Good morning: The defence contractor Babcock has written £1.7 billion off the value of its assets as the new(ish) chief executive sets out his strategy to turn the troubled business around.
A restructuring will deliver £40 million of savings, the company claimed, but will result in the loss of 1,000 jobs. The company is also planning to raise at least £400 million “by divesting certain businesses”.
Babcock, which employs 34,000 people, is a crucial MoD contractor. It operates the Devonport naval dockyard, maintains and helps to build the submarine fleet at Faslane and Barrow-in-Furness, and builds Royal Navy warships at Rosyth.
David Lockwood, who joined as chief executive last September, said: “Through self-help actions, we aim to return Babcock to strength without the need for an equity issue.”
Alongside full-year results, the fashion retailer JD Sports said it expected profits for the current financial year to be between £475 million and £500 million. “We are encouraged with trading to date in the new year,” stated JD.
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The actual numbers showed that revenue rose a fraction to £6.16 billion in the year to the end of January — despite many of the retailer’s shops being forced to close. Operating profit slipped to £482.3 million, down from £516.9 million. At the statutory level the company made a pre-tax profit of £324 million, down from £348.5 million.
Elsewhere on the corporate front this morning
• FTSE 100 listed Just Eat Takeaway has reported that first-quarter orders rose by 79 per cent to 200 million orders, up from 112 million orders a year earlier. “To capitalise on the strong momentum from its investment programme, the company will continue to invest heavily and prioritise market share over adjusted Ebitda,” Just Eat warned, which could put further pressure on shares in rival Deliveroo.
• Property giant Land Securities said £33 million of rent was outstanding in the quarter to March 25. The company said £10 million related to customers who have withheld payment pending documentation of agreed concessions. If this is received, the rent collection rate for the quarter would increase from 67 per cent to approximately 77 per cent.
• Like-for-like revenue at Electrocomponents, the FTSE 250 distributor, rose by 12 per cent across the group in its fourth quarter. The strong gains help the group report 1 per cent revenue growth for the full year to the end of March. Lindsley Ruth, chief executive, said: “We are very pleased with another strong performance in the fourth quarter. We expect profit for the year to March 31 to be around the top end of the consensus range.”
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• Plus500, the online trading company, said active customers rose by 25 per cent to 269,743 in the first quarter to March 31 compared with the fourth quarter. Revenue rose by 121 per cent to $203.2 million driven by attractive trading conditions.
Last month’s trade figures revealed that UK exports to the European Union fell 42 per cent in January, sparking much excitement among some — despite economists (and the Office for National Statistics) warning that the monthly data was erratic.
This morning’s data from the ONS for February suggests that January may have been a blip (although let’s not also fall into the trap of over interpreting one month’s figures). The value of goods exports to the EU, excluding non-monetary gold and precious metals, rose by £3.7 billion or 47 per cent in February.
We have also had gross domestic product data from the ONS this morning. The UK economy grew 0.4 per cent month-on-month in February despite coronavirus restrictions closing many businesses. Economists had forecast 0.6 per cent growth.
Finally, the business secretary Kwasi Kwarteng appears in front of MPs on the business, energy and industrial strategy committee at 10.30am. It could be a lively session.
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Richard
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