Economics
Manufacturing output suffered a surprise slump in May, according to
official data. Output fell by 0.5 per cent, matching a similar decline in
March, to stand 0.8 per cent down on a year earlier. The broader measure of
industrial production, including the extractive and utilities sectors, fell
by a sharper 0.8 per cent, to stand 1.6 per cent down on last year, fuelling
fears that industry is already in recession.
GDP growth probably slowed to 0.2 per cent in the second quarter, from
an already weak 0.3 per cent in the first, according to estimates by the
National Institute of Economic and Social Research (NIESR). It said that the
economy was probably fractionally stronger in the second quarter than in the
three months to the end of May, when it put growth at only 0.1 per cent.
Recession The latest survey of business conditions from the British
Chambers of Commerce (BCC) will show today that manufacturing and services
are sliding into severe downturn. Sales, orders and confidence in the
service sector are at their weakest since the last recession in the early
1990s, the BCC finds. Domestic sales and orders in manufacturing have sunk
to their lowest since 2001.
Employment Demand for permanent staff has fallen for the first time in
five years, the Recruitment and Employment Confederation reports today, in a
survey that will add to fears of sharp rises in unemployment.
German industrial production plunged by 2.4 per cent in May, after a
modest 0.2 per cent fall in April, confounding forecasts of a rise, and
adding to anxieties over deteriorating eurozone prospects.
European Central Bank (ECB) The ECB came under renewed pressure over
its decision last week to order a controversial rise in interest rates as
eurozone finance ministers met in Brussels. Christine Lagarde, the French
Finance Minister, said she hoped that the move was a one-off.
Credit ratings Europe’s chief financial regulator will tell its finance
ministers today that he intends to table legislation in the autumn to
regulate the activities of credit rating agencies.
VAT The European Commission proposed a shake-up of its value added tax
and state aid rules in an attempt to help small businesses, promote growth
and cut administrative red tape.
Banking
& finance
Bradford & Bingley is heading for one of Britain’s most expensive
rights issues with a £55 million bill to raise only £400 million, according
to information released to shareholders. Shares plunged by more than 16 per
cent to close at an all-time low of 42p, 13p below the rights issue price.
Man Group said that it would launch an environmental fund, the MENA
Associated Gas and Global Environment Fund (AGEF). The fund will invest in
projects to capture associated gas from crude oil production and use it to
generate electricity. The fund aims to raise $1.5 billion (£761 million).
FSA The Government set out its Financial Capability Action Plan to help
people who are struggling with their finances to get the assistance they
need. It plans to boost the capacity of the Financial Services Authority’s
consumer helpline so that it can give guidance to more people.
London Stock Exchange said that the number of equity trades across the
group increased 18 per cent from June last year, with 20.4 million equity
trades on the electronic order books of the LSE and Borsa Italiana, with a
combined value of £243.9 billion.
Construction
& property
Persimmon The housebuilder will today confirm about 1,000 job cuts and
is expected to write down the value of its land by up to £300 million, as
well as post a grim outlook for the sector.
Eatonfield Group, the property developer, said that it would sell two
residential sites for a total of £4.4 million, generating cash of £1.5
million after paying off debt. The contracts are for a 4.75-acre site in
North Wales and 5.05 acres in South Wales.
Consumer
goods
InBev The Belgian brewer’s campaign to buy Anheuser-Busch gathered
momentum after a senior member of the Busch family threw his weight behind
InBev’s $47 billion (£23.8 billion) bid for the Budweiser maker.
Engineering
General Motors, the world’s biggest carmaker, is considering thousands
of job cuts in a radical restructuring of its North American business as it
struggles with a dire domestic market. It is facing increased fears over its
financial stability, with Merrill Lynch saying that bankruptcy was “not
impossible” if the company did not secure a cash injection of $15 billion
(£7.6 billion) and if the home market weakened further.
Fiat will shut down most of its plants in Italy for periods in the
coming months because of the weak demand for its cars, according to reports.
Fiat plans to shut four of its five plants in Italy for an average of one
week per month between August and November.
Coe Group, the video surveillance system maker, said that trading in
its shares had been restored on AIM as it had secured a £350,000 debt
facility with a subsidiary of IP Group. Andrew Wallace, the chief executive,
will be replaced by Ian Jefferson, the finance director.
Health
Fresenius The German healthcare company has agreed to buy APP
Pharmaceuticals, a United States-based supplier of generic intravenous
drugs, for up to $29 per share in cash to give Kabi, its infusion therapy
subsidiary, access to US markets.
Antisoma, the cancer drug developer, said that early findings from
Phase-II trials of AS1411, used to treat relapsed and refractory acute
myeloid leukaemia, showed promise.
Industrials
Ciba The Swiss special chemicals group is stepping up its restructuring
efforts and plans to drop unprofitable businesses and cut up to 40 per cent
of its products.
Leisure
Von Essen Hotels, the luxury hotel operator, is understood to be in
advanced talks to acquire Herm, one of the smallest Channel Islands, for £15
million. The revelation comes in the wake of speculation that Lakshmi
Mittal, the Indian steel magnate, is in talks over the possibility of taking
a 40 per cent stake in Von Essen.
Punch Taverns has replaced Andrew Knight as the head of Spirit Group,
its managed pub division, as it tries to restore flagging investor
confidence.
Mike Tye, a former Whitbread executive who ran the Costa coffee and
Premier Inn divisions and David Lloyd Leisure until its sale last year, will
take over the role. The pubs group’s share price has fallen by almost 80 per
cent in the past year.
Aldgate Capital, the AIM-listed shell company, which last year outlined
plans to create a diversified gaming business, has acquired 31 Shipleys
gaming machine arcades for £25 million.
Media
EMI Guy Hands, the music company’s chairman, has promised to step back
from day-to-day management after appointing Elio Leoni-Sceti as chief
executive of its recorded music division. The new boss has no background in
the industry and spent the past 16 years with Reckitt Benckiser, the
consumer products group.
DVDs The British Video Association, which monitors the home
entertainment market, said that DVD sales had risen 3.3 per cent for the
first half of 2008, compared with the same period a year ago. According to
Lavinia Carey, its director-general, DVDs have become less a luxury and more
a necessity.
WPP The advertising group said that Wunderman, its wholly owned
operating company, had bought Designkitchen, the United States-based digital
and interactive agency, for an undisclosed amount.
Natural
resources
TNK-BP Robert Dudley, the chief executive of TNK-BP, has held on to his
job after a quartet of Russian billionaires failed in their attempt to fire
him. An extraordinary board meeting of TNK-BP management voted 3-2 against
dismissing Mr Dudley in response to a demand from its Russian shareholders.
Black Rock Oil & Gas said that it was in talks with “a number of
parties” regarding additional financing, a merger proposal or an offer for
the oil and gas exploration company or its assets.
Lonmin, the world’s third-largest platinum producer, said that it had
resumed normal smelting operations at its biggest furnace and expected the
down time to have deferred production of about 5,000 ounces to 10,000 ounces
of platinum from the financial year 2008 until 2009.
Rock Well Petroleum, a United States-based oil group, said that it was
listing on the main market of the London Stock Exchange this month. The
company, which uses mining techniques to recover oil not profitable using
conventional oil extraction methods, hopes to raise between $300 million
(£152 million) and $500 million.
Retailing
Marks & Spencer Paul Myners, the former M&S chairman, has
jumped to the defence of his close friend Sir Stuart Rose and said that
there was no one better to revive the retailer. Speaking before a possible
revolt by institutional investors at tomorrow’s M&S annual
meeting, Mr Myners said that he expected the 2,000 private shareholders due
to attend to show their full support for the executive.
Argos Britain’s biggest trade union is threatening strike action at
four key regional distribution centres that supply Argos, the high street
chain, in a row over pay. Unite said that two thirds of workers at
distribution sites in Basildon, Bridgwater, Heywood and Magna Park in
Leicestershire had voted in favour of a series of 24-hour stoppages.
Support
services
Michael Page, the international recruitment group, said that
recruitment in London’s financial services sector had ground to a halt, the
latest sign of the economic gloom sweeping Britain. The company said that
demand for permanent staff in the banking sector had slowed dramatically in
recent months, adding that many banks were relocating staff to other
countries, such as Dubai.
Bunzl, the distributor, has bought A&E Russell, the personal
protection company, which has gross assets estimated to be worth £10
million. A&E Russell, based in Glasgow, has 11 other locations
throughout Scotland and England and supplies a range of personal protection
equipment and related products.
Spice, the utility services group, reported a 40 per cent rise in
full-year pre-tax profit to £17.1 million, and said that it continues to
look to the future with confidence after a “pleasing” start to the new year.
May Gurney Integrated Services said that its performance was in line
with expectations and it remained confident about its business prospects for
the current financial year and beyond.
Technology
Microsoft announced its intention to renew takeover talks with Yahoo!
if the search engine group’s board was replaced at next month’s annual
meeting. Microsoft said that it would be interested in reopening discussions
to buy either the search business or the entire group if Carl Icahn, the
billionaire activist investor, succeeded in his quest to replace the board
on August 1.
Autonomy said that it expected to report record second-quarter 2008
results, with revenues and earnings per share “significantly” ahead of
consensus estimates at around $122 million (£61.8 million) and $125 million.
Bang & Olufsen, the Danish stereo and TV maker, cut its profit
estimate for 2007/2008 for the third time. It now sees operating profit of
about DKr195 million (£20.8 million) for the year to May 31.
Telecoms
Inmarsat Harbinger Capital, the activist American hedge fund, admitted
to making a tentative bid approach to Inmarsat, sending shares in the £2.4
billion satellite operator soaring. Shares closed 6 per cent higher, up 30p,
adding almost £140 million to its market value.
Transport
EasyJet, the budget airline, said that its acquisition last year of GB
Airways had helped it to boost passenger numbers by 19.5 per cent last
month, compared with June a year ago. The Luton-based carrier said that
passenger numbers had climbed to 4,112,951, from 3,440,630 previously.
Vueling and Clickair, the Spanish airlines, agreed to merge. Clickair,
in which Iberia holds a 20 per cent stake, began merger talks with Vueling
shareholders this year. Soaring oil prices have boosted the need to
consolidate Spain’s fragmented airline market.
Utilities
Novera Energy has secured a deal with Ford to supply up to 13MW of
electricity to the car manufacturer’s Dagenham Estate. Novera said that the
electricity will be generated by its East London Sustainable Energy
Facility.
