How Brexit vote has impacted UK companies so far

By: | Published: September 28, 2016 3:03 PM

Britain voted to leave the European Union on June 23 and is expected to trigger Article 50, the formal process of leaving the bloc, next year.

BrexitBritish Airways-owner IAG in July trimmed growth plans for 2016 and gave a cautious outlook for annual earnings due to weaker trading and the slump in sterling prompted by the vote result. (Reuters)

Britain voted to leave the European Union on June 23 and is expected to trigger Article 50, the formal process of leaving the bloc, next year.

Below is reaction from a selection of British companies as to how the Brexit vote has impacted their business so far.

AIRLINES

IAG

IAG, which includes carriers Iberia, Vueling and Aer Lingus, said it will cut its capacity growth to 4.5 percent this year, down from the 4.9 percent rise planned in April.

RYANAIR

Ryanair said in July it plans to cut millions of seats from London routes and shift them to more lucrative EU bases.

It said in August it was “very cautious” on the outlook for the winter as Brexit uncertainty and security concerns persist, forcing the carrier to cut fares.

EASYJET

Low-cost airline easyJet said Britain’s vote to leave the EU in June had a short-term impact on UK consumer demand for holidays after sterling fell against the euro, and appetite for holidays had since normalised.

WIZZ AIR

Eastern European-focused budget airline Wizz Air said it would switch some of its planned expansion away from Britain because of the weakness in the pound following the vote to leave the European Union.

Wizz had been intending to grow its UK business by 30 percent – equivalent to four extra planes in this financial year – but said it would reduce this to 15 percent.

MEDIA

AXEL SPRINGER

Brexit will be more painful for the rest of Europe than for Britain which could emerge stronger and better off than its European neighbours, Mathias Doepfner, the chief executive of Axel Springer said.

“In three to five years from now, my bet would be that England will be better off than continental Europe”.

RETAIL AND LEISURE

JOHN LEWIS

Sales of “big ticket” items such as furniture have held up since Britain’s vote to leave the European Union, indicating a relatively robust consumer economy, the head of its biggest department store group John Lewis said in September.

DIXONS CARPHONE

Dixons Carphone, Britain’s biggest consumer electricals and mobile phone retailer beat forecasts for first quarter sales in September and said it had not seen any impact on demand from Brexit.

“We’re not experiencing anything at the moment, we’re full steam ahead for peak (Christmas) and Black Friday (Nov. 25). If the consumer environment changes then we’ll trim our sails to match,” Dixons Carphone Chief Executive Seb James said.

AMAZON

Online retailer Amazon said in August that it would create 1,500 new jobs in 2017 when it opens a new distribution centre in Tilbury, south east England, maintaining its surge of investment in Britain.

Amazon’s new UK manager Doug Gurr said in July Britain’s decision to leave the European Union had not affected its investment plans for the country.

NEXT

Next, one of Britain’s biggest clothing retailers, reported a pick up in sales in the three months ended July 30, and said it had not seen a big impact on demand so far from Britain’s vote to leave the European Union.

In an update in August, Next said it had not seen an impact on sales, apart from in the first few days immediately after the vote.

RESTAURANT GROUP

Restaurant Group Chairman Debbie Hewitt said in August that consumer demand had not been hit by Britain’s decision to leave the European Union and that she did not expect that to change.

LUSH

UK cosmetics maker and retailer Lush is relocating European staff from Britain to Germany and has expanded production at its German factory in the wake of Britain’s vote to leave the European Union, it said in August.

Lush, which makes cosmetics by hand, said uncertainty caused by the Brexit vote had led it to accelerate plans to increase production at its factory in Duesseldorf, western Germany, for the European market.

FINANCE

The CEO of Hitachi Capital said a study that SME tech leaders outperformed their peers showed the need for firms to keep spending after Britain voted to leave the EU.

“This emphasizes the need for companies to continue to invest, not pause for Brexit,” CEO Robert Gordon told a conference in London.

GOLDMAN SACHS

Goldman Sachs Group Inc said in August that Britain’s vote to leave the European Union may adversely affect some of its operations in the EU and could require the bank to restructure some of its businesses.

Brexit will also likely change arrangements by which firms in the United Kingdom are able to provide services in the EU, which may adversely affect the way the bank conducts certain operations, the bank said in regulatory filing.

CHESNARA

Chesnara Plc, an insurance-focused takeover specialist, could move its headquarters to Amsterdam depending on the regulatory environment in Britain after negotiations to leave the European Union, its chief executive said.

“If things get bad, what we say is if it is more efficient and more appropriate for us to be based in Amsterdam, then we would,” he said. “Our preferred structure is to stay exactly as we are, with our head office in Preston.”

BATS EUROPE

Europe’s biggest stock exchange Bats Europe could open a base outside London following Brexit, said its Chief Executive Mark Hemsley, voicing doubts about whether the City of London would secure sufficient access to the European market.

Bats Europe accounts for about 24 percent of daily trading in European shares and barring a clear sign that Britain will get full access to the single European market, it will begin work on setting up a second base next year.

HOUSEBUILDERS, ESTATE AGENTS AND CONSTRUCTION

BARRATT

Barratt Developments, Britain’s biggest housebuilder, said in September that sales had risen in the two months since the vote to leave the European Union.

Overall, Barratt Chief Executive David Thomas said it was business as usual after the firm said that forward sales of houses since June 30 were up 4.1 percent over a year ago.

PERSIMMON

Persimmon has seen a jump in reservations by buyers of new homes over the last two months, the British housebuilder said in August with a 17 percent year-on-year increase since July 1 in its reservation rate — where buyers pay a fee to take a home off the market.

REDROW

British housebuilder Redrow issued a positive outlook in September after sales rose 8 percent in the ten weeks since June 30.

GALLIFORD TRY

Galliford Try said sales rates and prices at its housing division had risen since Britain’s vote the leave the European Union, adding to signs the housing sector is recovering form an immediate hit after the June 23 referendum.

COUNTRYWIDE

Countrywide Plc, the UK’s biggest lettings and estate agency company, warned on full-year core earnings in July, saying that commercial and London residential transactions had stalled after Britain voted for Brexit in June.

FOXTONS

London-focussed estate agent Foxtons blamed a 42 percent drop in first-half profit on Britain’s EU referendum, saying in July that it led to a fall in transactions which is likely to last until the end of the year.

ZOOPLA

Property website Zoopla said in September annual earnings would hit the top end of forecasts, boosted by a higher number of property listings and growth in its price comparison service.

KIER GROUP

British construction and services firm Kier Group stood by its profit guidance as long-running public contracts and low exposure to London’s housing market helped it withstand the jolt of Britain’s vote to leave the European Union.

AUTOS

NISSAN

The chief executive of Japanese carmaker Nissan said in August that future investment decisions about Britain’s biggest car plant will depend on the terms of a Brexit deal struck with the European Union on customs, trade and free movement of goods.

Nissan’s Sunderland plant in the north of England built nearly one in three of Britain’s 1.6 million cars last year.

BUSINESS SERVICES

ADECCO

Adecco has not been hit so far by Britons’ vote in June to leave the European Union, Chief Executive Alain Dehaze said in August, forecasting modest growth ahead for the world’s biggest staffing group.

“We don’t see any material impact of Brexit, either in the UK or in the neighbouring countries and the UK’s trading partners,” he said.

JCDECAUX

French outdoor advertising company JCDecaux is planning to reduce investments in Britain following the country’s vote to leave the European Union, its co-chief executive said in July.

The family-run company said it will review the number of screens it is installing in Britain following the Brexit vote in June.

WPP

WPP, the world’s largest advertising group, said its British operations showed signs in July of a “post-Brexit recovery”, adding that a plunge in the pound following Britain’s vote to leave the European Union had helped reported revenues.

In the long term, however, CEO Martin Sorrell said clients were cautious about big investments as they wait to see what type of deal Britain can secure with its global trading partners.

INDUSTRIALS

EXOVA

UK-based materials testing firm Exova Group said it is more cautious about investing in its home country.

The Edinburgh-headquartered company, whose laboratories test the safety and performance of products used in industries ranging from aerospace to pharmaceuticals, is beginning to make capital investment decisions for the next 6-12 months and Brexit is a factor, according to CEO Ian El-Mokadem.

“The uncertainty has made the UK a little bit less attractive. If you looking at an international portfolio, as we do, you’re likely to want to deploy capital outside the UK right now where there is greater certainty,” he said.

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