28/07/2016 BBC Business Live


28/07/2016

Similar Content

Browse content similar to 28/07/2016. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

This is Business Live from BBC News with Aaron

:00:10.:00:11.

With terror attacks across europe and a vote by the UK we look

:00:12.:00:19.

at the state of the regions once booming tourism industry.

:00:20.:00:21.

Live from London, that's our top story on Thursday the 28th of July.

:00:22.:00:40.

It's an industry in turmoil and today Thomas Cook added

:00:41.:00:43.

to the headache facing Europe's holiday business, saying that

:00:44.:00:46.

Terrorism and Brexit would lead to a decrease in profits.

:00:47.:00:50.

Were going to be looking at where next for the regions once

:00:51.:00:53.

Also in the programme, we should learn later today

:00:54.:01:10.

whether Britain's first new nuclear power plant in decades will actually

:01:11.:01:14.

If confirmed - the new Hinkley Point plant will be

:01:15.:01:17.

one of the biggest and most expensive energy projects ever

:01:18.:01:19.

We will the markets, London opening flat, some of the Asian markets down

:01:20.:01:26.

in the dumps. We will show you why. And we'll be getting

:01:27.:01:29.

the inside track on the booze industry with the man behind brands

:01:30.:01:31.

like Johnny Walker, Yes the head of Drinks Giant Diagio

:01:32.:01:34.

will be in the studio as the firm We will actually be talking to him

:01:35.:01:38.

live down the line. And a new report out today says that

:01:39.:01:46.

sitting at your desk for eight hours Increasing the risk

:01:47.:01:50.

of premature death by 60%. How long do you stay seated

:01:51.:01:56.

for at work? And what do you do to try and stay

:01:57.:01:58.

healthy in the office? Let us know using the

:01:59.:02:01.

hashtag BBCBizLIVE. Thankfully he's not in the studio,

:02:02.:02:19.

he would have brought props, you know what that means! Drinks early

:02:20.:02:21.

in the morning. The global tourism industry

:02:22.:02:23.

is going through a rough patch at the moment with terrorism,

:02:24.:02:29.

Brexit and Zika all affecting Thomas Cook has just

:02:30.:02:32.

released its third quarter results. The British travel company

:02:33.:02:35.

cut its full-year profit target and saw a 5% reduction

:02:36.:02:37.

in summer bookings. Safety and security concerns have

:02:38.:02:45.

had a huge impact in tourism in locations such as France,

:02:46.:02:50.

Egypt, Tunisia and Turkey, all of which have suffered deadly

:02:51.:02:57.

terror attacks in recent times. As you can see from this map much

:02:58.:03:02.

of the region is now considered to be under a 'high' level

:03:03.:03:12.

of terrorist activity with the likes of Portugal and Italy having

:03:13.:03:15.

an 'underlying threat' UK based travel firms have also had

:03:16.:03:20.

to deal with the fall in the value That's made holidays abroad more

:03:21.:03:30.

expensive for Brits and is having a knock impact on those countries

:03:31.:03:34.

that rely on UK tourists. The Independent's travel editor

:03:35.:03:40.

and all round tourism guru Aaron running us through numbers.

:03:41.:03:54.

Europe's tourism industry seems to be in a terrible state. Turkey, down

:03:55.:04:02.

50%. Tunisia, decimated. Is it too early to say it is in a state of

:04:03.:04:07.

crisis? That depends where you are. On the fringes, Turkey, absolutely

:04:08.:04:14.

dreadful. You go to the resorts and see almost nobody there. Down maybe

:04:15.:04:20.

50%, largely because there is limited demand, I personally had a

:04:21.:04:26.

vacation but in Turkey, the company said we're cancelling debt, there is

:04:27.:04:32.

simply not the demand. Switching flights to the western

:04:33.:04:34.

Mediterranean, Spain and Portugal. Spain will have a boom year, the

:04:35.:04:39.

best year ever. Even that comes at a price. Pushing lots of marginal

:04:40.:04:46.

accommodation into the mix. Simply because you have 10 million extra

:04:47.:04:53.

tourists chasing beds. They are not necessarily gay did have a great

:04:54.:04:58.

holiday, not getting the value in places like Turkey and Tunisia. Let

:04:59.:05:06.

me ask you this. We spoke to Ryanair, Europe's largest carrier

:05:07.:05:10.

number by passenger numbers. One luxury for them, it's an area takes

:05:11.:05:18.

a downturn, they move the planes, focus of an area doing better. If

:05:19.:05:23.

you owned hotels, bricks and mortar, you are screwed, excuse my French.

:05:24.:05:29.

Those assets stay where you put them. That is the huge issue

:05:30.:05:35.

affecting Turkey and Tunisia, also Egypt. Seeing a shortfall in travel.

:05:36.:05:41.

The airlines are having a better time, not a brilliant time. An hour

:05:42.:05:48.

ago, the chief executive Thomas Cook saying the German airline, Condor,

:05:49.:05:51.

suffering because of the competition. All the planes pointing

:05:52.:05:59.

towards Spain. If you have not yet but your summer location, they could

:06:00.:06:07.

be bargains around. This year they have 90% of their summer holidays

:06:08.:06:12.

but, up from 16 last year. Could put downward pressure on prices. A lotta

:06:13.:06:18.

people choosing to stay at home. Something politicians have been

:06:19.:06:22.

trumpeting. A drop in the pound, 10% drop. Great for the UK tourism

:06:23.:06:30.

industry, is that true? The demand for foreign holidays, even when the

:06:31.:06:35.

pound has been on par with the Euro, it continues to be strong. Quite a

:06:36.:06:42.

lot of elasticity. The pound may sink by 10%, does not mean 10% fewer

:06:43.:06:46.

people will go abroad. Even then people will go abroad. Even then

:06:47.:06:50.

they won't necessarily, if they are feeling the pinch, uncertain about

:06:51.:06:54.

what will happen with Brecht set, they were not necessarily spend that

:06:55.:07:00.

on UK vacations. They made a stay at home. Not entirely good news. There

:07:01.:07:06.

may be, hopefully in the next year or so an increase in overseas

:07:07.:07:10.

visitors to the UK. If you see a decline in aviation, talking to

:07:11.:07:18.

Ryanair, moving flights away from the UK, people cannot get there,

:07:19.:07:22.

they will not be there spending money. Interesting, a nuanced

:07:23.:07:27.

response under the headlines. Tuning to the BBC's Travel Show for the

:07:28.:07:31.

latest. How to maximise your money. The Federal Reserve has kept

:07:32.:07:37.

interest rates unchanged, maintaining the ultra-low level

:07:38.:07:38.

they have been at The US central bank said "near-term

:07:39.:07:40.

risks to the economic It is still expected to raise rates

:07:41.:07:44.

twice this year. Investors expect the first

:07:45.:07:48.

increase to come in autumn. Facebook posted quarterly

:07:49.:07:58.

profit results yesterday which were above and beyond

:07:59.:08:00.

what analysts were predicting. The social media giant posted a 59%

:08:01.:08:02.

increase from a year ago. The huge boost has been attributed

:08:03.:08:05.

to mobile ad revenue which is up 81% Investment in the new nuclear plant

:08:06.:08:08.

to be built at Hinkley Point, Investment in the new nuclear plant

:08:09.:08:25.

to be built at Hinkley Point, is set to get final approval today

:08:26.:08:31.

from France's EDF. A third of the almost 24 billion

:08:32.:08:33.

dollar project is being met It will be the UK's first nuclear

:08:34.:08:36.

power plant in over 20 years and is expected to provide

:08:37.:08:41.

7% of the UK's total For our UK audience we will be

:08:42.:08:44.

bringing you more on this later. Let's take a look round the world

:08:45.:08:57.

at what's business stories First, Strong smartphone sales have

:08:58.:08:59.

helped Samsung Electronics post its best quarterly results

:09:00.:09:03.

in more than two years. Look at you, hello. At the top end,

:09:04.:09:25.

I said that in a nice way, by the way, at the top end, competition

:09:26.:09:31.

from Apple, at the bottom end, they had competitors. It is the battle of

:09:32.:09:39.

the smartphones, to a point, anyway. It is, in fact the world's bigger

:09:40.:09:46.

smartphone maker. Profits up 8% from the beginning of the year to June.

:09:47.:09:52.

That was in line with guidance. Tom Werner, mobiles. Profit jumping 57%

:09:53.:09:59.

from one year earlier. Pretty impressive. Consumers keen on the

:10:00.:10:04.

galaxies smartphones. You have to put this against the slowing

:10:05.:10:07.

smartphone industry. You talked about the iPhone, just this week

:10:08.:10:12.

Apple struggling to boost iPhone sales. The future for mobiles is not

:10:13.:10:19.

Albright. They expect mobile profits to weaken in the second half, hoping

:10:20.:10:24.

to offset that with strong demand from the various very lucrative

:10:25.:10:29.

components they make. The shares ended down, just over 1% in a week

:10:30.:10:33.

and market. Good on you, we will talk to you soon.

:10:34.:10:36.

Asian stocks were mostly lower today as Chinese stocks

:10:37.:10:38.

Japan's Nikkei fell more than 1% because of the stronger yen

:10:39.:10:45.

and nerves before the Bank of Japan's monetary policy

:10:46.:10:47.

All that said the Federal Reserve provided a positive assessment

:10:48.:11:03.

of the US economy taking away some of the risk.

:11:04.:11:07.

I will say that the dollar fell as some in the currency market had

:11:08.:11:12.

hoped the Fed would give a clearer indication that it could raise

:11:13.:11:15.

Europe opened flat, but remember yesterday on the FTSE

:11:16.:11:28.

we saw the highest closing level in nearly a year,

:11:29.:11:30.

with house builders among the top performers and mid-cap stocks

:11:31.:11:34.

touching their best level since last month's shock Brexit vote.

:11:35.:11:46.

OK, let's jump over the pond and see what'll be making the biz

:11:47.:11:49.

In a week dominated by profit reports from the world's biggest

:11:50.:12:04.

technology companies, Facebook's will be hard to top, reporting a

:12:05.:12:09.

182% increase in net income. If anyone can challenge Facebook's

:12:10.:12:15.

dominance in the digital advertising market, it is Google. They have

:12:16.:12:20.

enjoyed rapid growth. The parent company Alphabet is expected to

:12:21.:12:25.

announce a rise in profits after the stock market closes. Another tech

:12:26.:12:33.

firm enjoying a banner year is Harmison, profits may be boosted by

:12:34.:12:42.

the retail giant. The car-maker Ford, and credit card operator

:12:43.:12:45.

MasterCard will both put out both their results first on Thursday.

:12:46.:12:48.

Joining us is Richard Dunbar, Investment Director

:12:49.:12:50.

We have had a raft of results coming in from various companies. One I

:12:51.:13:03.

want to pick up on his Rolls-Royce. Posting an 80% drop in first-half

:13:04.:13:10.

profit. That is a huge drop. Is it better than a lot of people are

:13:11.:13:15.

expecting? They are poor on the face of it, a little better than the

:13:16.:13:23.

market expected. The 80% fall reflects the mill they have been

:13:24.:13:27.

through. Poor demand for aero engines and marine engines.

:13:28.:13:31.

Rolls-Royce is not making enough profit from the sales of the after

:13:32.:13:35.

service of the engines. They have gone through a massive restructuring

:13:36.:13:39.

programme, that continues, cutting costs, doing things better,

:13:40.:13:43.

restoring the company to the position it should be in. Results

:13:44.:13:48.

slightly better than expected. The market expected a loss. Share price

:13:49.:13:58.

up 15%. That reflects the views of the current management team are

:13:59.:14:02.

doing something right. Confidence going forward. When we talk about

:14:03.:14:06.

Rolls-Royce, people may think of a car, it is not the car company, they

:14:07.:14:11.

make engines, big plane engines. Cracking new engines out at the

:14:12.:14:18.

moment. In the next 20 years, Airbus and Boeing will say they need 20,000

:14:19.:14:22.

plus new aircraft. One third of the plane to get some will have

:14:23.:14:25.

Rolls-Royce on the side of the engine. One of Britain's's Best

:14:26.:14:30.

companies. One of the best of three engine makers in the world.

:14:31.:14:33.

Gradually getting back to the position it should have been in

:14:34.:14:38.

before. You will stick around to take us through the business papers.

:14:39.:14:44.

Some good stories. Who selected those?

:14:45.:14:47.

Still to come: We'll be speaking to a world leading

:14:48.:14:50.

The man behind brands like Johnnie Walker Scotch whisky,

:14:51.:14:53.

and Guinness beer will joins us live to talk about the company's latest

:14:54.:14:56.

results and why it's too early to say if Brexit is bad news

:14:57.:14:59.

You're with Business Live from BBC News.

:15:00.:15:13.

And now a look at some of the stories from around the UK.

:15:14.:15:16.

Investment in the new nuclear plant to be built in Hinkley Point,

:15:17.:15:18.

Somerset, is set to get final approval today.

:15:19.:15:22.

Our very own Ben Thompson joins me now from The London Stock Exchange

:15:23.:15:26.

Have you got any likes? It looks awfully dark. We will need that new

:15:27.:15:40.

plant just do like you up! Yes, welcome to my new space age area at

:15:41.:15:46.

the London stock exchange. It is a really big day for corporate news.

:15:47.:15:55.

One of the biggest news items we are keeping our eye on is that. EDF will

:15:56.:15:59.

tell us whether they will go ahead with that new nuclear power plant at

:16:00.:16:06.

Hinkley Point in Somerset. There are similar plants being built at the

:16:07.:16:10.

moment which are massively and long facing their opening. In northern

:16:11.:16:18.

France it is 7 billion euros over and at Colston it is six years late.

:16:19.:16:23.

The initial estimates say it will cost around ?18 billion, and if that

:16:24.:16:28.

is the case, it would make it the most expensive nuclear power plant

:16:29.:16:32.

ever built, but some say the costs could escalate as high as ?37

:16:33.:16:38.

billion. Equally, there is a? Over the timing. When will it be built

:16:39.:16:43.

and when will it "Makes it is designed to meet 7% of the UK's

:16:44.:16:50.

energy needs but it is not due to open until 2025 and it could be

:16:51.:16:56.

later. Way over budget. Another company is Lloyds, their pre-tax

:16:57.:16:58.

profits have more than doubled but on this announcement it will cut

:16:59.:17:04.

some 3000 jobs. We have seen the share price drop dramatically. It is

:17:05.:17:08.

a bank in the eye of the Brexit storm. Yes, and a look at the share

:17:09.:17:13.

price now, it is one of the biggest borders. 3000 more jobs on top of

:17:14.:17:25.

the 9000 jobs it announced it would cut last year. It will also close

:17:26.:17:28.

another 200 branches. That is about 400 branches which will disappear by

:17:29.:17:30.

the end of the high street next year. They say that as a result of

:17:31.:17:34.

changing habits in how we do our banking, but also the record low

:17:35.:17:38.

interest rates which is squeezing the profit margins. They cannot

:17:39.:17:41.

charge more and for the banks it means smaller profits. Thank you for

:17:42.:17:45.

talking to us. The top stories the British travel

:17:46.:18:04.

company Thomas Cook had its results today, the terror attacks, Brexit

:18:05.:18:09.

and the failed coup in Turkey are all leading customers to cancel

:18:10.:18:14.

their holidays. We have a raft of results coming out and the decision

:18:15.:18:20.

by the US Federal Reserve to keep rates on hold. The European markets

:18:21.:18:22.

have opened fairly flat. In the last couple of hours Diageo

:18:23.:18:25.

reported a 2.8% increase in sales in the year 30 June -

:18:26.:18:28.

enabling the company to return You may not have heard of the drinks

:18:29.:18:31.

company, but you'll certainly have heard of some their

:18:32.:18:39.

international drinks brands. Diageo owns Captain Morgan's rum,

:18:40.:18:42.

Smirnoff vodka and Johnnie Walker Aaron is nodding. You are making me

:18:43.:18:47.

thirsty! Although Europe and North America

:18:48.:19:00.

accounts for the majority of the company's sales,

:19:01.:19:02.

Diageo also has a large and growing The company has given investors

:19:03.:19:04.

plenty to cheer about lately, since Britain took the decision

:19:05.:19:08.

to leave the European Union, the company's share price

:19:09.:19:10.

has risen around 16%. Let's speak to Ivan Menezes,

:19:11.:19:16.

Chief Executive Officer of Diageo. Many thanks for joining us on the

:19:17.:19:25.

programme. As I was just saying, your company has been, on the

:19:26.:19:30.

surface of it, a beneficiary of the UK vote to leave the EU. We saw your

:19:31.:19:36.

share price fall but article 50 is yet to be evoked. Are you concerned

:19:37.:19:40.

about what will happen to your business, access to the single

:19:41.:19:45.

market etc, if and when it is a vote? You know, Diageo is a global

:19:46.:19:50.

business. We have about 6% of our business in the UK. Scotch whiskey

:19:51.:19:56.

is 25%. It is one of the most healthy food and drink export

:19:57.:20:01.

businesses the UK has. As it relates to Brexit and what happens, our

:20:02.:20:13.

company is well positioned. If you look at the results we just

:20:14.:20:15.

announced, we grew at 3%, expanded margins. North America is a very

:20:16.:20:18.

important market, it is doing well. Europe is doing well and the

:20:19.:20:22.

emerging markets are growing. I am confident we will work our way

:20:23.:20:26.

through a post-Brexit world. What is most important to us is let's keep

:20:27.:20:32.

Scotch Whisky healthy. This is a thriving, successful business to the

:20:33.:20:36.

UK and my focus is ensuring we get the right conditions to continue to

:20:37.:20:40.

be successful, because the runway for Scotch whiskey around the world

:20:41.:20:45.

is very attractive, particularly in the emerging markets.

:20:46.:21:03.

Ivan, I want to ask you this, you mentioned the United States, the US

:21:04.:21:07.

accounts for nearly half of all your money, let's be frank, all the money

:21:08.:21:10.

you rake in, and you have seen a big improvement in the US, and I wonder

:21:11.:21:13.

what is behind that turnaround, why are the Americans drinking more? The

:21:14.:21:15.

Americans are drinking better and they are moving to spirits better!

:21:16.:21:17.

This works really well for Diageo. What we have done in the last few

:21:18.:21:21.

years is really sharpened up our focus on the consumer, our marketing

:21:22.:21:28.

is much better, and you know I love America, because to me, it is the

:21:29.:21:33.

world's most attractive developing market. You have wonderful

:21:34.:21:38.

demographics, a growing population, the multi-cultural shifts in

:21:39.:21:43.

America, the growth of the U know and Asian consumer is very good for

:21:44.:21:50.

us and it is profitable. Ed is about half our profits and it is the most

:21:51.:21:57.

sustainable and exciting growth engine for the company and our

:21:58.:22:02.

brands do really well. Our higher end brands like tequila and Bullet

:22:03.:22:08.

bourbon are growing right now and it is all about the trend to drink

:22:09.:22:12.

better and people love their cocktails. Indeed they do! One thing

:22:13.:22:17.

I am interested in is do you think it is a good time to renegotiate

:22:18.:22:21.

some of your trade deals, some of the tariffs out there which already

:22:22.:22:27.

exist? The UK now has an opportunity to negotiate its own deals,

:22:28.:22:32.

companies like India, given India in particular has huge tariffs, 150%,

:22:33.:22:39.

as I'm aware of, of wines and spirits, do you see opportunities

:22:40.:22:48.

now? I do. We as the UK need to get out aggressively and create the best

:22:49.:22:52.

trade conditions around the world. You point to India. We have a

:22:53.:22:58.

fabulous business in India in local spirits. It is our number two market

:22:59.:23:03.

after the United States. Indians love whiskey and Scotch whiskey

:23:04.:23:07.

still has very high tariffs. If the UK and India could get to a free

:23:08.:23:12.

trade agreement, that would be very positive for Diageo and I think both

:23:13.:23:16.

countries have a long connection and to me, this is what the new

:23:17.:23:21.

government needs to be out doing, creating the conditions outside the

:23:22.:23:30.

EU to create favourable trade agreements. OK, really good to talk

:23:31.:23:32.

to you, thank you. Ivan Menezes, chief executive of Diageo. And

:23:33.:23:39.

remember, we like props next time! He wants us to drink better.

:23:40.:23:46.

I wonder if Donald Trump is making the Americans drink more?

:23:47.:23:48.

In a moment we'll take a look through the Business Pages but first

:23:49.:23:51.

here's a quick reminder of how to get in touch with us.

:23:52.:23:54.

The Business Live page is where you can stay ahead with all the breaking

:23:55.:23:58.

business news. We will keep you up-to-date with all the details and

:23:59.:24:04.

analysis from the BBC's team right around the world. And we want to

:24:05.:24:08.

hear from you as well. Get involved on the BBC live web page. And you

:24:09.:24:13.

can find us on Twitter and Facebook. Richard Dunbar, Investment Director

:24:14.:24:22.

at Aberdeen Asset Management Can we start with this first story?

:24:23.:24:34.

I'm going off camera now. Sitting is not good. Apparently, it is as bad

:24:35.:24:39.

as cigarette smoking. As someone who started work when you could smoke in

:24:40.:24:43.

the office, I find it hard to believe this is the case but

:24:44.:24:46.

nevertheless, Cambridge University have told us it is. They say if you

:24:47.:24:50.

walk around for an hour, that is all you need to do. You do not need to

:24:51.:24:54.

join the gym and standing up in itself is a good thing is so good

:24:55.:24:56.

news for all of us who wish to cancel our gym

:24:57.:25:13.

subscription! A scary statistic that sitting down for eight hours

:25:14.:25:15.

straight increases the risk of premature death for 60%. In our

:25:16.:25:17.

office there are buttons which raise the desk up so you could stand

:25:18.:25:20.

instead of sit but sometimes it is like a field of sunflowers rising

:25:21.:25:23.

and falling as people rise and fall at their computers but nevertheless,

:25:24.:25:26.

it is positive for this kind of action. US real estate company

:25:27.:25:34.

buying a big chunk of the UK? They are buying into Pinewood Studios. It

:25:35.:25:40.

is a US investor taking advantage of a weaker sterling and still having

:25:41.:25:43.

confidence in the UK real estate market. Some we were worried about

:25:44.:25:47.

after the Brexit vote and it seems this company is less worried than

:25:48.:25:52.

others. The fifth biggest economy in the world still standing strong!

:25:53.:25:56.

Thank you. That is all we have time for.

:25:57.:25:57.

There will be more business news throughout the day on the BBC Live

:25:58.:26:02.

webpage and on World Business Report.

:26:03.:26:04.

Download Subtitles

SRT

ASS