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Economics
Credit conditions: The credit crunch bit deeper, as banks continued to
curb the availability of loans for individuals and businesses, the Bank of
England’s quarterly Credit Conditions Survey reported.
UK manufacturing: The UK manufacturing industry suffered its
second-worst month since 1992 during last month, the latest CIPS/ Markit
purchasing managers’ survey showed. The headline index rose a fraction, to
34.9 for December, from a November reading of 34.5, on a scale where any
figure under 50 indicates contraction. The survey showed that manufacturers
cut employment last month at a record pace as new orders tumbled, while
output prices for goods leaving factories fell for the first time since
mid2005.
Mortgage lending: The number of new mortgage approvals for house
purchase fell to another record low in November, the Bank of England
reported. Only 27,000 home loans were agreed, down from 31,000 in October.
The value of mortgage loans that were made last month rose by £740 million,
but the increase was far short of levels a year earlier.
US manufacturing: The woes of American industry deepened last month,
according to the latest Institute of Supply Management index of conditions.
Its headline reading fell to 32.4 for December, from a November reading of
36.2. The latest drop left the index close to a record low of 29.4 that was
reached in May 1980.
House prices: The average value of a home in the UK fell by a further
2.2 per cent, or £3,500, last month, to stand 18.9 per cent or £37,178 down
during 2008, Halifax, the nation’s biggest mortgage lender, reported.
Chinese output: China’s vast manufacturing sector, the driving force
behind the country’s economic growth, is on the brink of technical recession
as order books run dry and once humming factories fall silent. The bleak
snapshot of business conditions, which may herald yet more shrinkage in
China’s growth prospects for this year, arrived via the manufacturing
purchasing managers’ index — a survey produced by CLSA, the Hong Kong
brokerage.
Banking
& finance
HBOS: Pension trustees of the UK-based bank formally launched an attack
on the terms of the £33 billion all-share deal from Lloyds TSB. Trustees
agreed to ask an Edinburgh court, which needs to approve the arrangement not
to approve the takeover until Lloyds TSB gives cast-iron guarantees on the
future of the HBOS final salary pension scheme. The court is meeting on
January 12 to discuss the takeover, due to complete on January 19.
Rights issues: UK listed companies will be able to raise billions of
pounds in fresh capital faster in future after institutional shareholders
waived their right to veto all but the biggest rights issues. Companies
would no longer have to hold votes with their shareholders except when
expanding share capital by more than two thirds, the Association of British
Insurers said. The trigger point has been one third.
GMAC: The US car finance company part-owned by General Motors, said
yesterday that it will no longer have the exclusive right to provide
low-interest loans to borrowers buying GM cars, as part of its $6 billion
(£4.1 billion) bail-out by the US government. This means GM can offer
incentives to buy its vehicles through other lenders.
Bernard Madoff: The US financier took $10 million from a new investor
only five days before confessing to an alleged $50 billion (£34.4 billion)
swindle, according to a new lawsuit. Martin Rosenman, president of
Stuyvesant Fuel Service, a private New York fuel company, is suing Irving
Picard, the trustee supervising the unwinding of Mr Madoff’s business, for
the return of $10 million.
Intesa Sanpaolo: The big Italian has completed a securitisation deal of
performing residential mortgage loans for a value of €13 billion (£12.5
billion). It said that the operation was part of its plan to increase the
availability of eligible assets with central banks.
Construction
& property
Commercial property: UK commercial property companies recorded their
worst year in 2008 as values plummeted in the global credit crisis. The FTSE
350 Real Estate Index of 18 companies, including Land Securities and British
Land, fell 46 per cent last year, the biggest fall since the index started
in 1986.
Consumer
goods
PepsiCo: India will allow the global snack and beverages maker to
retain full ownership of its local bottling branch, and invest up to $50
million (£35 million), according to local reports. At the time of Pepsi’s
initial investment in India, rules capped foreign holdings in the sector at
51 per cent, and approval for the venture mandated that the company sell 49
per cent of its local unit within the first five years of operations.
Engineering
Tata Motors: India’s largest vehicle maker said that sales plummeted
last month as tight credit in a traditionally weak month and a slowing
economy trimmed demand. Overall vehicle sales fell by an annual 47 per cent
to 25,219 units, and sales of commercial vehicles dropped an even sharper 51
per cent from a year ago.
Goodrich: The UK supplier of aerospace components said it had completed
a joint venture to develop and supply engine controls for Rolls-Royce aero
engines.
Health
CustomVis: Shares in the UK group, which makes equipment for laser eye
surgery, were suspended as it was unable to publish its annual report and
accounts on December 31. The company said that it expected to post them next
week instead.
Immunodiagnostic Systems: The AIM-listed manufacturer and distributor
of diagnostic products said that it had sold its loss-making haematology
business to Escalon Medical Corp, a Nasdaq-listed healthcare company, for
€4.2 million (£4 million). The producer of diagnostic testing kits said that
its Biocode Hycel unit would get payment from Escalon over 48 months from
December 31, the date of completion of the deal.
Industrials
US steel: The American steel industry is banking on a $2,000 billion
(£1,380 billion) public infrastructure programme to save it from collapse.
US steelmakers are hoping that Barack Obama, the US President-elect, who
takes office in less than three weeks, will rush through federal approval to
fund a massive programme of road building, bridge, school and hospital
construction projects and air-port reform.
Manitowoc: The US industrial manufacturer has completed the $120
million (£83 million) cash sale of its shipbuilding business to the
Fincantieri Marine Group, of Italy. The sale leaves Manitowoc, the
Wisconsin-based company, which was founded in 1902 as a shipbuilder, with
two businesses: building cranes and commercial food-service equipment.
Manitowoc last year acquired Enodis, the British kitchen-equipment maker, in
an attempt to expand its food-related businesses.
Leisure
JD Wetherspoon: Britain’s biggest high street pub chain looks set to
spark a price war after reducing the price of a pint of beer to 99p for an
indefinite period to drum up business in what is expected to be another
difficult year for the industry.
InterContinental Hotels: Shares in the world’s biggest hotel operator
rose 6 per cent after Guoco, the Malaysian company that controls the Thistle
and Guoman chains, declared a 3 per cent stake.
Media
Change4Life: A new healthy living campaign aimed at tackling Britain’s
soaring obesity rates is being started by the Government. Adverts
highlighting the new Change4Life initiative will appear on television. The
idea is to “kick-start a lifestyle revolution for every family” by promoting
healthy eating and exercise, according to the Department of Health. The
companies involved include Cadbury, Unilever, Coca-Cola, Kellogg’s, Kraft,
Mars, Nestlé and PepsiCo which are taking part alongside big supermarkets
Asda, Tesco and the Coop.
Natural
resources
LyondellBasell: The business empire of Len Blavatnik, the Russian-born
oligarch, was racing against time yesterday to save one of its industrial
pillars, LyondellBasell, the chemical company, which is teetering on the
edge of bankruptcy with $26 billion (£18 billion) in debts. One of the
world’s biggest producers of raw plastics, LyondellBasell must pay $281
million by tomorrow to a group of lenders, including Merrill Lynch, Goldman
Sachs, Citigroup, ABN Amro and UBS.
Oil exploration: A giant oilfield that lies beneath suburban Baghdad is
among 11 being studied by Royal Dutch Shell and other Western oil companies,
after the Iraqi Government opened them to foreign companies this week for
the first time in decades.
Western Canadian Coal: The Canadian producer of high-grade coal for
steel production has agreed to provide a $36 million (£25 million) loan
facility to Cambrian Mining, the AIM-listed group.
Retailing
Waitrose: A pre-Christmas rush sent takings at the UK supermarket up 41
per cent to £112 million in the week to December 27, but sales at the John
Lewis Partnership, its parent, were down 1.6 per cent over the past 22
weeks. John Lewis, which is regarded as the bellwether of the British retail
sector, said that the week to December 27 had Waitrose’s strongest trading
day on record.
JJB Sports: Sir David Jones was appointed executive chairman of JJB
Sports in a big reshuffle in the troubled sportswear retailer. The company
said that Chris Ronnie would remain as chief executive, but it is unclear
what role he will play alongside Sir David, who was made a knight in the New
Year Honours this week. JJB last month paid £20 million to its banks, HBOS,
Barclays and Kaupthing, pro-rata, rather than repaying a £20 million
bridging loan that was due.
Play.com: The online CD, DVD and games retailer, said that sales rose
24 per cent over the Christmas period compared with last year, with 1,000
orders a minute on December 8, which was 43 per cent more than the same day
last year.
Woolworths: About 6,800 of the collapsed UK retailer’s staff will
receive an extra day’s pay after the administrators for the collapsed
British store chain decided to postpone the closure of its final 200 outlets
by 24 hours next week. Deloitte has put back the remaining stores’ final day
of operation from Monday to Tuesday to give them time to sell everything,
transport it from the premises and lock up the buildings.
Support
Services
PricewaterhouseCoopers: The accountancy group has bought Halliwell
Consulting’s executive remuneration business. It said that the deal called
for ten new staff joining PwC’s mid-tier reward practice on Monday.
Linklaters: After four years, the UK law firm has toppled one of its
biggest American rivals in the global mergers and acquisitions league
tables, beating Sullivan & Cromwell. Linklaters has been fortunate to
secure some of the bigger deals in one of the worst markets for M&A for
decades. Last year the firm worked on four of the top ten biggest
transactions.
Deutsche Post: John Allan, the chief financial officer of the German
postal service, is to step down at the end of June. Europe’s biggest postal
company said that Mr Allan was leaving "of his own volition" and
would act as a senior adviser to Frank Appel, the chief executive, after he
left the board.
Technology
NetPlay TV: The AIM-listed interactive gaming group has acquired
Venturygames.co.uk and Toucan-win.com, the mobile gambling and skill gaming
businesses of Info-download , a unit of Zed Worldwide, for £1 million in
shares. At present the businesses acquired generate a monthly gross revenue
of about £500,000, and the deal will add to its earnings immediately.
Semiconductors: Global semiconductor sales fell almost 10 per cent in
November, as the economic slowdown shook the chip sector, a chip industry
trade group said. Semiconductor sales dropped to $20.8 billion (£14.4
billion) in November from $23.1 billion a year earlier, the Semiconductor
Industry Association reported. Sales during the first 11 months of the year
rose 0.2 per cent to $232.7 billion. November sales were 7.2 per cent lower
than the $22.4 billion in October 2008.
Telecoms
MobileOne: Singapore’s third-largest mobile phone operator said that
Neil Montefiore, the chief executive, had resigned with effect from February
1. Mr Montefiore, who joined M1 in 1996, will leave the company to pursue
other interests. M1 has appointed Karen Kooi, the chief financial officer,
acting chief executive.
Transport
Flybe: Britain’s biggest regional airline is offering free insurance to
its customers, enabling them to get a full refund if they lose their jobs.
People who book flights, car hire and hotels in January and are travelling
before October 24 will receive a full refund if they have to cancel their
trip because they have been made redundant.
Utilities
Gas prices: Britain’s winter gas prices fell yesterday, despite Russia
cutting off Ukraine’s gas supplies on Thursday in a move that could affect
flows to Europe, as milder weather sapped demand for the heating fuel.
Britain gets little gas from Russia, but a drop in Russian gas exports to
continental Europe could make European traders reluctant to sell into the UK
through pipeline links to the Netherlands and Belgium.
You accentuate the negative as usual. In fact the December figures show that manufacturing has stopped falling, as has the demand for mortgage loans. In fact both show a small rise. At a turning point after such a collapse of course year-on-year figures still look bad but irrelevant for the future.
Robert Cookson, Milton Keynes, UK