Major International Business Headlines Brief::: 23 May 2019

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Major International Business Headlines Brief::: 23 May 2019

 


 

 


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*  Congo Republic's IMF bailout at risk over debt deals -document

*  Sasol raises cost estimate for U.S. plant by around $1 bln

*  MTN close to paying off 330 bln naira fine in Nigeria -NCC

*  South African drugmaker Aspen in talks with potential European partner

*  Zambia's central bank raises benchmark rate by 50 bps to 10.25%

*  New Kenyan body to help drive mortgage lending aims to raise 5 bln
shillings

*  Tiger Brands revenue falls short after challenges at meat unit

*  Morocco's CPI drops 0.2 pct in April- Planning agency

*  Tunisia's parliament approves $800 mln bonds plan-lawmakers

*  Huawei: ARM memo tells staff to stop working with China’s tech giant

*  Prada to stop using fur from next year

*  Boeing 737 Max: China's top airlines seek compensation

*  British Steel insolvency endangers 5,000 jobs

*  M&S sales and profits fall amid shake-up

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Congo Republic's IMF bailout at risk over debt deals -document

JOHANNESBURG/LONDON (Reuters) - Advisers to Congo Republic’s government have
warned it that there is a “major risk” the International Monetary Fund (IMF)
will reject its bid for a long-sought bailout, according to a letter
obtained by Reuters.

 

Negotiations for an IMF programme have dragged on since 2017, with the IMF’s
executive board demanding the central African oil producer ensure the
sustainability of its debt, most of which is owed to China and oil traders.

 

At the end of its most recent mission to Congo this month, an IMF team said
it was finally ready to support a three-year credit facility. But any
programme would first need to be approved by the Fund’s board. [nL5N22L7ZK]

 

“The advisers to the republic wish to make you aware of the major risk of
the programme’s rejection by the IMF’s board,” said the letter addressed to
Congolese Prime Minister Clement Mouamba and dated May 15.

 

Congo hired French financial advisers Lazard and more recently Parnasse, a
firm employing former IMF Managing Director Dominique Stauss-Kahn, to assist
it in the negotiations with the Fund.

 

The letter was signed by Strauss-Kahn and Matthieu Pigasse, head of Lazard
France. A source close to the matter confirmed its authenticity.

 

Lazard declined to comment on the letter. Attempts to contact Strauss-Kahn
were unsuccessful. Congo’s government spokesman and an official in the prime
minister’s office in Brazzaville did not respond to requests for comment.

 

An IMF spokesperson rejected the advisers’ position that the programme,
which would also likely unlock financing from the World Bank and African
Development Bank, was in doubt.

 

“This information does not represent the views of the IMF. The IMF team
continues to be in discussions with the authorities regarding the next steps
needed to be able to present this agreement to the IMF Executive Board for
discussion.”

 

REAL RESTRUCTURING?

Congo’s economy suffered from a sharp drop in oil prices in 2014, causing
debt levels to balloon to 118 percent of GDP in 2017.

 

For over a year, efforts to restructure debt with China - Congo’s leading
bilateral creditor - and oil traders including Glencore and Trafigura
[TRAFGF.UL] made little headway.

 

However, Congo reached an agreement last month to restructure a portion of
its debt to China. And the Bloomberg news agency reported that it had also
reached a deal on its debt to Trafigura. [nL5N22E8VD]

 

The letter said the IMF technical team had expressed concern with regard to
the real effort made by the Chinese in the deal.

 

“For the technical team, it’s a question of proving to the board members
that China has agreed to a real restructuring of its loans and not simply a
technical reconfiguration,” it stated.

 

Congo’s senate ratified the agreement with Export-Import Bank of China on
Monday. [nL5N22W5GZ]

 

According to the Finance Ministry, Congo’s debt to China stood at nearly
1.48 trillion CFA francs ($2.54 billion) at the end of March.

 

Under terms of the deal, repayment of 944 billion CFA francs owed for eight
infrastructure projects will be extended an additional 15 years. Congo,
however, must pay off a third of that amount by the end of 2021.

 

Lazard and Parnasse also criticised the deal with Trafigura, writing that it
did not meet the conditions set out by the IMF.

 

“The formalisation of such an agreement in the coming weeks would send a bad
signal...to the board members about Congo’s real willingness to stick to its
commitment to re-establish the sustainability of the public debt,” the
advisers wrote.

 

Anti-graft groups have long criticised the opacity of Congo’s oil sector and
loan agreements with oil traders and called on the IMF to use its position
to foster transparency.

 

“Congo needs to publicly disclose the existence and terms of all its
oil-backed loans before the IMF countenances any further financial support,”
said Natasha White, an oil researcher for campaign group Global Witness.

 

($1 = 583.2500 CFA francs)

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

Sasol raises cost estimate for U.S. plant by around $1 bln

JOHANNESBURG (Reuters) - Sasol has raised the expected cost of its U.S.
ethane cracker project by around $1 billion following a review by the
project’s new management, the South African petrochemicals firm said on
Wednesday, sending its shares more than 10% lower.

 

The estimate for the Lake Charles Chemicals Project (LCCP), which will
convert natural gas into plastics ingredient ethylene, is now $12.6-12.9
billion, including a contingency of $300 million, Sasol said in a stock
exchange announcement.

 

The company said the review of the project, which was initially expected to
cost $8.9 billion in 2014, revealed oversights such as duplicate credits and
overlooked contracts, adjustments for potential insurance claims,
procurement back-charges and remaining work and repairs that needed to be
done.

 

“We are extremely disappointed with the increase in LCCP’s capital costs. We
take accountability and we are confident that the revised plan will be
delivered,” said joint president and chief executive officer Bongani
Nqwababa on a conference call.

 

Sasol had said in February the plant in Louisiana, which saw the first of
seven units start production earlier this year, was expected to cost up to
$11.8 billion.

 

Shares in Sasol, the world’s biggest maker of motor fuel from coal, were
down 12.5 percent to 377.45 rand at 0753 GMT.

 

“The numbers just don’t look very flattering at all,” said Ryan Woods,
market trader at Independent Securities.

 

Sasol also cut the forecast return from the project to 6-6.5% from 7.5% due
to the increased cost as well as the outlook for market prices.

 

It reduced the project’s expected earnings before interest, tax,
depreciation and amortisation (EBITDA) for the 2022 financial year to $1
billion from $1.3 billion.

 

Sasol said the project was 96% complete, with capital expenditure at $11.4
billion as of the end of March.

 

The cost increase will result in higher gearing - net debt to EBITDA - for
Sasol for 18 to 24 months, with gearing expected to peak at 2-2.3 times
during fiscal 2019, the company said.

 

“We believe that the balance sheet is sufficiently robust to absorb the
increase in cost and our capital allocation strategy is unchanged. We remain
confident for the long-term outlook for the LCCP,” said Nqwababa.

 

Sasol, which has plans to offload around $2 billion in assets across its
portfolio, said the sales would further support deleveraging.

 

 

MTN close to paying off 330 bln naira fine in Nigeria -NCC

ABUJA (Reuters) - African telecommunications giant MTN has paid 275 billion
naira ($898.99 million) toward a 330 billion naira fine imposed on it for
not disconnecting unregistered SIM cards, Nigeria’s communications agency
said on Tuesday.

 

The final 55 billion naira payment from MTN, Africa’s largest
telecommunications firm, to the Nigerian government is due at the end of the
month, the Nigerian Communications Commission said in a statement.

 

MTN was originally fined 1.04 trillion naira for failing to deactivate more
than 5 million unregistered SIM cards, but it negotiated a reduced fine to
clear its path to list its subsidiary on the Nigerian Stock Exchange.

 

Last week, shares began trading on the Nigerian Stock Exchange in Lagos in a
2 trillion naira flotation that marked the exchange’s second-largest stock
by market value.

 

($1 = 305.9000 naira)

 

 

 

South African drugmaker Aspen in talks with potential European partner

JOHANNESBURG (Reuters) - South African drugmaker Aspen Pharmacare said on
Wednesday it is in talks with a potential partner in Europe after announcing
in March a strategic review of its European and domestic commercial
pharmaceuticals businesses.

 

Without giving details, in March, Aspen said under the first phase of the
review it would split its South African commercial pharmaceuticals business
into two divisions to sharpen its focus.

 

On Wednesday it advised shareholders in a brief statement to exercise
caution when dealing in the company’s shares.

 

 

Zambia's central bank raises benchmark rate by 50 bps to 10.25%

LUSAKA (Reuters) - Zambia’s central bank raised its benchmark lending rate
by 50 basis points to 10.25% to counter inflationary pressure and support
macroeconomic stability, its governor Denny Kalyalya said on Wednesday.

 

Annual inflation is expected to remain above the bank’s 6-8 percent target
over the next eight quarters, Kalyalya told journalists.

 

“Lower maize output, continued elevated fiscal deficits, high debt service
payments and a decline in international reserves are among the upside risks
to inflation,” he said.

 

Those risks were also contributing to the negative sentiment which was
pressuring the kwacha, he added.

 

When asked about the situation at Vedanta-controlled Konkola Copper Mines
(KCM), which is facing liquidation, Kalyalya said developments in the mining
sector had a bearing on the economy.

 

He added that he hoped a disagreement with mining companies over a hike in
tax bills could be resolved amicably so that the focus can return to
production.

 

Zambia has started to look for a new investor for KCM, President Edgar Lungu
said on Monday, in a move likely to stoke international miners’ concerns
about rising government intervention in the sector.

 

 

New Kenyan body to help drive mortgage lending aims to raise 5 bln shillings

NAIROBI (Reuters) - Kenya’s new mortgage refinancing company, set up to help
the many would-be homeowners who struggle to secure a mortgage, aims to
raise 5 billion shillings ($49.41 million) on the capital markets in the
next year or two, its chief executive said.

 

The government said last year it would set up the Kenya Mortgage Refinance
Company (KMRC) to help it provide affordable houses by making it easier for
banks to access long-term finance for home loans.

 

The company will issue mortgage-backed bonds and other instruments, to lend
on to banks and financial co-operatives using their mortgage loan contracts
with customers as security.

 

President Uhuru Kenyatta has made providing 500,000 new affordable homes by
the end of 2022 one of his top four priorities.

 

The East African country has an estimated 200,000 annual shortfall, which is
expected to rise to 300,000 by 2020.

 

“Housing mortgage finance in Kenya remains below its potential,” Kenyatta
said during KMRC’s launch.

 

Total outstanding mortgage debt stood at about 223 billion shillings in
2017, or 2.7% of GDP, according to central bank data. South Africa’s
mortgage industry is 31% of GDP.

 

Kenyatta said they expected that KMRC will increase the number of mortgages
to over 60,000 by 2022 from a current 26,000.

 

KMRC already has a $250 million loan from the World Bank, and another 90
million euros ($100.51 million) from the African Development Bank to kick
off mortgage refinancing.

 

The company will tap financial markets for more funds after it starts
drawing down the funding from the World Bank and the AfDB, Johnstone
Oltetia, its interim chief executive, told reporters after the company’s
official launch.

 

“Maybe the first bond will potentially be an MTM (medium term note) of about
5 billion shillings which will be drawn down over time.” .

 

As part of the government’s policy of providing affordable houses to more
people, the government introduced a 1.5% levy of taxpayers’ gross salaries
in September.

 

The housing plan has experienced some hiccups, with the levy being
challenged in court, and economists saying constructing so many homes in
such a short time would be challenging.

 

The government has said this is achievable, given private companies will
help with the construction.

 

The non-deposit taking Kenya Mortgage Refinance Corporation, is 80% owned by
commercial banks and savings cooperatives, and the rest is held by the
government.

 

($1 = 101.2000 Kenyan shillings)

 

 

 

Tiger Brands revenue falls short after challenges at meat unit

JOHANNESBURG (Reuters) - South Africa’s Tiger Brands underestimated the work
involved in re-establishing its processed meats business after a listeria
outbreak, it said on Wednesday, leaving it with disappointing sales and a
battle to reclaim market share.

 

The outbreak in February 2018 forced the country’s leading food producer to
recall cold meat products such as polony and suspend operations at its
facilities. Its shares now trade around 42% lower than before the first
announcement regarding the listeria.

 

Performance at the Value Added Meat Products (VAMP) division was hit by the
challenges of re-opening the factory and relaunching products. Revenue in
the six-months to end March tumbled by 79 percent and the unit posted an
operating loss of 296 million rand.

 

The operational challenges hit Tiger Brands harder than it expected, Chief
Executive Lawrence Mac Dougall said at the results presentation alongside
Chief Financial Officer Noel Doyle, who added they underestimated the
complexities of re-opening a plant that had not operated for nine-months.

 

Doyle said the facilities were re-opened slightly later than anticipated and
the group ended up losing some of its key customers during the important
Christmas trade.

 

“For the most part, the internal supply chain management issues have been
resolved and we are now in position to satisfy market demand,” Doyle said.

 

“The real challenge for us is that having been out of the market... we got
to now climb the mountain and reclaim market share.”

 

The operating loss in VAMP, alongside lower sales in international markets
resulted in the owner of Jungle Oats and Tastic rice reporting a 2% fall in
group revenue to 15.4 billion rand ($1.07 billion), compared with analysts’
expectations of 15.7 billion rand in a Refinitiv poll.

 

Excluding the VAMP division, revenue was up 4%.

 

Revenue from exports and international markets fell by 11% due to the change
in a Nigerian distributor, challenging market conditions in Mozambique,
exacerbated by two cyclones and price deflation in international markets.

 

CONSUMERS SQUEEZED

Domestic revenue excluding VAMP was 6% higher, driven by volume growth and
inflation at 4%.

 

South African retailers and food producers are struggling to lift sales
growth to double digits as consumers are dealing with a value-added tax
hike, record fuel increases and rising utility costs, which have all
intensified pressure on consumers’ disposable income.

 

The food producer said all categories, except sorghum-based products, maize,
pasta and Baby Care recorded selling price inflation, however the increases
were not sufficient “to fully recover cost increases, resulting in negative
operating leverage.”

 

Tiger Brands and its peers are grappling with an industry that has become
more competitive as manufacturers are forced to dip into their margins to
maintain volumes and market share.

 

Headline earnings per share (HEPS) from continuing operations in the period
dropped by 12% to 762 cents from 868 cents a year earlier.

 

Tiger Brands declared an interim dividend of 321 cents per share for the
first half to March, down 15% due to lower earnings. Shareholders will also
get a special dividend of 306 cents per share from once-off proceeds
received from the Oceana Group Ltd stake sale to Brimstone.

 

($1 = 14.3600 rand)

 

 

 

Morocco's CPI drops 0.2 pct in April- Planning agency

RABAT (Reuters) - Morocco’s consumer price index dropped 0.2 percent in
April from a year earlier, after falling 0.1 percent year-on-year the
previous month, the high commission for planning said on Wednesday.

 

Food prices fell by 1.2 percent year-on-year in April after rising by 1.8
percent year-on-year in March. Non-food prices increased year-on-year by 0.8
percent in April compared with a rise of 1.1 percent a month earlier.

 

On a month-on-month basis, the consumer price index rose 0.6 percent in
April.

 

Core annual inflation stood at 0.3 percent on a month-on-month basis and 1.1
percent year-on-year.

 

The central bank expects inflation to drop to 0.6 percent in 2019 from 1.9
percent in 2018 before picking up to 1.1 percent in 2020.

 

 

 

Tunisia's parliament approves $800 mln bonds plan-lawmakers

TUNIS (Reuters) - The Tunisian parliament on Wednesday approved a government
plan to issue bonds worth up to $800 million this year, lawmakers told
Reuters.

 

Tunisia in October sold a 5-year Eurobond worth 500 million euros with an
interest rate of 6.75 percent.

 

Tunisia needs around $2.5 billion in external financing in 2019, officials
said.

 

“The finance committee approved the government’s plan to issue bonds up to
$800 million,” lawmaker Marouan Felfel told Reuters. Another lawmaker
confirmed the approval.

 

The timing of the issuance was unknown.

 

Opposition parties have criticised the government over the size of Tunisia’s
debt, which hit record levels of around 74 percent of GDP by the end of
2018. They accuse the government of seeking easy solutions through
borrowing.

 

Prime Minister Youssef Chahed said earlier this year that painful reforms
must be launched to keep the deficit under control but his plans face strong
resistance from powerful labour unions.

 

 

 

Huawei: ARM memo tells staff to stop working with China’s tech giant

UK-based chip designer ARM has told staff it must suspend business with
Huawei, according to internal documents obtained by the BBC.

 

ARM instructed employees to halt "all active contracts, support
entitlements, and any pending engagements” with Huawei and its subsidiaries
to comply with a recent US trade clampdown.

 

ARM's designs form the basis of most mobile device processors worldwide.

 

In a company memo, it said its designs contained “US origin technology”.

 

As a consequence, it believes it is affected by the Trump administration's
ban.

 

One analyst described the move, if it became long-term, as an
“insurmountable” blow to Huawei’s business.

 

He said it would greatly affect the firm's ability to develop its own chips,
many of which are currently built with ARM’s underlying technology, for
which it pays a licence.

 

These are used in the Chinese company's 5G base stations and computer
servers in addition to its smartphones.

 

Cambridge-headquartered ARM had been described as the UK's largest tech firm
until its takeover by a Japanese fund. It employs 6,000 workers and lists
eight offices in the US.

 

In a statement it said it was "complying with all of the latest regulations
set forth by the US government”, but declined to comment further.

 

Huawei has issued a brief statement of its own.

 

"We value our close relationships with our partners, but recognise the
pressure some of them are under, as a result of politically motivated
decisions," it said.

 

"We are confident this regrettable situation can be resolved and our
priority remains to continue to deliver world-class technology and products
to our customers around the world."

 

What is ARM?

ARM is a chip designer founded in 1990. In September 2016 it was acquired by
Japanese telecoms giant Softbank, but remains based in Cambridge, UK.

 

ARM does not manufacture computer processors itself, but rather licenses its
semiconductor technologies to others.

 

In some cases, manufacturers only license ARM's architecture, or
"instruction sets", which determine how processors handle commands. This
option gives chip-makers greater freedom to customise their own designs.

 

In other cases, manufacturers license ARM's processor core designs - which
describes how the chips' transistors should be arranged. These blueprints
still need to be combined with other elements - such as memory and radios -
to create what is referred to as a system-on-chip.

 

As a result, when you hear talk of a device being powered by a Samsung
Exynos, Qualcomm Snapdragon or Apple A11 chip - or one in a Huawei
smartphone - it is still ARM's technology that is involved.

 

ARM's US headquarters are in San Jose, California, and the firm has offices
in Washington, Arizona, Texas and Massachusetts.

 

 

‘Unfortunate situation’

ARM’s staff were informed of the decision on 16 May, following the US
Commerce Department’s move to add Huawei to its “entity list” of companies
with which American firms could no longer do business.

 

The BBC has also seen a company memo dated 18 May detailing the implications
of the export ban.

 

On Monday 20 May, US government officials issued a 90-day reprieve on some
of the restrictions in order to minimise immediate disruption. But ARM
believes that the temporary licence involved does not apply to it.

 

A spokesman for ARM declined to offer any additional clarity about the
current status of its Huawei contracts.

 

A break with ARM would make it difficult for Huawei to develop future
generations of its Kirin processors

According to one memo, ARM staff were instructed to suspend all interactions
with Huawei and its subsidiaries.

 

It advised staff to send a note informing Huawei (or related) employees that
due to an “unfortunate situation”, they were not allowed to “provide
support, delivery technology (whether software, code, or other updates),
engage in technical discussions, or otherwise discuss technical matters with
Huawei, HiSilicon or any of the other named entities”.

 

ARM staff that come into contact with employees at industry events must
“politely decline and stop” any conversations about the business, the
guidance said - stressing that individuals could be held personally liable
for breaking the trade rules.

 

The ban also appeared to apply to ARM China, the China-based company in
which ARM Holdings owns a 49% stake. It was set up as a joint venture with a
Chinese investment consortium last year in order to enable ARM to develop,
sell and offer support for its products in the region.

 

'Insurmountable obstacle'

Huawei told reporters on Tuesday that its “plan B” for software would be to
develop its own operating system, something it has already been working on
for some time. However, it will be significantly more difficult for the firm
to source home-grown components of sufficient quality.

 

Huawei currently sources some of its chips from HiSilicon, which it owns.
However, while produced in China, HiSilicon’s chips are built using
underlying technology created by ARM.

 

While HiSilicon and Huawei are free to carry on using and manufacturing
existing chips, the ban would mean the company could no longer turn to ARM
for assistance in developing components for devices in future.

 

HiSilicon's upcoming processor, Kirin 985, is due be used in Huawei devices
later this year. According to a source at ARM, it is not expected to be
affected by the ban. However, the next iteration of the chip has not yet
been completed - and is likely to need to be rebuilt from scratch, the
source said.

 

Huawei also uses ARM's designs for its recently unveiled Kunpeng chips.
These are used to power its TaiShan-series computer servers, which are
designed to provide cloud computing and storage to clients.

 

In addition, the company told analysts in January that the Tiangang chip at
the heart of its 5G base stations is also ARM-based.

 

Huawei's carrier division chief Ryan Ding showed off its 5G base station
chip alongside an image saying it involved a "high-performance ARM-based
processor"

"The problem of the whole telecoms industry is that so much of it is based
on the exchange of technology between different companies - whether that's
chip companies, software providers or the makers of other hardware,"
commented Alan Burkitt-Gray, editor-at-large of the telecoms news site
Capacity Media.

 

He added that Huawei would likely face other problems licensing 5G-related
tech from others, and in turn US-based companies would now be unable to
licence the Chinese company's 5G inventions.

 

"This will carve out a chasm in the industry between Huawei-originated
intellectual property and the rest of the world's," he said.

 

"It's just a total mess and it's happened at a critical time for the rollout
of 5G."

 

The relationship between ARM and Huawei engineers is tight - earlier this
month Huawei announced its intention to build a research centre only 15
minutes from ARM’s headquarters in Cambridge, UK.

 

The latest development follows news that Huawei will lose access to some of
Google's Android services

"ARM is the foundation of Huawei’s smartphone chip designs, so this is an
insurmountable obstacle for Huawei,” said Geoff Blaber, from CCS Insight.

 

"That said, with an abundance of companies in Huawei’s supply chain already
having taken action to comply with the US order, Huawei’s ability to operate
was already severely affected.”

 

What is not yet clear is whether ARM is acting on its own interpretation of
the US rules, or whether it has been advised by the Commerce Department.

 

"If that interpretation is correct, that’s going to affect every
semiconductor company in the world,” remarked analyst Lee Ratliff, from IHS
Markit.

 

"They’re not going to be able to easily replace these parts with new,
in-house designs - the semiconductor industry in China is nascent.”--BBC

 

 

Prada to stop using fur from next year

Joh Vinding, chairman of the Fur Free Alliance (FFA), said: "The Prada group
with its brands now joins a growing list of fur-free brands that are
responding to consumers' changing attitudes towards animals."

 

The FFA is a coalition of more than 50 animal protection organisations.

 

Animal fur will not be used in its designs or new products, but items
already made will continue to be sold.

 

"Focusing on innovative materials will allow the company to explore new
boundaries of creative design while meeting the demand for ethical
products," said the head of the fashion chain, Miuccia Prada.

 

The change will take effect in the spring-summer 2020 women's collection and
also covers the brands Miu Miu, Church's and Car Shoe.

 

Last year, British luxury goods maker Burberry announced it would stop using
real fur in its products and would phase out existing fur items, while
luxury fashion brand Gucci stopped using fur in its spring-summer 2018
collection.

 

Campaigners stepped up their calls for Prada to stop using fur last year,
when, according to the Humane Society, Prada was selling jackets made of fox
fur and minx fur.

 

Those items no longer appear to be available on Prada's website, which does
list other items which apparently use fox fur as trim on coats.

 

Brigit Oele, programme manager for Fur Free Alliance, said: "Prada Group was
one of the fastest companies to go fur-free once positive dialogue began a
little more than a year ago."

 

Fur farming was banned in the UK in 2000, but it is legal to sell some types
of real fur that have been imported, if they are accurately labelled.

 

However, MPs have called for a ban on sale of real fur to be
considered.--BBC

 

 

 

Boeing 737 Max: China's top airlines seek compensation

China's three biggest airlines are demanding compensation from Boeing over
its grounded 737 Max fleet.

 

Air China, China Southern and China Eastern have filed claims for payouts,
according to state media reports.

 

China's regulator was the first to ground the fleet in the wake of two
deadly crashes involving the US-made aircraft.

 

It comes on the eve of a meeting of global aviation regulators that will
provide an update on the troubled jets.

 

The Chinese airlines are seeking compensation for losses incurred by the
grounded fleet, as well as delayed deliveries of the 737 Max jets, according
to reports.

 

China operates the largest fleet of Boeing 737 Max aircraft and was the
first country to take the jets out of service after the Ethiopian Airlines
737 Max 8 crash in March.

 

The disaster killed all 157 people on board. In October, 189 people were
killed in a Lion Air crash involving the same model.

 

Boeing grounds entire 737 Max fleet

What went wrong inside the Boeing cockpit?

Can China's plane-maker take on Boeing and Airbus?

Both crashes were linked to the jet's Manoeuvring Characteristics
Augmentation System, a new feature on 737 Max planes, which was designed to
improve the handling of the jet and to stop it pitching up at too high an
angle.

 

Last week, Boeing said it had completed development of a software update for
its 737 Max planes.

 

The planemaker's entire global fleet of 737 Max aircraft has been grounded
since March and the firm is anxious to prove it is safe to return to the
skies.

 

The move by China's top airlines to seek compensation comes ahead of a
closely watched summit of aviation regulators in Texas on Thursday.

 

The US Federal Aviation Administration (FAA) is due to provide an update on
reviews of Boeing's software fix and new pilot training.

 

The meeting in Texas will involve 57 agencies from 33 countries, including
China, France, Germany and the UK, as well as the European Union Aviation
Safety Agency.

 

But it is unclear if the planes will be back in the air before the end of
the critical summer travel season.--BBC

 

 

 

British Steel insolvency endangers 5,000 jobs

British Steel has been placed in compulsory liquidation, putting 5,000 jobs
at risk and endangering 20,000 in the supply chain.

 

The move follows a breakdown in rescue talks between the government and the
company's owner, Greybull.

 

The Government's Official Receiver has taken control of the company as part
of the liquidation process.

 

The search for a buyer for British Steel has already begun. In the meantime,
it will trade normally.

 

The Official Receiver said British Steel Ltd had been wound up in the High
Court and the immediate priority was to continue safe operation of the site.

 

The company was transferred to the Official Receiver because British Steel,
its shareholders and the government were not able to, or would not, support
the business. That meant the company did not have to funds to pay for an
administration.

 

The other companies within the British Steel group are continuing to trade
as normal and are not in insolvency.

 

British Steel failure: The role of Greybull

What are the EU rules about state aid?

So what happens now?

The Official Receiver and EY are looking for a buyer for the business.

 

If they fail to find one, the firm would be wound up and redundancies would
follow.

 

"I appreciate that this is a difficult time for the company's employees and
I want to thank them for their ongoing co-operation," Receiver David Chapman
said.

 

"The company in liquidation is continuing to trade and supply its customers
while I consider options for the business.

 

What about the staff?

British Steel has about 5,000 employees. There are 3,000 at Scunthorpe, with
another 800 on Teesside and in north-eastern England.

 

The rest are in France, the Netherlands and various sales offices round the
world.

 

Their wages this week have been paid by Greybull and the government will
pick up the bill from now on.

 

Roy Rickhuss, general secretary of the steelworkers' trade union, Community,
said: "This news will heap more worries on workers and everyone connected
with British Steel, but it will also end the uncertainty under Greybull's
ownership and must be seized as an opportunity to look for an alternative
future.

 

"It is vital now that cool heads prevail and all parties focus on saving the
jobs.

 

Kevin Prior, pictured with his partner Kayleigh Manderson, said rumours
about the plant had been "circulating for weeks"

Staff in Scunthorpe have also reacted. "Everyone is terrified," said
steelworker Kevin Prior. The 32-year-old scrap metal cutter has been at the
plant since 2015 and his sister and brother-in-law also work at there.

 

He said rumours about the company's future had been circulating for a number
of weeks.

 

"It's just heartbreaking," he said.

 

"It's horrible to hear that my sister is crying herself to sleep because she
doesn't know what's going to happen with her husband's job and what that
means for them."

 

As well as the plant's workers the North Lincolnshire town's economy relies
heavily on the giant steel works, with an estimated 20,000 jobs linked to
the site.

 

Its closure would be a body blow, with some residents claiming it would
leave Scunthorpe a "ghost town".

 

How did it come to this?

In 2007, India's Tata conglomerate entered the UK steel market after it
bought the Anglo Dutch group, Corus. In 2010, the business was renamed Tata
Steel Europe.

 

After a difficult few years, during depths of the 2016 steel crisis, Tata
sold the Scunthorpe long products division to private equity firm Greybull
Capital for a nominal £1.

 

Greybull rebranded the company as British Steel.

 

British Steel's more recent troubles have been linked to a slump in orders
from European customers ‎due to uncertainty over the Brexit process.

 

It has has also struggled with the weakness of the pound since the EU
referendum in June 2016 and the escalating US-China trade war.

 

In a statement on Wednesday, Greybull said: "The turnaround of British Steel
was always going to be a challenge, and yet the business overcame many
difficulties and until recently, looked set for renewed prosperity.

 

"The workforce, the trade unions and the management team have worked closely
together in their determination to strengthen the business. However, the
additional blows dealt by Brexit-related issues have proven insurmountable."

 

The High Court appointed accountancy firm EY to the role of Special Manager,
assisting the Receiver.

 

EY said the appointment of the Official Receiver followed "a number of
weeks" of negotiations by management with the company's various
stakeholders, including lenders, shareholders and the government, to secure
the necessary funding to avoid an insolvency.

 

"Regrettably, these efforts were unable to secure a solution before the
company's funding resources were exhausted."

 

How have customers reacted?

British Steel customer Network Rail sources 95% of its rails from British
Steel's Scunthorpe plant.

 

In a statement, the rail infrastructure operator said it had been working
closely with British Steel and the government for "many weeks".

 

"We have done what we can to help ease the company's financial difficulties.
We have improved our order book with the company - increasing rail
production volumes, bringing orders forward and committing to a long term
schedule - as well as offering immediate payment to ease the pressure on
cash flow."

 

It is understood the company has enough stockpiles to keep it going until
other suppliers can increase production.

 

What do the politicians say?

Business Secretary Greg Clark said the government had shown its "willingness
to act", having provided the British Steel with a £120m bridging loan in
April to meet EU emission rules and avoid a steep fine.

 

However, he added: "The government can only act within the law, which
requires any financial support to a steel company to be on a commercial
basis. I have been advised that it would be unlawful to provide a guarantee
or loan on the terms of any proposals that the company or any other party
has made."

 

Labour's shadow business secretary, Rebecca Long Bailey, called for the
company to be nationalised.

 

She said: "The government must act quickly to save this strategically
important industry and the livelihoods and communities of those who work in
it, by bringing British Steel into public ownership.''--BBC

 

 

 

M&S sales and profits fall amid shake-up

Marks & Spencer has reported a fall in both sales and profits as it
continues to implement a major turnaround programme.

 

Pre-tax profits were down by nearly 10% in the year to 31 March, at £523.2m.

 

Like-for-like sales, which strip out the impact of new stores, were down by
2.9% for the group as a whole.

 

Boss Steve Rowe said the firm was making "good progress" and judging itself
as much on the "pace of change" as by the trading outcomes.

 

The retailer, which has 1,043 stores, is part of the way though a big store
closure programme.

 

Like-for-like sales in its food halls fell by 2.3%, although M&S said this
was affected by the timing of Easter.

 

Clothing and home sales were 1.6% lower, dented by the timing of Easter and
poor stock availability, while UK like-for-like sales were down by 2%.

 

Total sales were 3.6% lower because of the store closures.

 

Mr Rowe said: "We are deep into the first phase of our transformation
programme and continue to make good progress restoring the basics and fixing
many of the legacy issues we face.

 

"As I have said, at this stage, we are judging ourselves as much by the pace
of change as by the trading outcomes and change will accelerate in the year
ahead."

 

However, he added that although there had been "green shoots", the retailer
had "not been consistent in our delivery" in a number of areas.

 

"M&S is changing faster than at any time in my career - substantial changes
across the business to our processes, ranges and operations - and this has
constrained this year's performance, particularly in clothing and home.

 

"However, we remain on track with our transformation and are now well on the
road to making M&S special again."

 

'Good progress'

In May 2018, M&S announced it would close more than 100 clothing and home
stores by 2022, of which 85 are still open.

 

In the last financial year, it closed 35 stores as part of its shake-up and
opened 48. Between now and 2024, it expects to close another 85 and open 20.

 

In these latest results, the company revealed it now also plans to close 25
smaller, low-volume, high-cost food stores and open 75 new and bigger food
outlets.

 

M&S said it had made "good progress" on cost savings during the last
financial year, which were about £100m, in addition to the operating costs
of stores which had closed.

 

In February, it announced a joint venture with Ocado to start home delivery
next year, which it said was a "strategically compelling route to unlock
profitable growth for M&S Food".

 

Richard Hunter, head of markets at Interactive Investor, said: "The results
give proof, if it were needed, that M&S required a significant shot in the
arm to give it relevance in the modern day."

 

He added that there were "also positive signs as M&S transforms apace".

 

"If there were a real requirement for M&S, however, it would be to
consolidate its food offering, while strengthening its online presence to
give it security and relevance in the new digital age. The Ocado deal could
provide that answer."

 

M&S had given guidance that at least 100 clothing and home stores would go
by 2022. It mentioned a figure of about 110 this time last year.

 

Now it's provided a bit more detail: the numbers now add up to potentially
120 closures by 2023-24.

 

It amounts to a 25% reduction in net clothing and home space overall as it
tries to modernise its business.

 

The most eye-catching announcement is its plan to open 75 new food stores.

 

At the moment, only about a dozen sites offer shoppers the chance to buy the
full range of M&S Food, some 6,500 to 7,000 products.

 

M&S food has always been seen as upmarket and a bit of a treat. The M&S boss
wants to broaden its appeal and become more relevant to a family-based
customer. The new stores will have parking, for instance.

 

It means 25 smaller Simply Food stores will either close or be relocated in
the process.

 

Next year, M&S is starting a partnership with online grocer Ocado to provide
a home delivery service.

 

There's an awful lot riding on this expensive tie-up.

 

With this push into bigger and better food stores as well, M&S is making a
play for a larger slice of the grocery market.--BBC

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


NMB

AGM

Head Office, 4th Floor, Unity Court

23 May 2019 , 3pm

 


 

Africa Day

 

25 May 2019

 


Dairibord

AGM

Steward Room, Meikles

31 May 2019, 12pm

 


Lafarge

AGM

Manresa Club, Arcturus

05 June 2019 , 12pm

 


CBZ

AGM

Stewart Room, Meikles

05 June 2019 , 3pm

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


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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