Business news in brief
Brexit effects hit profits at recruitment firm Hays
Profits at recruitment firm Hays took a Brexit hit in the first half of the year as British firms slowed down their hiring. The company said operating profit at its UK and Ireland business fell 29 per cent to £18.2m in the six months to December after the private sector saw a “marked step-down in activity after the EU referendum”. Net fees in the UK fell 10 per cent to £126.1m, with the public sector also remaining “challenging” throughout the half. Hays said private sector activity has since stabilised and the end of the period showed “early signs of improvement”.
Chief executive Alistair Cox told the Press Association: “UK activity has been slowing for the past 12 months, since December 2015, and then particularly as we got closer to the EU referendum. Immediately after the Brexit vote, we saw a big step-down, but this then stabilised and continued to remain stable in the first half. The private sector is looking a little bit better, especially since Christmas and the new year. As a result, we expect to see modest declines or a flat performance over the year in the UK. Some of the sectors that have been hit are banking and construction, for example on new project work. But SMEs are feeling that life is going on, and tech and IT are also doing well.”
PA
Barratt Developments profits up 8.8% to £321m
Housebuilder Barratt Developments has reported a healthy rise in half-year profits after notching up a large number of completions outside London. The company said pre-tax profits rose 8.8 per cent to £321m in the six months to 31 December, despite revenue falling 3.2 per cent to £1.8bn. Chief executive David Thomas said: “We have delivered another very strong first-half performance, pre-tax profits were up nearly 9 per cent and completions outside of London at their highest level in nine years.”
Total completions were down 5.8 per cent to 7,180 with a slowing property market in London dragging on performance. Completions in London came in at 367 versus 842 in the same period last year, although Barratt expects sales in the capital to pick up in the second half of the year.
Mr Thomas said: “With a record forward order book, strong consumer demand and a positive lending backdrop, we remain confident in our outlook for the full year. Our confidence in the business going forward is reflected in the improved and extended capital return plan.” The group said the “fundamentals” of the housing market remain robust, with strong demand supported by good mortgage availability and the Help to Buy scheme.
PA
Unilever reviewing options for change after Kraft bid fails
Unilever started a strategic review of its operations and boosted its profitability forecast, taking steps to speed up shareholder returns after Kraft Heinz’s failed $143bn (£114bn) takeover proposal. “The events of the last week have highlighted the need to capture more quickly the value we see in Unilever,” the Dove soap maker said in a brief statement yesterday. The company said it is conducting “a comprehensive review of options available to accelerate delivery of value for the benefit of our shareholders”.
While Kraft Heinz dropped its unsolicited approach on Sunday, only two days after it surfaced, the review shows that Unilever chief executive Paul Polman is not going back to business as usual but taking steps to boost the company’s value in a bid to fend off other unwanted suitors. Unilever said it expects core operating margin improvement for 2017 to be at the upper end of its guidance for an increase of 40 to 80 basis points.
Among options that Unilever is considering is a sale of the spreads subsidiary that’s previously been earmarked for possible disposal, a split of the business along personal care and food lines, or raising the dividend to appease investors who had hoped for a windfall from a takeover, according to two people familiar with the company’s thinking, who asked to remain anonymous because the review is not public.
Unilever “is probably alluding to a number of potential things, a more accelerated and aggressive costsavings plan or spin-out of some assets”, said Martin Deboo, an analyst at Jefferies.
Bloomberg
Developer CapCo drops London land values by 20%
Capital & Counties Properties wrote down the value of its land holdings in west London by 20 per cent, less than expected by some analysts, as higher taxes and political uncertainty weaken sentiment in the UK capital’s housing market. The company, which plans to build 10,000 homes at Earls Court with venture partners, cut the value of its sites in the district to £1.1bn from £1.4bn a year earlier, according to a statement yesterday. JPMorgan had estimated a write down of 30 per cent. “The reduction in Earls Court was driven mainly by a higher assumed developer’s margin for consented development land, trimming of sales values as well as some cost inflation,” JPMorgan analyst Neil Green wrote in a note to clients.