Kingfisher’s DIY skills show room for improvement 20 Sep 2017 The power drill-to-paint retailer’s first-half pre-tax profit beat expectations – welcome for a company that has lost a fifth of its value since May due to a messy business transformation. In a supposedly recession-proof sector, Kingfisher’s woes are largely self-inflicted.
Chinese are buying London’s skyline past its peak 7 Aug 2017 Hong Kong-based bidders have snapped up the Walkie Talkie and Cheesegrater skyscrapers for 1.3 bln and 1.2 bln pounds respectively. The sky-high prices mean lower yields at a time when Brexit is putting pressure on rents. Still, it’s better than buying real estate at home.
U.S. student debt dims home-ownership outlook 17 Jul 2017 Economic growth is supposed to lure millennials out of their parents’ basements. But a study from the New York Fed suggests that borrowing for surging college costs accounts for up to a third of the decline in home buying by 28-to-30-year-olds. That purchasing power won’t return.
Carillion needs high-speed balance sheet repair 17 Jul 2017 Despite winning a share of the UK’s 55 bln pound high-speed rail line, the distressed construction company’s situation is precarious. Its pressing task is to find investors to put in perhaps 500 mln pounds, before customers start cutting loose.
British property shows signs of wear and tear 17 May 2017 British Land’s full-year earnings increased 7.4 percent and leasing activity is surprisingly strong. Tweaks to the group’s portfolio should offset Brexit pressures. Still, shorter leases, lower values and a step-up in disposals are a better indicator of what’s to come.
Benettons bulldoze way into toll-road mega-league 15 May 2017 Atlantia, controlled by the Italian family, wants to buy Spanish infrastructure peer Abertis. The target’s main shareholder, Criteria, hasn’t yet backed the deal. Even so, the premium looks more than fair, a counterbid is unlikely, and holding out would leave Criteria stranded.
Australia hands U.S. timely infrastructure example 11 May 2017 An investor group is paying A$7.6 bln for 50.4 pct of Endeavour Energy, a New South Wales electricity distributor. It's an "asset recycling" model that raises private capital against established operations to fund new government investment. Trump's team should take note.
Cheap boss is a luxury Bovis can’t afford 2 May 2017 The troubled UK homebuilder's investors approved a hefty pay package for its new boss. He could earn over 100 times the average UK construction worker, up from 76 times for his predecessor. A politically incorrect salary is the price Bovis pays for a much-needed turnaround.
Saudi austerity U-turn highlights reform hurdles 24 Apr 2017 The kingdom has restored perks for public sector workers in an attempt to preserve its broader economic agenda. Though the unpopular measures helped cut the deficit the social costs outweighed the benefits. Riyadh is learning that austerity and reform rarely work in tandem.
Bovis Homes is a challenging fixer-upper 5 Apr 2017 The UK builder rejected a proposed merger with Galliford Try and instead hired the bidder’s former CEO to fix the business. Bovis has visibly lower returns and profitability than rivals. It’s not, though, a good time for the kind of cost cuts and land selloff that may be needed.
Bovis Homes suitors have good reasons to pitch low 13 Mar 2017 The UK homebuilder has attracted interest from two peers. The rival premiums of 5 pct and 7 pct appear underwhelming. But a takeover would be a quick fix for investors’ worries about management and building standards, and there are few justifications for a much sweeter offer.
UK housing policy may be answering wrong question 7 Feb 2017 The British government has some ideas to build 250,000 homes every year. But as real rents in England are below 2005 levels and the stock of surplus housing is higher, shortage of supply may not be the biggest issue. Managing rents, not house prices, should be the focus.
Markets well equipped for a post-truth world 23 Nov 2016 French builder Vinci's shares plunged after a hoax news release on Nov. 22, then mostly recovered. Markets have always been prey to the fake news and bogus rumours that now plague politics. The difference is that truth usually reasserts itself quickly in the world of money.
Aussie bet on U.S. building boom stacks up 21 Nov 2016 Building materials firm Boral is buying peer U.S. Headwaters for $2.6 bln. Savings easily cover the premium paid. The timing could prove savvy if president-elect Trump delivers an anticipated boost in infrastructure spending and a broader lift to the housing market.
Saint-Gobain loses either way in Sika fight 31 Oct 2016 The French materials group's two-year effort to sneak control of a $9 bln Swiss chemicals maker by buying a 16 pct super-voting family stake has hit a new legal setback. Saint-Gobain could keep trying or make a proper offer - but giving up would be better for its shareholders.
Europe’s lock on hostile M&A faces rare exception 14 Oct 2016 Frankfurt-listed construction group Braas Monier is under siege from U.S. rival Standard Industries. The offered 12 pct premium looks stingy, and hostile takeovers in Europe rarely succeed. Yet by targeting a Luxembourg-based group, the family-owned bidder may have a workaround.
Saudi faces choice of austerity over indulgence 7 Sep 2016 Falling oil prices may lead Riyadh to cut up to $20 bln of infrastructure projects. The risk is it might trigger a construction slump. Of course, Saudi could just increase borrowing and continue building in the desert. Restraint is perilous but would make more financial sense.
UK housing crisis jars with builders’ fat returns 24 Aug 2016 In a normal market, Persimmon’s 36 pct return on capital would get competed away. Instead, sclerotic planning and smaller rivals’ limited access to finance act as barriers to entry. Builders’ fat returns could be vulnerable if the new UK government decides to take bold action.
China SOE merger is tiny step dressed as a big one 23 Aug 2016 Construction giants Sinoma and CNBM are being crunched together, following similar mergers in moribund sectors like steel and shipping. It’s unlikely to create job cuts and closures on the scale an investor might want, but streamlining the bureaucracy could generate small gains.
Saudi building bust may demolish prince’s reforms 17 Aug 2016 Low oil prices have left thousands of foreign construction workers stranded without pay, and some building companies in financial trouble. Saudi is trying to diversify away from oil, make economic reforms and avoid disrupting the social order. It’s not easy to do all three.