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The new chief executive of Rolls-Royce has delivered a blistering message on the future of the motoring engineering giant, telling staff it is a “burning platform”.
Tufan Erginbilgic warned employees that investors are losing patience with the company, saying “we underperform every key competitor out there”.
In a global address broadcast to staff, parts of which were shared with the Financial Times, Mr Erginbilgic said “every investment we make, we destroy value,” adding that the company’s performance was “unsustainable”.
The Turkish-British national took over the running of the 117-year-old group from Warren East at the start of January.
Read the latest updates below.
08:38 AM
Give us a plan, Siemens chief urges Hunt ahead of speech
Jeremy Hunt will deliver a major speech on the economy this morning, setting the scene for the Budget on March 15.
Carl Ennis, chief executive of Siemens UK, said the main thing business wants from him, quite simply, is a plan. He told BBC Radio 4’s Today programme:
The discussions so far has been around tax. Corporation tax is a mechanism to encourage businesses to move to the UK, invest in the UK and grow in the UK.
Also we would argue that is not the only area and perhaps not the most important area.
Tax is part of the answer and the real answer that industries are looking for is a plan.
It is now coming up to three years since the Government unceremoniously dumped its strategy for industry and I would say we really miss that.
That allows businesses to take a forward looking view of what the Government feels the role industry will be in the economic position in the country.
08:22 AM
Superdry warns it expects to break even after hit from shipping delays
Superdry cut its profit forecast for the year despite hailing a strong Christmas period that returned its stores to pre-pandemic levels of trade.
The retailer said a 5.2pc decline in wholesale during its fourth quarter, which was hit by shipping delays, meant it expected to break even for 2023, having previously estimated a profit of £10m to £20m.
Profits in the first half of the year fell short of expectations, although stores revenue grew 14.3pc to £117.7m as customers returned to high streets.
Over the Christmas period, stores returned to 2019 levels in December, with retail revenue up 24.9pc in the final nine weeks of 2022.
Founder and chief executive Julian Dunkerton said:
Despite the underlying brand recovery, our profits in the first half fell short of expectations mainly due to the underperformance of wholesale.
Whilst we did trade well through November and December, the outlook for the remainder of the year is uncertain and as a result, we are moderating our profit outlook to broadly breakeven.
We don’t expect market conditions to become easier any time soon, but with a new financing package in place and the brand in great health, we approach the year ahead with optimism.
08:03 AM
Markets rise amid hopes US economy outperforming pessimists
Stock markets in Britain have jumped at the open tracking a rally on Wall Street and in Asian markets following data suggesting the US economy and corporate profits may be doing better than feared.
The FTSE 100 rose 0.3pc to 7,770.62 to begin the day while the FTSE 250 was up 0.2pc to 19,961.24.
07:53 AM
H&M profits hammered by cost of Russia exit
H&M suffered a slump in earnings due to its exit from Russia, as well as costs related to a restructuring plan and higher garment prices.
Operating profit dropped 87pc to 821m kronor (£64m) in the three months through November, the company told investors.
H&M warned in September that garment costs were very negative for the fourth quarter given the strength of the dollar.
The company said in November it would take an 800 million-kronor (£62.7m) restructuring charge in the fourth quarter as part of a plan to reduce staff by 1,500 and reach annual savings of 2 billion kronor (£156m).
Sales returned to growth in December and January, rising 5pc during the key holiday period. Last month, the company reported that revenue was little changed in the fourth quarter excluding currency shifts as it ended operations in Russia and Belarus.
07:42 AM
LVMH toasts record profits but warns of champagne supply squeeze
Moët & Chandon maker LVMH has warned of a mounting squeeze on champagne supplies as a boom in luxury spending boosted it to a second year of record profits.
Retail editor Hannah Boland has the details:
LVMH, which also makes Veuve Clicquot and Dom Pérignon champagne, said its sales of wines and spirits jumped by a fifth last year, with the amount of champagne sold rising 6pc year-on-year.
It said this was driven by higher demand which had sparked “growing pressure on supplies”. Figures last month suggested 2022 was on course to be a record year for sales of champagne following the lifting of Covid restrictions and even as shoppers faced mounting cost of living pressures.
David Chatillon, chairman of the Union of Champagne Houses, said it was seeing that “people want to have fun, they want good products and opening a bottle of champagne is in itself a celebration”.
LVMH cautioned over supply pressures for champagne, as it revealed a spike in sales and profits. LVMH is the world’s biggest luxury group, owning leading designers including Louis Vuitton and Dior.
07:36 AM
Wholesaler Bestway takes £193m stake in Sainsbury’s
Family-owned wholesaler Bestway Group has bought shares in Sainsbury’s that could be worth around £193m.
The business, which said it is the seventh largest family-owned firm in the UK with a turnover of about £4.5bn, announced it had acquired or agreed to acquire more than 80.7m shares in Sainsbury’s.
Based on Sainsbury’s share price at close on Thursday of 239.4p, the acquisition would be valued at around £193.4m.
Bestway said it plans to hold the shares for investment purposes and to support the executive management team, and confirmed it is not considering an offer for Sainsbury’s at this time.
Qatar Holdings is currently a major shareholder in Sainsbury’s with, as of March last year, a 15pc share of the supermarket.
07:32 AM
HS2 could terminate on London outskirts
The Government is considering terminating HS2, a flagship new high speed rail line connecting the capital to northern England, on the outskirts of London as the cost of the project soars, the Sun newspaper reported on Friday.
The costs of the project are said to be rocketing due to the mounting cost of steel, concrete and labour, forcing the government to consider stopping the line in west London, instead of Euston, central London, the newspaper said.
A delay to building track to Euston was also being considered.
Asked about the report, the Government did not deny that it was considering the west London option, but confirmed its commitment to building the line to Manchester, in northern England.
Department for Transport spokesperson said: “The government remains committed to delivering HS2 to Manchester, as confirmed in the Autumn Statement.”
07:23 AM
ChatCPT to write articles at struggling BuzzFeed
Struggling online publisher BuzzFeed will start using artificial intelligence (AI) to help write its quizzes after laying off dozens of employees.
James Warrington has the details:
The media company, known for its light-hearted articles and “listicles”, will work with OpenAI, the creator of ChatGPT, on the initiative.
The technology will be used to create quizzes on the website that are tailored to an individual, with for example a pitch for a personalised rom com.
The quiz would ask prompt questions such as “Pick a trope for your rom com” and “Tell us an endearing flaw you have” before using AI to generate a write-up based on the responses, according to a memo to staff from chief executive Jonah Peretti.
Mr Peretti said he planned to increase the use of AI across BuzzFeed’s editorial output and business operations this year, according to the memo seen by the Wall Street Journal.
Mr Peretti said he expected AI to assist the creative process and enhance the content, while humans would provide “cultural currency” and “inspired prompts”.
07:08 AM
Rolls-Royce’s performance ‘unsustainable’ warns new chief executive
Speaking at Rolls-Royce’s UK manufacturing site at Derby, the new chief executive of Rolls-Royce potentially laid the groundwork for a shakeup of the historic British engineering company.
As he delivered a brutal address, Tufan Erginbilgic reportedly said the company’s performance was “unsustainable”, adding:
It is at a level [at which] it cannot continue.
Rolls-Royce has not been performing for a long, long time, it has nothing to do with Covid, let’s be very clear. Covid created a crisis, but the issue in hand has nothing to do with it.
Given everything I know talking to investors, this is our last chance.
06:53 AM
Good morning
The new boss of Rolls Royce has delivered a brutal message to staff, telling employees it must transform the way it operates or it will not survive.
Tufan Erginbilgic described the company as a “burning platform”, adding “we underperform every key competitor out there”.
5 things to start your day
1) Public sector to cost UK ‘tens of billions’ as productivity slumps | Working from home to blame says Jacob Rees-Mogg with productivity still below pre-pandemic levels
2) Royal Mail accused of ‘letting people down’ as millions miss health appointments and legal letters | Figures show delays had ‘real and worrying consequences’
3) Russian-born city trader named as Britain’s biggest taxpayer | Alex Gerko has racked up an estimated bill of nearly £490m
4) Comment: Tax cuts are a terrible idea – but so is Rishi Sunak’s assault on business | Britain needs to get with the global economic programme – or it will be left behind
5) Sadiq Khan blocks free public lavatories on the London Underground | Officials reject proposal to build new lavatories as Khan faces pressure to cut costs
What happened overnight
The new Rolls-Royce boss has warned staff the company must reinvent how it operates or it will not survive. The International Monetary Fund is considering extending up to $16bn (£12.9bn) of aid to Ukraine.
Meanwhile, Asian stocks climbed on Friday and were poised for their fifth straight week of gains after data highlighted a resilient US economy, boosting investor sentiment ahead of next week’s slate of central bank policy meetings.
MSCI’s broadest index of Asia-Pacific shares outside Japan jumped as much as 0.55pc to hit an almost nine-month high of 562.10. The index, which fell nearly 20pc last year, is up about 11pc so far this month and is on course for its best-ever January performance. Japan’s Nikkei rose 0.07pc and Hong Kong’s Hang Seng Index opened 0.2pc higher after surging more than 2pc on Thursday.
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