Covid resurgence pushes eurozone into double-dip recession - Financial Times

The eurozone slid into a double-dip recession in the first three months of this year as output dropped under the weight of lockdown measures to contain a resurgence in coronavirus infections, leaving the bloc lagging behind other major economies.

The 0.6 per cent quarter-on-quarter decline in gross domestic product followed a contraction of 0.7 per cent in the final three months of 2020, plunging the single-currency zone into a technical recession — defined as two consecutive quarters of negative growth.

By contrast, on Thursday the US reported first-quarter growth of 1.6 per cent from the previous three months, and two weeks ago China announced a 0.6 per cent expansion.

Much of Europe was subjected to varying levels of lockdown in the first three months of this year, shutting shops and limiting travel to contain a third wave of Covid-19 infections. 

Germany was Europe’s worst-hit major economy, logging a quarterly contraction of 1.7 per cent as falling household consumption offset higher manufacturing exports. Spain’s GDP contracted 0.5 per cent due to declines in household consumption and manufacturing while Italy’s output fell 0.4 per cent, dragged down by lower services sector activity. Portugal’s economy shrank 3.3 per cent after a rampant Covid-19 outbreak.

But the French economy outshone economists’ expectations by growing 0.4 per cent, boosted by strong growth in construction and a slight rebound in household consumption.

Eurostat said GDP fell 0.4 per cent in the wider EU; Sweden, Austria and Belgium reported better than expected growth. Most economists expect a quarterly contraction in UK output when its figures are released next month.

Carsten Brzeski, head of macro research at ING, said Germany’s “major setback” in the first quarter had turned it from a “positive growth driver” to a “drag factor”. But he added that a “strong rebound is on the cards”.

Countries including Germany and France recently tightened containment measures again in response to rising coronavirus infections and hospitalisations, but the accelerating pace of vaccinations and signs that infections may have peaked are fuelling economists’ hopes of a return to growth in the second quarter.

Consumers are expected to unleash a wave of pent-up spending once countries ease containment measures. Economists at Allianz predict consumers in the bloc will use some of their excess savings to spend an extra €170bn this year, equal to 1.5 per cent of GDP.

“The economy in the first quarter proved to be less elastic to restrictions compared to last spring and could operate at almost normal levels,” said Maddalena Martini, economist at Oxford Economics. “We see activity rebounding steadily this year, in parallel with a strong pick-up in vaccine rollouts and the gradual relaxation of restrictions.”

The European Central Bank forecasts that the eurozone economy will grow 4 per cent over the course of this year and return to its pre-pandemic level in 2022 with growth of a further 4.1 per cent. 

“We do see a good recovery throughout the rest of this year, so that is very much, if you like, a two-sided story,” Philip Lane, ECB chief economist, told Dagens Industri TV on Thursday. “Looking backwards, the initial weeks have been very tough for many firms . . . and the fact we’re rebounding from the worst of it does not mean there’s a full recovery.”

Separate figures also published on Friday showed that eurozone inflation continued to rise, from 1.3 per cent in March to 1.6 per cent in April.

The rebound in price growth, which had turned negative in the final months of last year, moved inflation closer to the ECB’s target of just under 2 per cent, although most economists expect this increase will only be short term. Core inflation, excluding more volatile food and energy prices, fell from 0.9 to 0.8 per cent.

Unemployment across the bloc dipped to 8.1 per cent in March, down from 8.2 per cent the previous month and up from just over 7 per cent before the pandemic hit. However, the jobless figures exclude millions more people who have either stopped looking for work or are on government-subsidised furlough schemes.

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2021-04-30 10:19:48Z
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US economic rebound gains momentum in first quarter - Financial Times

US economic growth received a boost in the first three months of 2021 from massive fiscal stimulus that fuelled consumer spending, as well as looser lockdown restrictions, bringing output close to pre-pandemic levels.

Gross domestic product advanced 6.4 per cent on an annualised basis in the first quarter, the commerce department said on Thursday. That topped economists’ expectations for 6.1 per cent growth, according to a Refinitiv survey, and marked the quickest first-quarter growth since 1984.

Economic output advanced 1.6 per cent compared with the previous quarter, based on the measure used by other big economies. Real GDP was just 1 per cent shy of its pre-pandemic level.

Speaking to lawmakers on Wednesday night on the eve of his 100th day in office, Joe Biden hailed the country’s revival from the struggles of the pandemic, declaring America was “ready for take-off”.

“We are working again. Dreaming again. Discovering again. Leading the world again. We have shown each other and the world: there is no quit in America,” he said.

Despite the quick bounceback in the world’s largest economy, Biden made an extensive appeal for lawmakers to approve his sprawling spending agenda, which is designed to plough trillions of additional government funds into investments over the next decade to correct deficiencies in public goods.

After enacting a $1.9tn fiscal stimulus plan in March, Biden has turned his focus to winning support for a $2.3tn infrastructure spending bill he called a “blueprint for blue-collar America” and a $1.8tn expansion of the social safety net. “We can’t stop now — we’re in a competition with China and other countries to win the 21st century.”

Biden was heading to Georgia on Thursday afternoon to meet former president Jimmy Carter and hold an event to promote his economic packages, as he tries to increase public support for the legislation.

The president wants to pay for the next stages of his economic programme with higher taxes on corporations and the wealthy, which have triggered a backlash from Wall Street and corporate America, opposition from Republicans and even some wariness among fellow Democrats.

US economic growth has accelerated as more Americans are vaccinated against coronavirus and states and cities have begun to relax pandemic restrictions. The US has administered 234.6m doses, and 98m Americans are fully vaccinated — representing 29.5 per cent of the total population. 

Consumers spent lavishly on goods as the economy has reopened, drawing on stimulus cheques as well as their savings pile. Personal consumption expenditures grew at a 10.7 per cent annualised pace. However, Ian Lyngen, head of US rates strategy at BMO Capital Markets, noted that spending on services was little changed.

“This leaves open the possibility for a strong second quarter as reopening will stoke service sector consumption, although it also reiterates the concern that simply unlocking the doors and turning on the lights won’t be sufficient to get consumers re-engaged in in-person commerce,” he said.

Pressure eased briefly on longer-dated Treasuries after the GDP report, with the benchmark 10-year bond falling to 1.65 per cent. It later edged back up to 1.68 per cent. US stocks rose, with the S&P 500 closing nearly 0.7 per cent higher.

The Federal Reserve on Wednesday acknowledged progress in the economic recovery, but maintained that its future path would “depend significantly on the course of the virus”. Jay Powell, the Fed chair, said that while the “recovery has progressed more quickly than generally expected, it remains uneven and far from complete”.

Indeed, despite the improvement, the labour market is a long way from recovering all the jobs lost since the start of the pandemic. Powell on Wednesday noted that one month of stellar job growth was “not enough”.

“The Fed will clearly acknowledge this as an important factor with which to judge the overall recovery,” said Padhraic Garvey, global head of debt and rates strategy at ING. “But crucially, this is a different type of Fed, in the sense that their focus is on the most vulnerable Covid-impacted households, rather than the median one.”

A separate report from the labour department on Thursday showed that 553,000 Americans filed for new unemployment benefits last week, the lowest level since the start of the pandemic but still historically elevated. Nearly 16.6m Americans continue to seek jobless benefits more than a year since the pandemic began.

The Fed, which signalled that it was in no rush to remove its ultra-easy monetary policy, has projected 6.5 per cent GDP growth and an unemployment rate of 4.5 per cent this year. Growth is expected to moderate to 3.3 per cent in 2022.

Despite the strong GDP report, Patrick Leary, chief market strategist and senior trader at Incapital, raised concerns about the economy’s growth trajectory once the effects of the most recent Covid stimulus relief package ebbs.

“I question how much the economy can grow without the help of stimulus, but perhaps that doesn’t matter near-term as the administration is planning another round of spending to stimulate the economy.”

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2021-04-29 17:13:28Z
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BT confirms talks over the future of its sports business - BBC News

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BT has confirmed it is in talks with several companies about the future of its sports broadcasting arm.

The group says it is exploring "ways to generate investment, strengthen our sports business" to "help take it to the next stage in its growth".

BT said early talks were being held "with a number of select strategic partners".

It is not clear if this means selling a stake in BT Sport or a full sale of the division, which was launched in 2013.

BT added that the discussions were confidential and "may or may not lead to an outcome".

The Daily Telegraph reported on Wednesday that Amazon, Disney and Dazn were in talks with BT, but that an unnamed British broadcaster might also be in the running to buy the sports business.

The telecoms giant did not confirm which firms are involved.

Amazon and Dazn declined to comment, while Disney did not immediately respond to the BBC's request.

Talks have emerged as the Premier League has held discussions with broadcasters, including BT, Sky and Amazon, about scrapping its next domestic media rights auction.

The government is now considering whether to approve a rollover of the current £4.7bn deal, which was secured in 2018.

That sale represented a 10% drop in value and some clubs are concerned there could be another fall if the usual open-market auction begins as planned next month for the three-year cycle between 2022 and 2025.

Broadband push

Jerry Dellis, an analyst with stockbrokers Jefferies, said BT Sport costs the company about £800m a year, mainly due to football rights, including £400m for the Champions League.

He said that since its launch, BT Sport has struggled to define how it adds value to the business.

"BT Sport was initially pivotal to stabilising the consumer retail business... Sky was overwhelmingly the favourite destination for consumer lines migrating away from BT.

"BT consumer retail line loss more than halved as soon as BT Sport launched, and dropped to zero when the Champions League was added in 2015."

However, Mr Dellis suggested, that may no longer be needed as other BT products improve.

The company has revamped its customer service, introducing face-to-face support in stores, and is focusing on replacing copper telephone wires with fibre-optic broadband lines across Britain.

Openreach

BT's Openreach subsidiary lays down and maintains the cables for "full-fibre" internet connections, as well as as operating the associated telephone exchanges. It then sells use of these services to individual internet service providers, who sell access to the public.

The business recently confirmed plans to build fibre-to-the-premises connections to 20 million homes and offices by the mid-to late-2020s.

It currently reaches 4.1 million homes.

BT said it would "build like fury" after the UK's telecoms regulator Ofcom decided not to impose price caps on full-fibre connections provided by Openreach.

Last May, BT announced it would scrap its dividend payment to shareholders until 2022, when it will be reduced by 50% from 2019 levels, to free up cash for investing in broadband projects after the pandemic.

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2021-04-29 09:07:33Z
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Boss of Scottish banking giant: We would move HQ to London in event of Scottish independence - HeraldScotland

THE chief executive of Royal Bank of Scotland owner NatWest Group has reiterated that the institution would move its headquarters from Edinburgh to London in the event of Scottish independence.

Alison Rose said the Edinburgh-based bank has “always been very clear” that its balance sheet would be “ too big” for an independent Scotland.

Her comments came in response to a question from The Herald regarding the bank’s strategy should next week’s Scottish election return a majority victory for the SNP and ultimately lead to a referendum on Scottish independence.

Speaking as the bank unveiled an operating profit before tax of £946 million for the first quarter, Ms Rose said: “As you know, we are neutral on the issue of Scottish independence – it is something for the Scottish people to decide.

"We have been very clear, and it is recognised by senior nationalists, that in the event that there was independence in Scotland, our balance sheet would be too big for an independent Scottish economy, and we would move our registered headquarters… to London.”

Ms Rose insisted, however, that such a move would not affect the bank’s commitment to Scotland, where it is one of the country’s biggest private sector employers and supporters of businesses and households.

“It is really just the size of the balance sheet at that point, which we have been very clear in public about and with senior nationalists. The issue of Scottish independence is one for the Scottish people.”

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2021-04-29 08:02:44Z
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Nestlé to cut almost 600 jobs as it closes UK factory and moves some production to Europe - Sky News

Nestlé is to make almost 600 people redundant as it closes a factory in the UK and moves some of its production to Europe.

The Swiss multinational said products currently made at Fawdon near Newcastle would move to other plants in Britain and on the continent.

Fawdon, which opened in 1958 and makes products including Fruit Pastilles, is due to close "towards the end of 2023", it added.

Image: There will be investment at the York factory, where the KitKat is made

The GMB union described the move as "sickening" and claimed that lives are being "ruined in a ruthless pursuit of profits".

The company said it was making the announcement "as early as possible" to provide "the maximum time for consultation" with staff and trade unions, adding that it does not "underestimate the impact" the closure will have on the local area.

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In total, 573 roles are "at risk, subject to consultation". Most of those - 475 - are at Fawdon, with a further 98 at Nestlé in York.

The company, which employs 8,000 people in the UK, described Fawdon as "home to many smaller, low-growth brands" and a plant with a "diverse and complex mix of production techniques".

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"In contrast, our factories at York and Halifax have clearer specialisms and manufacture some of Nestlé's biggest brands," the firm added.

It said it plans to invest £20.2m in York to "modernise and increase production of KitKat in the city where the brand was first created in 1935".

A further £9.2m will be invested in Halifax to "equip the factory to take on the largest portion of Fawdon's current production".

York is the base of Nestlé Confectionery's global R&D centre, while the Halifax factory, which has been in use for well over a century, will "become even more important", the company said.

The decision to "propose Fawdon's closure" follows investment and efforts to reduce complexity while bringing in new products, it added.

Staff have "worked tirelessly to deliver those changes and these proposals are absolutely no reflection on their efforts", the company said in a statement.

Image: The company says Fawdon is 'is home to many smaller, low-growth brands'

GMB national officer Ross Murdoch said: "To ruin hundreds of lives in a ruthless pursuit of profits, to the very workers who've kept the company going during a global pandemic, is sickening.

"Nestle is the largest food producer in the world, with astronomical profits. It can afford to treat workers right.

"Instead, they've allowed factories to deteriorate, outsourced production overseas and now slash almost 600 jobs."

Newcastle North's Labour MP Catherine McKinnell said: "Today's announcement that 63 years of chocolate manufacturing in Fawdon could soon come to an end is absolutely devastating.

"This will be an extremely worrying time for loyal workers who produce some of the best-known names on the sweet aisle and have helped keep the nation fed during the COVID-19 pandemic.

"It is particularly difficult to accept that the world's largest food company needs to make hundreds of Newcastle workers redundant at a time when it has just achieved its strongest quarterly growth in a decade.

"I will be meeting urgently with the GMB union and employees impacted to discuss how we respond to the proposals."

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2021-04-28 15:00:00Z
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Reckitt: More sex, fewer colds drive sales at Durex maker - BBC News

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Condom sales have jumped in countries including China where lockdowns are easing, says consumer goods giant Reckitt.

It reported a "double-digit" increase in Durex sales in the first quarter of 2021, compared with one year ago.

But demand for health products fell overall as fewer customers stocked up on cold and flu medicines.

Reckitt's boss pointed out that sales for Lysol and Dettol were strong as hygiene habits improved.

At the start of the pandemic last year, the firm said people were having less sex because of the coronavirus crisis, partly a "manifestation of anxiety".

Conversely, the company said sales of Durex jumped when social-distancing rules were relaxed in the summer.

In its nutrition division, which includes baby formula brand Enfa, sales in the first quarter fell 12.3%, but with hygiene sales up 21.1%, the overall sales tally for the first three months of the year stood at £3.5bn - down 1.1%.

Chief executive Laxman Narasimhan said: "Demand for Lysol and Dettol continues to be strong as consumers remain vigilant to the spread of the virus and see use of our products, and improved hygiene habits, as a way of protecting their health and regaining normality in their lives."

He said that the firm would continue to track changes in consumer behaviour and demand for different products at different stages of the pandemic.

• Durex condom sales jump after virus rules relaxed

The company reported a 16.4% decline in sales for health products like cold and flu relief products such as Nurofen or Strepsils. It estimated that cases of flu were down by as much as 90%, while consumers had already stocked up last year.

Mr Narasimhan added that in countries with few coronavirus cases and high vaccination rates, people have eased off on washing their hands or using hand sanitizers, although use was still higher than before the pandemic.

For example, sales of Dettol showed strong growth in India, which is currently dealing with soaring cases of Covid, but declined in China.

"Sexual wellness" products saw a big uptick in sales in countries like China too, as well as parts of the United States and Europe.

Return to 'normal'?

Bosses said they expect this to grow in other countries as lockdowns and social distancing measures lead to the opportunity for more people to use their products.

The results are an illustration of changes in spending habits as lockdown rules loosen.

On Tuesday market research firm Kantar said that UK shoppers are making more trips to supermarkets and buying less online as lockdown lifts and the vaccine rollout continues.

Its latest figures show how that online supermarket sales growth has halved since the height of the pandemic, to 46%. Meanwhile, the number of trips to grocery stores rose by 4% month-on-month in the four weeks to 18 April.

Kantar said older shoppers accounted for much of the rise in footfall, with much of the over-65 community now vaccinated.

More than 33 million people in the UK have received at least one dose of a coronavirus vaccine - part of the biggest inoculation programme the country has ever launched.

Overall supermarket sales rose by 5.7% to £31.6 billion in the 12 weeks to 18 April, marking a slowdown in the rate of growth seen a year ago when shoppers panic-bought at the start of the crisis.

Fraser McKevitt, head of retail and consumer insight at Kantar, said: "While the market may fluctuate between growth and decline in the months ahead, depending on the year-on-year comparison being made, the fact that trip numbers are up and basket sizes down suggests that habits are slowly returning to normal."

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2021-04-28 10:24:46Z
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Sainsbury's: Cost of Covid has been high - BBC News

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Sainsbury's has slumped to a £261m loss despite bumper food and Argos sales during the coronavirus pandemic.

The supermarket giant said that in the year to 6 March Covid costs "to help keep our colleagues and customers safe" had been "high".

However, it said it expected profits to bounce back in the coming year.

Rival Tesco reported a sharp fall in profits earlier this month after spending nearly £900m to carry on trading during the pandemic.

Sainsbury's said it had spent £485m on Covid-related costs, including paying colleagues that were required to shield or needed to self-isolate.

It also paid back business rates relief on its stores in line with rivals.

Sainsbury's £261m pre-tax loss for the year was despite like-for-like sales rising 8.1%.

Argos did especially well, with total sales rising almost 11% as digital sales boomed.

However, Argos standalone stores, rather than those inside the supermarkets, were closed for much of the year during lockdowns.

Sainsbury's online sales rose as coronavirus restrictions accelerated internet shopping. Online jumped from 8% of grocery sales to 17% during the year.

Chief executive Simon Roberts praised the "heroic" efforts of staff to keep the business going during the pandemic, but added: "The cost of keeping colleagues and customers safe during the pandemic has been high."

Sainsbury's has already embarked on a restructuring, and announced in March that 1,150 jobs were at risk.

As well as Covid costs, it also incurred restructuring costs, including the closure of 170 standalone Argos stores.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the costs of operating through the coronavirus crisis have "seriously dented" the supermarket giant's bottom line.

"Redesigning layouts to keep customers and staff safe, paying colleagues in full who needed to shield, all added [to costs] with £485m spent on Covid related costs," she said.

Sainsbury's also spent £100m on higher staff salaries and special recognition payments to colleagues "for their efforts during the crisis", Ms Streeter added.

Keith Bowman, equity analyst at Interactive Investor, said the results offered "broad optimism" for the future.

"[But] intense competition across the sector, including from discount retailers Aldi and Lidl, cannot be ignored," he said.

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2021-04-28 08:19:35Z
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Heathrow loses bid to raise airport charges by 10% - BBC News

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The Civil Aviation Authority (CAA) has rejected a "disproportionate" request for funding from Heathrow which would have hiked airport charges by 10%.

Heathrow is attempting to offset losses incurred because of the pandemic.

CAA has instead sanctioned a smaller increase which will allow Heathrow to fund the reopening of terminals as air traffic begins to recover.

The CAA regulates what Heathrow can charge users, such as airlines.

Those airlines can then choose to pass on the charges to their passengers.

• Covid: When can I go on holiday abroad or in the UK?

Heathrow had asked to increase charges to recover around £2.6bn which has been lost due to the sharp drop in airline traffic because of the coronavirus.

The CAA said this would have increased airport charges by 10%, amounting to roughly £2 per passenger.

It said this would be "disproportionate and not in the interest of consumers".

The investment costs that the airport can recover and the profit it can make are calculated according to its regulated asset base - a figure intended to represent the economic value of the business.

Heathrow had asked for this figure to be increased by £800m immediately and by a total of £2.6bn by the end of 2021.

While the CAA rejected this request, it said it recognised that the current circumstances were "exceptional" and created potential risks to consumers in the short-term.

It therefore allowed an increase of £300m in Heathrow's regulated asset base, to "incentivise Heathrow Airport Limited to plan effectively, reopen its terminals in a timely way for a summer recovery".

This will lead to an increase in charges of around 30p per customer. The CAA said that issues raised by Heathrow could be considered during the next review of charging levels at the airport.

'Deep frustration'

Heathrow said the CAA had recognised the need for action to support its business, but had "failed to deliver".

It said this would undermine investor confidence in UK regulated businesses, and put the government's infrastructure agenda at risk.

Meanwhile, British Airways-owner IAG said it was "extremely disappointed" with the CAA´s decision to grant even a smaller increase which it said "will unfairly penalise consumers".

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"Post-Brexit this makes the UK even less competitive and will drive traffic to other airports. We're assessing our options," it said.

The International Air Transport Association (IATA), which represents the airline industry, also expressed "deep frustration" at the CAA's decision.

IATA director Willie Walsh, who was the boss of IAG until last year, said the CAA had "caved to pressure from Heathrow" and said consumers will end up "paying millions more" to travel.

"This is the time when everyone in aviation should be pulling together to reduce costs and rebuild an important sector of the economy, not seeking to cover losses on the tab of its customers," Mr Walsh said.

"Irrespective of our next steps to counter the damage of this decision, we do agree with the finding of the CAA that Heathrow must invest in better services for airlines and travellers."

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2021-04-27 10:23:09Z
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HSBC forecasts brighter outlook as profits surge - BBC News

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HSBC has reported stronger than expected profits and says the economic outlook is looking brighter.

Europe's biggest bank by assets reported income of $5.8bn (£4.2bn) for the January-to-March period, up from $3.2bn a year earlier.

More than half of its profits came from Asia, the region where the bank does much of its business.

The improved outlook led HSBC to release some of the cash it had set aside for bad loans.

Last year, HSBC had set aside $3bn to cover bad debts, but it has now released $400m of that following "an improvement in the economic outlook, notably in the UK".

Solid growth in its mortgage business in the UK and Hong Kong also helped to boost profits.

The bank says it is on track with its restructuring plan, including cutting 35,000 jobs and focusing on earning more client fees in Asia.

The jump in profits marks a turnaround for HSBC, which reported a 34% drop in profits for 2020, partly due to the impact from the coronavirus pandemic.

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Noel Quinn, HSBC's group chief executive, said the bank had made a "good start to the year".

He said: "Global banking and markets had a good quarter, and we saw solid business growth in strategic areas, including Asia Wealth and trade finance, and mortgages in Hong Kong and the UK.

"We also strengthened our lending pipelines in our retail and wholesale businesses."

The bulk of the bank's profits came from Asia, where HSBC made $3.8bn, but it said it was profitable in all regions, with its UK business reporting profits of $1bn.

Although HSBC said it expected better economic conditions in 2021, it predicted continued uncertainty as countries emerge from the pandemic at different speeds and as governments pare back support measures.

While its profits were stronger, its revenues were down 5% to $13bn due to the impact of interest rate reductions in all global businesses.

The bank expects lending to continue to grow in 2021, although that growth depends on the global recovery from the pandemic.

"There doesn't look like there is an immediate cure for the bank's underlying ailment, the ultra-low rates plaguing the banking sector," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"HSBC is not alone in feeling the squeeze of net interest margins, which tightened again slightly over the quarter, but other banks with huge investment banking arms have been able to capitalise on the trading surge over the past year.

"The bank notes that the outlook remains highly uncertain. HSBC's resilience could be tested as governments remove the arms of support that have been wrapped around their economies to help them limp through the crisis.''

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2021-04-27 06:43:33Z
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BP commits to share buybacks after first-quarter earnings treble - Financial Times

BP pulled out the stops to woo back investors, saying it was committed to buying back shares this year after cutting debt faster than expected in a quarter when earnings trebled.

The UK energy major said on Tuesday its first-quarter results had been driven by “exceptional” gas marketing and trading performance, significantly stronger oil prices and improved refining margins.

“With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early,” said Bernard Looney, chief executive.

BP was dealt a double blow in the past year. Its finances took a battering because of the coronavirus crisis and it struggled to get investors to reward it for its plans to transform itself into a cleaner energy company, with its share price taking a big hit in recent months.

The company’s net debt fell from $38.9bn at the end of 2020 to $33.3bn in the first quarter, beating its target of $35bn. BP previously said that once it achieved this goal it would return “at least 60 per cent” of surplus cash flow to shareholders through share buybacks.

BP said it would initially offset the dilution from the vesting of employee share schemes through buybacks at a cost of about $500m in the second quarter. While future buybacks would require board approval, Looney told the Financial Times the company also expected a cash surplus in the second half of the year.

Looney added that investors had questioned whether the company could stabilise its finances and hand back cash to shareholders while also spending money on its shift towards greener fuels.

“With the start of the buybacks . . . we have shown, I hope, that it doesn’t need to be a choice,” he said. “We can develop competitive cash returns for our investors and at the same time invest to transition BP to a low-carbon future.”

Underlying profit on a replacement cost basis, the measure of income tracked most closely by industry analysts, was $2.6bn in the three months to March 31. This beat analyst expectations of $1.6bn and compares with $791m in the same period the year before as the pandemic took hold across the globe.

BP’s share price rose more than 2 per cent in early trading on Tuesday.

The company is emerging from a brutal year for the sector as the pandemic hit energy demand and prices. Brent crude is now back above $66 a barrel as big global producers enact supply cuts and demand picks up. But the oil market still faces huge uncertainty amid new outbreaks of coronavirus in big consumer countries such as India.

BP’s reported profit stood at $4.7bn versus a loss of $4.4bn in the first quarter of 2020.

The company cut its dividend in August for the first time since the 2010 Deepwater Horizon disaster. It has since maintained it at 5.25 cents, including in the latest quarter.

Divestment proceeds totalled $4.8bn. The company has a goal to sell $25bn in assets by 2025 to cut debt and pay for green investments as part of a plan to become a net zero emissions business by 2050.

BP is shrinking production in the coming decade and reshaping its business, which includes restructuring the company and cutting 10,000 jobs.

BP said last August that returning extra cash to shareholders would only come after funding the dividend, cutting debt, shifting cash towards lower-carbon investments and sustaining its oil and gas business.

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2021-04-27 07:39:59Z
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Post office scandal: Ex-boss quits Dunelm and Morrisons director roles after convictions quashed - The Independent

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1. Post office scandal: Ex-boss quits Dunelm and Morrisons director roles after convictions quashed  The Independent
2. Ex-Post Office boss Paula Vennells quits Morrisons and Dunelm boards  The Guardian
3. Ex-Post Office chief Paula Vennells quits retailer boardroom roles after sub-postmasters have convictions overturned  Sky News
4. Post Office IT scandal: Former chief Paula Vennells resigns from roles  The Times
5. Ex-Post Office head apologises to workers after convictions quashed  The Guardian
6. View Full coverage on Google News

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2021-04-26 12:26:02Z
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COVID-19: Older workers suffer biggest annual employment hit since 1980s - Sky News

Over-50s have suffered their biggest annual fall in employment since the 1980s as a result of the COVID-19 economic crisis, according to new figures.

A study by the Resolution Foundation found that while under-25s have been by far the worst affected by the hit to jobs caused by the pandemic, the cost of being laid off can be particularly high for older workers.

They take longer to return to work and suffer the biggest hit to incomes when they do so, it found.

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Why the jobless rate has fallen for third month

Workers aged 16-24 saw employment numbers fall by 3.9% over the past year compared to 0.7% for 25-49-year olds and 1.4% for those aged 50-69, the study found.

The setback for older employees comes after a period of near-continuous employment growth for that age group since the mid-1990s, the study showed, with men over 50 experiencing only a relatively small drop in employment in the wake of the financial crisis.

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Meanwhile the rate of employment of women in the workforce climbed from 46% in 1990 to 68% on the eve of the pandemic.

The cost of being laid off as an older worker was highlighted by figures showing that six months after losing their jobs, just 62% of over-50s had returned to employment, compared to nearly three-quarters of those in younger age groups.

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Over-50s also face having to work for less, typically seeing a 9.5% fall in hourly pay compared to what they were earning before they were made unemployed.

That compared to a 4% wage hit for 25-49-year-olds and a 5.1% boost for under-25s.

Nye Cominetti, senior economist at the Resolution Foundation, said: "The COVID-19 crisis has had a U-shaped effect on people's employment prospects.

"While the youngest workers have been hardest hit by the crisis, older workers have also been badly affected, experiencing the biggest annual fall in employment since at least the 1980s.

"The cost of unemployment for older workers is particularly high.

"They take the longest to return to work - with fewer than two-in-three returning within six months - and experience the biggest earnings fall when they finally to return to work.

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'I'm worried young people will have no hope'

"In the face of the current crisis, unemployed older workers may have to either work for longer to make up for these negative employment effects, or retire earlier than they planned to.

"The government must ensure that older workers are not forgotten in the design and implementation of schemes created in the wake of the crisis to help people back into work."

Latest official figures show the number of people in payrolled employment was 813,000 lower in March 2021 than a year earlier.

The official unemployment rate has risen since last year to stand at around 5%, with the government's furlough scheme helping to prevent a more significant surge in joblessness during lockdowns.

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2021-04-26 08:16:00Z
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Abrdn: disemvoweled - Financial Times

Gd mrnng:

Standard Life Aberdeen plc ("the Company") today announces its intention to change its name to "Abrdn plc". The new Abrdn name (pronounced "Aberdeen") will be part of a modern, agile, digitally-enabled brand that will also be used for all the Company's client-facing businesses globally.

The new brand identity marks the next stage in the reshaping of the business and future-focused growth strategy. The Company is focused on three interrelated growth vectors: global asset management (Investments), technology platforms for UK financial advisers and their customers (Adviser), and UK savings and wealth (Personal).

(As an aside: there's apparently an old joke about taking the ‘E’ out of Aberdeen but we won’t go into the specifics of that here.)

In other news, now that even Aberdeen is pushing to be a modern, agile, digitally enabled brand, FT Aalphaaviillee (still pronounced ‘FT Alphaville’), luddites that we are, is going the other way.

Send us your most analogue news items for consideration. No bitcoin, blockchain or anything with a “tech” suffix please. Only the financial news equivalent of a vinyl record for us from now on.

Related Links:
What's in a (Band) Name? These Days, Not Many Vowels: Here's Why -- Billboard

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2021-04-26 07:43:22Z
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Ex-Post Office chief Vennells quits Morrisons and Dunelm boards - Sky News

Paula Vennells, the ex-Post Office chief executive, is quitting the boards of two major retailers days after her former employer was found culpable over one of the biggest miscarriages of justice in British legal history.

Sky News has learnt that Ms Vennells' departure as a director of Wm Morrison, the supermarket chain, and home furnishings retailer Dunelm will be announced on Monday morning.

City sources said her resignation had been mutually agreed with the two London-listed companies following Friday's verdict by the Court of Appeal.

"The decision was inevitable," one boardroom colleague said.

"She has been a diligent and effective director, but there was no way for her to stay on after the ruling - and It's hard to see how she will ever be able to work again."

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Ms Vennells ran the Post Office between 2012 and 2019 - a period when reports of a faulty IT system called Horizon were not properly investigated by the state-owned company's board, leading to a vast miscarriage of justice involving scores of loyal workers.

She was awarded a CBE towards the end of her tenure - which unions argue should now be stripped from her - while she also faces demands to repay millions of pounds in bonuses handed to her during her stint at the helm.

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The Court of Appeal quashed the convictions of 39 sub-postmasters who had been accused of theft, fraud and false accounting, with some wrongly have been sent to prison.

Taxpayers now face having to cover a compensation bill which could run to hundreds of millions of pounds.

Dunelm and Morrisons both declined to comment on Sunday night.

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Cisco says computer chip shortage to last six months - BBC News

The boss of networking giant Cisco has said the shortage of computer chips is set to last for most of this year.

Many firms have seen production delayed because of a lack of semiconductors, triggered by the Covid pandemic and exacerbated by other factors.

Cisco chief Chuck Robbins told the BBC: "We think we've got another six months to get through the short term.

"The providers are building out more capacity. And that'll get better and better over the next 12 to 18 months."

That expansion of capacity will be crucial as advances in technology - including 5G, cloud computing, the internet of things and artificial intelligence - drive a big increase in demand.

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Mr Robbins is the latest tech boss to weigh in on the debate - and with 85% of internet traffic using Cisco's systems, his opinion matters.

"Right now, it is a big problem," he says, "because semiconductors go in virtually everything."

The seemingly insatiable demand is why major US manufacturer Intel announced a $20bn (£14.5bn) plan to significantly expand production, including two new plants in Arizona.

• Jaguar Land Rover halts output over chip shortage
• Chip shortage: Samsung warns of 'serious imbalance'
• How will 'chipageddon' affect you?

According to Dan Ives, a tech analyst at investment firm Wedbush Securities, current "demand is probably 25% higher than anyone would have expected".

Even though the shortage "is going to be an issue for the next three to six months", technology share prices are doing well because investors are focused on the growing long-term demand for their products.

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US President Joe Biden also sees this as a long-term issue and used a White House summit with business leaders this month to urge them to make the country a world leader in computer chips. Amid the trade and technology war with China, the White House says it is "a top and immediate priority".

The US-based Semiconductor Industry Association says 75% of global manufacturing capacity is in East Asia. Taiwan's TSMC and South Korea's Samsung are the dominant players.

European politicians also want more chips made locally, a view partly driven by concerns over China's desire to achieve reunification with Taiwan. Meanwhile, China has seen a huge growth in domestic demand for chips to power new technology, but has only a small share of global manufacturing capacity.

Mr Robbins says: "I think that it doesn't necessarily matter where they're made, as long as you have multiple sources."

However, Intel chief executive Pat Gelsinger told the BBC it was not "palatable" to have so many chips made in Asia.

Cisco

TSMC appears intent on holding on to its position as the world's biggest contract manufacturer and is spending $100bn to expand capacity over the next three years.

This week its founder, Morris Chang, called on the Taiwanese government to "keep hold of it tightly", arguing it is better positioned to make chips than the US or China, despite their big government subsidies.

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The chip shortage was heightened by the coronavirus pandemic. At first, many companies cut their orders for chips, thinking demand would fall, which led suppliers to reduce capacity. However, demand for consumer electronics rose during the pandemic.

The problems have been worsened by a string of other factors, including a fire at a semiconductor factory and weather issues.

This, combined with a "generational technological change has created an unprecedented situation for the industry", according to Paul Triolo, who leads the geo-technology practice at consultancy Eurasia Group.

• Factory blaze adds to computer chip supply crisis
• Texas freeze shuts chip factories amid shortages
• Drought hits Taiwan chip supply as US wants more

He thinks it doesn't matter where chips are made as long as there is a diversity of supply. However, the shortages are likely "to persist for some time" and longer-term solutions are needed to address the concentration of manufacturing of semiconductors, which is a "problem that predates the shortage".

That is why Mr Robbins says: "What we don't want is to have consolidation where any of the risks that we may face could, frankly, result in the situation we're seeing today, whether it's weather-related disaster risks, whether it's single point of failure risk, whether its geopolitical risks, whatever those are. We just need more options, I think, for where semiconductors are built."

AFP

Cisco recently completed the $4.5bn acquisition of Acacia Communications, which, among other things, designs computer chips. Mr Robbins ruled out Cisco using it as an opportunity to start making its own chips.

"We're not a semiconductor fab company, so it's not a core competency for us to do that. So we think that companies that play in this space are much better equipped, we're working very closely with them."

The huge cost of chip manufacturing facilities means they operate at near full capacity and so it will take time to meet the increased demand.

The size of that demand "is not clear", according to Mr Triolo. He says that, like other major technology vendors, "Cisco's equipment relies heavily on reliable supply chains for a range of semiconductors."

The shortages, he says, have been "exacerbated by companies over ordering components to build up inventory, afraid of being caught short again".

You can watch Chuck Robbins' full interview on "Talking Business with Aaron Heslehurst" this weekend on BBC World News at Saturday 2330 GMT, Sunday 0530 and 1630 GMT, Monday 0630 GMT and 1030 GMT and Tuesday at 1230 GMT.

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