Business news in brief
Hornby directors defend chairman Roger Canham
The board of the troubled toymaker Hornby has backed its chairman and is now urging shareholders to vote against proposals that would force Roger Canham to step down. New Pistoia, Hornby’s second biggest shareholder with a 20 per cent holding, is pushing the firm to replace Mr Canham with Alexander Anton – a fellow shareholder and non-executive director of Victoria Carpets. Directors have now been forced to hold a general meeting for shareholders to vote on New Pistoia’s demands on 16 May.
But the directors say the resolutions are “not in the best interests of the company or its shareholders as a whole” and “unanimously recommend” that shareholders vote against the proposals. The board said: “The strategy currently being pursued by the board is well thought out and is working; the current structure and composition of the board is consistent with good corporate governance, and the board has the support of a majority of its shareholders.”
The votes will be binding, but will require a simple majority of over 50 per cent to pass. However, Hornby said a consultation found that shareholders including Phoenix Asset Management Partners Limited, Ruffer LLP and Downing LLP – which together represent a 53.96 per cent stake – intend to vote against the proposals.
PA
Virgin Money keeps close eye on debt levels as credit card balances jump 8 per cent
Virgin Money has said it would keep a close eye on rising consumer debt levels as credit card balances jumped 8 per cent in the first quarter. The lender said credit card debt rose to £2.65bn in the three months to 31 March, but said that it was seeing “stable customer behaviour and arrears levels” despite the jump. It comes after the Bank of England’s Financial Policy Committee warned earlier this month that the recent surge in consumer borrowing could pose a risk to the UK financial system, leaving banks exposed if their lending rules are too loose and people cannot make their repayments. Virgin Money said in its latest trading statement it was taking a cautious approach to lending and while credit card competition had increased, it was not following rivals “into top of the table pricing”.
“We watch the increase in consumer indebtedness closely and continue to lend responsibly to our prime books of mortgage and credit card customers who are showing no signs of strain in the current environment.” The company added: “We prioritise asset quality over balance growth, despite which we remain confident of achieving £3bn of prime credit card balances by the end of 2017.”
PA
AXA’s fund management arm to cut investment in coal companies
The asset management arm of the French insurer AXA plans to cut the amount it invests for clients in the coal industry worth €177m (£148m). The decision of AXA Investment Management, which manages €714bn of assets, comes on top of the group's announcement in 2015 that it would cut its exposure to the coal industry to the tune of €500m. AXA IM plans to pull out of companies that derive more than half of their revenue from coal-related activities. “The decision means AXA IM will be divesting approximately €165m of fixed income portfolios and €12m of equities portfolios,” AXA IM said, adding that clients may choose to opt out of this policy should they wish so.
Reuters
Emirates CEO says US laptop ban still puzzles him
The chairman and chief executive of Dubai’s long haul carrier Emirates says he “can’t dig into somebody's mind” to understand why the US instituted a ban on laptops and other personal electronics in carry-on luggage from 10 cities in Muslim-majority countries. However, Sheikh Ahmed bin Saeed Al Maktoum says he believes US President Donald Trump is a businessman who “wouldn't want to affect American business” in his decisions.
The Emirates boss spoke to journalists yesterday at the Arabian Travel Market exhibition, which this year didn’t have a stand for the hotel brand bearing the name of America's president like it did last year. Sheikh Ahmed also acknowledged watching a video of crew forcing a United Express passenger off a flight, saying the airline “should have been more professional”.
AP
Google targets ‘fake news’, offensive search suggestions
Google has sprinkled some new ingredients into its search engine in an effort to prevent bogus information and offensive suggestions from souring its results. The changes have been in the works for four months, but Google hadn’t publicly discussed most of them until now.
The announcement in a blog post yesterday reflects Google’s confidence in a new screening system designed to reduce the chances that its influential search engine will highlight untrue stories about people and events, a phenomenon commonly referred to as “fake news”.
“It's not a problem that is going to go all the way to zero, but we now think we can stay a step ahead of things,” said Ben Gomes, Google’s vice president of engineering for search.
AP
AstraZeneca moving costs rise as new HQ nears completion
AstraZeneca’s move to Cambridge will cost more and take longer than initially expected, following increased expenditure on new technology and equipment. Investment in Cambridge, where AstraZeneca is building a strategic research and development centre and global corporate headquarters, is now expected to be more than £500m, the drugmaker said yesterday. Staff are set to start moving into the new building from 2018, with the site fully operational in 2019. Back in 2013, when the scheme was first unveiled, the cost was put at £330m and the aim was to establish the centre by 2016.
For Pascal Soriot, the chief executive, the new site on the Cambridge Biomedical Campus symbolises his desire to create a science-led company with uniquely close ties to academia. The University of Cambridge has a global reputation for life sciences and the city is a hub for biotech start-ups. More than 2,000 AstraZeneca staff are already located in the Cambridge area.
Reuters
Big Mac makeover helps McDonald's overcome restaurant slump
A revamp of McDonald’s iconic Big Mac burger and more aggressive drink promotions are helping the restaurant giant overcome a broader slump in the fast food industry. The chain posted a surprisingly strong gain in same-store sales last quarter, with the measure growing 4 per cent globally. Analysts had estimated a 1.3 per cent rise. Earnings also topped projections.
The results suggest that Steve Easterbrook, the chief executive, got a payoff from efforts to overhaul the company’s menu. He rolled out different sizes of the Big Mac and offered $1 and $2 drink deals, a bid to attract customers in a cut-throat US restaurant environment. A switch to all day breakfast in 2015 also continues to fuel sales.
“US sales showed a nice acceleration in the quarter,” said Michael Halen, an analyst at Bloomberg Intelligence. “They’ve made a lot of positive changes over the last two years, and all of these positive changes are starting to add up.”
Bloomberg
US insurer FM Global picks Luxembourg as EU hub amid Brexit concerns
FM Global, a US commercial property insurer, is planning a European hub in Luxembourg following Britain’s decision to leave the bloc, the head of its European division told Reuters. The mutual insurer, which earned $5.5bn in gross premium last year, plans to continue many business operations in Windsor, west of London, but has also set up a Luxembourg-based subsidiary, FM Insurance Europe, to issue policies in the EU and other countries, said Chris Johnson, an executive vice president in charge of FM Global’s European business.
The move follows that of American International Group Inc (AIG.N), a US insurer which last month said it would keep its main European headquarters in London and open a subsidiary in Luxembourg to cope with Brexit. The Lloyd’s of London insurance market, meanwhile, chose Brussels for its subsidiary.
Reuters
Coca-Cola renews push to slim operations under incoming CEO
Coca-Cola will step up its bid to transform the company into a far leaner operation under James Quincey, its incoming chief executive, after quarterly earnings missed estimates. The soft drink giant vowed to cut costs by an additional $800m (£624m) a year, adding to a plan to wring $3bn in savings. The belttightening effort accompanies a move to spin off much of Coca-Cola’s bottling operations, one of the company’s biggest strategic changes in decades.
The 52-year-old Quincey takes the reins on 1 May from Muhtar Kent, who has been divesting bottling plants around the world. The company is trying to re-emerge as a more focused – and profitable – business, and will concentrate on developing new drinks and selling ingredients to partners.
But for now, the changes are taking a toll on results. Coca-Cola posted first quarter earnings of 43 cents a share on Tuesday, short of the 44 cents predicted by analysts. A decline in soda volumes and currency fluctuations also continued to weigh on sales.
Bloomberg