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Economics
UK outlook: Sir John Gieve, Deputy Governor of the Bank of England,
warned that Britain is confronting its worst economic downturn for decades,
and said that further monetary and fiscal policy measures will be needed to
jump-start growth.
Spanish prospects: Spain forecast that it would suffer its worst
recession in five decades this year. The Madrid Government predicted that
the Spanish economy will shrink by 1.6 per cent over 2009, in the country’s
first bout of recession since 1993.
Eurozone trade: A 4.7 per cent slump in eurozone exports during
November meant the 16-nation bloc moved from a trade surplus to a deficit in
the month, registering a trade gap of €7 billion (£6.3 billion), compared
with a surplus of €500 million in October.
US inflation: Price pressures in the US faded to almost nothing last
month, official figures showed. The headline annual rate of US inflation
dropped to 0.1 per cent in December, the weakest since December 1954, as
overall consumer prices fell by a sharp 0.7 per cent in the month. The news
stoked fears of deflation.
US industrial production: Output from US factories dropped by 2 per
cent last month, leaving it down by 7.8 per cent on a year earlier, in the
sharpest annual fall suffered since September 1975, an indication of the
deepening malaise in American manufacturing.
US consumer confidence: Sentiment among American consumers edged higher
in January but remained mired close to recent half- century lows, the latest
poll from the University of Michigan revealed. Its headline gauge of
confidence rose to 61.9 for this month, from a December reading of 60.1.
Banking
& finance
Barclays: Shares in the UK bank dived by 25 per cent in the last hour
of trading, in a day of broad weakness in the banking sector. The company
said it did not know why its stock was falling, and that it had not said
anything that would require regulatory reporting obligations. Shares in the
bank, one of the few not to have asked the Government for more capital,
ended down 32p at 98p.
Anglo Irish Bank: The Irish Government said that it was drawing up a
compensation scheme for investors in Anglo Irish Bank after the surprise
decision last night to pull € 1.5 billion (£1.3 billion) in funding and
nationalise the ailing lender.
Citigroup: The US bank revealed plans to split in two and a $235
billion (£157 billion) government bailout as the newly rescued Bank of
America announced that Merrill Lynch, which it acquired this month, reported
a $15.3 billion loss. The US Treasury agreed to rescue BOA with a $138
billion in loans, guarantees and capital days after it officially took over
Merrill Lynch, the Wall Street brokerage.
Norwich Union: Britain’s largest life insurer, added to the economic
gloom yesterday by announcing lower final payouts across the board for its
2.3 million with-profits customers. Payouts on policies maturing this month
will, on average, be up to 15 per cent lower than a year ago.
Tenon: The UK-based accountant said that it had continued to perform in
line with expectations for the first half and that prospects remained
encouraging. The company said that it had generated excellent growth in its
recovery and related service lines, adding that it expected the economic
downturn to benefit these services.
Invocas: The debt-management company said it was possible that an offer
could be made for the business as its shares soared almost 40 per cent. The
Edinburgh-based company said that negotiations were at an early stage.
Construction
& property
Bellway: Shareholders in Bellway, one of Britain’s biggest builders,
have voted down a pay-and-bonus scheme for executives in a rare victory for
investors. The protest vote, prompted by anger over the pay plan, marked one
of the few instances in which shareholders have defeated a company’s
remuneration plan for directors.
Colliers: The commercial property consultancy said that it planned to
make a further 70 staff redundant after sector activity plummeted, causing a
33 per cent drop in 2008 full-year revenues to £78 million. The company,
which has offices in Manchester and Glasgow said that most of the cuts would
be in London, where it has its headquarters.
Consumer
goods
C&C Group: The Magners Irish Cider maker reported a 13 per cent
fall in revenues in the three months to the end of November as the extent of
the challenge facing new management was laid bare. Its cider division was
down 19 per cent, with sales in the UK down 24 per cent. It said that it was
also faced with having to fund a pension deficit of €60 million, up from
€32.3 million since August.
Headlam: The flooring distributor said that 2008 profits would meet
expectations but that its markets would probably stay subdued over the next
year. The company, which distributes floor coverings to retailers and
contractors, said that like-for-like revenues in the UK fell by 2.5 per cent
for the year to the end of December 2008.
Engineering
Honda : The carmaker is suspending work at its plant in Swindon in
April and May in response to a collapse in consumer demand for cars in
Europe. The Japanese carmaker announced a further round of job cuts in Japan
and said that production would be halted to cut output. No jobs are
threatened at the British plant, where production cuts have already been
signalled.
Renold: The maker of industrial chains said it would shed 350 staff to
cut costs, after orders fell in its third quarter on a constant currency
basis, with December showing a significant decline. Renold, whose products
are used in transport, energy, and mining, said that the decline in new
orders meant that an accurate view of the effect on its full year was not
possible.
Health
Biocompatibles International: The medical technology group said that it
expects 2009 revenues to rise by 30 per cent to more than £20 million as a
result of rising sales, an acquisition and income from a deal with
AstraZeneca.
Industrials
Vale: The Brazilian mining group said that it has cancelled plans to
build a mill with Baosteel Group, China’s largest steelmaker, because of a
slump in global steel demand.
Leisure
Accor: The French hospitality group’s UK division reported a 6.9 per
cent increase in like-for-like sales in the fourth quarter of 2008 thanks to
a 16 per cent jump in childcare and luncheon vouchers. Its midmarket and
upmarket hotels, principally Novotel and Sofitel, fell by 8.8 per cent,
while its economy Ibis, Etap and Formule 1 hotels were down 1.1 per cent.
The group as a whole suffered a fourth-quarter decline of 1.1 per cent.
Gourmet Restaurants: The troubled Tiffinbites and Bombay Bicycle Club
operator has been rescued by Anoup Treon, the entrepreneur behind European
Care Group, the care homes operator. Administrators said they would be
“closely scrutinising” why the company had failed just seven months after
buying the Bombay Bicycle and Vama businesses.
Media
Dori Media Group: The London-listed producer of television drama, said
that sales had slowed noticeably in the fourth quarter of 2008, reflecting
caution from programme buyers. The Tel Aviv-based company said that it
expected revenue for the year to be about $50 million (£34 million) and
that, as a result of the slowdown, pre-tax profits would be between $4
million and $6 million.
Mecom: David Montgomery, the executive chairman of Mecom, the newspaper
group, yesterday survived an attempt to oust him in a boardroom coup,
prompting the resignation of six members of the board. Sir Robin Miller, the
former chief executive of Emap, joined forces with John Allwood, the finance
director, to try to force out Mr Montgomery.
Walt Disney: Robert Iger, the President and Chief Executive of Walt
Disney, received a 3 per cent raise in compensation in fiscal 2008, to $30.6
million, according to a proxy filed with the US Securities and Exchange
Commission. The proxy showed that Steve Jobs, a director, would stand for
re-election in March. Mr Jobs is Disney’s largest individual shareholder.
Natural
resources
TNK-BP: The appointment of a new Russian chief executive of TNK-BP, the
Anglo-Russian oil venture, has been held up because of wrangling over pay.
Denis Morozov, the former chief executive of Norilsk Nickel, emerged as a
front-runner to replace Robert Dudley, the ousted chief of Russia’s
third-biggest oil company, almost three months ago.
Oil demand: China’s oil demand is likely to rise a mere 1.1 per cent
this year, compared with estimated growth of 4.2 per cent in 2008, the
International Energy Agency said. It cut its forecast for China’s demand by
270,000 barrels per day — roughly the amount of oil consumed by Switzerland.
The IEA said in its monthly report that China’s oil demand would hit 7.951
million barrels per day, the lowest rate of growth since 2001, when the
country’s now-faltering economic boom began to move up the gears.
Retailing
John Lewis: Trading by the retailing partnership gained ground last
week, but the performance of its department stores and its Waitrose grocery
chain was less impressive than in the first week of post-Christmas sales.
Total sales for the department stores in the week to January 10 were up by
3.5 per cent against the same seven days in 2007 but paled against the 27
per cent gain recorded in the previous week. Cumulative sales for the first
24 weeks in the John Lewis calendar amounted to a negative 2.9 per cent
against the same period in 2007.
Circuit City Stores: The US electronics chain, which has 567 stores,
would be fully liquidated after failing to find a buyer or a refinancing
deal. The group filed for Chapter 11 protection in November, citing a
deteriorating cash position and tighter terms from suppliers.
Theo Fennell: The luxury jeweller said that sales fell 21 per cent in
December as the economic downturn hit demand for high-end gems and trinkets.
The company — popular with celebrities and known for its diamond-encrusted
skulls and silver Marmite lids — blamed the “very depressed” consumer market
in the UK for the like-for-like sales drop and warned that it would make a
loss for the year to the end of March.
Instore: The owner of Poundstretcher said that Christmas sales came
under pressure as discount shoppers flocked to snap up Woolworths’
closing-down bargains. The operator of Instore and Poundstretcher said that
like-for-like sales dropped 1.9 per cent in the five weeks to January 3,
adding that it would make a loss of up to £5 million for the year to the end
of February.
Support
Services
Smiths News: The newspaper and magazine distributor, said that trading
for the 19 weeks to January 10 remained in line with its expectations
despite difficult economic conditions. The company said that there was no
significant change in its financial position since last September and that
the business continued to generate positive cashflow and operated well
within its bank facilities which expire in June 2011.
Technology
Sony Ericsson: The world’s No 3 maker of mobile phones reported a much
bigger than expected quarterly loss and announced plans for further cost
cuts, possibly including jobs, as it braced itself for even weaker demand.
Dick Komiyama, its president, forecast that global demand would shrink at
least 5 per cent this year, and said that market share was less of a
priority than preserving profitability.
LG Display: The flat-screen maker fell to a record loss in the fourth
quarter, its first loss in seven quarters, and drew a sombre picture of the
current period, predicting lower shipments and weak prices. Although a
sizeable part of its loss was because of a $400 million (£273 million)
price-fixing fine, its woes underscore difficulties in the liquid crystal
display industry.
Telecoms
SES Astra: The satellite operator SES said yesterday that it had shut
down its ASTRA 5A satellite’s mission because of a technical anomaly. The
satellite, belonging to SES’s SES Astra arm, was feeding cable networks in
Germany and internet networks in Eastern Europe. All of the German cable
traffic was switched to another Astra satellite.
Transport
Morgan Stanley: Shipping brokers in Tokyo said that Morgan Stanley has
joined a growing international scramble to secure an oil supertanker amid
dire warnings of a second massive collapse in shipping rates in 2009. Morgan
Stanley, with other oil traders, plans to charter a supertanker to store
millions of barrels of crude in what commodity dealers believe may be the
“trade of the year”. Analysts are predicting carnage in the wider shipping
industry.
Frontline: The oil-tanker owner said that oil companies were storing
about 80 million barrels of crude oil at sea, possibly the most in a quarter
of a century.
Utilities
Nuclear reactors: Plans to build new reactors in the UK could be
accelerated under plans being considered by the Government and some of
Britain’s power companies. E.ON, the German power group; EDF, its rival
controlled by the French state, and Areva, the French designer of the EPR
reactors proposed for use in the UK, are studying “modular” construction
similar to that used to build offshore oil platforms.
Vestas: The world’s biggest maker of wind turbines, said that it had
won an order for 67 of its 3 megawatt turbines for two projects in
Constanta, Romania.
