DB Live: Job cuts at Rolls-Royce; M&S; inflation
4.45pm: London close
The FTSE 100 index finished the day higher as the investor mood again swung behind hopes of an improving coronavirus outlook and global markets.
The benchmark closed up 64.93 points, or 1.08% at 6,067.16..
On Wall Street, stocks were also on the up. The Dow Jones Industrial Average added over 429 points and the S&P 500 gained over 56.
Crude prices rose with WTI up 3.25% to $33 a barrel, and Brent crude gaining 2.6% to$35.65 as US inventories fell by 5 million barrels, the largest drop in stockpiles since January, taking glut worries off the table for now.
3pm: Added help
The Scottish Government’s Business Support Fund has been increased to provide additional help for key sectors of the Scottish economy.
10.30am: Ad gaming firm funding
AdInMo, the Edinburgh-based programmatic ad platform for video games, has secured a $500,000 investment round
8.15am: London open
The London market eased slightly after the strong start to the week. The FTSE 100 was trading 21.02 points (0.35%) lower 5,981.21.
Britain’s inflation rate fell sharply from 1.5% in March to 0.8% last month – its lowest since August 2016 as retailers turned to discounts to combat the coronavirus shutdown and global oil prices fell.
7am: Rolls-Royce axeing 9,000 jobs
Aero-engine maker Rolls-Royce is to axe 9,000 jobs in a major response to the coronavirus outbreak.
The company, which employs several hundred at a plant at Inchinnan near Glasgow Airport, will also cut expenditure across plant and property, capital and other indirect cost areas.
The proposed reorganisation is expected to generate annualised savings of more than £1.3bn, of which it expects headcount to contribute around £700m. The cash restructuring costs related to these actions are likely to be around £800m, with outflows incurred across 2020 to 2022.
CEO Warren East said it is “increasingly clear that activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago.”
He said: “This is not a crisis of our making. But it is the crisis that we face and we must deal with it.
“Our airline customers and airframe partners are having to adapt and so must we.”
The proposed reorganisation will predominantly affect the civil aerospace business.
It will also have implications for central support functions. The Power Systems business and ITP Aero are currently developing, negotiating and executing extensive measures to deal with the current situation.
The defence business, based in the UK and US, has been robust during the pandemic, with an unchanged outlook, and does not need to reduce headcount.
“As part of the reorganisation, we will ensure that our internal Civil Aerospace supply chain continues to support our defence programmes and explore any opportunities to move people into our Defence business,” said Mr East.
“Due to the need to consult with the appropriate employee and trade union representatives, we are not providing further details of the impact of the proposed reorganisation on specific sites, or countries, at this stage. The restructuring announced on 14 June 2018 will transition into this wider proposed reorganisation. “
“We have emerged from troubled times before, to achieve incredible things. We will do so again.”
M&S unveils action plan
Marks & Spencer has unveiled a £1bn plan to tackle changes in the retail environment after reporting a 21.2% slump in profits.
A rise in sales in its food division failed to outweigh a plunge in revenues in its clothing business.
The company has estimated that revenue across its divisions will fall by £2.1bn in 2020/21. The biggest hit will come in UK Clothing and Home, where revenue is expected to decline 70%, or by £1.5bn.
Ed Monk, associate director from Fidelity Personal Investing’s share dealing service said: “The company says it can free up £1bn through cost savings and cash management this year, and it is likely to need it all. Cost saving plans include putting clothing stock from this year into ‘hibernation’ until next spring.
“Currently, some 27,000 M&S staff are having their pay supported by the furlough scheme and they will naturally be very concerned about the company they come back to when the scheme ends. M&S had already embarked on a ‘never the same again’ programme of change in light of Covid-19 and that seems an apt name.”
Group statutory profit before tax declined 20.2% to £67.2m. This was largely driven by a decline in Clothing & Home operating profit as a result of lower sales.
Statutory profit before tax includes an estimated total impact of £264.7m for Covid-19.
Steve Rowe, CEO said: “I am determined to act now to capture this and deliver a renewed, more agile business in a world that will never be the same again.”
Harry Potter publisher Bloomsbury reported resilient sales of the titles, in line with last year though children’s revenue was affected by the timing and fewer frontlist titles from Sarah J Maas.
Harry Potter and the Philosopher’s Stone, the debut novel by JK Rowling, was the 10th bestselling Children’s title on Nielsen BookScan in the UK, 22 years after first publication
The company reported a 9% growth in profit before tax to £15.7 million from £14.4m in 2018/19 as revenues increased to £162.8m (2018/19: £162.7m).
Today’s top Daily Business headlines