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

Steve Clayton, Head of Equity Funds, Hargreaves Lansdown:

‘Global stock markets were sent reeling 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 week.

‘Trading on Friday was particularly gloomy as risk takers looked to hedge the risks they faced heading into the weekend. Sentiment was dampened by news of disappointing earnings from Tesla and LVMH and signs that US bond yields could soon rise above 5%.

‘Monday starts a new week and at the moment the European futures markets are breathing a small sigh of relief. With no other protagonists joining the Israeli-Hamas conflict, markets appear to be stabilizing, with little news from the corporate sector this morning to sway investor opinions in either direction.

‘Oil prices fell in the absence of further escalation in the Middle East, with Brent crude and West Texas Intermediate, the two global marker prices for oil, both falling 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-related shares, while Indivior shares have boosted the FTSE 250 after a court case.

Precious metals miners fell 1 percent after gold prices fell as US dollar and government bond yields rose, while oil and gas stocks also traded lower on lower prices.

Shares of Indivior rose 7 percent after the drugmaker said it would pay $385 million to settle a lawsuit. The broader pharmaceutical and biotech sector rose 0.4 percent.

Investors will be watching all week for a slew of banks to report results, with major lender Barclays set to release results on Tuesday.

Meanwhile, across the Atlantic, investor focus is said to be on major tech companies reporting third-quarter results during the week, including Meta Platforms, Microsoft and Alphabet.

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

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

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

The group’s shares rose 6 percent in early trading as the latest settlement could spell the end of long-running lawsuits related to Suboxone – once Indivior’s blockbuster opioid addiction treatment.

Indivior agreed in June to pay $102.5 million to settle a lawsuit from dozens of U.S. states over the claims. In August, it agreed to pay $30 million to settle a class action lawsuit over health plans.

The agreement with the wholesalers who purchased the treatment directly from the Virginia-based company will mark the end of the multi-district litigation involving Suboxone once the court approves it.

“The resolution of this lawsuit, which was filed more than a decade ago, provides greater certainty for all of Indivior’s stakeholders,” said CEO Mark Crossley.

(AP) – An ambitious 2021 deal among more than 140 countries and territories to eradicate tax havens and force multinational companies to pay minimum taxes has been weakened by loopholes and will raise only a fraction of the targeted revenues, according to reports a tax watchdog backed by the European Union has warned.

The landmark agreement, brokered by the Organization for Economic Co-operation and Development, set a global corporate tax of at least 15%. The idea was to stop multinational companies, including Apple and Nike, from using accounting and legal maneuvers to shift income to low or no tax havens.

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

According to the report, released on Monday by the EU Tax Observatory, the deal was expected to raise an amount equivalent to almost 10% of global corporate tax revenues. Instead, because the plan has been watered down, the minimum tax will raise only half of that: less than 5% of corporate tax revenues.

Much of the hoped-for revenue has been siphoned off through loopholes, some of which emerged as the OECD refined the details of the agreement, which has not yet entered into force.

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

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

‘Vistry’s trading update is bittersweet, the open market housing market remains tough and there has been no recovery in autumn/back to school sales.

‘So it requires more effort to sell homes. However, Vistry’s focus is now on partnership activities and underlying demand is robust, although profit margins are lower, a classic case of swings and roundabouts.”

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

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

Michael Speakman, CEO of Keller Group, said:

“The Keller team built on an exceptionally strong first half to deliver better than expected performance in the third quarter, and as a result we now expect full-year underlying earnings to be significantly ahead of current market expectations.

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

US tech giants will brave global market gloom this week as they kick off what is expected to be a record season generating £62 billion in profits.

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

It comes at a time when broader markets are roiled by fears over the Middle East conflict and interest rates.

iPhone maker Foxconn is facing a tax investigation by Chinese authorities, amid speculation that the probe may be politically motivated ahead of Taiwan’s upcoming elections.

China’s state-backed tabloid Global Times reported on Sunday that some of Foxconn’s major subsidiaries in China were the subject of tax audits and that China’s Natural Resources Department had conducted on-the-spot investigations into land use by Foxconn companies in Henan provinces and Hubei 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 praised by Beijing as an example of the success of Taiwanese investors in the country.

The group said Monday morning: “Legal compliance wherever we operate in the world is a fundamental principle of Hon Hai Technology Group (Foxconn). We will actively cooperate with the relevant units in related activities and operations.”

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

According to the Sunday Times, Jingye, the Chinese owner, has consulted consultants to oversee a cost-cutting program.

However, no decisions have yet been made on job losses, sources told the newspaper.

Vistry has cut profit targets as the housebuilding group plots a restructuring that could cost as many as 200 jobs, in further evidence of the pressure on the UK housing sector.

The company now expects adjusted pre-tax profits for 2023 to be £410 million, including the impact of a reduction in site margins for the full year, compared to the more than £450 million the company was targeting.

Vistry said: ‘In September, the Group announced its updated strategy to focus its business squarely on its fast-growing Partnerships model, increasing the supply of much-needed affordable mixed-use housing across the country.

‘The implementation is progressing well: the revised corporate structure and senior appointments have been confirmed and the employee consultation process has been completed. The Group will operate as a single company with 27 regional business units, down from 32, and the Group’s total workforce will increase by c. 200 as a result of this restructuring.

‘The Group has the capacity within this infrastructure to achieve its medium-term growth objectives, with greater use of standardization and timber frame construction.

‘The Group expects c. £25 million in annualized cost savings from this integration of Partnerships and Residential Building, in addition to the £60 million in synergies from the Countryside acquisition.”