Siemens Energy seeking government support; markets await ECB interest rate decision – business live

Back in the financial markets, Israel’s currency has hit its lowest in over a decade against the US dollar.

The shekel has fallen 0.25% today to 4.07 to the dollar, the weakest since 2012, as traders continue to anticipate a ground invasion in Gaza.

On 6 October, the day before Hamas’s surprise attack on Israel, the shekel had traded at 3.83 to the dollar.

Today’s losses come after Israel said its tanks had taken part in a “targeted raid” overnight in northern Gaza.

WirtschaftsWoche: Siemens Energy seeking €15bn of guarantees

A spokesperson for the German economy ministry has confirmed it is in talks with Siemens Energy, describing the discussions as “close and trustworthy”, according to Reuters.

Siemens Energy shares plunge as it seeks government support

Unemployment in Spain has risen, giving the European Central Bank’s policymakers something to ponder as they set interest rates today.

The Spanish jobless rate rose to 11.84% in the third quarter of the year, statistics body INE reports, up from 11.6% in Q2.

Wouter Thierie, economist at ING, suggests the uptick might be caused by seasonal factors.

Thierie says:

The labour market benefited from strong growth in the more labour-intensive service sector, which was underpinned by a strong tourist season. In addition, the labour market is also suffering from a structural supply shock.

For instance, the average number of hours worked per worker is still lower than before the pandemic, which means more labour is needed to cover the same amount of hours. This exerts downward pressure on the unemployment rate.

INE also reports that the number of employed people in Spain increased by 209,100 in the third quarter of 2023, a rise of almost 1%, to 21,265,900, suggesting demand for labour remained robust.

European stock markets are in the red as traders await today’s ECB interest rate decision at lunchtime.

The pan-European Stoxx 600 inded has lost around 1%, with Germany’s DAX down 1.3%.

Shares in Mercedes Benz Group are down over 5% after it reported a 6.8% drop in operating profits, and warned that the electric vehicle market was “brutal” due to a flurry of price cuts.

In London the FTSE 100 is down 62 points, or 0.85%, pulled down by Standard Chartered (now -12.9%), while Unilever are still down almost 3%.

A takeover battle over the owner of Wagamama is brewing.

The Restaurant Group has told the City that the owner of Pizza Express, Wheel Topco, have asked to see financial information so they can decide whether to make a takeover offer for the company.

It told shareholders:

The Board of TRG confirms that it will provide diligence information to Wheel Topco in accordance with its obligations under the Code.

If any proposal is provided by Wheel Topco, the Board of TRG will carefully consider its terms, in conjunction with its advisers.

Restaurant Group has already accepted a £506m takeover offer from the US buyout group Apollo, which values it at 65p per share.

Shares in TRG have risen 1.8% to 67.6p, as traders anticipate a possible bidding battle.

Back in the City, shares in Standard Chartered bank have tumbled over 11% after it missed profit expectations and took a hit on its exposure to China.

Standard Chartered, the Asia Pacific-focused bank, reported that pretax profits more than halved in the last quarter to $633m, down from $1.391bn in Q3 2022.

The drop in profits was mainly caused by a $697m cut to the carrying value of Standard Chartered’s investment in China Bohai Bank.

Its credit impairment charges also rose, including $186m related to the China commercial real estate sector.

CEO Bill Winters says:

“We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results.

Wealth Management has continued its recovery with double digit income growth and the Financial Markets performance has been resilient against a strong comparator period.

European Central Bank chief Christine Lagarde was in upbeat mood last night, ahead of today’s interest rate decision.

Lagarde told a dinner in Athens that Greece has made an impressive comeback from the Covid-19 pandemic.

She said:

Real GDP per capita is now almost 10% above its pre-pandemic level – a much stronger performance than the euro area as a whole. The unemployment rate has also declined steeply, and was 10.9% in August, the lowest level since the end of 2009.

And with a stronger economy, the country has been able to work further through its debt challenge. Greece’s public debt-to-GDP ratio has dropped 35 percentage points from its peak of 206% in 2020, one of the fastest falls in the world.

Two rating agencies recently upgraded Greek government bonds to investment grade status.

The ECB’s Governing Council is in Athens as part of its policy of regularly holding meetings around the eurozone, rather than at its headquarters in Frankfurt.

And here’s Victoria Scholar, head of investment at interactive investor, on Unilever:

“Unilever reported underlying sales growth of 5.2%, missing analysts’ expectations. While prices grew by 5.8% actual volumes of goods sold fell by 0.6%. However price growth slowed from 9.4% in the first half of 2023. Its personal care division outperformed with growth up 8% but ice cream lagged, falling by 2.8%. Unilever has named Fernando Fernandez as its new CFO today who will take over from Graeme Pitkethly.

New CEO Hein Schumacher who took to the helm in July said “our performance in recent years has not matched our potential. The quality of our growth, productivity and returns have all under-delivered.” He said the company plans to focus on 30 key brands accounting for 70% of its sales and does not plan to carry out any major acquisitions.

Unilever hopes that Schumacher’s appointment will help the company turn over a new leaf after recent criticisms of ‘profiteering’ from the inflationary environment and the failed £50bn bid for GSK’s consumer healthcare division under former CEO Alan Jope prompting Unilever’s activist investors to fight for a C-suite shake-up.

Shares in Unilever have fallen sharply today echoing a similar performance from rival Reckitt which saw its shares slump yesterday. Unilever is down over 10% in the past six months reflecting the weak consumer backdrop as shoppers trade down to unlabelled, cheaper substitute products.”

Here’s Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, on Unilever’s results:

“This is another drab quarter from Unilever with underlying sales growth being entirely led by higher prices and volume declines accelerating in the quarter. Europe was particularly weak with volumes falling by over 10%, and the percentage of Unilever’s business winning market share on a rolling 12 month-basis fell to a disappointing 38%.

Unilever’s new CEO, Hein Schumacher, recognises that the group could and should be doing better. His ‘Action Plan’, announced today, is designed to reinvigorate performance through more impactful innovation, productivity savings and an improved culture.

Schumacher’s mantra is “fewer things, done better, with greater impact”. This means prioritising the top 30 Power Brands, instilling greater accountability and simplifying the business. For too long, Unilever has been too slow-moving, too complex and too weighed down by too many mediocre brands. A strategy to simplify and refocus on core strengths, perhaps augmented by some non-core brand disposals, feels like the right way to go.

Shares in Unilever have dropped 2.7% at the start of trading in London.

Matt Britzman, equity analyst at Hargreaves Lansdown, says the 0.6% drop in sales volumes was a little larger than expected.

Britzman says:

It looks like consumers are struggling to justify forking out extra for a tub of Ben & Jerry’s as Ice Cream sales continue to struggle. The group’s strengths in emerging markets continue to shine through, despite a slower recovery than expected in China.

It’s closer to home, in Europe, where price hikes are still in double-digit territory and Personal Care’s the only business unit showing volume growth. It’s hardly the end of the world, results were broadly in line with expectations and full-year guidance remains intact.

Unilever’s newish chief executive, Hein Schumacher, is outlining his action plan to drive growth at the company.

Schumacher, who took over this summer, says:

Unilever is a company of many strengths, including, its category positions, the strength of its brands, its unmatched geographic reach and talented and passionate people.

However, there has been a disconnect between these intrinsic strengths and the quality of our performance. Remedying this underperformance is our top priority and with Unilever’s strong fundamentals and the many opportunities across the five Business Groups, we are confident that we can achieve that.

The plan includes focusing on Unilever’s “30 Power Brands”. which make up 70% of its sales today, and building back its gross profit margins – which were hit by rising costs – through higher productivity.

Unilever has also signed a deal to sell Dollar Shave Club, the men’s grooming brand it acquired for $1bn in 2016 as part of a push into direct sales to consumers.

Ice cream sales hit by bad weather

Price rises lift Unilever sales

Introduction: ECB interest rate decision and US GDP report coming up