Services

New Smith & Nephew boss hobbled by old injury

3 May 2018

Shares in the artificial hip maker dropped 6 pct after it warned of slower revenue growth and flat profit margins. Incoming CEO Namal Nawana inherits a good portfolio of products in promising markets. His most pressing task is to quickly to reverse S&N’s sickly sales record.

Ailing Indian hospitals warrant healthy bid action

16 Apr 2018

Buyout firm TPG is backing one of three rival offers valuing scandal-hit Fortis at up to $1.3 bln. Private services are in demand with rising incomes and an increase in lifestyle diseases set against New Delhi's failure to provide decent healthcare. Medical tourism helps, too.

HNA’s Swiss airplane food IPO is far from gourmet

6 Mar 2018

The former Chinese deal machine is listing up to 65 pct of Gategroup to help ease its liquidity crunch. The maker of in-flight meals has expanded since HNA paid $1.5 bln for it in 2016. Factor in an IPO discount, though, and HNA will do well to recoup its original investment.

Poste Italiane tries to catch some Amazon sparkle

27 Feb 2018

The mailing incumbent is targeting a 60 pct EBIT jump to 1.8 bln euros by 2022. Its loss-making delivery business is a drag on the lucrative financial segment, but parcel shipments should rise as Italy catches up with a global e-commerce boom. If Amazon grows, Poste can follow.

StanChart shareholders pay Winters a compliment

27 Feb 2018

The Asia-focused lender rewarded investors by resuming dividends. Yet return on equity is still dire at just 1.7 pct. With shares near to tangible book value, investors must believe boss Bill Winters is on track to hit ambitious sales and return targets. That looks optimistic.

AIA’s warchest is good omen for investors

27 Feb 2018

After a 28 pct surge in new business last year, the Asian life insurer is sitting on a cool $12 bln. It is hard to see all of that being consumed by modest M&A or investments in growth. That means before long shareholders should be in line for a big special dividend or buyback.

McKinsey’s next leader inherits a big project

26 Feb 2018

Kevin Sneader has been chosen to run the elite consultancy. He’s a traditional-looking candidate but a stint in Asia suggests growth markets are a priority. The challenge is to keep digital reinvention on track and avoid embarrassments like that recently suffered in South Africa.

AA roadside repair prolongs debt hazard

21 Feb 2018

The UK breakdown group’s shares lost of a fifth of their value after its new CEO warned of lower earnings and slashed the dividend. A costly push to sign up younger members is necessary but risky. Pulling it off is the only way to shrink the company’s 2.7 bln pound debt load.

Capita’s kitchen sink still leaves dirty linen

31 Jan 2018

The UK outsourcing group’s shares slumped 40 pct after its new CEO flagged a 700 mln pound rights issue, asset sales and scrapped its dividend. They should plug balance sheet holes. To recover Capita will need investment, and show how it differs from recently collapsed Carillion.

Suez public sector blowback makes for sorry trend

24 Jan 2018

Shares in the French water group fell 16 percent after a profit warning. Utility-like groups with long-term public contracts typically enjoy a low cost of capital. But having governments as clients is no safeguard, as Veolia and Carillion have already shown.

Chancellor: Carillion’s flaws are common to many

22 Jan 2018

The collapsed UK construction firm’s problems may look idiosyncratic. But its problems with “onerous contracts” were exacerbated by a balance sheet stuffed with intangible assets and ultimately shaky assumptions. These issues are not peculiar to Carillion.

Carillion collapse exposes new bank folly

22 Jan 2018

The failed UK contractor used lenders to finance 412 mln pounds of payments to suppliers when cash was running low. The process, known as “reverse factoring”, seems a lucrative way for banks to provide short-term credit. But insolvency exposes the true extent of the risks.

UK poorly placed to fight Carillion domino effect

17 Jan 2018

Ministers are fretting about Interserve, after fellow contractor Carillion’s collapse. If this were the banking sector, the state could deploy familiar tools to contain contagion. But the government’s dual role as client and bailout-wary market promoter complicates matters.

Carillion pension hole is ominous for UK companies

16 Jan 2018

Before its collapse the construction firm estimated it owed 587 million pounds to retirees. Britain’s pension protection fund, however, reckons the shortfall is nearer 900 million pounds. That’s bad news for Carillion’s creditors – and for other groups with big liabilities.

Carillion collapse is UK outsourcing stress test

15 Jan 2018

The troubled construction firm has gone into liquidation after failing to secure fresh funds. The UK government was right not bail out one of its key suppliers. Nevertheless, a messy cleanup will raise questions about the risks in handing state work to private contractors.

Gemalto investors’ best call is the Atos helpline

14 Dec 2017

The digital-security group rejected its French suitor’s 4.3 bln euro offer. But Gemalto’s claim that the price is low looks iffy, and after four profit warnings a promised turnaround plan is unlikely to be persuasive. Shareholders are justified if they find Atos more convincing.

Atos’ brassy Gemalto bid promises thin cashback

12 Dec 2017

The French group wants to buy the digital-security firm for $5 bln. Gemalto’s shares had fallen 41 pct this year after profit warnings. Its units that make chips for bank cards and phones are struggling, and even generous cost savings would give Atos a mediocre return.

Australian waste deal may scrap shareholder value

11 Dec 2017

Trash hauler Cleanaway is buying rival Tox Free for about $625 mln, including debt. The deal is prudently funded with equity, and promises sufficient synergies to cover the premium being paid. Unless more savings can be found, though, the high price implies a rubbish return.

Scandinavian payments buyout faces long payback

25 Sep 2017

Hellman & Friedman is buying Danish group Nets for $6.6 bln including debt. It’s the latest private equity firm to ride the switch to online payments. Nets has been through the buyout machine before, and faces threats. There are few easy wins in the current hot market.

Founders’ coup leaves a void at Infosys

18 Aug 2017

Vishal Sikka delivered three years of outsize returns. Now the Indian outsourcer's first professional CEO has resigned, against the board's wishes, after criticism from founder shareholders. Finding a solid outsider who can put up with the backseat driving will be challenging.