✂️ BT To Slash 40% of Workforce

PLUS: Aston Martin shares jumped following a strategic investment from China’s Geely and Burberry found themselves at the bottom of the FTSE 100 despite better-than-expected sales for Q4.

May 19, 2023

Good morning. In today’s update - BT announced plans to cut around 55k jobs in the next five years, Aston Martin shares jumped after a strategic investment from China’s Geely and Burberry found themselves at the bottom of the FTSE 100 despite better-than-expected Q4 sales.

Markets

Despite tailing off into the afternoon, UK equities closed the day higher as sentiment was boosted by signals from the US that a debt ceiling deal could be voted on as early as next week (below). In terms of sector specifics, housebuilders got a lift after a positive trading update from Vistry. Overall, the FTSE 100 and FTSE 250 rose 0.2% and 0.4% respectively.

Top Stories

✂️ BT to slash up to 40% of staff

The telecoms giant joined rival Vodafone in announcing firm-wide cuts, with plans to axe as many as 55k of its 130k staff over the next 5-7 years as it looks to become “leaner“. CEO Philip Jansen said the majority of the cuts would come from the end of the full fibre rollout, whilst AI is also expected to play a part as it makes the business “more efficient”. This comes as BT reported a mixed set of results for the year to March; Revenue and EBITDA were slightly ahead of expectations (at £20.7bn and £7.9bn respectively), whilst free cash flow came in at the lower end of management’s forecasts (£1.3bn) due to higher capital expenditures. Shares slumped 5%. (Official)

🚘 Aston Martin shares jumpstarted by Geely investment

The British carmaker’s shares surged 12.5% on Thursday as it announced a strategic investment from Geely - the Chinese auto firm that also owns Volvo and Lotus. Under the terms of the deal, Geely will acquire around £140m in shares from Yew Tree (the investment vehicle of Aston Martin chairman Lawrence Stroll), whilst also injecting another £94m of primary investment into the business. As a result, Geely will become Aston Martin’s third largest shareholder. In the announcement, Stroll said Geely would offer a “deep understanding” of the key strategic Chinese market, as well as access to technology and components. (Official)

🧥  Mixed results for Burberry

Revenue at the luxury retailer exceeded expectations for Q4, with comparable store sales (Burberry’s preferred metric) growing 16% driven by strong performance in leather goods and outwear, as well as positive momentum in China following the reopening. However, momentum across the pond wasn’t as strong. Sales in the US slumped 7%, with CEO Jonathan Akeroyd admitting there was a “challenge” in the region as spending by younger consumers weakened. Burberry also decided against lifting its forecast for the following year, citing the “macroeconomic and geopolitical” challenges. Markets weren’t encouraged - shares dropped 5.2%, the biggest faller on the FTSE 100 for the day. (Official)

What Else Happened?

Economics / Politics / General

The Bank of England’s balance sheet “will not return” to pre-financial crisis levels, according to Andrew Bailey.

Deals

UK-based boutique investment bank Arma Partners was snapped up by Italian bank, Mediobanca, as it looks to strengthen ties with top tech firms.

EON is reportedly looking to offload Npower - one of the UK’s largest suppliers of electricity to industrial users. (BBG)

Todays VC round up:

  • Covatic - a Birmingham-based developer of software for the broadcasting industry - raised a $5m Series A funding round led by Praetura Ventures.

  • Deployed - London-based enterprise tech firm - secured £3.2m co-led by Microsoft.

  • HR DataHub - creator of tools for HR departments to be able to compare pay and benefits - raised £1.4m in seed funding.

Company News / Trading Updates

UK fintech Revolut is reportedly set to be denied a banking license by the Bank of England, not long after CEO Nik Storonsky complained of the “long and tiring process”.

Low-cost airline EasyJet hailed “strong demand” for flights and holidays as it expects to return to pre-pandemic levels by the summer. (Official)

Royal Mail owner IDS swung to a £748m loss for the year to March, due to industrial action over pay and working conditions. (Official)

FourFourTwo and Country Life publisher Future saw shares slump 15.9% as it reported a fall in profits for the last six months, warning that the “challenging market backdrop” would continue into the second half of the year. (Official)

🌎 Global Snapshot

House Speaker Kevin McCarthy claimed to be hopeful that an agreement to raise the debt ceiling could be voted on by the House as early as next week.

Alibaba is kicking off its historic separation with a spinout of its Cloud Intelligence Group.

A potential case of mistaken identity caused shares in tech distributor CDW to plunge 97% on Thursday, before making a full recovery.

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