US attacks Hammond’s digital tax proposal
Philip Hammond’s proposals for a new digital sales tax has faced a backlash from the US.
Political leaders and business groups from the US, including Facebook (NASDAQ: FB) and Google, have asked for more clarity and said the tax could hurt US-UK trade.
Representative Kevin Brady from Texas said in a statement: “If the United Kingdom or other countries proceed, that will prompt a review of our US tax and regulatory approach to determine what actions are appropriate to ensure a level playing field in global markets.”
A UK Treasury spokesman responded to Brady and said: “As the chancellor said, this tax is a proportionate and targeted interim response that reflects the changing global economy, and how digital businesses derive value from users – it’s not targeted at any country and seeks to ensure the tax system is fair.”
Hammond’s proposals were shared in the latest Budget on Monday. He hopes to introduce a tax on tech companies that operate and make a large profit in the UK but pay limited tax.
“The UK has been leading attempts to deliver international corporate tax reform for the digital age,” Hammond said on Monday. “A new global agreement is the best long-term solution. But progress is painfully slow. We cannot simply talk forever. So we will now introduce a UK digital services tax.”
“It is only right that these global giants, with profitable businesses in the UK, pay their fair share towards supporting our public services.”
The proposed tax will take 2% of UK revenue from companies with over £500 million of global income in three sectors: search engines, social networking, and online marketplaces.
Channel 4 picks Leeds for new HQ
Channel 4 has announced plans to move a new headquarters to Leeds.
The broadcaster picked the new national HQ in Leeds over Birmingham, Greater Manchester and Cardiff.
The channel will move approximately 200 of the 800 staff in London to the new location, whilst Bristol and Glasgow will become new ‘creative hubs’.
Culture Secretary Jeremy Wright said: “The Government made clear that Channel 4 needed to do more to increase its presence in the regions to help better reflect and provide for UK audiences outside of London.”
“Congratulations to Leeds, Bristol and Glasgow, and I look forward to Channel 4 taking further steps to increase its impact around the UK in the years ahead.”
First Minister Nicola Sturgeon has welcomed the news of Channel 4’s new creative hub in Glasgow, which will be home to 50 employees.
Sturgeon said it was “fantastic news for Scotland’s screen sector and creative industries”.
“As home to one of the most vibrant cultural scenes in Scotland, BBC Scotland, STV and more than 120 production companies – I am pleased Channel 4 has recognised Glasgow is the ideal location for one of their new hubs.”
Alex Mahon, who is the chief executive of Channel 4, said: “We undertook a rigorous process over the last seven months and the high calibre of all the pitches meant those were incredibly difficult decisions to make.”
“However, I know that Leeds, Bristol and Glasgow will best deliver our objectives to grow the production sector across the UK, build the pipeline of creative talent outside London and support our increased investment in programming produced across the nations and regions.”
“Glasgow has a well-established production sector across multiple genres, and locating a creative hub in the city will give Channel 4 the opportunity to tap into the rich cultural diversity of Scotland and also allow us to exploit the city’s strong connectivity with Belfast and the Northern Ireland production sector,” he added.
Jaguar Land Rover employees fear job cuts after £90m loss
After posting a £90 million loss, employees at Jaguar Land Rover are facing potential job cuts.
Britain’s biggest car manufacturer now plans to reduce £2.5 billion worth of costs.
No decisions about employment have been made yet.
Jaguar Land Rover slipped into the red following falling sales in China and Europe. Sales fell 13.2% and reported revenues of £5.6 billion, down 10.9% year-on-year.
Ralf Speth, Jaguar’s Land Rover Chief Executive, said on Wednesday:
“In the latest quarterly period, we continued to see more challenging market conditions. Our results were undermined by slowing demand in China, along with continued uncertainty in Europe over diesel, Brexit and the WLTP changeover.”
“Given these challenges, Jaguar Land Rover has launched far-reaching programmes to deliver cost and cashflow improvements. Together with our ongoing product offensive and calibrated investment plans, these efforts will lay the foundations for long-term sustainable, profitable growth.”
Unions have been briefed on Jaguar Land Rover’s cost-cutting announcement.
“Unite will be pressing JLR for further detail on its plans in addition to commitments on future models to be made here in the UK to ensure the carmaker remains a powerhouse of UK manufacturing and source for decent, well-paid jobs,” said Des Quinn, national officer at the Unite union.
The car manufacturer announced 1,000 job losses in April after the group reported a slump in sales due to “headwinds” from Brexit and diesel uncertainty.
The Castle Bromwich plant will also be moving to a three-day week.
In September, Jaguar Land Rover warned that “tens of thousands” of jobs may be at risk if the government fails to reach a Brexit deal.
The group has begun a freeze on recruitment and non-essential travel.
General Motors reports better-than-expected earnings
General Motors has reported better-than-expected earnings in the third quarter, sending shares up 6.3% in morning trading.
The car manufacturer said on Wednesday that it sold fewer cars during the third quarter but sole them at higher prices.
Net profit for the group was $2.53 billion, a significant increase than the $3 billion loss for the same period last year.
Analysts expected revenues of $34.85 billion. General Motors achieved revenue of $35.79 billion.
The CFO, Dhivya Suryadevara, said: “Our disciplined approach to the U.S. market, combined with strength in China and further growth of GM Financial, drove a very strong quarter.”
“We will continue to take actions to mitigate headwinds including foreign currency volatility and commodity costs.”
Suryadevara added that the group also expects fourth-quarter performance to be strong.
Sales dropped by 14.7% from this period last year but General Motors added an average of about $800 per vehicle. Sales of the Cadillac broke sales in China.
Jeff Schuster, the president of Americas operations and global vehicle forecasts at LMC Automotive, said: “Affordability may be the canary in the coal mine for the level of auto sales as we close out 2018 and begin to look at 2019. Transaction prices are still edging higher.”
“This is a combination that could cause consumers to be squeezed out of the new-vehicle market, putting pressure on volume even if other fundamentals are favourable.”
Shares in General Motors have fallen nearly 19% since the start of 2018.
Shares in the group (NYSE: GM) are trading +8.14% at 36,27 (1435GMT).
L’Oreal shares soar amid strong Q3 growth
L’Oreal shares soared on Wednesday after the cosmetics giant posted strong third quarter results.
Last night the French cosmetics firm posted revenues of €6.47 billion (£5.75 billion) in the July to September period, up 6.2% from the year before, and 7.5% on a like-for-like basis.
L’Oreal attributed the strong performance to growth in Asia in particular, with sales up 25.8% across the region.
This was largely due to strong demand for products within its luxury division, with brands such as Lancôme, Yves Saint Laurent and Giorgio Armani bolstering sales by 15.6%
Chief executive Jean-Paul Agon said: “After an acceleration in the third quarter, with the highest quarterly growth rate for 10 years, L’Oréal’s sales have shown strong growth over the first nine months of the year.”
The global cosmetics industry continues to expand at an exponential rate, with a raft of beauty bloggers, new beauty brands and trends pushing up demand.
L’Oreal was founded over 100 years ago, and it has now grown to become the world’s largest cosmetics company.
Its brands include Maybelline, Kérastase, Essie, Urban Decay and Vichy.
The company is currently traded on the French security market, the Euronext Paris, formerly known as the Paris Bourse.
Shares in L’Oreal (EPA:OR) are currently trading +7.14% as of 14.16PM (GMT).
Half of Evans Cycles stores to close, 440 jobs at risk
Sports Direct (LON: SPD) has bought Evans Cycles out of administration, in a deal which will close half of the retailer’s stores.
Mike Ashley, the Sports Direct boss, also bought House of Fraser earlier this year after the department store fell into administration.
“We are pleased to have rescued the Evans Cycles brand. However, in order to save the business, we only believe we will be able to keep 50% of stores open in the future. Unfortunately, some stores will have to close,” said Ashley.
The cycling retailer employs 1,300 people across 62 UK stores.
Evans Cycles struggled amid the difficult high street conditions, which also led to the collapse of Toys R Us and Maplins.
In the year to October 2017, the group recorded a loss of £2.5 million. The company found itself almost £6 million into the red in 2016 after sales only rose 2% to £138 million.
Matt Callaghan, who is a joint administrator and PwC partner, said: “Evans is a longstanding, well known and trusted brand with nearly 100 years of heritage in the cycling market.”
“To have managed to preserve the business and transfer all staff to the purchaser is particularly pleasing; 2018 has been a very difficult trading year for the business, in part due to the impact of the extended winter weather in the early part of the year and a lack of cash to invest in stores and develop the online platform. A combination of losses, the capital expenditure requirements and tightening credit has led to a liquidity crunch.”
Standard Chartered net profit up 35% in Q3
Financial services provider Standard Chartered (LON:STAN) announced Q3 on-year profit growth of 35%, with income spiking and charges for sour loans falling.
The firm is based in London but focuses its operations in Asia, Africa and the Middle East. Standard Chartered employ 87,000 personnel over 1,200 branches in 70 countries.
Its profits for the third quarter through September stood at $752 million, up from $557 million for Q3 2017. As part of this growth, net interest income grew 8% and credit impairments dipped 67% in the third quarter. As a measure of the bank’s performance in this period, its interest margin rose to 1.58%, up from 1.53% on-year. For the first three quarters of the financial year, Standard Chartered net profits were up 33% on-year, to $2.35 billion.
Company Chief Executive Bill Winters said, “The results for the first nine months of the year reflect our focus on significantly improving profitability, balance sheet quality, conduct and financial returns,”
“Income growth year-on-year was slightly lower in the third quarter impacted by Africa and the Middle East and we remain alert to broader geopolitical uncertainties that have affected sentiment in some of our markets.”
“But growth fundamentals remain solid across our markets and we are cautiously optimistic on global economic growth.”
The corporate and institutional banking division continues to reign supreme within Standard Chartered ranks. The division saw a slight growth in on-year income for Q3, eventually finishing at $1.65 billion. The modest growth was attributed to low deal and client activity due to flat market performance.
In spite of its recent success, the bank could suffer a fine of $1.5 from US authorities, with allegations that it allowed customers to breach Iran sanctions.
“The Group continues to cooperate with authorities in the U.S. regarding an investigation into historical violations of U.S. sanctions laws and regulations,” the bank said in a statement, adding that “in the U.S., the vast majority of the issues pre-date 2012 and none occurred after 2014.”
There is also an investigation by UK regulators into Standard Chartered’s financial crime controls.
“The Group is engaged with relevant authorities to resolve these investigations as soon as practicable. Concluding these historical matters, which could have a substantial financial impact, remains a focus of the Group,” Standard Chartered said.
The firm’s shares are currently trading up 4.15% or 22.1p as of 13:00 GMT, at 554.7p. UBS Analysts have kept their ‘Neutral’ stance unchanged, while Shore Capital have reiterated their ‘Buy’ stance on Standard Capital stock.
eBay rallies with strong Q3 and Q4 forecast
American e-commerce group eBay (NASDAQ:EBAY) have seen their shares rally following strong performance in third quarter trading, and a promising forecast for the fourth quarter. The news comes just after the online commerce giant filed a law suit against its rival Amazon (NASDAQ:AMZN), and Amazon announcing a disappointing third quarter.
The firm’s shares jumped 6% in the last window of trading, with the company announcing net profits of £567 million, which represents a 38.6% on-year increase.
Similarly, the eBay’s revenues jumped 6% on-year for the third quarter and matched analyst expectations at £2.07 billion, with revenues for the next quarter being expected to exceed expectations and peak as high as £2.26 billion.
The retailer attributed much of its recent success to major investments in product developments, brand marketing and simplifying its payment process and boosting its number of active buyers up from 175 to 177 million between the second and third quarters.
“This quarter we continued to make foundational investments to improve the long-term competitiveness of our marketplace while setting the stage for significant growth opportunities,” said eBay president and chief executive Devin Wenig.
“We will continue to innovate the customer experience while executing our growth initiatives in payments and advertising to position Ebay for future success.”
As of 09:30 GMT, eBay shares are trading up 6.35% or $1.74.
William Hill launch £242m bid gambling group Mr Green
William Hill have launched a £242 million bid for Swedish gambling group Mr Green.
The deal will potentially secure an international hub for the business outside of the UK and Gibraltar, as it looks to hedge its business against Brexit.
Currently, Mr Green holds remote gambling licenses in Denmark, Italy, Latvia, Malta, the UK and Ireland.
It is also set to acquire licensing in Sweden by the end of the year.
Thus far, the deal has been recommended to be approved by Mr Green’s board.
‘This proposed acquisition accelerates the diversification of William Hill – immediately making us a more digital and more international business,’ the company chief executive Philip Bowcock said.
‘Mr Green will provide William Hill with an international hub in Malta with market entry expertise and strong growth momentum in a number of European countries.’
‘William Hill will move from a single brand to a suite of brands that can maximise growth opportunities moving forward in new and existing markets.’.
Shares in the UK-based betting company (LON:WMH) are trading +3.85% as of 12.26PM (GMT).
Crawshaws collapse could put 600 jobs to the knife
Meat retailer (LON:CRAW) Crawshaws Group Plc has gone into administration after it failed to raise funds from investors. This news coming just days after another UK food retailer narrowly avoids the chop.
The group were founded in Yorkshire in 1954, and today have 54 stores across Northern England and the Midlands. Following disappointing results for 2018 and its fundraiser flop, Crawshaws are in the process of appointing its administrators, who will seek a buyer for the company.
The firm reported pre-tax losses of £1.7 million for the first half through July, and despite extensive discussions with existing and prospective investors, the company said that they had “not been successful in raising sufficient capital”. As a result of these factors,
“The company does not have sufficient cash resources to effect the required restructuring of the business”.
The statement from the company’s board also added that Crawshaws had, “taken the decision to place the company into administration and intends to appoint administrators shortly with the purpose of seeking buyers for the group’s business and assets on a going concern basis.”
Following the news, the firm’s shares on the London Stock Exchange’s junior AIM market were suspended.