Economics
Retail sales volumes dropped by 0.4 per cent in September, cutting
their year-on-year pace of increase to 1.8 per cent, the weakest since
February 2006. Sales of food fell by 0.3 per cent over the latest three
months, compared with a year earlier, the sharpest such fall on record.
Mortgage approvals The number of new mortgage approvals by banks
produced a small rise in September to 23,422, from the record low of 21,342
in August, but was still 25 per cent down on a year earlier, the British
Bankers’ Association reported. Overall, 110,413 home loans, including
remortgages, worth £11.2 billion were agreed by the banks.
Pay rises of about 3.5 per cent are being predicted by private sector
employers for their staff next year, according to a survey by Industrial
Relations Services, the pay consultancy. It said the predicted level of
settlements reflected “unexpected optimism” from employers.
The profitability of Britain’s non-financial companies fell in
the second quarter. The net rate of return on capital invested by businesses
dropped to 14.4 per cent, from 14.9 per cent in the previous three months.
Profitability in services companies tumbled, with a net rate of return of
16.2 per cent, down from 18.6 per cent, but returns for manufacturing groups
unexpectedly rose to 5.1 per cent, from 3.6 per cent.
Icelandic economy Stalemate in talks between Iceland and Britain over
the fate of UK savers’ money frozen in Icesave, the UK offshoot of
Landsbanki, Iceland’s nationalised bank, was being blamed for the delay in
bailing out the stricken North Atlantic economy.
Eurozone industrial orders fell by 1.2 per cent in August,
leaving them 6.6. per cent lower than a year ago.
US house prices fell by 0.6 per cent in August, compared with July, the
Federal Housing Finance Agency said. In the 12 months ending in August,
prices fell by 5.9 per cent. The cumulative decline from the peak reached in
April 2007 is 6.5 per cent.
US unemployment Weekly jobless claims for US unemployment benefit rose
last week by 15,000 to 478,000.
Japan registered a trade deficit in September for the second month in
succession because of dearer bills for imports, particularly imported fuels.
The world’s second-largest economy recorded a deficit of 33 billion yen
(£209.4 million), after a revised shortfall of Y155 billion in August.
Banking
& finance
Credit Suisse, the banking group, said that it had reduced its risk
exposure to leveraged finance from SwFr14.3 billion (£7.5 billion) in the
second quarter to SwFr11.9 billion, while its exposure to commercial
mortgage-backed securities fell from SwFr15 billion to SwFr12.8 billion.
Cattles, the specialist consumer lender based in Batley, West
Yorkshire, said that it would know by February whether the Financial
Services Authority, the City regulator, had granted it a banking licence. It
added that third-quarter trading had been in line with expectations.
HSBC, the banking group, said that its business in France will invest
in the country’s €50 million (£40 million) financing company set up by the
French Government to support the economy. HSBC is to invest €4.8 million for
a 9.43 per cent shareholding, but it said that it would not participate in
the French Government’s recapitalisation scheme.
Ideal Insurance Services The Financial Services Authority, the City
regulator, said it has banned Neil McKay, who ran Ideal Insurance Services
in Chorley, Cheshire, after finding that he had cancelled customers’
insurance without their knowledge and failed to pass on their premiums to
insurers or other brokers. Mr McKay had also hid from the FSA the fact that
he had been convicted in 1996 of eight counts of obtaining property by
deception and had beeen sentenced to eight months in prison.
Goldman Sachs, the US investment bank, plans to shed 10 per cent of its
worldwide workforce of 33,000 in an attempt to trim its cost base.
Construction
& property
Wolseley, the London-listed building materials group, said that it will
close 86 of its remaining 295 US branches and cut 3,000 jobs. The new job
cuts will mean that staff numbers will have fallen by 55 per cent since
2006.
Rightmove, the property search website, said it planned to cut staff
numbers by 20 per cent to cope with the housing market slump. It added that
the redundancies were part of plans to cut its costs by £5 million,
reflecting its view that the “current challenges will continue through
2009”.
Consumer
goods
Carlsberg, the Danish brewer, unveiled a turnaround strategy for
Brasseries Kronenbourg, the loss-making French beer company that it acquired
earlier this year from Scottish & Newcastle. It will involve cutting 214
of 1,400 jobs.
Danone, the French food group, has signed an agreement with Suntory of
Japan for the sale of its Frucor subsidiary, based in New Zealand and
Australia, for more than €600 million (£475 million).
Engineering
Raymarine, the London-listed Portsmouth group that makes navigation
equipment for the marine market, said that its full-year results will be
significantly below the lower end of analysts’ expectations, citing a rapid
decline in its markets. Order intake and sales during October have been
substantially below its estimates.
TT Electronics, the maker of sensors and electronic components, said it
expects its full-year results to be materially below market expectations
after trading in the automotive sector had deteriorated significantly in
recent weeks.
JCB Thousands of workers at JCB’s British assembly plants have voted in
favour of a £50 a week pay cut to prevent 350 staff having to lose their
jobs with the excavator manufacturer.
Health
GlaxoSmithKline, Britain’s biggest drugs maker, has bought the rights
to the experimental therapeutic vaccines for Alzheimer’s disease produced by
Affiris, the Austrian biotech business. GSK could end up paying €430 million
(£340 million) to Affiris if its early-stage vaccines are a commercial
success, although the upfront payment is only €22.5 million.
Industrials
Dow Chemical, the US group, reported lower third-quarter profits,
citing a drop in sales volumes and shutdowns from hurricanes, and gave
warning that the global economy would suffer recession for most of 2009. It
had been forced to shut a large part of its North American operations in
September because of damage from hurricanes Ike and Gustav.
Leisure
Starwood Hotels & Resorts, owner of the Sheraton and Westin brands,
reported a 12 per cent fall in third-quarter profits on the back of a
slowing economy and weakening hotel demand in the United States. It said
that the uncertain economic outlook had made it difficult to forecast future
results and it planned to offset declining revenues by cutting jobs at its
headquarters, closing sales centres and reducing hotel costs.
InterContinental Hotels Group, which recently announced plans for its
first Hotel Indigo in Costa Rica, at San José airport, is to open a Holiday
Inn Express in San José, its first Express in Central America.
Chain-run hotels in London saw an 11 per cent fall in profits during
September as the banking crisis affected room rates in the Docklands area
and the City, according to TRI Hospitality Consulting.
Media
Informa, the London-listed publishing and events group, said that its
current trading was strong and that it expected to report full-year results
in line with forecasts.
Pearson, the publishing group, said it was raising its stake in South
Africa’s Maskew Miller Longman to 85 per cent, from 50 per cent, forming a
new educational publishing unit in the region.
Natural
resources
Kefi Minerals, the AIM-quoted gold and copper explorer, said that it
has entered into a joint venture for its wholly owned Artvin project in
Turkey with Centerra Gold, the Canadian goldminer.
Anglo American, the mining group, said that it would review its capital
expenditure plans because of uncertainty in the markets as it reported a
12.7 per cent fall in third-quarter copper output, its most important metal.
Leni Gas & Oil, the London-listed company, said its joint venture
with Mediterranean Oil & Gas has received approval for its 2009 work
programme from the Maltese Government.
Meridian Petroleum, the London-listed oil and gas exploration and
production company, said it has signed a contract with Terrex for the Otway
Basin, onshore South Australia, where a survey is expected to commence next
year and is estimated to cost about $2.5 million (£1.55 million).
Renova Energy, the AIM-listed ethanol production company, said that it
is seeking to reduce its debt levels and raise capital through the sale of a
controlling stake in its US business to AE Biofuels. Renova’s US
subsidiaries filed for Chapter 11 bankruptcy protection in June.
Vale, the world’s biggest iron ore producer, said its third-quarter net
profits had risen to $4.8 billion, from $2.9 billion last time. The
Brazilian company also said that pretax earnings rose to $6.4 billion, from
$4 billion.
Retailing
DSG International, the owner of Currys and PC World, became the latest
high street retailer to cut its investment plans as it gave warning of a
sharp fall in consumer confidence in recent weeks. Sales at Currys fell by 7
per cent on a like-for-like basis in the 24 weeks to October 18. Sales fell
by 11 per cent at PC World.
Amazon, the US online retailer, said that Mamma Mia! is set to overtake
the Star Wars Trilogy as its biggest selling DVD. It added that pre-orders
in Britain had surpassed all expectations, but said that it still expects
its slowest sales growth at Christmas since the dot-com crash in 2000-02.
J Sainsbury, Tesco and Asda, the supermarket groups, have triggered a
new battle in the petrol price war by promising to reduce pump prices by 3p
per litre to a new low of 94.9p per litre. Asda said that it would guarantee
the new price for ten days.
Debenhams John Lovering, the chairman of Debenhams, has hinted that he
would prefer TPG, the US private equity group that owns 12 per cent of the
department store chain, to buy Baugur’s assets in Britain. He told Drapers
Record magazine that such a move would offer “interesting angles” for the
business.
Sports Direct International, the specialist retailer, forecast that
full-year earnings would be in line with expectations, despite saying that
it was dealing with the toughest trading conditions it had ever experienced.
Theo Fennell, the jeweller. became the first luxury retailer to give
warning that the economic downturn has wiped out its profits when it also
revealed that it is in advanced talks with an investor to sell a stake in
the business.
Support
services
Vp, the equipment rental specialist, said that Hire Station, its
subsidiary, has acquired Power Tool Supplies, the tool hire and sales
company based in Brighton, for £1.1 million. It said that PTS had generated
full-year revenues of £2.3 million and reported pre-tax profits of £400,000.
Technology
Sony, the Japanese electronics and entertainment group, has cut its
full-year earnings forecasts by 57 per cent in an unprecedented profit
warning for the year to next March, reflecting the growing weakness of
businesses across the global economy.
Telecoms
COLT Telecom, the London-listed group, reported a 9.7 per cent rise in
underlying earnings and said it was comfortable with its full-year
expectations. It added that despite uncertain markets, it was making
progress with data revenue growth and earnings.
Transport
Royal Mail reported a 51 per cent increase in half-year operating
profits to £177 million, from about £86 million last time, after cutting
costs, but said that the future of its loss-making postal service was under
threat.
Go-Ahead, the bus and train operator, reported that the number of
passengers using its deregulated bus services had continued to increase and
that its rail arm, which includes the London commuter services Southern and
Southeastern, had seen double- digit rises in like-for-like passenger
revenues in the latest quarter.
Stobart, the transport and logistics group — formed by a merger between
Westbury, the ports group, and Eddie Stobart, the haulier, last year — said
that it was not experiencing any impact on volumes from the economic crisis
and added that it expected to report further growth in the year ahead.
Utilities
Drax is entering a partnership with Siemens, the German engineering
conglomerate, to build three biomass-fired power plants that will generate
at least 15 per cent of Britain’s renewable power. The project is expected
to cost about £2 billion.
