neutrality principle takes no account of climate change and environmental risk in the bond buying process. The approach currently in place has been around since 2016, and aims to avoid misrepresentation of securities prices, by only purchasing them in proportion to the overall eligible market.
This approach, however, has been met by resistance from sustainability advocates, who state that the ECB bond purchasing principle was biased towards high-carbon and environmentally-degrading companies. These businesses are normally in sectors such as oil, gas, utilities and airlines, and are over-represented in the ECB’s bond portfolio, simply because they issue a higher volume of bond.
Fortunately for sustainable businesses, President Lagarde appeared to share their mindset in a recent online video, where she said: “In the face of what I call the market failures, it is a question that we have to ask ourselves as to whether market neutrality should be the actual principle that drives our monetary policy portfolio management.”
“I’m not passing judgment on the fact that it should no longer be so, but it warrants the question and this is something we are going to do as part of our strategy review.”
She told viewers of the event, organised by the UN Environment Programme Finance Initiative, that: “more needs to be done because it is probably the case that financial markets by themselves are not actually measuring the risk properly and have not priced it in”.
Lagarde also said that central bankers “will have to ask themselves the question as to whether or not we’re not taking excessive risk by simply trusting mechanisms that have not priced in the massive risk that is out there”.
She did also note that no formal decision had been made on what would be a seismic change of tac for Europe’s central bank. She did also say, though, that potential changes would be discussed as part of the ECB strategy review, which will likely be wrapped up by summer next year.
As part of its €3.4 billion asset purchase programme, the ECB currently owns more than €236 billion in corporate bonds. However, Positive Money reported that more than 63% of the bank’s corporate bonds were financing carbon-intensive sectors last year.
Further, Lagarde will have to face off opposition from council members, if she hopes to bring her proposals to fruition. Indeed, German central bank boss, Jens Weidmann, has argued in favour of neutrality, stating that the ECB should leave national governments to make decisions on their own climate change policies.
However, her considerations are receiving support. Not only are environmental campaigners applauding Lagarde’s suggestions, but the executive director of Positive Money, Stanislas Jourdan, sated that: “We obviously welcome this reflection which we have called for since several years ago.”
Similarly, ECB executive board member, Isabel Schnabel, went even further in a speech made last month, suggesting that the central bank should exclude certain bonds altogether, in order to avoid financing businesses that conflict with the EU’s 2050 carbon neutrality target.
Test and Trace consultants paid £7k per day in public funds
According to documents seen by Sky News, some consulting executives operating the government’s Test and Trace system are being paid a rate of £7,360 per day – equivalent to more than 1.7 million a year in taxpayer money.
The executives receiving this pay are part of the Boston Consulting Group, with the UK government dishing out £10 million for 40 BCG staff to work on the Test and Trace system between April and August.
While the government employed the consultants for four months, BCG were charging day rates, rather than a set fee for a medium-term contract. The company added that the fees it charged were standard day rates for public sector work, and below what they’d charge private sector clients, though still ranging from £2,400, to £7,360 per day for senior staff.
Even with the 10-15% discount BCG said it was offering the Department of Health and Social Care, the upper fee rate is still equivalent to an annual salary exceeding £1.7 million (with weekends and 28 days unpaid holiday included).
This development follows several questions being raised about the bang for buck taxpayers are receiving with this high-cost and seemingly error-ridden system. It isn’t just infuriatingly ad hoc, it’s also covertly lining the pockets of overpaid consultants, who are using Excel data logging software costing under £100.
Also reacting to the cost of the dubious Test and Trace system, Labour MP, Toby Perkins, spoke in Commons on Wednesday afternoon: “Occassionally you get a story that seems, in itself, to demonstrate a much wider point,” “And so it was today with the scoop revealed by Ed Conway of Sky News that the government is paying, on a daily rate, £7,360 per day to the management consultants at Boston Consulting Group, who are in charge of test and trace.” “Equivalent to a £1.5m salary to individuals as a day rate, to preside over this shambolic sight that is letting down all the people in my constituency and in so many others.” Perkins called for “dedicated public servants” to be brought in, to help run the Test and Trace system at lower cost. “You won’t find dedicated public servants being paid £7,500 per day, you won’t find them on £1.5m, but what you will find is a basic competence, a knowledge of their area, a desire to make sure that the systems work before they are implemented,” he said. “And that is what we need right now in our system.” Referring to his career in the sales industry, he added: “I never came across a customer nearly as naive as what we have with the government.” “I just wish that at some point in my life I could have come across a customer with as much money as the government has, as willing to be so easily impressed as this government is, and as willing to give it to people and then defend the people who let them down as a supplier,” The bottom line is we’re currently paying over the odds for software that, while being rolled out on a huge scale, isn’t actually performing especially sophisticated tasks by modern standards. Not only have other countries managed it, but we need to stop describing it as the ‘NHS Test and Trace app’. Neither BCG nor Deloitte consultants work for the NHS, and linking their efforts to the services the NHS provides, is a great disservice.Simply a scandal. With our money. Governments have always been cavalier with our money when it comes to consultants, especially in Health. But this must be something of a record. Especially for a testing system that doesn’t even work. https://t.co/pJyMaRaBbB
— Andrew Neil (@afneil) October 14, 2020
Asos reports +329% profits – so why did shares fall 10%?
Asos shares (LON: ASC) are trading 9% lower despite the 329% surge in pre-tax profits amid the pandemic.
The online fashion retailer added a further 3.1 million customers, taking the total to 23.4 million.
Sales as Asos surged to £3.3bn, increasing by 19% in the year to 31 August thanks to the demand for skincare products and leisurewear.
“The normal pattern of social events is not going to resume in the short term so whilst we have confidence in our ability to continue growing our market share globally, we are cognisant of the economic impact this crisis is having on our 20-something customers and the pressure on their disposable incomes,” said Asos in a trading update.
Despite the strong trading over the past year, Asos shares fell almost 10% over Wednesday as investors worried about tougher trading conditions over the rest of the year.
Investment analyst at Hargreaves Lansdown, Susannah Streeter, said: “A depressed economic outlook may push down demand to refresh wardrobes.
“With venues forced to close at 10pm and the Christmas party season cancelled, profits from party wear will be thin. Job prospects are uncertain for its core group of customers in their 20s and so the company will have to be very choosy about the ranges and prices it offers.”
The group’s chief executive, Nick Beighton, commented: “After a record first half which saw us make progress in addressing the performance issues of the previous financial year, the second half will always be defined by our response to Covid-19. I am proud of the way ASOS met this challenge head on, putting our duty to act as a responsible business at the heart of our approach and working to balance our performance in that context. As well as protecting staff, suppliers and customers, we’ve driven efficiency and have emerged a stronger, more resilient and agile business whilst delivering strong profit and cash generation.
“I am pleased by the improvements we have made this year but there is still more for us to do to continue our progress. Whilst life for our 20-something customers is unlikely to return to normal for quite some time, ASOS will continue to engage, respond and adapt as one of the few truly global leaders in online fashion retail,” he added.
Asos shares (LON: ASC) are trading -10.22% at 4.828,40 (1613GMT).
Gourmet Burger Kitchen to close 26 restaurants
Gourmet Burger Kitchen will be axing 26 restaurants and 326 jobs in an attempt to save the wider workforce.
As reported by Sky News, the chain will continue to operate in 35 sites with the remaining 669 jobs, however, 26 restaurants will be sold to Ranjit Boparan.
Earlier this year, Boparan rescued the Carluccio’s chain and also owns Giraffe, Ed’s Easy Diner, and Fishworks.
Deloitte is handling the administration process for Gourmet Burger Kitchen and said: “As with a number of dining businesses, the broader challenges facing ‘bricks and mortar’ operators, combined with the effect of the lockdown, resulted in a deterioration in financial performance and a material funding requirement.”
The news comes as much of the UK has been forced into a second lockdown – risking many jobs in the hospitality sector.
Since March, companies in the casual dining sector including Wagamama and Prezzo have resorted to insolvency processes, auctions, or emergency fundraisings.