Economics
World trade Hope that a breakthrough had been achieved at the world
trade talks in Geneva galvanised the top negotiators yesterday evening to
continue talks into the night with the expectation that a deal might be
sealed on the Doha trade round within the next four days.
GDP growth The economy all but ground to a halt in the past three
months. Economists said that the odds on Britain sinking into recession rose
sharply yesterday after official figures showed that economic growth dropped
to a meagre 0.2 per cent in the second quarter, from an already lacklustre
0.3 per cent in the previous three months.
The US housing slump showed no signs of abating after the number of
homeowners facing foreclosure more than doubled during the second quarter of
the year. One household in every 171 received a foreclosure notice during
the three-month period.
Japanese inflation is rising at its fastest pace in 15 years, pushing
the world’s second-largesteconomy closer to the brink of stagnation. Driven
by dramatic advances in the cost of fuel, food and the imported raw
materials on which the Japanese industrial juggernaut depends, average
prices in June surged by 1.9 per cent from a year earlier.
US durable goods orders rose by 0.8 per cent last month, confounding
forecasts of a 0.3 per cent fall. Excluding transport equipment, orders rose
by an even stronger 2 per cent.
Banking
& finance
Halifax, the UK’s biggest mortgage lender, will make cuts of up to 0.3
percentage points on 16 of its home loan products, while Bank of Scotland,
its sister company, reduces rates on 29 products by up to 0.45 points. The
latest cuts are the third this month and the ninth since the start of the
year.
Munich Re and Hannover Re, two of the world’s largest reinsurers, gave
warning yesterday that global market turmoil would hit their 2008 results,
sending insurance stocks across Europe tumbling. Munich Re, the
second-largest reinsurer in the world, said that its second-quarter profits
would be sharply down because of steep falls in equities and bond.
Beazley Group, the Lloyd’s of London insurer, said that first-half
pre-tax profit fell by 25 per cent to £45 million because of a decline in
investment income, though it just managed to beat market expectations. The
company said that volatile market conditions had hit its investment income.
Clarification Cazenove has asked The Times to clarify that charges of
insider dealing brought against Michael Calvert, a former Cazenove partner,
relate to trades carried out after he retired from the stock broker in 2000.
Construction
& property
Saint-Gobain, the world’s biggest building materials group, said that
its 2010 profit targets will require a “big turnaround” in the US market and
that it may sell bonds or other operations to raise funds. Saint-Gobain this
week cut its profit forecast and announced that it would dismiss 6,000 of
its 200,000 employees.
Westfield Peter Lowy, the son of Frank Lowy, the biggest shareholder in
Austrailia’s Westfield property firm, took the Fifth Amendment and refused
to testify yesterday in a US Senate committee hearing into the use of tax
havens. The Lowys are accused of using LGT, a Liechtenstein bank, to hide
$68 million (£34.2 million) from US tax authorities. They refute the
allegations.
Consumer
goods
Britvic, the British soft drinks maker, yesterday cautioned that pub
sales of its drinks are under pressure, claiming that more people choose to
save money and stay at home. The news sent shares in the group down more
than 7 per cent to close at 237¼ despite the 29.9 per cent jump in sales
reported by the company for the first nine months of its financial year.
SABMiller, the Peroni Nastro Azzurro and Grolsch brewer, said that it
intended to boost its volumes significantly over the next five years by
extending its European export operations into countries including Sweden and
Austria and by expanding its existing facilities in France and Spain.
Engineering
Gaz, the Russian automotive group, plans to forge a $1 billion joint
venture with General Motors to build a new factory. Gaz said that it could
also involve Daimler in the project. Russia’s car market is expected to
overtake Germany’s this year to become the biggest in Europe.
Honda Motor’s quarterly earnings beat market estimates but it cut its
annual profit and global car sales forecasts as it battles with rising costs
for raw materials and a crumbling US auto market. Quarterly net profit at
Japan’s No 2 automaker showed a surprise 8 per cent rise due to brisk sales
in China, Brazil and other emerging markets.
Morgan Crucible Ian Norris, the former chief executive of Morgan
Crucible, is facing extradition to the US on charges of obstruction of
justice after a judge at City of Westminster Magistrates Court said that the
charges were of “such gravity” for him to be extradited. This follows a
ruling by the House of Lords that charges of price-fixing did not warrant
his being handed over to American authorities.
Health
Southern Cross Bankers to Southern Cross, the stricken care homes
operator, have thrown the company a lifeline by extending current loan
facilities until October to allow the sale of property assets to reduce
debts. Southern Cross stunned the market at the end of June by announcing
that it was in breach of its banking covenants.
Sanofi-Aventis paid £276 million in cash for Acambis, the British
vaccines specialist, a 65.2 per cent premium to Acambis’s share price. The
French drugs giant was attracted by Acambis’s vaccines pipeline, which
includes the only vaccine against the Clostridium difficile bacteria, as
well as a smallpox vaccine supplied to the US military.
Axis-Shield, the diagnostics company, said that it has signed
distribution agreements with Abbott Laboratories and PSS World Medical to
market its Afinion system, a point-of-care immunoassay instrument, in the
United States. The company said that the agreements are for an initial term
of three years until 2011 and will effectively extend and strengthen
existing distribution arrangements.
Industrials
Mondi, the paper and packaging group, said that it expects first-half
basic earnings per share of 16-19 euro cents. The results for the six months
to June 30 will include a charge for special items mainly relating to the
previously announced closure of the Uncoated Fine Paper mill in Hungary.
Leisure
Mitchells & Butlers, the Harvester and All Bar One operator,
claimed yesterday that the rising cost of shopping for fresh food in
supermarkets was persuading some consumers to eat out at its pubs. The
company said that its cheaper food-based outlets, notably Pub & Carvery
and Sizzling Pub Co, were also benefiting from a trend by consumers to trade
down from more expensive restaurants on the high street.
Morgans Hotel Group The mystery suitor that has made a bid approach for
Morgans Hotel Group, the boutique American operator, is being advised by
Goldman Sachs. Wall Street sources suggested that the suitor could be Meraas
Capital, a Dubai-based fund.
Media
Twenty, the marketing services provider, said that there is sufficient
headroom within its existing facilities to support its ongoing working
capital position. Twenty said that it has been finalising the revised
banking facilities over the last two weeks, adding that the bank has renewed
the invoice discounting line at £2 million and kept the original capital
repayment profile in place.
Aegis Group, the communications company, has bought Aposition, the
French search engine marketing agency. Aposition has gross assets of €2.7
million. Its clients include Mappy and Unedic.
Natural
resources
BP yesterday threw down the gauntlet to its Russian partners, saying
that the group would not be forced out of its troubled joint venture. Tony
Hayward, chief executive of BP, told The Times: “We intend to hold our
ground and we are not going to be intimidated.” Robert Dudley, the American
chief executive of TNK-BP, remains in hiding outside Russia as speculation
grows that his abrupt departure was triggered by fears of imminent arrest.
Keystone Petroleum, an AIM-listed oil and gas exploration and
production company with assets in Algeria and Kurdistan, is to raise £25.1
million in a placement of new shares. RBC Capital market is acting as joint
broker.
Vedanta Resources agreed to pay compensation to tribal people displaced
by a planned bauxite mine in eastern India, as the Indian Supreme Court
concluded hearings and reserved judgement. ActionAid, which has been
campaigning against the mine, said that the court was expected to issue a
report on the conditions by which mining could proceed.
Retailing
John Lewis, the department store group that is a key benchmark of high
street performance, has seen a slight recovery in its sales for the second
week running, after a poor performance in May and June. The company’s 26
department stores experienced a 0.4 per cent increase in year-on-year sales
to £49.97 million in the week to 19 July.
Support
services
Rentokil Initial Alan Brown, the chief executive of Rentokil Initial,
the troubled rat catcher to parcel delivery company, refused to rule out
further woes for its shareholders after issuing the fourth profits warning
since December. Rentokil shares fell to their lowest point in more than a
decade, down 30.75p to 70.75p, after it said that full-year profits would be
£35 million lower than forecast.
Technology
Microsoft Analysts expressed frustration at the lack of detail shown to
them about how Microsoft plans to spend $500 million (£250 million) on
expanding its online business so that it can better compete with Google.
Steve Ballmer, Microsoft’s chief executive, unveiled the company’s strategy
in the wake of its failed six-month battle to buy Yahoo!.
Samsung, Asia’s biggest electronics maker, reported lower than expected
quarterly profits amid concerns that the economic slowdown will curtail
consumer spending on televisions, mobile phones and computers. The South
Korean group’s net profit rose 51 per cent to 2.14 trillion won (£1
billion), for the quarter ending June 30, but fell below analysts’
expectations.
Telecoms
Patientline, the hospital communications provider, was taken private
yesterday in a deal that rendered shareholders’ investments worthless. The
company has sold its subsidiary Patientline UK to Hospedia, a newly
incorporated company that includes Patientline’s main competitor, Premier
Telesolutions.
Inmarsat A takeover of Inmarsat is back on the cards after Harbinger
Capital, the American hedge fund investor, announced that it plans to make
an offer for the UK satellite telephone operator four days after initial
talks were suspended between the groups.
KCom Group, the IT and communications services provider, said that it
has improved profitability in the first quarter despite lower revenues in a
challenging market, and said that it is on track with its efficiency
initiatives.
Transport
Lufthansa’s ground crew and cabin crew workers will launch strikes on
Monday after some 90.7 per cent of union members voted in favor of
industrial action. Strikes will begin at midnight and will last until the
union can come to an agreement with the airline over its demand for a 9.8
per cent pay increase.
Utilities
EDF Energy raised its prices by almost a fifth from yesterday without
warning, hitting customers with double-digit price increases in what is
expected to be an industry-wide rush to put up gas and electricity bills.
The French-owned electricity giant’s five million customers will see an
immediate 17 per cent increase in electricity bills and a 20 per cent
increase in gas.
United Utilities told investors that it was trading in line with
expectations and proposed an increase in its final dividend of nearly 4 per
cent. The water company said that it was on track to deliver good profit
growth, after an allowed 7.8 per cent increase in water bills, and would
return £1.5 billion to shareholders, on top of the dividend, following the
sale of its electricity network business.
