ITV gets Carolyn McCall on board – speedily. FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.
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With a speed matched only by a sharp elbowed family at Stansted’s Gate 87, who have refused to pay for ‘Speedy Boarding’ but still intend to wedge all seven of their oversized cabin bags into the overhead lockers before you can, ITV has dashed to grab easyJet’s Dame Carolyn McCall as its new chief executive.
This morning, the companies confirmed the news broken on Saturday by Sky News’s own Speedy Boarder, Mark Kleinman, that the broadcaster had completed its search for a successor to Adam Crozier – in record time.
Dame Carolyn will be installed in ITV’s Seat 1A and pressing the call button for tube of Pringles by January 8. One person briefed on the situation told the FT that the turnaround time was impressive. “Some companies take a year to do this,” the person said. Two media industry executives also confirmed on Sunday that Dame Carolyn had emerged as the leading candidate for the job.
As a former chief executive at Guardian Media Group, her experience of running a major media business as well as an international FTSE 100 company gave her an edge over other contenders, such as Direct Line boss Paul Geddes and the head of Scottish broadcaster STV Rob Woodward.
However, Dame Carolyn will be taking over at ITV at a challenging time, with the UK TV advertising market heading for its worst year since the financial crash in 2009.
Last week, the chief executive of Channel 4, David Abraham, said the ad market had dipped into recession as advertisers reduced spending in the face of the political and economic uncertainty caused by Brexit. A few months ago, ITV warned its own shareholders to expect a 8-9 per cent decline in ad revenues in the first half of 2017.
Dame Carolyn will also find most of the obvious strategies have already been pursued. Under Mr Crozier, who was in charge for seven years, ITV reduced its reliance on the advertising market by growing its production division. Now, the job is harder: maintaining ITV’s dominance of UK TV advertising while focusing on growing digital revenues, such as targeted online ads.
ITV said Dame Carolyn would be paid an annual salary of £900,000 and a pension allowance of 15 per cent of her salary – broadly the same pay package as that received by Mr Crozier.
She “will also be able to participate in the Company’s existing annual bonus plan up to a maximum of 180 per cent of salary, and the long-term incentive plan up to 265 per cent of salary”, said ITV.
ITV chairman Sir Peter Bazalgette said Dame Carolyn “stood out” for her “track record in media, experience of an international operation, clear, strategic acumen and strong record of delivering value to shareholders”.
Dame Carolyn said:
“This was a really difficult decision for me to make. I have had an amazing seven years at easyJet, I am so proud of what the airline and its people have achieved in that period.
“After seven years, the opportunity from ITV felt like the right one to take. It is a fantastic company in a dynamic and stimulating sector.
EasyJet’s third quarter trading update will be issued on Thursday, when it is expected to report that an improving revenue per seat trend, as outlined in the half year results in May, has been supported by strong third quarter load factors. Full year cost per seat at constant currency is likely to be in line with guidance.
Balfour Beatty expects to be going places fast, too – but on the questionable assumption that work on the High Speed 2 (HS2) railway line will be quick and easy. This morning, the infrastructure group said it will be awarded two contracts on the project worth a combined total of £2.5bn.
These contracts have been awarded to Balfour Beatty’s 50:50 joint venture with Vinci. Together, they will deliver Lot N1, valued at £1.32bn, and Lot N2, valued at £1.15bn, covering work between the Long Itchington Wood Green tunnel and the Delta Junction/Birmingham Spur, and from the Delta Junction to the West Coast Main Line tie-in.
Vinci brings experience of working on the High Speed Tours-Bordeaux project in France. With Balfour, it will endeavour to deliver one of Britain’s largest infrastructure projects in decades, creating thousands of jobs and supporting the economic growth of the country.
Leo Quinn, Balfour Beatty group chief executive, said:
“This is a generational engineering project. HS2 will provide vital infrastructure not only to rebalance the economy, but also to fuel growth in skills, jobs and prosperity across the UK for the future. Balfour Beatty’s joint venture with VINCI has world-class capability in this area and our selection as preferred bidder for two sections is a major endorsement of our strength.”
Do you think it will it be finished on time? No, me neither.
Carillion, the troubled construction company, has also won some HS2 work. Last week, it lost almost three-quarters of its market value following a profit warning. This week, it has been awarded the contract to build the the North Portal Chiltern tunnels to Brackle, along with Eiffage Genie Civil, Kier Infrastructure and Overseas Ltd.
Transport secretary Chris Grayling announced the contract this morning. What form Carillion takes when the project starts is another question, though. It has now appointed more outside help in an effort to avoid collapse: bringing in professional services firm EY, to cut costs and collect more cash.
Carillion’s shares fell 71 per cent last week amid fears it woud have to launch a debt-for-equity swap or rights issue to avoid an emergency takeover or bankruptcy.
On Friday the company hired HSBC as a joint adviser and broker to help repair its balance sheet, and today it announced it has also appointed professional services firm EY “to support its strategic review with a particular focus upon cost reduction and cash collection”.
Carillion said it has already identified a number of actions it will take to reduce its borrowing, and Keith Cochrane, interim chief executive, said:
“We are moving forward quickly with the actions outlined last week. Alongside our own efforts, EY will provide support across the business and bringing an external perspective to our cost reduction and cash collection challenge. My priorities are to reduce the group’s net debt and create a balance sheet that will support Carillion going forward.”
Beyond the Square Mile
Asia Pacific equities were mixed following a sharp fall for Chinese stocks at the open on Monday. The technology-focused Shenzhen Composite fell as much as 4.5 per cent later easing to be down 2.2 per cent while the Shanghai Composite recovered to be down 0.1 per cent after falling as much as 2.7 per cent. Hong Kong’s Hang Seng was up 0.6 per cent and Australia’s S&P/ASX 200 was down 0.1 per cent. Japan’s markets was closed for the Marine Day public holiday.
Data released on Monday showed the Chinese economy grew 6.9 per cent year-on-year in the second quarter, matching the previous three months and putting the economy on track for its first annual acceleration since 2010.
The Australian dollar was down 0.3 per cent against its US counterpart, at $0.7811, but holding at its strongest levels since May 2015.
The Japanese yen edged down 0.1 per cent against the dollar to ¥112.61.
The dollar index, a measure of the US currency against a basket of peers, was hovering at 10-month lows. The dollar fell as much as 0.6 per cent on Friday as a reading on retail sales and inflation added weight to Federal Reserve Chair Janet Yellen’s comments to Congress that were perceived as dovish.
The yield on the 10-year US Treasury was down 1.3 basis points at 2.332 per cent, while that for 10-year Australian bonds was up 0.4 basis points at 2.718 per cent.
Brent crude was holding above $49 a barrel and heading for a sixth successive day of gains, up 0.3 per cent at $49.07. West Texas Intermediate, the US marker, was up by the same amount, at $46.68 a barrel.
Gold prices rose 0.2 per cent to $1,230.82 an ounce.
In the US, the S&P 500 is set to open flat later on Wall Street.
Corporate earnings for Monday include Atlas Copco.
The economic calendar is on the lighter side (all times London):
10.00: Eurozone June consumer price index (final)
11.00: Ireland trade balance
The markets at 08:00
Nikkei 225 up +19.05 (+0.09%) at 20,119
Topix up +6.37 (+0.39%) at 1,625
Hang Seng up +74.65 (+0.28%) at 26,464
S&P 500 up +11.44 (+0.47%) at 2,459
DJIA up +84.65 (+0.39%) at 21,638
Nasdaq up +38.03 (+0.61%) at 6,312
Eurofirst 300 up +1.50 (+0.10%) at 1,520
FTSE100 down -35.05 (-0.47%) at 7,378
CAC 40 unchanged 0.00 (0.00%) at 5,235
Dax unchanged 0.00 (0.00%) at 12,632
€/$ 1.15 (1.15)
$/¥ 112.64 (112.50)
£/$ 1.31 (1.31)
€/£ 0.875 (0.8757)
Brent Crude (ICE) up +0.08 at 48.99
Light Crude (Nymex) up +0.09 at 46.63
100 Oz Gold (Comex) up +3.30 at 1,230
Copper (Comex) up +0.03 at 2.71
10-year government bond yields (%)
UK [Symbol not found: GB10,P:FSI]
CDS (closing levels)
Markit iTraxx SovX Western Europe [Unknown key: data/CHG_COMPOSITESPREAD]bps at 19.9bp
Markit iTraxx Europe +0.14bps at 54.48bp
Markit iTraxx Xover +1.21bps at 244.62bp
Markit CDX IG -0.71bps at 58.26bp
Sources: FT, Bloomberg, Markit