Business news in brief
Profits fall for McColl’s after Co-op stores acquisition
Profits at convenience store chain McColl’s were almost cut in half after it took a hit from its acquisition of 298 Co-op stores, despite warm weather boosting sales. The group said pre-tax profits fell from £8.2m to £4.5m in the first half of the year after it booked £2.3m in exceptional cost linked to the deal. But revenue rose 7.6 per cent to £504.8m in the six months to 28 May, with like-for-like sales growing 0.2 per cent. In the second quarter, comparable sales increased 1.4 per cent, supported by “favourable weather and our evolving mix of growth products”.
Chief executive Jonathan Miller said: “I am encouraged by the performance we have delivered over the first half of the year as our business has continued to gain momentum. We have traded well in a challenging environment, and also benefited from the recent hot weather, which has helped to drive sales in key growth categories including grocery and alcohol. We are delighted to have completed the
integration of the acquired stores, on time and on budget.” Analysts believe the Co-op deal has the potential to drive a surge in earnings at McColl’s, but the grocery sector is in flux, with a number of bigger players attempting to consolidate.
BMW denies diesel cheating amid probe into car cartel
BMW sought to defuse concerns about possible collusion with other German car manufacturers by rejecting allegations of cheating on diesel emissions and downplaying talks with rivals as being focused on promoting exhaust-treatment technology in Europe. With uncertainty clouding the German car industry, BMW said it has gone farther than competitors to ensure its diesel cars meet regulatory guidelines while still performing well on the road. The company says it combines AdBlue fluid to neutralise pollutants as well as a system that stores nitrogen-oxide emissions, adding it sees no reason to recall or upgrade its latest diesel vehicles. The company is offering a voluntary upgrade on older Euro 5 models.
“We compete to provide the best exhaust treatment systems,” the Munich-based carmaker said. “Unlike other manufacturers, BMW Group diesel vehicles employ a combination of various components to treat exhaust emissions” and thereby “fulfil all legal emissions requirements and also achieve a very good reallife emissions performance.” German car manufacturers are under intense scrutiny after a report in Der Spiegel magazine on Friday said BMW, Daimler and Volkswagen, including its Audi and Porsche brands, may have colluded for decades on technology, including the size of AdBlue tanks. European Union and German authorities are studying possible collusion among German car manufacturers.
Bloomberg
Campari sells brands to US rival in order to refocus portfolio
Drinks giant Campari has agreed to sell its Carolans and Irish Mist brands to American rival Heaven Hill for $165m (£127m). It is the largest ever disposal by the Italian group, and comes as it seeks to focus its portfolio on core brands and cut its debt level. Carolans, an Irish cream alcoholic drink, and Irish Mist, a whiskey liquor, together made up 2 per cent of Campari’s turnover last year, with combined net sales of £30m. Under the terms of the deal, both brands will transfer to Kentucky-based spirits company Heaven Hills, but Campari will continue to distribute the drinks outside the United States. The sale is expected to conclude by 1 August.
It follows the group’s recent divesture of a number of other brands as it whittles down its product range. Last month, it sold its French Chateau de Sancerre winery to Maison Ackerman, marking its exit from wine. Bob Kunze-Concewitz, chief executive of Campari, described the sale to Heaven Hill as “a perfect fit” for the two liquor brands. “With this transaction, we continue to streamline our non-strategic portfolio and further increase our focus on our priority spirit brands, particularly in our largest and core US market,” he said. “Moreover, thanks to this disposal, we can further accelerate in the reduction of our financial indebtedness. Since the beginning of 2016 we have divested non-strategic assets for a total value of approximately €260m [£232].” Campari bought both brands in 2010 from William Grant & Sons for €129m.
Sizzling sales for sausage maker Cranswick
Food giant Cranswick has churned out a 27 per cent rise in first-quarter sales, helped by a strong performance in the UK. The sausage maker said that on a like-for-like basis, revenue jumped 21 per cent in the three months to 30 June, driven by robust domestic volume growth. All product categories contributed positively, and with the strong momentum expected to continue, the FTSE-250 firm reiterated its confidence of hitting its full-year targets. Cranswick, like other British manufacturers, has been grappling with rising input costs triggered by sterling’s collapse since last year’s Brexit vote.
The group said that it had managed to “partially mitigate” these higher costs. It added that it plans to
continue investing in its pork-processing facilities in Preston and at its recently acquired Ballymena site in Northern Ireland, in a bid to drive “further operating efficiencies”. “With experienced management at all levels of the group, a strong range of products, a well-invested asset base and a robust financial position, the board is confident in both the outlook for the current financial year, which remains unchanged, and the continued long-term success and development of the business,” Cranswick said in a statement.
Ryanair’s talk of fare cuts chills sector
Ryanair has warned rivals that it may cut its fares in late summer by as much as 9 per cent from last year, triggering a share sell-off by investors concerned about the impact on profitability. Europe’s largest airline by passenger numbers, Ryanair has helped drive down short-haul ticket prices in Europe by increasing its capacity by 33 per cent, or about 30 million seats, in the past two years.
Some investors thought higher fares in the three months to the end of June were a sign that a period of heavy discounting may be ending. But management made clear the annual increase was just a blip due to the timing of Easter and that prices would fall sharply in the coming months. “It’s a competitive market out there. You’re looking at fares down anywhere between 7, 8, maybe as much as 9 per cent,” in the three months to 30 September, chief financial officer Neil Sorahan said.
F-16 supplier gets financing edge as EU boosts defence support
Denmark is offering big clues to the European Union’s defence-policy ambitions. Terma, a closely held Danish aerospace company, says business is looking up because of the EU’s fresh focus on security. The maker of radars for airports and electronics for the F-16 fighter jet recently accepted its first loan from the European Investment Bank after the terms for the €28m (£25m) deal proved more attractive than anything from private lenders, including the company’s traditional financier, Danske Bank.
Terma’s embrace of European bureaucracy underscores the emboldened approach to defence of the bloc, which is stepping up security initiatives as it’s forced to contend with the UK’s departure and a US President who’s shaken the transatlantic order that’s helped keep the region at peace since the end of the Second World War. A minnow in an industry dominated by the likes of Lockheed Martin and BAE Systems, Terma now wants to expand participation in the EU’s research programme. “The EIB loan is a significant opportunity for Terma,” Per Thiesen, the company’s chief financial officer, said.
Bloomberg
Deutsche Bank and JPMorgan agree to settle Libor lawsuits
Deutsche Bank and JPMorgan have agreed to pay a combined $148m (£113m) to resolve claims that they conspired to manipulate the benchmark yen Libor rate and said they will cooperate with investors suing other banks. Investors including Sonterra Capital Master Fund, Hayman Capital Management and the California State Teachers’ Retirement System sued 21 banks and three brokerage firms in a US federal court in 2015, accusing them of manipulating the rate from 2006 to 2011. Deutsche Bank will pay $77m and JPMorgan $71m under the settlements, which were outlined in court documents filed late on Friday. Neither company admitted wrongdoing under the agreements, which must still be approved by a judge. A spokesperson for Deutsche Bank declined to comment.
Bloomberg