February 28, 2017

Pegler’s market report – 28.02.17: News on the transport sector

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (28.02.17) Business under the title Pegler’s Market Report:

News on the transport sector

Google is suing Uber for allegedly stealing the technology behind its self-driving cars. If the Google lawsuit is successful, Uber could be blocked from using the technology powering its self-driving cars, which is currently being trialled in Arizona. The brains behind Uber’s autonomous car fleet come from Otto, a self-driving truck start-up founded by former Google employees, which Uber bought for $680 million (£543m) last year. Google is claiming that before leaving Otto’s founders stole designs for its proprietary technology.

Coach company National Express benefited last year from an additional 25,000 customers whose commutes had been disrupted by Southern rail strikes. Commuters on Southern were particularly impacted over the festive season and have also had to endure more industrial action in the new year, with the threat of more on the way after the latest walkout on February 21. It came as National Express reported its full-year results to the end of December. Sales jumped 20pc to £2.10bn, boosted in part by favourable exchange rates, while pre-tax profit rose 11pc to £136.3m

Keeping to the transport theme, Halfords has come under the spotlight with some analysts nervous about its growth in the coming years as the replacement cycle for bikes is getting longer and price inflation having a big impact on volumes. Questions are being raised about the increased maturity of the cycling industry that could mean that 2017 and onwards will be a bit of a struggle. Analysts also fear Halfords’ car maintenance division will also be hit by rising oil prices.

Royal Bank of Scotland has reported a £7bn loss and warned of further job cuts and branch closures before it may finally be able to post its first profit since the financial crisis. The lender, which remains 72pc owned by the taxpayer, fell to its ninth annual consecutive loss last year, taking its total losses since the credit crunch to almost £60bn, after it suffered a £5.9bn hit from litigation and conduct costs and a £2.1bn restructuring charge. It said it aims to return to profit in 2018 but not before it suffers another loss this year, which would mean the bank has spent a decade in the red.

Onto better news, RSA Insurance, which has considerable operations in Sussex, beat forecasts, posting a 25pc increase in full-year operating profit to £655m.

Germany has overtaken the UK to claim the title of fastest growing major advanced economy in 2016. Official data confirmed that German GDP rose by 1.9pc last year, that compares to the UK, which grew by 1.8pc over the same period.

Elsewhere in Europe, investors are still only too aware of the political risk of the upcoming French elections and Le Pen’s anti-euro stance.

By David Pegler, Brighton Capital Management