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Business - Need to Know

Morning Edition

Good morning. You can almost sense the relief in the Marks & Spencer trading update this morning. After 15 consecutive declines in quarterly sales the group’s general merchandise business is once again growing - without the retailer having to slash prices (and profit margins) to do so.

"We have made strong progress over the quarter,” says Marc Bolland, chief executive. “We continued to deliver on general merchandise gross margin, and are pleased that we have achieved this whilst also improving general merchandise sales”.

Sales of general merchandise - clothing, footwear and homewares - rose 0.7 per cent in the 13 weeks to March 28. Like-for-like sales in M&S's food business rose 0.7 per cent. We’ll have a full story shortly on www.thetimes.co.uk/business.

Elsewhere on the corporate front, Premier Oil claims to have “struck oil” in the Falkland Islands. Two other explorers have a stake in the well - Rockhopper Exploration and Falkland Oil & Gas. We have also got a trading update from Dunelm and Booker has announced that chairman Richard Rose will step down later this year.

Having jumped sharply yesterday after data from the Energy Information Administration (EIA) showed a drop in US oil output last week for the first time since late-December, Brent crude has fallen overnight as attention returned to nuclear talks with Iran (see below). For the latest on the markets, log on to our Business Now live blog. You can also follow me on Twitter for updates throughout the day - @fletcherr.

Following yesterday’s better-than-expected manufacturing PMI data, we get construction PMI data for March at 9.30am this morning. Economists forecast a reading of 59.50, down from 60.10 in February. In the US we get trade balance and factory orders data.

Have a great Easter weekend. We’ll be back first thing on Tuesday morning.

Richard Fletcher Business Editor The Times richard.fletcher@thetimes.co.uk

Already two days past their deadline, major world powers negotiated with Iran into the early hours of this morning on Tehran's nuclear programme. Diplomats say prospects for a preliminary agreement were finely balanced between success and collapse. The negotiations, aimed at blocking Iran's capacity to build a nuclear bomb in exchange for lifting sanctions, have become bogged down over crucial details of the accord, even as the broad outlines of an agreement have been reached, Reuters reported.

Jitters hit the markets yesterday as analysts warned investors that Britain faced the prospect of a weak and ineffective government after a dead-heat election. With the polls still tied, forecasters unanimously predicted a hung parliament on May 7. The pound fell against the euro yesterday, despite evidence of accelerating growth in Britain’s manufacturing industry. Sterling volatility, one measure of market concern, is now higher than before any poll since 2000, including the Scottish referendum last year.

Greece warned yesterday that the viability of the single currency “is now in question” as it submitted a revised list of economic reforms designed to unlock the €7.2 billion in loans it needs to stay afloat.

“In Germany, optimism about the recovery is tinged with anxiety. In Berlin and Frankfurt, there is already a debate under way about whether the economy is at risk of overheating.” The German economy is not so much overheating as running very hot argues Simon Nixon.

In Tokyo the Nikkei 225 has closed down 1.46 per cent at 19,312.79. The FTSE 100 is expected to open a fraction lower when trading begins shortly.

Encouraging data showing that UK manufacturing grew at its fastest pace in eight months gave equities a lift yesterday, sending the FTSE 100 higher by 0.5 per cent or 36.5 points to close at 6,809.5. The broader FTSE 250 also enjoyed a positive start to the new quarter with a rise of 0.2 per cent or 32.8 points to 17,123.4. Read Gary Parkinson’s Market report.

It was another matter for Wall Street, where shares fell on concerns over weaker than expected factory activity and the prospect for first-quarter earnings. The Dow Jones Industrial Average finished 0.4 per cent or 77.9 points lower at 17,698.2 while the S&P 500 fell by 0.4 per cent or 8.2 points to 2,059.7. An above daily average of 6.9 billion shares changed hands.

Oil prices see-sawed for much of the mid-week session as all eyes were on the extended talks with Iran about its nuclear programme and whether it might boost the country’s exports if agreement is finally reached. In the end, Brent crude for May settlement finished 2.8 per cent higher at $56.67 a barrel, which is still 48 per cent lower than it was a year ago.

Not even a resurgence in British manufacturing could help the pound overcome concern about the lack of a clear winner in the general election. Sterling fell by 0.2 per cent against the US dollar to $1.479 and by 0.3 per cent against the single currency to 72.635p per euro.

FirstGroup is some way through its attempts to ensure the transport operator is generating the sort of cash returns it should, helped by the recent extension of its First Great Western franchise. The company has set out its targets for margins and return on capital, but is it one step forward and one step back, asks Tempus? Arrow Global is a one-off, buying and collecting distressed UK consumer debt, and it has found in Portugal a useful territory to expand the business. Evraz shareholders are offered the chance to sell some of their shares, which seems to be designed as an alternative to dividends. Read on for more about the Tempus share tips of the day.

The Times
Greece warned yesterday that the viability of the single currency “is now in question” as it submitted a revised list of economic reforms designed to unlock the €7.2 billion in loans it needs to stay afloat.
read full update
The Daily Telegraph
The Greek government has threatened to default on its loans from the International Monetary Fund, as Athens continues its battle to convince creditors to provide a fresh injection of bailout cash.
read full update
Financial Times
Barack Obama has declared cyber threats from abroad a “national emergency”, as he took action to impose sanctions on overseas actors engaging in cyber attacks that threaten the US’s national security or economic health.
read full update
City AM
The new banking ethics group designed to improve behaviour in the City has won over some of its critics, and recruited a heavyweight advisory panel of top industry leaders.
read full update
Economics

UK factory output: Robust domestic demand and a pick-up in export orders helped factory output to grow at the fastest rate in eight months in March. Manufacturing activity continued its rebound from a slow few months, according to the purchasing managers’ index. Markit and the Chartered Institute of Procurement and Supply said that companies had reported “improved order inflows” from a broad range of nations, including the US, China and the Middle East. The headline activity reading rose to 54.4 in March from 54 in February, with anything above 50 indicating growth.

UK productivity: The country remains less productive per hour worked than it was in 2007 before the financial crisis struck, official figures for 2014 show. The seven-year stagnation in productivity is “unprecedented” in postwar UK history, the Office for National Statistics said.

Greece: The debt-stricken country warned that the viability of the single currency “is now in question” as it submitted a revised list of economic reforms designed to unlock the €7.2 billion in loans it needs to stay afloat.

Banking & Finance

+1.11%

Arrow Global Group: The purchaser of distressed debt is enlarging its Portuguese operation, its largest outside the UK, with the purchase of two collection services and a portfolio of debt worth €565.6 million (£411 million) on face value and is signing a five-year agreement with a US company in the same line of business to exploit opportunities in that country.

Standard Chartered: Another senior executive has quit the emerging markets bank amid further management reshuffles in advance of the arrival next month of its new chief executive. Viswanathan Shankar, the chief executive of Europe, Middle East, Africa and Americas, will quit after 13 years at the bank at the end of this month.

Shawbrook: Sir George Mathewson, the former boss of Royal Bank of Scotland, has made nearly £3.6 million from the flotation of the start-up bank. Sir George, who was RBS’s chief executive and then chairman before leaving the bank in 2006, has sold shares worth nearly £900,000 as part of the initial public offering of the niche business lender and has received shares worth a further £2.7 million, valued at Shawbrook’s 290p offer price, which was announced yesterday.

Morgan Stanley: James Gorman, the chief executive, has received a 25 per cent pay rise after the US investment bank handed him $22.5 million (£15.2 million) for last year. The Wall Street bank said Mr Gorman’s pay package, which included a $4.7 million cash bonus, was based on an assessment of Morgan Stanley’s performance and shareholder returns.

Consumer goods

-0.11%

Chilgrove Gin: The Sussex-made gin, which is sold in Harrods and Fortnum & Mason, is to go on sale in Canada after The British Bottle Company, its export partner, signed a distribution deal with a distributor in Quebec.

Engineering

-0.15%

Lymington Precision Engineers: A group behind the specialist in making equipment and tools used in the oil and gas, aviation and nuclear sectors has cashed in after selling the company for £45.8 million to a rival. Anthony Clark and Richard Cole, the chief executive and finance director of Lymington respectively, between them could take as much as £10 million from yesterday’s sale to Senior Group, a global manufacturing group.

US new vehicles: Demand for new vehicles in America showed signs of a thaw in March, particularly for luxury cars and big trucks. New vehicle sales rose 0.6 per cent from a year ago, to 1,545,802, according to Autodata, the industry consultant. The strong performers were Toyota, Hyundai, Kia and Audi. The annualised sales rate rebounded sharply last month, to 17.15 million vehicles, from 16.2 million in February.

Health

+0.35%

Evgen Pharma: A flotation intended to raise £20 million for the Liverpool-based drug development company has been scrapped. Evgen wanted the money to pay for clinical trials of a cancer treatment derived from sulforaphane — a substance found in broccoli.

Industrials

+5.22%

Ineos: The billionaire founder of the owner of the Grangemouth chemical site in Stirlingshire is squaring up for a multimillion-pound battle with his former close colleague, whom he accuses of poaching staff. Jim Ratcliffe, the chairman of Ineos, claims that Calum MacLean, the former chief executive who left the chemicals group last year, has poached a finance director and breached the terms of his departure.

Leisure

+0.01%

Hotels: Two of Dublin’s top hotels — the Clyde Court and Ballsbridge hotels — are tipped to go up for sale in the next few weeks for between €120 million and €150 million through Savills and Eastdil Secured, a big discount to the €380 million paid by the bankrupt developer Sean Dunne at the peak of the property boom in 2005, according to The Irish Times. The hotels are controlled by Ulster Bank and Rabobank.

Racecourse Media Group: A tender has been launched for the sale of the betting shop broadcast rights to 34 racecourses, including Aintree, Ascot and Epsom, for the period 2018 to 2023. While distributors are being invited to pitch, bookmakers who produce their own in-house channels will be able to submit expressions of interest to acquire rights directly.

Tripsta/airtickets: The Athens-headquartered companies have merged their online travel agency businesses to expand their reach across European markets and become the largest ecommerce company in Greece. The new group is expected to reach sales of more than €500 million.

Natural Resources

-0.15%

Evraz: The Russian steelmaker, which counts Roman Abramovich as a shareholder, is to buy back up to 8 per cent of its share capital in a tender offer to investors, at a premium to the most recent market price. This will provide investors with some return.

Iron ore: Prices have tumbled below $50 a tonne for the first time in more than a decade in the face of dwindling demand from China. At the same time, the world’s largest miners have new supplies scheduled to come on stream soon. Prices are nearly a quarter of their 2011 high, threatening to put less efficient miners out of business.

Oil price: The price of oil rose nearly 4 per cent yesterday as crunch talks in Switzerland aimed at settling a dispute over a nuclear weapons programme for Iran appeared to stall and official figures showed that stockpiles of US crude had risen by less than had been feared. Brent crude for delivery next month jumped by $2 a barrel to $57.11.

BG Group: The troubled oil and gas group has admitted it made a mistake offering its new chief executive a £25 million “golden hello” package last year, triggering a shareholder revolt. BG said in its annual report that it would learn from the experience of recruiting Helge Lund, whose appointment was confirmed only after BG’s board caved in and scrapped a one-off share award worth £12 million.

Professional & Support Services

+0.45%

Quindell: The credibility of the London stock exchange’s junior market was brought into question by the latest debacle at the troubled insurance services company. Shares in Quindell were suspended after it admitted to a glaring error in a statement to the stock market on Monday.

Retailing

-0.88%

Asos: Top-end brands are being dropped as the clothes website focuses on more affordable trends for twentysomething customers. Half-year profits fell by 10 per cent to £18 million as lower prices in international markets ate into margins. It was ahead of the City’s forecast of £16.3 million and Asos reassured investors that annual profit and margin would be in line with expectations, helping to push the price of its shares up 99p to £37.28.

Shop rents: Dublin is likely to experience the biggest rise in shop rents in Europe over the next two years, with growth forecast at 6 per cent, according to M&G Real Estate, outstripping rises in Amsterdam, Berlin, Paris and Warsaw. However, the cost of commercial property is still 50 per cent below record highs. Supermarkets: BESI, the broker formerly known as Espírito Santo, collected its thoughts on whether Britain’s food retailers are in “a race to the bottom”. Rickin Thakrar, its analyst, noted that trends for prices charged in the supermarkets against prices they pay to fill the shelves are the weakest in a decade. That, he warned, could scuttle the “V-shaped” recovery the market has baked in to Tesco’s share price and lead to a slower recovery.

Kurt Geiger: The upmarket shoe retailer’s management and their backers at Sycamore Partners, an American private equity firm, have hired bankers at Goldman Sachs to explore a sale of part or all of the business less than a year after its last buyout, according to Sky News. Analysts said the price tag could be in the region of £300 million, roughly equivalent to last year’s estimated sales.

Technology

-0.91%

Google: Every April Fool’s Day, companies put out a torrent of announcements in search of cheap laughs and even cheaper advertising. Pets, selfies and bizarre technological innovations seemed to be the most popular themes this year. Google reversed its search engine and turned its Maps app into the Pac-Man video game. Microsoft relaunched MS-DOS for the Windows smartphone, while retailers came up with bouncy aisles, yolkless eggs and carrier pigeon delivery.

GoDaddy: The latest high-tech stock to float on Wall Street without yet making a profit, GoDaddy, which registers and maintains websites, saw its shares soar by almost a third on their debut, valuing the company at more than $5 billion (£3.4 billion).

Transport

-0.17%

FirstGroup: The rail and bus operator released a mixed trading update for the year to the end of March, with some slowdown at its US student and Greyhound coach operations but progress towards proper cash generation.

Fastjet: Sir Stelios Haji-Ioannou has pumped another £5 million into the low-cost airline as part of a £50 million fundraising designed to enable it to pursue its pan-African ambitions. The AIM-quoted carrier said the share placing would enable it to acquire new aircraft and fund the launch and development of “sizeable operations” in Zambia, Zimbabwe, Kenya and South Africa.

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