BUSINESS LIVE: Vistry plots restructuring; Foxconn faces China probe; Keller eyes record year

Few sectors in Britain were as severely affected by coronavirus-related curbs as traditional high-street fashion retailers.

Remote working, restrictions on socialising and the on-off closure of non-essential shops dramatically reduced consumers’ willingness to buy new clothes, especially suits and dresses.

Steve Clayton, head of equity funds, Hargreaves Lansdown:

‘Global stock markets were routed last week as the potential escalation of the Israeli crisis dominated sentiment. Both the MSCI World index and the FTSE 100 index lost around 3% over the course of the week.

‘Trading on Friday had been especially downbeat as risk-takers looked to hedge away the risks they were carrying into the weekend. Sentiment was dampened by news of disappointing earnings from Tesla and LVMH and signs that US bond yields could soon top 5%.

‘Monday brings a new week and at the moment, European futures markets are suggesting a small sigh of relief. With no further protagonists joining the Israeli/Hamas conflict, markets look to be steadying, with little news flow from the corporate sector this morning to change investors’ minds in either direction.

‘Oil prices eased back on the lack of further escalation in the Middle East, with both Brent crude oil and West Texas Intermediate, the two global marker prices for oil, both slipping back almost a dollar to trade at $91 and $87 respectively.’

The FTSE 100 is trading lower this morning amid rising government bond yields and losses in commodity-linked stocks, while Indivior shares have boosted the FTSE 250 on a lawsuit settlement.

Precious metal miners are down 1 per cent after gold prices slipped as US dollar and Treasury yields strengthened, while oil and gas shares are also trading lower on lower prices.

Indivior shares have added 7 per cent after the drugmaker said it would pay $385 million to settle a lawsuit. The broader pharma and biotech sector is up 0.4 per cent.

Investors will be on the lookout for a slew of banks reporting results throughout the week with major lender Barclays scheduled to post results on Tuesday.

Meanwhile, across the Atlantic, investor focus would be on big tech companies reporting third-quarter results during the week, including Meta Platforms, Microsoft and Alphabet

Rishi Sunak must not buckle under intense lobbying from the world’s biggest online giants to help them ‘escape’ vital regulation, a group of leading economists have warned.

The five eminent academics, whose government-commissioned report formed the basis of a new Bill to rein in Big Tech, have written a powerful letter to the Prime Minister urging him not to water it down.

Drugmaker Indivior has agreed to pay $385million to settle lawsuits brought by drug wholesalers on claims it illegally suppressed generic competition for its opioid addiction treatment Suboxone.

The group’s shares are up 6 per cent in early trading as the latest settlement could mark the end of long-running litigation relating to Suboxone – once Indivior’s blockbuster opioid addiction treatment.

Indivior in June agreed to pay $102.5million to settle a lawsuit by dozens of US states regarding the claims. In August, it agreed to pay $30million to settle a class action lawsuit by health plans.

The agreement with the wholesalers that bought the treatment directly from the Virginia based company will mark the end of the multi-district litigation relating to Suboxone once the court approves it.

‘The resolution of this litigation, which was filed over a decade ago, provides greater certainty for all Indivior stakeholders,’ CEO Mark Crossley said.

(AP) – An ambitious 2021 agreement by more than 140 countries and territories to weed out tax havens and force multinational corporations to pay a minimum tax has been weakened by loopholes and will raise only a fraction of the revenue that was envisioned, a tax watchdog backed by the European Union has warned.

The landmark agreement, brokered by the Organization for Economic Cooperation and Development, set a minimum global corporate tax of 15%. The idea was to stop multinational corporations, among them Apple and Nike, from using accounting and legal maneuvers to shift earnings to low- or no-tax havens.

Those havens are typically places like Bermuda and the Cayman Islands where the companies actually do little or no business. The companies’ maneuvers result in lost tax revenue of $100billion to $240billion a year, the OECD has said.

According to the report, being released Monday by the EU Tax Observatory, the agreement was expected to raise an amount equal to nearly 10% of global corporate tax revenue. Instead, because the plan has been weakened, it says the minimum tax will generate only half that – less than 5% of corporate tax revenue.

Much of the hoped-for revenue has been drained away by loopholes, some of them introduced as the OECD has been refining details of the agreement, which has yet to take effect.

The watchdog group estimates that a 15% minimum tax could have raised roughly $270billion in 2023. With the loopholes, it says, that figure drops to about $136billion.

Managing director for equity research at RBC Capital Markets Anthony Codling:

‘Vistry’s trading update is bittersweet, the open market housing market remains tough, and it didn’t see the usual autumn/ back to school pick up in sales.

‘It is therefore having to try harder to sell homes. However, Vistry’s focus is now its partnership business and here underlying demand is robust although profit margins are lower, a classic case of swings and roundabouts.’

FTSE 250 geotechnical engineering company Keller Group expects a record 2023 after an ‘exceptionally strong first half’.

The group now expects full-year operating profits to be materially ahead of market expectations, despite weaker than expected demand in Europe.

Michael Speakman, CEO of Keller Group, said:

‘The Keller team has built on an exceptionally strong first half to deliver a better than expected third-quarter performance, and consequently we now expect full year underlying profit to be materially ahead of current market expectations.

‘This performance reflects continued momentum and operational improvements within the business and the outstanding contribution of colleagues across the Group, whom I would like to thank for their dedication and hard work.’

America’s tech giants are this week set to defy global market gloom as they kick off what is expected to be a bumper earnings season generating a £62billion profit haul.

Revenues generated by the giant firms – Meta, Amazon, Microsoft, Alphabet and Apple – are forecast to total £324billion.

It comes as wider markets are wracked by fears over the conflict in the Middle East, and interest rates.

IPhone maker Foxconn faces a tax investigation by Chinese authorities, amid speculation the probe may have political motives ahead of the upcoming Taiwan elections.

China’s state-backed Global Times tabloid reported on Sunday that some of Foxconn’s key subsidiaries in China were the subject of tax audits and that China’s natural resources department had conducted on-site investigations on land use by Foxconn enterprises in Henan and Hubei provinces and elsewhere.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, employs hundreds of thousands of people in China and is a major investor there, regularly hailed by Beijing as an example of the success of Taiwanese investors in the country.

The group said on Monday morning: ‘Legal compliance everywhere we operate around the world is a fundamental principle of Hon Hai Technology Group (Foxconn). We will actively cooperate with the relevant units on the related work and operations.’

British Steel is reportedly preparing to slash up to 2,000 jobs amid an operational shake-up.

Jingye, its Chinese owner, has sounded out consultants to oversee a cost-cutting programme, according to the Sunday Times.

However, no decisions have been taken about job losses, sources told the newspaper.

Vistry has slashed profit targets as the homebuilding group plots a restructuring that could cost as many as 200 jobs, in further evidence of pressure on Britain’s housing sector.

The company now expects adjusted pre-tax profit for 2023 to come in at £410million, including the impact of a reduction in full-year site margins, compared with the over £450million it was targeting.

Vistry said: ‘In September, the Group announced its updated strategy to fully focus its operations on its high growth Partnerships model, increasing its delivery of much needed affordable mixed tenure housing across the country.

‘The implementation is making good progress with the revised operating structure and senior appointments confirmed, and the employee consultation process concluded. The Group will operate as a single business with 27 regional business units, a reduction from 32, and the Group’s overall headcount will reduce by c. 200 as a result of this restructuring.

‘The Group has the capacity within this infrastructure to deliver upon its medium-term growth targets, with greater use of standardisation and timber frame manufacturing.

‘The Group expects to deliver c. £25m of annualised cost savings from this integration of Partnerships and Housebuilding, in addition to the £60m of synergies from the Countryside acquisition.’