Rolls-Royce expecting to turn cash flow positive, GSK and Sanofi delay Covid vaccine

Stocks to watch

Aircraft engine maker Rolls-Royce said it expected to turn cash flow positive in the second half of 2021 as air travel demand started to recover from the Covid-19 crisis driven by vaccination programmes. The company on Friday maintained full-year guidance, adding it was targeting at least £750m in free cash flow, excluding disposals, as early as 2022 and at least £2bn from disposal proceeds.

InterContinental Hotels Group said on Friday that it had reached agreement for further amendments to its revolving credit facility, including an additional waiver of the covenants at 31 December 2021, together with a relaxation to the covenants at 30 June 2022 and 31 December 2022. The FTSE 100 company said the covenant relaxations were based on a theoretical severe downside scenario. It said its minimum liquidity covenant of $400m would continue while the amendments were in place, and would be tested on 31 December 2021, 30 June 2022 and 31 December 2022.

G|axoSmithKline and Sanofi have delayed their Covid-19 vaccine programme after the vaccine showed a weak response in people aged 50 and over. The companies said they would do more work on the vaccine and expected it to be available in the fourth quarter of 2021.

Newspaper round-up

Jaguar Land Rover has shut down production at its Castle Bromwich factory until Christmas because “an issue related to Covid” has prevented the delivery of key materials, in another sign of the strains facing the UK automotive industry. Production of JLR’s XE and XF cars stopped earlier this week and will not restart for two weeks, in another blow to the UK’s largest carmaker as it struggles with the coronavirus pandemic and Brexit preparations. - Guardian

US regulators and 48 attorneys general are limbering up for what promises to be the biggest legal battle against a US company in decades. Letitia James, the New York attorney general who is spearheading one of two lawsuits against Facebook, this week accused the social network of abusing its “dominance and monopoly power to crush smaller rivals, snuff out competition, all at the expense of everyday users.” In a powerful speech, James said Facebook used its “vast troves of data and money” to fund a “buy or bury” scheme to quash competition. James said she would not rest until the courts ordered Facebook to sell off WhatsApp and Instagram, which she said the social network had acquired illegally. - Guardian

Accounting firm BDO will not repay furlough money even though its partners took home £518,000 each in the past year and staff have been promised pay rises. It furloughed 700 employees - an eighth of its UK workforce - at the start of the pandemic despite its main rivals refusing to accept state support for fear of reputational damage. - Telegraph

BT’s first national strike since 1994 has moved a step closer after union members overwhelmingly backed holding a vote early next year in a dispute over job losses, pay and conditions. A consultative ballot of members of the Communication Workers Union returned 97 per cent support for moving to a formal vote on industrial action. - The Times

Analysts at one of the banks advising TalkTalk on a contentious £1.1 billion takeover valued the telecoms company at a substantial premium days before the approach was disclosed. Deutsche Bank issued a note in October reiterating a price target of 175p a share, 80 per cent higher than the preliminary 97p per share proposal from Toscafund, TalkTalk's second-largest shareholder, announced later that month. TalkTalk agreed in October to enter into talks with Toscafund, which holds 29.52 per cent, according to Refinitiv, and the deadline to make a firm offer has twice been extended. - The Times

US close

Wall Street trading finished in a mixed state on Thursday, as the Food and Drug Administration (FDA) met to discuss Pfizer and BioNTech's Covid-19 vaccine, and following some worse-than-expected jobless claims data.

At the close, the Dow Jones Industrial Average was down 0.23% at 29,999.26 and the S&P 500 lost 0.13% to 3,668.10, while the Nasdaq Composite advanced 0.54% to 12,405.81.

The Dow ended the session 69.55 points lower on Thursday, extending losses recorded in the previous session after Senate majority leader Mitch McConnell said Republicans and Democrats were "still looking for a way forward" on additional fiscal aid.

The House of Representatives passed a funding extension on Wednesday that will see the Federal government continue to run until 18 December, buying further time for negotiations around a Covid-19 relief bill.

However, there was also an air of optimism as a US advisory panel began a meeting late in the day to decide whether to recommend that the Food and Drug Administration approve Pfizer and BioNTech's vaccine.