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What to Watch: Pearson and Hays plunge, Premier Inn update, UK property sales jump

Edmund Heaphy
Finance and news reporter
Pearson designers using tools to create digital textbooks. Photo: Pat Greenhouse/The Boston Globe via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Pearson shares hit 10-year lows as CFO departs

Shares in London-based publishing and education firm Pearson hit their lowest levels since 2008 on Thursday after the company warned that profits would fall next year.

The company also announced that CFO Coram Williams would step down just a month after CEO John Fallon said he would step down after seven years at the helm.

Pearson said on Thursday that its sluggish shift to digital would continue in 2020. Its legacy print textbook business declined by 12% in 2019.

The publisher said that it expected full-year profits for its current financial year to come in at around £590m ($770.7m), at the lower end of its own guidance.

“It’s hard to imagine how shareholders must be feeling right now, having been assured by senior management that they had a vision for the business going forward, that the two architects of the business restructuring, as well as the share price declines of the last five years, have now decided to walk away from the wreckage,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

Recruiter Hays shares crash as UK election hit hiring

Shares crashed in recruitment firm Hays as it issued a profit warning on Thursday, blaming the UK election for hitting client confidence in taking on new staff.

The company (HAS.L) said its net fees from private firms had dropped by 8% in the final three months of 2019 in its UK and Ireland business.

It said in a trading update for its second quarter both candidates’ and firms’ confidence had been “significantly impacted” by political uncertainty, particularly in December.

The company also saw fees falling in other markets, with the bushfires in Australia, general strikes in France, and Germany’s manufacturing woes hitting recruitment levels.

“Growth slowed markedly in December, driven by specific events in key markets: general strikes in France, tragic Australian bushfires, and the UK election,” said chief executive Alistair Cox.

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Premier Inn owner blames economic uncertainty for fall in room sales

Premier Inn-owner Whitbread (WTB.L) on Thursday pointed to continued economic and political uncertainty in the UK as it blamed weak business and leisure confidence for a decline in its accommodation business.

In a trading update, the FTSE 100 hotel operator said that UK accommodation sales fell by 0.4% in the three months to 28 November.

Like-for-like sales, which excludes the 1,000-plus hotel rooms it has added in the past year, fell by 2.1%.

While the company said that it still expected full-year results to be in line with expectations, it pointed to economic uncertainty and said that weak business and leisure confidence outside London continued in its third quarter.

Its UK room occupancy rate fell by 1.8 percentage points, while its average room rate in the UK fell by 2.3%, to £62.18 ($81).

UK property sales on the rise in 'Boris bounce'

Property sales jumped immediately after the Conservatives’ decisive election victory last month, according to a new industry survey.

A majority of chartered surveyors interviewed across Britain reported a jump in the number of sales agreed in December compared with the previous month. It was the first time since May last year the monthly survey has seen more respondents predict growth than decline.

Expectations of greater sales over the year ahead soared among members of the Royal Institution of Chartered Surveyors (RICS), which released its latest residential market survey on Thursday.

It showed 66% of members expected sales to increase, up significantly from 35% last month.

Simon Rubinsohn, chief economist at RICS, said it was a fresh sign that greater certainty over Brexit from the decisive win for prime minister Boris Johnson had boosted confidence.

Uber rival Bolt raises €50m from European Investment Bank

Estonia’s Bolt, one of Uber’s biggest competitors in the European ride-hailing market, has raised €50m (£42.5m) from the European Investment Bank (EIB).

The funding comes in the form of a venture debt facility, which combines the advantages of a long-term loan with repayment terms tied to the company’s performance.

The EIB said on Thursday that the funding would support product development and research in areas where technology can improve the safety, reliability, and sustainability of its services.

This includes investments in ride-hailing and food delivery, the EIB noted.

Bolt, formerly known as Taxify, was valued at over $1bn in a funding round in 2019.

The ride-hailing start-up is near identical to Uber (UBER) in function. But while Uber has raised tens of billions since it was founded in 2009, Thursday’s haul from the European Investment Bank brings Bolt’s total raise to around $250m.

European stocks largely down

The pan-European Stoxx 600 index (^STOXX) was down marginally on Thursday.

Germany’s DAX (^GDAXI) declined by 0.19%, while the FTSE 100 (FTSE) was down 0.40% in London. The French CAC 40 (^FCHI) was on the level, meanwhile.

Sterling was up 0.05% against the dollar (GBPUSD=X) to around $1.305 in morning trading on Thursday. The currency was down slightly against the euro (GBPEUR=X).

What to expect in the US

Futures are pointing to a higher open for US stocks.

S&P 500 futures (ES=F) are up by 0.30% and Dow Jones Industrial Average futures (YM=F) are up by 0.24%. Nasdaq futures (NQ=F) are up by 0.39%.

Companies reporting later on Thursday in the US include:

  • Morgan Stanley (MS)

  • Charles Schwab (SCHW)

  • Bank of New York Mellon (BK)