Thousands of Jobs at Royal Mail Under Threat: The London Rush

(Bloomberg) — Chancellor Kwasi Kwarteng told broadcasters yesterday he is “not going anywhere.” Then, just hours later, he was going home, on a flight back to London amid reports Downing Street was preparing what could prove to be the mother of all U-turns. Amid the political drama, don’t ignore the real pain in the economy that’s underscored this morning by Royal Mail, who said they will start a consultation on thousands of job cuts in the wake of industrial action.

Here’s the key business news from London-listed companies this morning:

In The City

International Distributions Services Plc: Royal Mail’s parent company will consult on job cuts in its UK business response to industrial action, what it called “delays in delivering agreed productivity improvements,” and lower parcel volumes.

• The company said about 5,000 to 6,000 redundancies and 10,000 full time equivalent operational roles cuts might be required by the end of August 2023

Ashmore Group Plc: The emerging markets specialist asset manager experienced $5 billion worth of net outflows in the first quarter of the year, as well as a negative investment performance of $3 billion.

• Risks of a recession are impacting investors risk appetite, which CEO Mark Coombs said will stay “limited in the near term”

Mondi Plc: The packaging and paper manufacturer reported a jump in earnings after higher average selling prices and volume growth more than offset “significant” cost pressures.

• The company mostly dodged the impact of higher European energy prices by using biomass sources in its pulp and paper mills, although a tight market for wood is impacting availability.

In Westminster

The Chancellor has been forced to dash back to London overnight to deal with the mounting crisis surrounding his mini budget. Reports yesterday that the government is preparing an extraordinary U-Turn on the tax-cutting plan where met positively by markets. The question now remains, can Liz Truss survive if her economic project is over? Here are some of the dynamics in play. 

The prime minister faces four traps of her own making, writes Bloomberg Opinion’s Therese Raphael. 

In Case You Missed It 

Here’s a deep dive into Shell Plc’s plans for electric-vehicle charging stations with snacks — but no gasoline. 

Finally, OnlyFans Ltd. executives have mapped out a plan to become more transparent and highlight less-explicit content at a time when the company’s home country is finalizing strict new online safety laws. 

Looking Ahead 

As the new earnings season picks up pace, here’s a look at what to expect next week: 

Monday: Mining company Rio Tinto Plc will report its third quarter operations review in the evening. That follows a soft first-half update where the firm halved its dividend and reported a sharp decline in profit. Concerns about slowing demand have led to lower prices for commodities like iron.

Tuesday: Homebuilder Bellway Plc’s update will be closely watched for further signs of storm clouds gathering over Britain’s housing market. Barratt Developments Plc flagged this week that private reservations, the average weekly number of homes reserved at its sales sites, has dropped more than 30%.

Wednesday: Asos Plc’s full-year results will likely provide an important insight into the state of the consumer. Most spending with the online fashion website is discretionary, and it warned last month that sales in August were weaker than expected as shoppers cut back.

Thursday: Alongside a trading update, Jupiter Fund Management Plc’s new boss Matthew Beesley is expected to announce his turnaround plans for the London-based asset manager which has been grappling with years of outflows. 

Friday: Deliveroo Plc’s results will follow those of food delivery rival Just Eat Takeaway.com earlier in the week. London-based Deliveroo has set its eyes on achieving adjusted Ebitda profitability and after that, free cash flow generation, but is facing headwinds from a worsening consumer environment. Bloomberg Intelligence analyst Diana Gomes suggests the company could narrow its gross transaction value guidance range, which at 4%-12% appeared too wide.

For a news fix when the day is done, sign up to The Readout with Allegra Stratton, to make sense of the day’s events.

©2022 Bloomberg L.P.