Companies in the news ... and how they were assessed
Bombardier/boeing: nest of hornets
Theresa May flew to Canada this week – straight into the “hornets’ nest” of a bitter dispute between two aircraft-makers, said the Financial Times. May has joined forces with the Canadian PM, Justin Trudeau, to protest a competition case brought by the US giant Boeing against its Canadian rival Bombardier. In a nutshell, Boeing wants the US government to impose tariffs against Bombardier’s C Series jets, which it claims are sold at “absurdly” low prices because the firm receives “unfair” state support. Canada has been lobbying the US to ignore Boeing – and has threatened to block all future Boeing deals (including lucrative contracts to supply Super Hornet fighting jets) unless it drops its challenge. Why, you might wonder, is this row “reverberating across the Atlantic”, asked Dara Doyle in Bloomberg Businessweek. Because Bombardier has a 4,500-strong workforce in Northern Ireland – and May needs the support of ten local DUP MPS to get her business through Parliament. “The PM is navigating turbulent airspace,” said Christopher Williams in The Daily Telegraph. Boeing is also a big force in Britain: some 16,500 jobs and £2bn in annual spending rely on its supply chain, and it is planning a big new site in Sheffield. “Overall it is a mess.” Good luck with clearing it up.
Toys ‘R’ Us: bankrupt giant
Toys ‘R’ Us has long been America’s largest toy store chain, said Michael Corkery in The New York Times. Now it is the country’s largest bankrupt toy store chain. “Crippled by competition and debt”, it has become “the latest casualty” in a long line of bricks-andmortar retailers “struggling to compete with Amazon” and the might of generalist retailers such as Walmart. (The group’s operations in Australia, Europe and Asia are unaffected.) A “heavy debt load” has weighed on the private equity-owned company “for years”. Indeed, the Chapter 11 filing, to restructure $5bn of long-term debt, “is among the largest ever by a speciality retailer”, said Reuters, casting doubt over the future of some 64,000 employees and nearly 1,600 stores, which, for now, remain open. The collapse came swiftly. Reports earlier this month that the company had hired a law firm specialising in bankruptcy set off “a dangerous game of dominoes”, according to CEO David Brandon. But the timing, ahead of the crucial holiday season, “could not be worse”. Brandon is putting a brave face on matters. “Today marks the dawn of a new era at Toys ‘R’ Us,” he said this week. Well, that’s one way of putting it.
KPMG: frying pans and fire
Great news for KPMG, said Lucy Burton in The Daily Telegraph. The Financial Reporting Council has closed its investigation into the accountancy firm’s all-clear audit of HBOS in 2007 – just a year before the bank’s collapse – saying that KPMG could not have predicted the “extreme funding conditions” created by the financial crisis. But now it faces trouble on another front, said Matt Oliver in the Daily Mail. KPMG is “fighting to keep some of its biggest clients” in South Africa, after becoming involved in the scandal that sank the “disgraced” City PR firm Bell Pottinger. At issue is KPMG’S role as auditor to an array of businesses run by the Gupta family, who have been accused of cosying up to President Jacob Zuma to win contracts. Campaigners have urged KPMG clients including Old Mutual, BAT, BHP Billiton and Barclays Africa “to cut ties”.