Thursday, 6th April: The FTSE’s week of gains came to an abrupt end this morning as the index started the day 0.85% down at what is set to be their largest decline in more than two months, following the release of the Fed Reserve meeting minutes which revealed the plan to start shrinking the balance sheet. At the very bottom of the index was media company Pearson, as their shares took a turn for the worse by opening around 8.25% lower following a rating downgrade.
After the Unilever and Kraft Heinz deal fell through, Unilever have now announced a restructuring plan. Step one is to sell/demerge the spreads division, which consists of brands like Flora and Stork, some of the UK’s most popular household brands, which investors have suggested they could rake up a hefty £5bn from doing so. Step two is to merge the food and refreshment divisions into one. They currently operate via four different categories; personal care, foods, home care, and refreshments. Food currently consists of products such as Marmite spreads and Hellmann’s mayonnaise, while refreshments are made up of ice creams and teas. Combining the two is believed to achieve a cut in costs and boost growth. Step three is to launch a €5bn share buyback, which last took place at Unilever in 2007, and raise the dividend this year by 12%. All of this, in addition to executing a more efficient marketing spend and supply chain savings, is aimed to result in higher cost savings.
The ambiguity surrounding Brexit has hit airlines hard, but one aviation group seems to be in more panic than the rest. Ryanair is already discussing its next steps in steering their growth away from Britain over fears of what Brexit will entail for the aviation industry. The single aviation market created in the 1990’s gave airlines based in the EU the right to fly to, from and within any country in the bloc, so Britain has around two years to figure out how they are going to work around this once they are officially no longer included in this agreement. Although Ryanair has reportedly been putting the most pressure on the government to deliver more clarity and put their minds at rest, it is actually EasyJet who have suffered the most with regards to share price. The day after Brexit, EasyJet’s share price plunged almost 17% to £13, while Ryanair dropped 12% to £12.23. However, in the nine months from Brexit to this day, EasyJet shares have dropped 48% to £10.36, whilst Ryanair shares have actually gone up 10% to £15.07.