Major International Business Headlines Brief::: 15 November 2018

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Major International Business Headlines Brief::: 15 November 2018

 


 

 


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*  South Africa's Standard Bank to lay off more than 500 workers

*  MTN shares rise on report that Nigeria could reduce $10.1 bln fine

*  South Africa's retail sales up 0.7 percent year/year in September

*  Zimbabwe's inflation at highest in a decade as dollar shortage bites

*  Shares in Nigeria's Diamond Bank fall further after denying takeover talks

*  European businesses help lift South Africa's SPAR FY earnings

*  MTN making progress to resolve $10.1 bln dispute with Nigeria - CEO

*  MTN aims to offer mobile banking in Nigeria next year

*  Apple Stores to employ human trafficking victims

*  Sterling rallies after cabinet backs May's draft deal

*  Ex-UBS trader Kweku Adoboli has been deported

*  German economy contracts for first time since 2015

*  UK inflation holds steady at 2.4% in October

*  IMF's Lagarde says central banks could issue digital money

*  SSE admits 'some uncertainty' over merger with Npower

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

                                      

South Africa's Standard Bank to lay off more than 500 workers

JOHANNESBURG (Reuters) - South Africa’s Standard Bank aims to cut 526 information technology (IT) jobs as part of plans to restructure its IT division, the lender said on Wednesday.

 

“Of the impacted permanent staff, the majority are in the executive and managerial bands,” South Africa’s largest bank assets said in a statement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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MTN shares rise on report that Nigeria could reduce $10.1 bln fine

JOHANNESBURG (Reuters) - Shares in South Africa’s MTN Group rose 2.6 percent on Wednesday on a media report that Nigerian authorities could reduce the $10.1 billion sum they are demanding from the telecoms company in a dispute.

 

The sum covers the return of funds transferred overseas by MTN and a separate $2 billion tax bill.

 

“Someone in the Nigerian government has said the fine will come down,” said Greg Davies, equities trader at Cratos Capital referring to a report by Nigerian newspaper Vanguard which did not disclose its sources. A second trader cited the same report.

 

A spokeswoman for MTN said she could not yet comment on whether the report was accurate.

 

Nigeria’s central bank on Aug. 29 ordered the South African firm and its lenders to bring $8.1 billion back into Nigeria that it alleges the company sent abroad in breach of foreign exchange regulations.

 

 

 

South Africa's retail sales up 0.7 percent year/year in September

JOHANNESBURG (Reuters) - South African retail sales rose 0.7 percent year-on-year in September after increasing by 2.5 percent in August, the statistics office said on Wednesday.

 

On a month-on-month basis, sales contracted 0.6 percent from a 0.6 percent expansion previously. Sales were up 1.5 percent in the three months to the end of September compared with the same period last year, Statistics South Africa said.

 

 

Zimbabwe's inflation at highest in a decade as dollar shortage bites

HARARE (Reuters) - Inflation in Zimbabwe soared last month to its highest level since 2008, official data showed on Tuesday, after a severe dollar shortage led to a surge in prices of food, drinks and clothes.

 

The annual inflation rate shot up to 20.85 percent in October, statistics agency Zimstat said, from 5.39 percent in September after the dollar shortage led to a collapse in Zimbabwe’s parallel ‘bond note’ currency, triggering sharp price hikes in many goods and services.

 

That has sent a ripple of fear among citizens still traumatised by the hyperinflation era, which ended when Zimbabwe was forced to abandon its currency and adopt the U.S. dollar in 2009.

 

Some businesses in Zimbabwe are now demanding cash in U.S. dollars only and have raised prices by more than three times for the majority of Zimbabweans who pay for their goods using the bond note, mobile money or bank cards.

 

On a monthly basis, prices jumped by 16.44 percent in October from 0.92 percent in September, Zimstat said.

 

“This was expected after the jump in prices we saw last month but it’s more than what I had forecast,” said Tony Hawkins, a professor of business studies at the University of Zimbabwe.

 

“Authorities will probably say its a one-off spike but how many people are going to believe that? It now makes a mockery of the official inflation forecast of 5 percent next year.”

 

Prices of basic goods like meat, cooking oil and flour rose when the value of the bond note and electronic dollars collapsed on the parallel market last month, leading to panic buying by consumers.

 

Zimstat stopped publishing official inflation data in September 2008 when it reached 236 million percent, but the International Monetary Fund put the figure at 500 billion percent. The statistics agency resumed running inflation figures in February 2009.

 

Finance Minister Mthuli Ncube said on Oct. 2 the budget deficit, which is expected to reach double digits this year, was fuelling inflationary pressures and could hobble the economy.

 

The economic crisis is a major challenge for President Emmerson Mnangagwa, who won a disputed vote on July 30 in the first election in the southern African nation since Robert Mugabe was removed by the army a year ago after nearly four decades in power.

 

Teachers unions last week petitioned the government to pay them in U.S. dollars or increase their salaries saying the cost of living had increased beyond their wages.

 

 

 

Shares in Nigeria's Diamond Bank fall further after denying takeover talks

ABUJA (Reuters) - Nigeria’s Diamond Bank dropped 9.48 percent on Tuesday to a more than one-year low, a day after the mid-tier lender denied media speculation it was in talks to be bought by rival Access Bank.

 

Shares of Diamond Bank fell for a second straight day to 1.05 naira in late trades.

 

Diamond has been managing its capital since 2016 to ensure it stays within the minimum regulatory ratio and has said it would consider raising fresh funds after selling some assets to strengthen its balance sheet.

 

 

European businesses help lift South Africa's SPAR FY earnings

JOHANNESBURG (Reuters) - South African retailer and wholesaler SPAR Group Ltd reported on Wednesday a 1.4 percent increase in full-year headline earnings, boosted by improving contributions from its European businesses.

 

SPAR, a grocery chain which also sells building materials and medicine in Southern Africa, said headline earnings per share rose to 965.7 cents for the year-ended September from 952.8 cents a year earlier.

 

Headline earnings per share is the main profit measure in South Africa and strips out certain one-off items.

 

Group turnover increased by 5.9 percent to 101 billion rand ($7.00 billion)

 

South African retailers have struggled to lift sales and profit to double-digit numbers as elevated household debts, higher fuel prices and an increase in value-added tax squeeze consumer income.

 

In Southern Africa, its biggest market, turnover increased 6.7 percent, boosted by the inclusion of the S Buys pharmaceutical business acquired on October 2017, strong liquor sales growth and an expansion in the building materials business.

 

“Against the backdrop of subdued consumer and business confidence in Southern Africa, the trading environment is expected to remain largely unchanged in the medium term,” SPAR said in a statement.

 

The BWG Group, a unit of SPAR, reported euro-denominated turnover growth of 4.2 percent in Ireland, while SPAR Switzerland saw operating profit jump 80.6 percent.

 

The board declared a full-year dividend of 729 cents, up 8 percent.

 

($1 = 14.4236 rand)

 

 

 

MTN making progress to resolve $10.1 bln dispute with Nigeria - CEO

CAPE TOWN (Reuters) - South Africa’s MTN Group is making progress in resolving a $10.1 billion funds repatriation and tax bill depute with Nigerian authorities, its CEO said on Tuesday.

 

“I believe we are making steady progress towards finding a resolution,” Rob Shuter told Reuters on the sidelines of a telecoms conference in Cape Town.

 

 

 

MTN aims to offer mobile banking in Nigeria next year

CAPE TOWN (Reuters) - MTN Group will apply for a mobile banking licence in Nigeria and plans to launch the service there next year, its CEO said on Tuesday, further embedding the South African telecoms company in its biggest but increasingly problematic market.

 

Nigeria announced last month that it would allow telecom companies to provide banking services, aiming to give millions of Nigerians without bank accounts access to so-called mobile money services, a policy that has been very successful in Kenya.

 

MTN runs Nigeria’s biggest mobile phone network serving 56 million people, but it is also involved in a dispute with the authorities after the central bank said it illegally transferred $8.1 billion overseas.

 

Separately, it has been slapped with a $2 billion Nigerian tax bill and whether those issues could influence how quickly MTN secures a licence remains to be seen.

 

“We will be applying for a payment service banking licence in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,” Rob Shuter told a telecoms conference in Cape Town.

 

Rivals Airtel, a unit of India’s Bharti Airtel, as well as privately owned Globacom and 9mobile, are also expected to apply for licences.

 

The success in east Africa of M-Pesa, the mobile money unit of Kenya’s Safaricom, has convinced investors and the industry that financial services is the next growth area for the telecoms sector which is grappling with falling prices for basic services.

 

‘HUGE OPPORTUNITY’

If granted a licence, MTN would launch the service in a country where 115 million Nigerians, or 60 percent of the population, does not have a bank account, according to the World Bank.

 

“It’s a huge opportunity for MTN,” said Byron Lotter, fund manager at Vestact, which owns shares in MTN. “The problem is they are being held hostage by this $10.1 billion demand because their business is too big to leave.”

 

Shuter, who has led MTN since last year, also said the company would relaunch mobile money services in South Africa, two years after canning the service. The company has also bought a music streaming business Simfy, which Shuter said was “Africa’s leading music streaming business.”

 

He did not give details about MTN’s plans to relaunch mobile money in South Africa, a market that has proved difficult to crack because around 80 percent of the population already has access to traditional bank accounts.

 

Separately, MTN has joined forces with China’s Unisoc, China Mobile Communications and Kaios, a mobile operating system, to manufacture affordable 3G phones with some smartphone features such as YouTube and a camera, Shuter told a press briefing at the conference.

 

The new devices would be launched in the first quarter of next year with an initial 10 million phones available, he said.

 

Shuter, who has experience in banking, is in the middle of a strategic revamp of Africa’s biggest telecoms group to hunt for returns in everything from financial services, music and video games.

 

Shares in the company rose 1.3 percent to 80.89 rand, outpacing a broadly flat JSE Top-40 index.

Apple Stores to employ human trafficking victims

Apple has announced a programme to help human trafficking victims get behind-the-scenes jobs at its stores.

 

The technology company has teamed up with an NGO that will help the victims pass interviews for caretaker and landscaping posts among other roles.

 

The individuals will not be identified to Apple and will be employed by its suppliers rather than directly. But it intends to monitor the initiative.

 

The announcement coincides with the company winning the Stop Slavery Award.

 

The prize was given by the Thomson Reuters Foundation and accepted by Apple's retail chief Angela Ahrendts in London.

 

It recognises companies that are at the forefront of efforts to combat forced labour in supply chains.

 

Judges praised the Apple's "extremely robust" audit programme and the fact it had "openly shared its learnings with the public".

 

Unilever's chief executive, Paul Polman, was also presented with an award in recognition of the work he had done.

 

But one campaign group described the decision to honour Apple as "a joke".

 

"Apple may be doing more compared to other companies but that is because it has the resources to do so," said Li Qiang, executive director of China Labor Watch.

 

"However, Apple isn't doing enough, as forced labour persists in its suppliers' factories in China."

 

'Beacon of hope'

Apple's trafficking victims scheme is already under way, although the BBC understands only a handful of people have been employed as consequence so far.

 

The UN's International Organization for Migration is the NGO involved.

 

Although the effort is currently limited to jobs with third-party contractors, in time it may be extended to include front-of-house retail staff employed by Apple itself.

 

"Though we have only just started, we see huge opportunity to be a beacon of hope for trafficking survivors integrating them into our retail team," Ms Ahrendts said in her acceptance speech.

 

"These efforts are just a part of a broader set of initiatives to eliminate modern slavery from every part of our company, in every part of the world."

 

In the UK, the Co-operative Group has run a similar scheme since 2017.

 

'Could go further'

Other examples of Apple's efforts include a ban on contractors withholding their workers' passports or otherwise forcing staff to work until they have paid off a debt.

 

Ms Ahrendts said audits carried out to check for workers being wrongfully charged recruitment fees to secure their posts had resulted in it making suppliers return over $30m (£23m) to more than 35,000 people over the past decade.

 

Contractors found guilty of the practice are banned if they do not make the repayments and put on probation for a year if they do.

 

Ms Ahrendts also mentioned Apple's efforts to source materials used in its devices more responsibly from the Congo and elsewhere.

 

The US company was stung in 2016 when a report by Amnesty International identified it as one of several technology companies failing to check if cobalt used in their batteries had been mined by children.

 

Apple has since mapped its cobalt supply chain and made public the smelters involved.

 

In addition, it is working with two NGOs to educate mining communities about the dangers involved in using children and the opportunities for other types of work.

 

Amnesty has since acknowledged that Apple is now behaving better than many of its competitors but said Wednesday evening's award should not be viewed as a sign the company was doing enough.

 

"While it shouldn't be necessary to reward companies for taking steps to stop slavery in their business, we should recognise that some companies, such as Apple, are doing more than others to be transparent about how they are tackling slavery in the supply chain," said Peter Frankental, Amnesty UK's business and human rights programme director.

 

"It could go further though. And whilst it's commendable that Apple is investigating its cobalt supply chain, it's still failing to disclose all the human rights risks and abuses it finds."--BBC

 

 

 

Sterling rallies after cabinet backs May's draft deal

The pound has rallied after the Prime Minister announced she had the backing of the cabinet for her Brexit withdrawal plan.

 

It followed a volatile day's trading while the outcome of Theresa May's five-hour meeting with cabinet colleagues remained unclear.

 

The pound reached $1.30 following the announcement, having fallen to $1.28 in mid-afternoon.

 

It then fell back slightly against both the dollar and the euro.

 

Against the euro the pound had recovered to reach €1.15 before dipping back towards its opening value of €1.14.

 

Cabinet backs draft agreement

Brexit deal: does this mean everything is decided?

Market commentator Russ Mould at AJ Bell said investors were "using the pound as their lightning rod" to express worry and satisfaction about how the negotiations were progressing.

 

"For the last 18 months the Brexit talks haven't really gone anywhere and people had begun to fear no deal," he said.

 

The pound is still more than 10% below where it was before the referendum over leaving the EU 2016, but it has rallied from deeper lows "as markets have begun to express optimism that some kind of deal can be struck", he added.

 

Business secretary Greg Clark and the Chancellor Philip Hammond thanked business leaders tonight for helping to highlight the economic damage a no-deal scenario might do to the economy. That prospect helped focus minds among cabinet ministers at the marathon and fractious meeting, according to sources present. "When evidence and facts met hopes and aspirations, the evidence and facts won" said one minister.

 

One attendee described the backstop arrangement - the fallback position if a trade deal is not secured by December 2020 - as unsatisfactory, as it might result in unwelcome additional checks and oversight of goods travelling between the UK and Europe. People around the table have become much more familiar with advanced manufacturing supply chains, a minister pointed out. But the possibility the transition period could be extended beyond 2020 helped offset that concern.

 

However ministers said they don't expect firms to alter their preparations for a no-deal outcome in March, given the challenge of getting the deal through parliament.

 

'Milestone'

Business bodies welcomed the agreement, with the Confederation of British Industry describing it as "an important step forward" towards a negotiated Brexit.

 

Carolyn Fairbairn, CBI director general, said: "It moves the UK one step away from the nightmare precipice of no deal."

 

"Securing a transition period has long been firms' top priority and every day that passes without one means lost investment and jobs, hitting the most vulnerable hardest."

 

The British Chambers of Commerce (BCC) said agreement on the draft was a "milestone" but said business still needed clarity and precision on the specific terms of trade they will face.

 

Dr Adam Marshall, BCC director general, said businesses would need to look carefully at the "real-world" implications of the agreement.

 

He said the agreement could represent "the end of the beginning - but not yet the beginning of the end" of uncertainty.--BBC

 

 

 

Ex-UBS trader Kweku Adoboli has been deported

Kweku Adoboli, the former UBS trader convicted of fraud, has been deported to Ghana, despite a long campaign to keep him in Britain.

 

His lawyer confirmed he was flown out of Heathrow Airport this evening after being detained in Scotland on Monday.

 

Adoboli, aged 38 and who has lived in the UK for 26 years, was said to be in a distressed state before he left.

 

The Home Office declined to comment on the reports.

 

Mr Adoboli's local MP, Hannah Bardell, told the BBC he would be flown to Casablanca and then on to Ghana.

 

Adoboli: Deportation process 'is racism'

MPs support for threatened fraud trader

The MP, who has campaigned to stop the deportation, spoke to him on the phone before his departure and said he was "struggling not to break down".

 

'Punished twice'

"This is a travesty of justice. Kweku has been here since he was 12 and he would have been entitled to British citizenship," she said.

 

"No one is saying he hasn't committed a crime, but he has been rehabilitated and is being punished twice."

 

Nick Hopewell-Smith, one of the lawyers acting on behalf of Adoboli, said: "We are deeply upset about the manner in which he was whisked away, because there was no chance to say goodbye.

 

"His friends and all his supporters will keep campaigning to bring him home because this is his home.

 

"He supports Leeds United. He's a Yorkshireman. He is being sent to a place where he hasn't lived since he was four."

 

'Compelling reasons'

Adoboli served four years of a seven-year sentence for a £1.4bn fraud and was released in 2015.

 

He was born in Ghana but left when he was four and has lived in the UK since he was 12.

 

He is leaving behind his partner Alice, with whom he had been living in Livingston, West Lothian.

 

Immigration minister Caroline Nokes had said that all foreign nationals sentenced to more than four years' imprisonment are subject to automatic deportation, unless there are compelling reasons for them to remain.

 

Adoboli was expected to be put on a charter flight in September, but a judge awarded a last-minute reprieve while his case was reviewed.

 

Since then, more than 74,000 people have signed a petition against Adoboli's deportation, with more than 130 members of the UK and Scottish parliaments signing a letter asking Home Secretary Sajid Javid to intervene.

 

Ms Bardell said Adoboli's team would now explore further legal means of securing his return, but said doing so could prove difficult from overseas.

 

Adoboli was found guilty of booking fictitious trades to cover up big losses during the financial crisis between 2008 and 2011.

 

He pleaded not guilty, saying his senior managers knew what he was doing and encouraged him to take risks.--BBC

 

 

German economy contracts for first time since 2015

Germany's economy contracted in the third quarter of the year, dented by weaker exports, figures have shown.

 

Europe's largest economy shrank by 0.2% between July and September, as global trade disputes had a knock-on effect for Europe's largest economy.

 

It was the economy's first quarter-on-quarter fall since 2015.

 

Meanwhile, the eurozone economy as a whole grew at its slowest rate for four years in the third quarter, the European statistics agency confirmed.

 

Germany's economy grew by 1.1% from July to September, compared with the same quarter of the previous year, the Federal Statistics Office said.

 

"The slight decline in GDP compared to the previous quarter was mainly due to foreign trade developments: provisional calculations show there were fewer exports, but more imports in the third quarter than in the second," the Destatis office said.

 

"According to provisional calculations, exports were down while imports were up in the third quarter of 2018, compared with the second quarter of the year.

 

"As regards domestic demand, there were mixed signals. While gross fixed capital formation both in machinery and equipment and in construction was higher than in the previous quarter, final consumption expenditure of households declined."

 

'Downward trend'

On Tuesday, the ZEW research institute said that investors did not expect the German economy to recover rapidly from the third-quarter weakness.

 

The German government had flagged up potential bottlenecks in the car industry last month, stemming from the introduction of new pollution standards, as an economic factor.

 

One economist said that while there were positive signs on the horizon for Germany, issues remained around exports.

 

"Both exports and consumer spending could rebound in the coming quarters as car producers make up for lost time and car spending increases accordingly," said Jennifer McKeown, chief European economist at Capital Economics.

 

"More fundamentally, the high level of consumer confidence, rising wage growth and the likelihood of a marked fall in inflation all point to a pick-up in spending growth ahead.

 

"But export growth will remain on a downward trend as global demand softens further."

 

She added that it looked as though the German economy would grow by about 1.5% this year, rather than a previous estimate of 1.8%.

 

The 19-nation eurozone saw its gross domestic product (GDP) rise by 0.2% between July and September, according to Eurostat.

 

The economy of France grew by 0.4% in the third quarter, while Italy's was flat.

 

Year-on-year the eurozone grew by 1.7%, the slowest pace since the final three months of 2014.--BBC

 

 

UK inflation holds steady at 2.4% in October

The UK inflation rate remained steady at 2.4% in October, confounding analyst expectations of a rise to 2.5%.

 

The Consumer Prices Index (CPI) figure included falls in food and clothing costs, but rising utility bills and petrol prices, said the ONS.

 

The inflation figure comes a day after data showed that wages were rising by 3.2% - the fastest pace in nearly a decade.

 

Core inflation also held steady at 1.9% in October.

 

That figure strips out the out the effects of energy, food, alcohol and tobacco prices.

 

Has inflation peaked?

Inflation hit a five-year high of 3.1% in November 2017, as the inflationary effect of sterling's decline after the June 2016 Brexit vote hit its peak.

 

However, it is still above the Bank of England's 2% target.

 

The ONS's head of inflation, Michael Hardie, said: "Prices paid by consumers continued to rise at a steady rate, with falls in food and clothing offset by rising utility bills and petrol, as crude [oil] prices continued to rise."

 

The Bank of England expects inflation will drift lower, but expects to have to raise interest rates in coming years to keep inflation at or near its target figure.

 

How were different retail sectors affected?

Food prices cooled off. The cost of oils and fats dropped by 6.3% compared with the previous month, while milk, cheese and eggs prices were down 1.4%.

 

Overall food and non-alcoholic drink prices dropped by 0.2% in October. Clothing and footwear also dipped by 0.5%.

 

But gas and electricity prices both jumped by 2%, while liquid fuels soared by 7.2%.

 

How have manufacturers fared?

Looking at the latest date, for manufacturers, the cost of raw materials was 10% higher than in October 2017.

 

And manufacturers increased the prices they charged by 3.3% year-on-year compared with 3.1% the previous month.

 

How have house prices been affected?

The ONS said house prices in September rose by an annual 3.5% against 3.1% in August.

 

But prices in London fell for a third month running, down by 0.3%.

 

What does this mean for interest rates?

Analysis by economics correspondent Andy Verity

 

There may not have been a change in the inflation rate, but there has been a change in expectations regarding when interest rates are likely to rise. In the City, the betting now is that the next upward move by the Bank of England is more likely than not to come as early as next May.

 

That would take the official rate to the giddy heights of 1%.

 

But is by no means obvious that rates will have to rise soon to tame inflation. If you strip out volatile items like food and fuel, so-called "core inflation" remains subdued at 1.9%.

 

Even though wages are rising more strongly, there's little sign that prices are rising to compensate for those higher costs - rather, competition is holding prices down. Then again, the Bank of England has made no secret of its desire to "normalise" rates, so the markets may be right.

 

Is there a Brexit factor?

According to Laith Khalaf, senior analyst at Hargreaves Lansdown: "Brexit is still the elephant in the room when it comes to the future path of inflation, and consequently of monetary policy.

 

"That's because the pound now waxes and wanes with the Brexit negotiations, and that has a big impact on how much UK consumers pay for imported goods.--BBC

 

 

 

IMF's Lagarde says central banks could issue digital money

International Monetary Fund head Christine Lagarde said central banks around the world should consider issuing digital currency.

 

Speaking in Singapore, Ms Lagarde said this could make digital currency transactions safer.

 

Non-cash payments have increased over the years, raising challenges for governments and central banks.

 

Regulators have voiced concerns with digital currencies and called for greater oversight.

 

"I believe we should consider the possibility to issue digital currency," Ms Lagarde said in a speech at a conference in Singapore. "There may be a role for the state to supply money to the digital economy."

 

"The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous... And central banks would retain a sure footing in payments."

 

Ms Lagarde said central banks in Canada, China, Sweden and Uruguay were all "seriously considering" digital currency proposals.

 

A virtual currency issued by a central bank would be a liability of the state - as cash is - not of a private firm.

 

This would help consumers by making transactions safer and more common, and as a result cheaper.

 

"The more people you serve, the cheaper and more useful the service," Ms Lagarde said. "Private firms may under-invest in security to the extent they do not measure the full cost to society of a payment failure."

 

She added that while the case for digital currency "is not universal" it should be investigated "seriously, carefully and creatively".

 

Although the technology underlying digital assets has been praised for speeding up financial transactions and reducing costs, the anonymity behind cryptocurrency trading has prompted concern among regulators.

 

Ms Lagarde previously said the anonymity of currencies such as Bitcoin means they are used by criminals and terrorists.

 

Bank of England Governor Mark Carney has also said cryptocurrencies such as Bitcoin should be regulated to crack down on illegal activities and protect the financial system.--BBC

 

 

 

SSE admits 'some uncertainty' over merger with Npower

Energy firm SSE has admitted there is "some uncertainty" that its merger with rival Npower will go ahead.

 

The announcement comes after the companies delayed the tie-up due to the incoming energy bill price cap of £1,137 a year for "typical usage".

 

It means suppliers will have to cut the price of their default tariffs to the level of the cap or below it.

 

The SSE-Npower merger, which has been cleared by the regulator, would create the UK's second-biggest energy company.

 

However, Perth-based SSE has revealed it has been hit by widened losses for its household gas and electricity supplier.

 

It has also reported the loss of another 460,000 SSE customer accounts as competition takes its toll.

 

Energy bills to be capped in new year

Watchdog clears SSE-Npower merger

Households to benefit from energy price cap

In its half-year results, SSE said: "There is now some uncertainty as to whether this transaction can be completed as originally contemplated.

 

"Nevertheless, the board believes that the best future for SSE energy services, including its customers and employees, will continue to lie outside the SSE group."

 

Image caption

The incoming energy price cap will mean suppliers having to cut the price of their default tariffs

The two firms had been hoping to seal the merger of their retail operations in the first quarter of 2019.

 

But they said talks over the new terms of the deal will take several weeks and will probably see the deal delayed beyond the first quarter.

 

They still insist, however, that work to complete the merger continues and they plan to update by mid-December.

 

SSE reported a 41% fall in underlying pre-tax profits to £246.4m, stripping out its energy services division.

 

On a bottom-line basis, SSE posted pre-tax losses of £265.3m for the six months to 30 September against profits of £409.3m a year earlier.

 

Its energy services arm, which is split out from the main numbers due to the Npower deal, saw operating losses widen to £62.1m from £7.1m a year ago.

 

Small suppliers

It said annual profit margins in the energy services arm was set to fall to between 2% and 3%, down from 6.8% in the previous year, due to the price cap and "competitive pressures".

 

"Margins are expected to be lower still in 2019/20," it added.

 

On Tuesday, Npower's German owner Innogy also reported falling customer numbers in the UK.

 

It said it has lost about 500,000 accounts this year and warned the supplier will make a loss for the fourth consecutive year.

 

SSE said suppliers were suffering amid competition from small suppliers as households switch to cheaper providers.

 

It said: "The market for energy and related services in Great Britain remains intensely competitive, with over 70 suppliers competing for customers and around three million customers switching their electricity provider in the six months to 30 September."--BBC

 

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2018

 


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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:         <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw&sa=D&sntz=1&usg=AFQjCNH8LYgdY55h-XKseuM8Kpr-JKdfhQ> www.bulls.co.zw 

Blog:            <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bulls.co.zw/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:      <http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimbabwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA> www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 



 

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