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Titanic Shipyard to go into administration

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Titanic Shipyard to go into administration
Getty Images Stock image showing the yellow crane in Belfast with H & WGetty Images

Non-core operations are being wound down, the firm said

Shipbuilding company Harland and Wolff has confirmed the business is to be placed into administration for the second time in five years.

Insolvency practitioners Teneo are being lined up to act as administrators and some “non-core” staff are being made redundant.

However, the company’s board said there was a “credible pathway” for its four shipyards to continue trading under new ownership.

Its main yard is in Belfast, best known for building the Titanic, with other operations at Appledore in England and Methil and Arnish in Scotland.

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The company said the administration process will be confined to the holding company, Harland & Wolff Group Holdings plc, and the operational companies which run the yards are expected to continue trading.

However, shareholders will see the value of their investments in the business entirely wiped out.

Job losses

In a statement, the firm said its non-core operations are being wound down.

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That process had already started with the closure of its Scilly Isles ferry service before sailing had even begun.

Other non-core operations include a small business in the US and a marine services business which is to sold in the hope of preserving 14 jobs.

A small number of non-core staff and others in support roles were told Monday they were losing their jobs.

The company warned that “a further reduction in headcount in our core activities may be necessary” depending on the progress of the sales process.

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Reuters A picture of the Belfast skyline with a yellow Harland and Wolff craneReuters

Shipbuilding has been a major part of Belfast’s industrial history

On Saturday, the firm’s executive chairman, Russell Downs, said the yards “together or separately have a credible future”.

“We have strong leadership in all of our yards,” he added.

“We have a strong business case around the work they are currently doing and the work they expect to do in the future.

“They have a funding need in the near term but into the future they will be generating cash.”

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Rothschild bank is running the sales process and the company said a number of parties had contacted it to express an interest in acquiring some or all of the yards with a first-round bid deadline due shortly.

It is understood that Spain’s state-owned shipbuilder Navantia is interested in the Belfast operation.

Navantia is the major partner in the Fleet Solid Support (FSS) programme to build three Royal Navy logistics vessels with Harland and Wolff as subcontractor.

Sky News has reported that Babcock International, the UK defence contractor, is also a potential bidder for the Belfast business.

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Mr Downs told the BBC he hoped to be able to conclude a deal or deals by the end of October.

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Business

How vulnerable is the UK to Trumponomics?

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UK chancellor Rachel Reeves does not want to “speculate or jump to conclusions” about what Donald Trump’s election means for the British economy.

“It’s an incredibly important trade relationship for the UK and US as well,” she told the Financial Times. “We want to grow that, as it has grown in recent years.”

Yet even if the UK’s reliance on services shields it from the worst of any fresh tariffs, the country remains vulnerable to global shocks in trade, business confidence and the bond market, say economists.

What are the risks to the UK?

Trump warned during the campaign that he wanted to impose a 60 per cent tariff on Chinese imports and 10 to 20 per cent on goods from other parts of the world.

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The UK is a relatively small, open economy, which makes it notably vulnerable to changes in import prices. While the EU is by far the UK’s biggest overall trade partner, in national rankings the US comes first when it comes to purchases of UK goods and services.

That said, analysts argue the UK should be less exposed to Trump’s ire than countries that run a large trade surplus with the US — such as China, Germany, or Mexico.

The US had a trade surplus with the UK, including an $8.2bn goods trade surplus in the January-September period, according to official US figures. However, partially because of differences in accounting for exports from the Channel Islands, the UK also reported a trade surplus with the US.

What happens if fresh tariffs come in?

If the UK ends up getting hit by US tariffs, vocal and economically sensitive industries would be affected. The UK exported about £8.2bn of pharmaceuticals, £7.5bn of cars and £5.3bn of mechanical power generators in the 12 months to the end of June 2024, according to official statistics. 

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Nevertheless, a relatively low proportion of UK goods exports overall go to the US — about 14 per cent in 2023, compared with more than 70 per cent for Canada and Mexico, according to United Nations Conference on Trade and Development data. 

The EU accounts for more than 40 per cent of UK goods and services exports, and about half of its goods exports. “The UK would not be in the front line of countries” hit by US tariffs, said Michael Saunders, a former Bank of England rate-setter who is now at Oxford Economics. “The UK is less vulnerable.”

Any inflationary impact from trade tensions would be mitigated if the UK opts against imposing retaliatory tariffs on the US, he added. 

Based on calculations that took into account the importance of the US as a trade partner and a country’s trade openness, Deutsche Bank concluded that the UK was not in the top 20 countries likely to be most affected by trade tariffs.

Total UK exports to the US are only 2 per cent of its GDP. As such, even assuming full pass-through from a fully implemented 10 per cent tariff increase, the GDP impact to Britain would be close to 0.2 per cent at most, said economist Allan Monks at JPMorgan.

What else does the UK sell to the US? 

The UK is the world’s second-largest services exporter after the US, accounting for about 7 per cent of global services exports. The UK will hope these do not get snarled up in Trump’s protectionist dash. 

British services exports made up for more than half of its total exports last year — a record high, according to official statistics. This is much larger than about a fifth for Germany. 

As a share of the economy, services exports account for about 18 per cent of UK GDP, the largest proportion of any G7 country, about double the figure for Germany and three times the shares of Italy and Canada.

“The UK would be little affected by the direct effects of US import tariffs,” said Elliott Jordan-Doak, economist at Pantheon Macroeconomics. “But the direct effects of Mr Trump’s likely tariffs are only the start.”

What are the wider risks?

IMF analysis suggests global growth would suffer a blow if Trump goes ahead with his trade plans, even though the exact details of his tariff proposals remain unclear.

Any trade war between the US and key partners would have a great impact on EU export powerhouses such as Germany — leading to knock-on effects for the UK economy.

Christian Keller, an economist at Barclays, warned that uncertainty caused by the spectre of tariffs would “negatively affect investment and, more generally, confidence levels in Europe” even before they take effect, which may not be until the second half of 2025.

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The German economy is heavily at risk of US tariffs because of its massive manufacturing sector. It is forecast to grow only by 0.6 per cent in 2025 after marginally contracting this year, according to data compiled by Consensus Economics.

The IMF has modelled the combination of tit-for-tat tariffs, a 10-year extension of Trump’s 2017 tax cuts, reduced net migration and higher global borrowing costs. It warned of a 0.8 per cent hit to forecast global economic output next year and a 1.3 per cent blow in 2026.

What about other US policies?

Trump has vowed not only to extend tax cuts passed during his first term but to push through fresh reductions in corporate tax rates as well as reductions at an individual level on income from overtime pay, tips and pensions. He also wants to deport millions of undocumented immigrants.

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The federal debt is projected to swell by an additional $7.5tn in 10 years if Trump follows through with his proposals, according to pre-election analysis from the Committee for a Responsible Federal Budget.

This raises the prospect of bond market investors taking fright at US fiscal laxity and associated inflation risks. If this happened, there could be contagion risks for other fiscally vulnerable countries, including the UK, said Sushil Wadhwani, a former BoE policymaker.

Bond market vigilantes could “switch their attention to us, having first had a go at US Treasuries”, he said. “As a small, open economy we can’t insulate ourselves from trouble globally.”

Additional reporting by George Parker

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Assura boosts profits as portfolio value grows to £3.1bn

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Assura boosts profits as portfolio value grows to £3.1bn

The profit boost comes amid a £25.4m rise in investment property value to £3.1bn.

The post Assura boosts profits as portfolio value grows to £3.1bn appeared first on Property Week.

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Jet2 launches London Luton base

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Jet2 launches London Luton base

The carrier will fly to 17 destinations from Luton next summer, including Alicante, Girona, Madeira and Verona

Continue reading Jet2 launches London Luton base at Business Traveller.

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Just Eat’s Grubhub takeout leaves a bitter taste for investors

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Line chart of Share prices rebased in € terms showing Uber and DoorDash have cracked the code on food delivery

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Who didn’t go overboard on takeout during the pandemic and now wants to shed the resulting excess weight? Just Eat Takeaway this week announced a long-anticipated sale of the US subsidiary, Grubhub. The sale valuation is a mere mouthful at $650mn, made up of $500mn of attached debt and just $150mn in cash paid to Just Eat.

Grubhub had been acquired during the 2020 frenzy at a $7.3bn valuation. Just Eat gave up a nearly a third of the company’s overall shares as consideration to Grubhub shareholders. Since the day the deal was announced, Just Eat shares have fallen nearly 90 per cent and its equity value today is just above €2bn. Pandemic-era miscalculations are proving to be very expensive and investors are showing little mercy in punishing 2020-era profligacy.

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Just Eat created what was a “quad” strategy. It had already established food delivery businesses in the Netherlands, UK and Germany with the huge US marketplace as its fourth “profit pool”. The US economics, however, were not very good, pandemic boost aside.

Line chart of Share prices rebased in € terms showing Uber and DoorDash have cracked the code on food delivery

For 2023, Grubhub generated €2bn in revenue but just €125mn in ebitda. Free cash flow is similarly scant. Worse yet, North America gross market volume — the total dollar value of orders — shrunk 14 per cent compared with the year before. The company had been trying to unload Grubhub for some time and even presented group results excluding North America to avoid tainting the European operations.

Yet in the US, rivals DoorDash and Uber Eats are thriving. Meanwhile, Grubhub has disproportionate exposure to New York City, through its Seamless brand, where the municipal government has capped delivery fees and even sought to crack down on e-bike battery usage. 

True, Just Eat deciding to use its inflated share price and valuation multiple in 2020 to acquire Grubhub was a better call than relying on debt and cash. Still, the dilution remains painful. Just Eat shares rallied 15 per cent on Wednesday on the prospect of an end to this saga.

Grubhub’s buyer is Wonder, a New York-based ghost kitchen chain founded by the billionaire entrepreneur Marc Lore. In conjunction with the Grubhub buyout, Wonder said it was raising $250mn in private funding. It can only hope that is enough to fix this dodgy takeout order. 

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Bitcoin Surges Past $90,000 After Trump Election Win

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Trump Crypto Surge Pushes Bitcoin Beyond $90,000 Amid Market Shake-Up

In a historic rally, Bitcoin has broken through the $90,000 mark following Donald Trump’s recent election victory, a monumental leap driven by the former president’s crypto-friendly stance. The cryptocurrency, which stood at $36,000 a year ago, has surged on Trump’s campaign promises to make the U.S. the “crypto capital of the planet” and accumulate a national Bitcoin reserve. As expectations build around regulatory relaxations, Bitcoin is now eyeing the $100,000 milestone, potentially reaching it before Trump takes office.

Yesterday saw Bitcoin’s price rise from $88,000 to over $93,000. Meanwhile, the broader markets reacted cautiously to the latest U.S. inflation report, which held steady at 2.6%. New York indices made small gains in early trading, while London’s FTSE 100 ended with a slight increase of 0.06%, closing at 8,030.33. At one point, it dipped below 8,000 for the first time since August, and the FTSE 250 dropped 0.34%, ending the day at 20,359.21.

Shifts in Traditional Markets Amid Bitcoin Buzz

While Bitcoin captured the financial world’s attention, traditional markets showed mixed reactions. New York’s major indices saw modest growth, whereas London’s markets struggled with more subdued gains. Dowlais, a key player in the automotive industry, led the FTSE 250 gainers board after reporting stable trading performance. Despite a decline in its electric powertrain division, the company’s shares jumped 6.7% to 51.3p, as underlying revenue for the year fell by 6.1% to £4.2 billion. Dowlais, spun off from the GKN empire in 2023, has faced challenges in its primary market but received positive investor support, particularly outside China where joint venture revenue stayed flat.

Smiths Group, a FTSE 100 company, was among the day’s biggest winners, climbing 10.5% to 1681p. The medical and airport scanners firm raised its full-year revenue growth outlook to between 5% and 7% after posting 16% organic revenue growth for the first quarter. On the other hand, private equity firm Intermediate Capital took a hit, falling 7.2% to 2078p as its half-year pre-tax profits dropped from £241.9 million to £198.4 million, despite a rise in net asset value. Similarly, Experian saw a 2.5% decline as interest rate movements contributed to a 5.9% drop in first-half pre-tax profit.

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Automotive and Energy Sector Developments

In the automotive sector, Dowlais’ Driveline division outperformed other global light vehicle production markets, with the exception of China, providing some optimism to investors after a challenging period since its spin-off from Melrose Industries in 2023.

Scottish energy giant SSE saw a modest dip of 0.6% after announcing the upcoming retirement of CEO Alistair Phillips-Davies, who has served at the company’s helm for 11 years. Nevertheless, SSE reported a 38% rise in half-year pre-tax profit and boosted its interim dividend by 6%, signaling continued strong performance despite executive turnover.

Bitcoin’s Future and Market Uncertainty

Bitcoin’s unprecedented rally has fueled hope for continued growth in the cryptocurrency market under a Trump administration that has vowed to embrace digital assets. Traditional markets, however, remain cautious as they navigate the latest inflation figures and other economic challenges. While Bitcoin’s record-breaking surge has brought renewed enthusiasm to the digital asset sector, the broader financial landscape continues to grapple with sector-specific issues and the potential effects of economic policies under new leadership.

With Trump’s support energizing the cryptocurrency sector, the question remains whether this momentum can sustain Bitcoin’s upward trajectory. As the U.S. economy and global markets adapt to changing conditions, both traditional and digital assets will be closely watched to see if this surge heralds a new era for Bitcoin and crypto investments.

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Monte dei Paschi shares jump 9% after rival BPM takes stake

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Shares in Monte dei Paschi di Siena jumped 9 per cent in early trading on Thursday after the Italian government sold a 15 per cent stake in the bailed-out lender for €1.1bn, bringing in rival Banco BPM as a shareholder.

Milan-based BPM said it had bought a 5 per cent position in MPS after the market closed on Wednesday, as the government offloaded a majority of its remaining stake in the Tuscan lender that it bailed out in 2017.

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MPS’ stock rose more than 9 per cent to €6.04 in early trading in Milan.

The sale reduces the Italian government’s stake in MPS, the world’s oldest bank, to 11.7 per cent from 26.7 per cent.

“We have completed an important action as we had announced in institutional venues by providing for the implementation of an Italian banking and financial policy operation aimed at strengthening the shareholder base,” said economy minister Giancarlo Giorgetti.

The government’s stake sale via an accelerated book build marks the latest step in a drawn-out restructuring process at MPS.

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The Italian government held as much as 64 per cent of the bank’s shares as recently as last year, but has been reducing its ownership as part of an agreement with EU authorities to return the lender to private ownership.

Although BPM said it had no plans to request permission to exceed a 10 per cent holding in MPS, analysts at Keefe, Bruyette & Woods said the market was “likely to speculate that [BPM] could be interested in acquiring a controlling stake . . . in the future”. They added that “such a scenario could be favourable to both banks”.

BPM shares rose more than 4 per cent to €7.05 in early trading on Thursday.

Despite producing bumper profits and shareholder returns over the past two years, European lenders are under pressure to cut costs and find new revenue sources as interest rates fall. One option is to merge with rivals, which can produce cost savings and economies of scale.

The Italian government stepped in to rescue MPS in 2017 by handing over €5.4bn in exchange for a 70 per cent stake in the lender, marking Italy’s biggest bank nationalisation since the 1930s.

The Italian Treasury said on Wednesday it had placed the MPS shares at €5.792, a 5 per cent premium on Wednesday’s closing price.

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