Economics
Interest rates Hopes of a cut in interest rates before Christmas were
boosted as Kate Barker, a member of the Bank of England’s Monetary Policy
Committee, said there were real dangers that the impact of the recent
financial crisis would trigger a severe economic downturn.
The CBI Director-General, Richard Lambert, cautioned against the
temptation to make the City and leading bankers scapegoats for the financial
crisis.
Irish GDP Ireland is the first member state of the eurozone to slide
into recession. Irish GDP shrank by 0.5 per cent between April and June,
after falling by 0.3 per cent in the first three months of the year. Page 60
US unemployment The number of US workers filing new claims for jobless
benefits rose by 32,000 last week. Initial claims for state unemployment
insurance benefits rose to a seasonally adjusted 493,000 in the week ending
September 20, from a revised 461,000 the prior week, the highest reading
since September 29, 2001.
US orders for large manufactured goods fell in August by the largest
amount in seven months as demand for aircraft and cars fell sharply. The
Commerce Department said orders for durable goods fell by 4.5 per cent, far
worse than the 1.6 per cent decline that economists had expected.
Japan’s trade balance recorded a 324 billion yen (£1.65 billion)
deficit in August, as exports to the United States fell by the biggest
amount on record. Excluding January this year, it was the first deficit
since 1982.
Banking
& finance
The Lloyd’s of London insurance market said rising claims costs
and lower investment income contributed to a 47 per cent fall in half-year
profits to £949 million. The figures cover the period to June 30 and do not
include the impact of Gustav and Ike, the hurricanes that struck the US and
the Caribbean this month.
Bradford & Bingley, the buy-to-let mortgage lender, said it will
close its mortgage processing centre in Hertfordshire which employs 300
people, and added that it plans to cut 370 jobs in a crackdown on costs.
Shares in the bank fell by 15 per cent to a new closing low of 21¼p.
3i, the private equity group, invested a total of £622 million in the
five months to August 31, from £1.01 billion last year. a reduction of
nearly 40 per cent, in response to tougher credit and equity market
conditions.
GE Money Home Lending has been fined £1.12 million by the Financial
Services Authority, the City regulator, for short-changing hundreds of its
mortgage customers for more than two years by failing to rectify its systems
failings.
Mortgage rates HSBC and Woolwich are increasing their rates on some
fixed-rate home loans by up to 0.3 per cent and 0.35 per cent respectively
after the cost of interbank lending spiralled.
The Financial Ombudsman Service, which settles disputes between
consumers and financial services companies, plans to name and shame the
worst offenders for poor customer service in the banking industry. The
number of complaints it received last year was up by 27 per cent on 2006.
Banking relief The UK’s five biggest banks could account for as much as
$190 billion (£103 billion) of the US Federal Reserve’s $700 billion
Troubled Asset Relief Programme, the proposed bailout plan for Wall Street.
Construction
& property
Songbird Estates, which owns much of the Canary Wharf business estate
in London’s Docklands, said the half-year market value of its entire
property portfolio had fallen by 9.6 per cent to £6.7 billion because of the
downturn in the property market. But it added that it had little to fear
from the collapse of its tenant Lehman Brothers, the US investment bank.
Consumer
goods
Zetar, the confectionery and snack foods group, said that while its
year-to-date sales are about 10 per cent ahead compared with last year,
currency effects, raw material and energy prices make it difficult to
predict results for the year to the end of April.
Real Good Food Group, the sugar and baking ingredients supplier,
reported widening half-year pre-tax losses of £1.5 million, against profits
of £184,000 a year ago, and said that its full-year results were expected to
be about £1 million lower than forecast.
William Sinclair, the Lincoln-based garden products supplier, said the
wet summer had hit peat harvests and its pre-tax profits for the 15-month
period to the end of September would be significantly below market
expectations.
Engineering
BAE Systems, the defence group, said its £538 million offer for Detica,
the Surrey-based business and technology consultancy, had been approved by
84 per cent of shareholders and it hopes the takeover will be completed in
October.
Jaguar, the carmaker owned by Tata Motors, the Indian group, is
stopping production at its Halewood plant in Liverpool for a week at the end
of October because of the gloomy economic outlook, but said staff at the
plant would continue to go to work and get paid.
Health
Osmetech, the molecular diagnostics group, reported a wider first-half
pre-tax loss of £6.7 million, saying this reflected its continued
investment.
Industrials
Carclo, the supplier of technical plastic components based in West
Yorkshire, said that its first-half trading was in line with expectations
and added that it remains confident of its full-year outlook, with higher
energy costs offset by new contracts.
Leisure
Park Plaza Hotels, the fast-growing four-star operator, reported solid
first-half results although it said that a growing trend towards later
bookings meant that reservation levels were slightly lower than this time
last year. As the UK economy slows, it expects underlying revenue per
available room for its British hotels to show “low single digit” growth.
Luminar, Britain’s biggest nightclub operator, reported broadly flat
first-half underlying like-for-like sales as promotional activity and
increased spend per head mitigated the impact of reduced visits by clubbers.
Pub companies The Federation of Small Businesses has called for the
scrapping of the beer tie imposed by big pub companies on their tenants
after a survey of its pub trade members found that 94 per cent were against
it.
Media
Daily Mail and General Trust, the newspaper publisher, said total
revenue across the group for the 11 months to August 31 was up 4 per cent
year on year and Northcliffe Media, its regional newspapers division, saw a
5 per cent decrease in total revenues compared with the same period last
year, with advertising revenues down 9 per cent. But it cautioned that its
full-year results would be at the lower end of expectations.
M&C Saatchi, the advertising group, reported a 107 per cent rise in
first-half pre-tax profits to £8 million, driven by an “excellent” UK
performance, but said tougher economic conditions would cause growth to
stall in 2009.
Bloomsbury Publishing said it is to buy Oxford International Publisher,
better know as Berg Publisher, the academic publishing company, for a
maximum of £3 million in cash and shares.
Natural
resources
Central African Gold said its first-half pre-tax loss had widened even
as revenues rose, but improved output in the second half is expected to lead
to better cash flows. However, volatility of the dollar gold price remains
one of the company’s concerns.
Gulf Keystone Petroleum, the oil and gas explorer which operates in
Algeria and the Kurdish region of Iraq, reported a narrower pre-tax loss of
$18.5 million (£10 million) and said it is making rapid progress in
Kurdistan.
Gemfields Resources, the AIM-listed gemstone miner, released to stock
exchanges an open letter to the board of Tanzanite One in which it raised
concerns about the mining group’s share capital and questioned its ability
to pay out a dividend announced earlier. Gemfields, a significant
shareholder in Tanzanite, had previously made a £33 million takeover offer
for the miner, which was rejected.
Highland Gold Mining, the Russian miner, reported a first-half net
profit of $22.2 million, from a loss of $2.8 million last year, fuelled by
higher output and strong prices. The company also said it was on the lookout
for takeovers as it had $308 million in cash and short-term deposits at the
end of June.
TNK-BP, the Russian joint venture of BP, the oil and gas group, has
approved management’s original 2008 capital spending plan of $4.4 billion,
according to reports. The company also approved dividends of 40 per cent of
net profit, up to about $1.9 billion.
Retailing
Willis Gambier More than 130 jobs are hanging in the balance after
Willis Gambier, the Essex-based furniture supplier to Marks & Spencer,
Laura Ashley and John Lewis, the retailers, fell into administration.
PricewaterhouseCoopers has been appointed to find a buyer for the business.
Moss Bros, the struggling menswear retailer, said it was a “miracle”
that it achieved flat like-for-like sales in the past eight weeks given a
marked downturn at its stores in the City. The group reported a half-year
pre-tax loss of £1.6 million, from £700,000 last time, with like-for-like
sales down by 2.6 per cent.
DSG International, the electronics retailer, said hedge funds shorting
its shares would be proved wrong by the turnaround plan put in place by John
Browett, chief executive. It added that it had not asked the Financial
Services Authority to extend a ban on short- selling to retail stocks.
Ocado, the online grocer which offers home delivery of Waitrose food,
is seeking to tap investors for £20 million in December to pay down debt.
The group’s pre-tax losses fell to £39.7 million last year, from £44.2
million in 2006, with sales up by about 20 per cent on a year ago.
MFI, the struggling furniture retailer, is understood to be in urgent
talks with landlords just days after starting a search for emergency
funding. The group is believed to be fighting to secure new terms ahead of
its quarterly rent bill on Monday.
Support
services
G4S, the international security group, said it had received an offer to
buy its manned security business in France from Security Services Group,
ultimately controlled by Sun Capital Partners, the US investment group. G4S
is consulting local works councils in accordance with French labour laws.
Penna, the recruitment group, said its first-half performance was
substantially ahead of expectations with net revenues rising by about 25 per
cent year-on-year. Its shares rose 21 per cent, their biggest increase in 17
years, after it said that full-year earnings would beat analysts’ estimates.
Technology
Celoxica Holdings, the computer services group, said its first-half
loss had narrowed to £500,000 on increased turnover from continuing
operations, adding that it is strongly committed to reducing its overhead
costs.
Google Visa, the credit card company, will offer alerts, special offers
and other services in a software application for mobile phones powered by
Google’s Android system.
Telecoms
Vyke Communications, the internet phone service provider, said its
first-half pre-tax loss had widened because of higher operations costs, but
added that it was confident about its future.
Transport
Air France-KLM is splitting the roles of chairman and chief executive.
Jean-Cyril Spinetta will remain as chairman and will hand his chief
executive duties to Pierre-Henri Gourgeon, his deputy.
Alitalia, the embattled carrier, said its unions had signed up to a
rescue plan that they had rejected a week ago from Italian investors in the
CAI consortium. After the unions’ refusal, the investors had withdrawn their
€1 billion (£795 million) offer.
Utilities
British Energy EDF came under attack from rivals furious at a condition
of its £12.5 billion deal for British Energy that allows the French energy
group to sit on key sites for new nuclear power stations until 2011.
National Grid said that the UK risks power shortages and a jump in
utility bills this winter because of repairs to ageing nuclear reactors and
pollution rules that limit coal burning.
