- In CAR-RELATED NEWS, we look at Honda fallout, emissions difficulties, and the latest on Lyft, Uber and Tesla
- In RETAIL-RELATED NEWS, “Sasda” looks dead, retailer landlord Intu suffers and so does Laura Ashley
- In INDIVIDUAL COMPANY NEWS, Samsung launches a bendy phone
- In OTHER NEWS, I bring you some haircut inspiration . For more details, read on…
So we look at Honda implications, emissions challenges, Lyft’s “lysting” on NASDAQ, Uber’s delivery plans and Tesla’s revolving door…
Honda closure fallout to hit scores of companies (Financial Times, Michael Pooler) looks at some of the implications of Honda’s announcement to close its Swindon production facility, with the loss of 3,500 jobs. Apparently, the general rule is that each job in a car assembly plant supports between one and four additional jobs elsewhere and the impact is likely to be particularly heavy on small and mid-sized businesses with high exposure to the Japanese company. This news is the latest kick in the teeth to an industry that is currently in flux due to tighter new regulations, changing ownership patterns and weakening demand. * SO WHAT? * Things could be worse (but not by that much). Britain’s car manufacturing industry hit a low when MG Rover went bust in 2005 which prompted a major overhaul of the whole supply chain. This has led to domestic auto part production going in the right direction in recent years with the average domestic content in a UK-built car going up from 36% to 44% since 2011. Having said that, there’s still a gap between this and cars built in Germany and France which contain nearer 60% of locally-produced parts. The other good thing is that the shut-down isn’t just happening overnight – there will be a tail-off – which means that suppliers will at least have some time to steel themselves and/or change their business models. HOWEVER, I’m trying to put a positive spin here on a very negative development – the fact is that Honda’s announcement could be a catalyst for other manufacturers to follow suit and that would be very bad.
Carmakers warn of huge hit from deadline for EU emissions tests (Financial Times, Jim Brunsden and Patrick McGee) highlights continued difficulties facing manufacturers who are trying desperately to comply with “real world” emissions limits for nitrogen oxides of 80mg per litre. Manufacturers say they need more time to comply, saying that up to 7.5m cars slated for production by the end of February next year would not be able to meet these limits. Erik Jonnaert, secretary-general of the European Automobile Manufacturers Association (the ACEA – it’s in French, don’t worry ????), said that if the EU court stuck to its guns, “the impact could indeed be enormous [and could] create legal uncertainty for the entire industry”. The ACEA also warned that vehicles “would have to undergo extensive re-engineering – something which would require far more time than is allowed by the judgment of the court”. * SO WHAT? * This is just another example of the current problems facing car manufacturers at the moment. Car makers are obviously going to claim maximum doom-and-gloom to give them the best possible breathing space to make changes whereas the environmental lobby want to keep the pressure on to force change. Whichever way you look at it, the tighter emissions regulation is costing manufacturers money at a time where
it ain’t exactly growing on trees for them.
In Lyft is planning to list shares on Nasdaq (Wall Street Journal, Corrie Driesbusch and Maureen Farrell) we see that the ride-hailing company is planning a flotation by the end of March after much hype. The timing is better than it was when Lyft originally filed with the Securities and Exchange Commission (SEC) last year in the midst of a tech downturn as the NASDAQ has risen by 13% so far this year but Lyft founders to tighten grip with supervoting shares in IPO (Wall Street Journal, Maureen Farrell and Cara Lombardo) warns that although founders John Zimmer and Logan Green (president and chief exec, respectively) only hold less than 10% of the company, they are working together with underwriters and lawyers to create a new class of shares with extra voting powers. * SO WHAT? * There’s been a lot of hype surrounding Lyft and Uber, particularly around who’s going to get to market first. Well, Lyft is obviously going to win that race but the founders also look like becoming the latest Silicon Valley entrepreneurs to get way more influence over their company than their shareholding would imply. Facebook, Alphabet and Snap are all high profile examples where founders have been able to keep an iron grip on their companies due to these unusual share structures and when things are going well, no-one really cares. It’s only when things start going down the toilet that shareholders realise that they have no sway over what is going on with the company, so it’ll be interesting to see what investors think of these plans as there is a lot more scepticism now about these structures. It may yet prove to be a good thing that Lyft gets to market first as any existing goodwill in this regard could start to dry up somewhat before Uber floats.
Talking of Uber, Uber to cut food delivery fees in battle with Deliveroo and Just Eat (Financial Times, Aliya Ram and Shannon Bond) heralds the latest development in the battle of the deliverers as competition continues to intensify with its rivals. Uber Eats, the company’s food delivery arm, will limit the fees it charges to restaurants to 30% of the value of an order versus the current maximum of 35%. It will also let restaurants use its app but make their own deliveries. The pressure was always on – but it’s just gone up a notch!
Tesla’s top lawyer steps down after just two months in the job (Daily Telegraph, Hannah Boland) highlights yet another senior departure at Tesla, with general counsel Dane Butswinkas returning to his law firm Williams & Connolly after describing the job as a “unique and inspiring opportunity” when he was appointed at the end of December. He’ll continue to work with Tesla, but as an “outsider”. * SO WHAT? * It must be pretty windy in Tesla’s reception area with the continued departure of senior execs turning the revolving door into a something resembling a fan. I think that investors can forgive some staff turnover given the pressure that the company is under, but then again I am sure many are hoping to see things on a more even footing in the not-too-distant future. The more senior bods leave, the more uneasy investors will feel as they will interpret this as Elon Musk being unable to hold on to top people.
“Sasda” dies while Intu and Laura Ashley suffer…
Just in case you found yourself living under a rock yesterday, Sainsbury’s-Asda merger in doubt over ‘extensive competition concerns’ (The Guardian, Julia Kollewe and Jasper Jolly) shows that the initial findings of the Competition and Markets Authority (CMA) on the Sainsbury’s/Asda merger pretty much put the mockers on hopes of the deal going ahead, despite the fact that a final report is not due until April 30th. The CMA said in a statement that the merger would create a “substantial lessening of competition at both a national and local level” on both groceries and petrol. It added that major store and asset disposals would be needed to even stand the faintest chance of going through but many investors think that this would cut too deep. * SO WHAT? * Sainsbury’s shares fell by 15% on the news, but other retailers who stood to benefit from picking up its asset disposals also suffered, with Morrisons falling by 4.6%. I still think that there is time for this deal to fly but it will be a major test of resolve for the parties concerned and how deep they really want to cut things to keep the party going.
There’s more evidence of a tricky retail climate in Intu
slumps to £1.2bn loss on lower shopping mall valuations (Daily Telegraph, Jack Torrance) as shopping centre owner Intu announced a massive annual loss due to its properties (which include Lakeside in Essex and Manchester’s Trafford Centre) shedding £1.4bn of their value and a scrapping of its final dividend. Investors didn’t take kindly to this and sent Intu’s shares down by 7.8%. * SO WHAT? * Although there is obviously potential for more downside due to general weakness in the retail sector and continued Brexit uncertainty, I would have thought that this is going to be the big downgrade. I suspect that investors will be trying to guess which landlord(s) will be the next to do something like this.
Talking of tricky retailing, Laura Ashley lays bare decline in sales (The Times, Gurpreet Narwan) shows a weak first-half for the homewares and fashion retailer. Group sales fell by about 9% but furniture and decorating saw sales falling by 14% and 13.5% respectively over the six-month period. * SO WHAT? * This bad news comes at a time when the company is trying to effect a turnaround under new chief exec Andrew Khoo, including the closure of 25% of its 146 high street shops and an expansion in China. He said that “Given the continued market turbulence and having reviewed the revised management forecast for the second half-year, the board now holds the view that the performance for the entire year will fall short of market expectations”. The shares fell by over 13% on the news.
INDIVIDUAL COMPANY NEWS
Samsung has a new phone in the fold…
I know I’ve been going on about it for a while now – so imagine my “joy” when I saw Samsung has new phone in the fold (The Times, Tom Knowles) as the South Korean conglomerate announced its first foldable handset, called the Galaxy Fold, at an event in San Francisco for the bargain (!) price of $1,980 when it hits the shops in April.
The device’s 4.6inch screen folds out to a 7.3inch tablet screen – how crazy is that?!? It has six cameras and allows three apps to be open at the same time meaning that users can look at their e-mails while being on a video call and surfing the web. * SO WHAT? * Samsung released other phones as well, but this is the one that got the attention! I think that foldable phones could be the tech development that gets people excited again – but not at this price. That is just eye-watering. Still, pretty cool. If Samsung is going to charge $1,980, I dread to think what Apple is going to charge when it comes out with something bendy!
And finally, in other news…
Tired of the same old haircut/style? Want some inspiration? How about Vietnamese hairdresser giving out Trump and Kim cuts (Sky News, Emily Mee https://tinyurl.com/yxz3p53b). Impressive.