Economics
Spain The Spanish economy is slowing more sharply than expected after
the implosion of the country’s property bubble, triggering widespread gloom
and rekindling talk that it could leave the single European currency. The
latest statistics paint an even more pessimistic picture than many
economists had predicted after a decade-long boom in construction hit the
buffers in recent months.
World Bank The president of the World Bank has called for immediate
action to deal with rapidly rising food prices that have caused hunger and
violence and threatened the economic stability of the world's poorest
countries. Rising food prices could potentially push 100 million people
deeper into long-term poverty, Robert Zoellick said.
High street sales fell last month on a like-for-like basis, in the
first such drop for two years, according to a survey from the British Retail
Consortium (BRC). The value of like-for-like sales fell by 1.6 per cent last
month compared with a year before, the BRC said. The value of total sales
rose by 1.1 per cent from a year earlier, sharply down from an annual
increase of 3.9 per cent in February.
House price falls gathered pace last month, the latest snapshot of
market conditions from the Royal Institution of Chartered Surveyors (RICS)
showed. It indicated that 78.5 per cent more surveyors around Britain said
that house prices were falling last month than said they were rising. This
was the survey’s most negative reading since June 1990.
Manufacturing prices Prices of goods leaving factories rose last month
at their fastest annual pace since May 1991 thanks to rising fuel prices and
increases in tobacco and alcohol duty, figures showed. Output prices rose by
0.9 per cent in March, lifting the annual rate of increase to 6.2 per cent.
Banking
& finance
Wachovia reported an unexpected loss as a jump in foreclosures in
California and Florida contributed heavily to a $4.4 billion (£2.2 billion)
writedown in the first quarter.
Prudential, the insurer, has a shortlist of about half a dozen
candidates to replace Sir David Clementi, its chairman, who looks set to be
eased out before the end of the year.
JC Flowers’s £3.5 billion takeover tilt at Friends Provident looked to
be on the brink of collapse after the American buyout firm refused to
sweeten the terms of its offer and said that it would walk away unless it
was given access to top management by Friday.
Alliance & Leicester has issued £500 million of covered bonds to
itself to be used as collateral, should it need to raise additional
wholesale funds. Covered bonds are similar to mortgage-backed securities but
offer lower risk to investors. The bank set up its new covered bond
programme last week.
A US judge has sentenced Samuel Israel, a former executive of the Bayou
hedge fund, to 20 years in prison and ordered him to pay $300 million (£150
million) in restitution for defrauding investors out of more than $400
million. Two of his top associates, Daniel Marino and James Marquez, had
been sentenced to 20 years and 51 months in prison, respectively.
Citigroup is allowing private equity groups bidding for up to $12
billion of its leveraged loans to select from a range of assets rather than
sell the loans as a block, reports indicate. Groups bidding for the assets
are understood to include Apollo, TPG and Blackstone.
Construction
& property
General Re Joseph Brandon resigned as chief executive of Berkshire’s
General Re insurance group after the convictions in February of four of its
former executives for fraud put untenable pressure on his position. Mr
Brandon had been one of the key contenders to take over Berkshire Hathaway
when Warren Buffett retires.
UK commercial property returns slid for an eighth successive month in
March, easing by a broadly expected 0.8 per cent because of another 1.3 per
cent fall in property values, according to data from Investment Property
Databank (IPD). However, the rate of decline slowed compared with the
previous month.
Consumer
goods
Philips Europe’s biggest consumer electronics manufacturer suffered a
28 per cent drop in its core profits as its key TV business was hit by
deepening losses. The group, which sells consumer and electronic goods to
people around the world, gave warning that it would feel more impact from
the global credit crunch with a softening in “mature economies”. The fall in
the Dutch-based group’s first-quarter profits to €265 million (£219 million)
followed last week’s sharp profits drop at General Electric, Philips’s US
rival.
Groupe Danone has reported an 11.4 per cent rise in like-for-like sales
for the first quarter, supported by price increases and a return to strong
growth at its recently acquired baby food business. The company said that
total sales reached ¤3.2 billion a year earlier.
Engineering
Siemens has won a power plant order from Severn Power, part of Welsh
Power, worth £665 million. The plant will have an installed capacity of 850
megawatts. The company said that construction had already started and was
scheduled to be completed in 2010.
Raymarine said that it saw first-quarter underlying sales “slightly
below” those of last year, because of delays in product launches combined
with a weak US retail environment, but said it was hopeful that full-year
sales would be in line with market expectations.
Health
Antisoma, the cancer drug developer, has won approval to develop and
commercialise Betagenon’s activated protein kinase (AMPK) activators, used
to treat cancer. The company plans to continue the pre-clinical evaluation
of AMPK activators from Betagenon’s pipeline. The two companies have also
formed a collaboration to explore the potential of AMPK-based cancer
treatment.
Industrials
OAO Severstal said it was reorganising its business into three
divisions to boost production and reduce costs. The Severstal Russian Steel
division will include all of its Russian steel operations and be led by
Anatoly Kruchinin. Severstal Resources will include all of the company’s
iron ore, coal and goldmining operations and be led by Roman Deniskin.
Leisure
Mitchells & Butlers, the owner of the All Bar One and Harvester
chains, has admitted that several private equity firms have expressed
interest in the company and confirmed that it has approached rival Punch
Taverns about buying its £1.1 billion managed pubs division.
Tottenham Hotspur said in a statement to the London Stock Exchange that
Lord Ashcroft, the deputy chairman of the Conservative Party, had increased
his stake in the North London football club to 3.96 per cent.
Media
WPP, the advertising and marketing group, has bought a minority stake
in the independent video game developer Realtime Worlds. Realtime secured
$50 million (£25.1 million) in Series B funding, with WPP investing $8.1
million, the company said, adding that it joins the investors Maverick
Capital and New Enterprise Associates.
Natural
resources
Royal Dutch Shell Jeroen van der Veer, the oil company’s chief
executive, has given warning that a proposed European Union scheme to force
companies to pay for carbon emissions permits previously handed out free
threatens to destroy Europe’s petrochemicals and refining industry.
Max Petroleum said that it planned to invest $300 million (£151
million) to $400 million in a three-year strategic plan, adding that
although it is not yet in a position to process its crude oil fully,
facility improvements have allowed it to achieve average production of 2,700
barrels of oil a day in March.
Russia Leonid Fedun, vice-president of Lukoil, the largest independent
Russian oil company, said that the country’s oil production had peaked. The
comment has fuelled concerns that the world’s biggest oil producers cannot
keep up with rampant Asian demand.
Retailing
Wal-Mart moved a step closer to opening its first store in Russia by
appointing an executive to explore business opportunities in the country. Dr
Stephan Fanderl, formerly on the board of Rewe, the German retailer, joins
Wal-Mart as president of Wal-Mart Emerging Markets - East.
Marks & Spencer The Local Authority Pension Fund Forum has become
the latest fund to hit out at Marks & Spencer’s plans to promote Sir
Stuart Rose to executive chairman, claiming the move poses a “significant
risk” to investors. It added that moves to put Sir Stuart up for re-election
every year personalised the issue.
Support
services
Enodis, the maker of restaurant equipment for chains including
McDonald’s and Starbucks, has agreed be to be taken over by Manitowoc, the
US commercial fridge maker, for £948 million cash.
Technology
Sage Group, the accounting software specialist, said it expected its
half-year results to March 31 to be in line with market forecasts.
Filtronic, the wireless communications and electronic defence equipment
group, said that trading in its two businesses had been “satisfactory”,
although the performance of its defence electronics division had been more
subdued.
Telecoms
LM Ericsson has signed GSM expansion framework agreements with China’s
two largest mobile operators, China Mobile and China Unicom, valued at about
$1.3 billion (£655 million) and $140 million respectively. Under the
agreement with China Mobile, Ericsson will be one of the main suppliers of
core and radio network equipment in 19 regions across China.
Transport
Virgin Group Sir Richard Branson has held talks with Dubai
International Capital (DIC), the $12 billion (£6 billion) sovereign wealth
fund, about financing a possible takeover bid for bmi. The billionaire
entrepreneur is understood to have joined senior executives from the Virgin
Group when they visited Dubai recently to discuss potential deals in the
health, mobile phone and airline sectors. They discussed a possible joint
£750 million bid for bmi, the former British Midland.
BAA Heathrow’s profits rose by more than 10 per cent last year, despite
coming under repeated criticism for its poor service and standards. Accounts
for the private holding company that owns BAA, the airports operator, show
that Heathrow’s operating profits rose by £40 million to £438 million in
2007. Profits at Stansted rose 68 per cent to £86 million after BAA doubled
the charge for passengers.
Utilities
British Energy The bid process for British Energy has been dealt a
further blow after it was forced to shut down one of its largest
power-producing units on Friday night for an unspecified length of time. The
closure of the unit highlights the company's ageing infrastructure. The
shutdown raises questions about the valuation of its assets.
