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Economics
UK mortgages: Lending doubled during December but the figure was only a
quarter of the level of 12 months earlier, figures from the Bank of England
show. Net lending was £1.9 billion during the month, up from November’s
depressed level of £834 million. The number of mortgages approved for house
purchase also edged up to 31,000 from a record low of 27,000 in November.
Irish recession: Ireland’s Central Bank said its recession-hit economy
would shrink by a worse-than-expected 4.0 per cent this year, sharply
revising its initial forecast of a 0.9 per cent fall.
Eurozone inflation: The countries in the eurozone saw inflation fall to
1.1 per cent in January, the lowest in almost 10 years. Unemployment rose to
8 per cent in December from an upwardly revised 7.9 per cent of the
workforce in November.
US Midwest: Business activity in the US Midwest contracted in January
at a more severe rate than expected. The ISM Chicago business barometer fell
to 33.3 from 35.1 in December. Economists had forecast the index at 34. A
reading below 50 indicates contraction.
US growth: President Obama said that the struggling US economy had
turned Americans’ lives upside down and was “like the American dream in
reverse” as economic growth sank at its fastest rate for 28 years. GDP
slumped by a 3.8 per cent annual rate in the final quarter of last year, the
fastest pace since the first quarter of 1982, when output contracted 6.4 per
cent. This followed a 0.5 per cent decline in the third quarter.
Japanese output: The industrial production of the world’s
second-largest economy fell a record 9.6 per cent last month and
unemployment grew by 0.5 per cent to a three-year high of 4.4 per cent.
Output fell at its fastest pace since records began in 1953 and it was much
worse than the 9 per cent consensus forecasts expected by the market.
Household spending slid 4.6 per cent from a year earlier.
Banking
& finance
Henderson: The London-based fund manager announced the terms of its
deal to buy New Star, the struggling asset management group founded in 2000
by John Duffield, for £115 million in shares and cash. The acquisition
follows the completion of the debt-for-equity swap agreed last month between
New Star and its lenders. Henderson said that it would pay £22 million for
New Star’s ordinary shares and £73 million for its preference shares and pay
off £20 million of its debt.
Halifax: Britain’s biggest mortgage lender withdrew all its base-rate
tracker deals ahead of the interest rate decision by the Bank of England
next Thursday. Bank of Scotland, Birmingham Midshires and Intelligent
Finance also pulled trackers. All four brands, now part of the Lloyds
Banking Group, have also scrapped self-certification loans and restricted
the availability of buy-to-let deals and home loans for new-build
properties.
Bernard Madoff: Several former top Merrill Lynch executives lost money
in Bernard Madoff’s $50 billion Ponzi scheme. The men reportedly put money
into Spring Mountain Capital, a fund set up by John Steffen, the former head
of Merrill’s brokerage business. Spring Mountain said that it had about $40
million invested in hedge funds run by Ezra Merkin, the former chairman of
GMAC and a close associate of Mr Madoff. David Komansky, who was chief
executive of Merrill between 1996 and 2002, also invested in Spring
Mountain.
3i Infrastructure: The public investment company said that it was
well-placed to make new investments and had bought more junior debt since
October 1. The company said Cressida Hogg had been appointed managing
partner of infrastructure at 3i Group, the British private equity firm that
is its investment adviser and biggest shareholder.
Blue Oar: The small-cap investment bank said that it continued to
review options including the sale of assets and businesses other than its
Rowan Dartington unit, as it forecast a significant loss for 2008. The
company also said that it did not believe that a management buyout proposal
by former executive directors would progress.
Terra Firma: The venture capital group that owns EMI, injected £84
million of new equity into the music major in the first half of last year —
including £16 million of cash to ensure that the company met its banking
covenants. The company lost £155 million in the six months to September 30.
Close Brothers: The merchant bank said that it expected economic
troubles to continue to hit some businesses, but forecast “satisfactory”
results for the six months to the end of January. The company said that it
expects the challenging economic and financial market environment to
continue to impact its businesses.
Construction
& property
Costain: The London-listed construction group has won a design and
build construction contract from the Highways Agency to strengthen an M53
viaduct and restore the motorway to full capacity. The project will be
managed by the Highways Agency and has a total value of £85 million.
Simon Property Group: The largest US mall owner and operator reported a
6.5 per cent increase in quarterly funds from operations, citing cost
controls and a curtailed spending for development.
Consumer
goods
Procter & Gamble: The world’s biggest consumer products maker
admitted that group sales had fallen 3 per cent during the second quarter of
the year which missed Wall Street estimates. The company cut its full year
earnings forecast due to weaker demand. A.G. Lafley, the chairman and chief
executive, said that he expects the environment to remain difficult and
highly volatile.
Engineering
Honda: British workers at the Japanese carmaker will start an enforced
four-month layoff today against the backdrop of a further warning over the
trading outlook from the group. The company slashed its annual profit target
by more than half as its quarterly profits slumped 90 per cent.
Boeing: The aircraft manufacturer said airlines should be forced to buy
biofuel to encourage the development of non-fossil sources of jet fuel. The
company has completed its biofuel flight test programme and said it hoped
that the fuel would be certified for passenger flights within two years.
Health
Roche: The Swiss drug company cut the price of its bid for outstanding
shares in Genentech taking the bid hostile and dashing investor hopes of a
sweetened offer for the 44 per cent of the US biotech group it does not
already own.
Industrials
Dyson Group: The materials technology firm said that it expected to
report a loss for the year to March 31. The company said that the outlook
for the year to March 31 is likely to result in a further deterioration of
performance below previous expectations.
Leisure
Thomas Cook Group: Manny Fontenla-Novoa, the tour operator’s chief
executive, pocketed a total of £7.04 million last year, up from £2.9 million
in 2007, after receiving a £5 million bonus for exceeding the target for
synergies from the merger with MyTravel.
Premium Bars & Restaurants: The embattled operator of the
Prohibition and Living Room chains reported a 8.5 per cent fall in
like-for-like sales in the six months to December 28, despite a strong
Christmas, and continued to talk to its banks about refinancing.
Media
Chime Communications: The marketing services group reported a
fuller-than-expected order book and impressed analysts with its balance
sheet. The company said it had net cash of more than £5 million at the end
of 2008 compared with net debt of £13.2 million on June 30 and said that it
remained committed to “a more progressive dividend policy” in 2009.
Natural
resources
Exxon Mobil: The world’s largest publicly-traded company said that its
fourth-quarter net income fell 33 per cent to $7.8 billion (£5.4 billion),
down from $11.7 billion last year, as a steep drop in crude oil prices hit
results.
Rio Tinto: The mining group has sold two South American mines for $1.6
billion as part of a plan to reduce its $39 billion debt. Rio said it had
sold the Potasio Rio Colorado potash project in Argentina and its Corumbá
iron ore mine to Vale, the Brazilian miner.
Retailing
Kingfisher: The operator of B&Q, the DIY retailer, has sold its
Castorama Italy DIY business for €615 million (£545 million) cash.
Kingfisher said that the proceeds from the sale to Leroy Merlin Italy, part
of a French home improvement group, will be used to reduce its debt.
John Lewis: Sales at the department store group fell by 0.8 per cent
last week as the post-Christmas high-street malaise returned. The company
said that after a good start to the week at its stores, sales had been
thinner on Friday and Saturday. The 0.8 per cent fall in the week to January
24 followed rises of 4 per cent and 3.5 per cent in the previous two weeks
and a huge 27.4 per cent increase in the key week to January 3.
Amazon.com: The online retailer announced strong earnings last night
after it cut prices to attract customers in the brutal economic climate.
Although many other retailers, on the web and the high street, struggled
with falls in consumer spending, the company said that its fourth-quarter
profit rose 9 per cent, beating expectations and sending its shares sharply
higher. Amazon had already called the Christmas holiday season its "best
ever" and proved it with profits in the fourth quarter of $225 million
(£157 million).
Tesco: The UK supermarket group plans to launch an own-label clothing
website to take on internet fashion retailers such as Asos. The site will
sell thousands of items and could be operating in time to stock this
autumn’s ranges. The Tesco Direct website stocks only a limited number of
its own-brand lines and only the biggest 200 stores carry the ranges.
Jessops: The specialist camera retailer reported full-year losses of
almost £50 million after the digital camera market had its first slowdown in
“many years”. The deficit for the year to September 30 reflected heavy
writedowns following a review of future cashflows in the current climate.
Prior to one-off items, Jessops announced losses of £19.1 million.
Support
Services
Mitie: The Bristol-based outsourcing group said that it has secured 98
per cent of its revenue forecast for the year to the end of March. The
company said that it had won contracts in the social housing, transport and
education sectors since the start of October.
Serco: The outsourcing group that runs the Docklands Light Railway in
East London announced a 50/50 joint venture with Guy’s and St Thomas NHS
Foundation Trust with the aim of improving the Trust’s pathology service.
The 10-year contract is worth an estimated £250 million.
Technology
Misys: The software provider said that Sir James Crosby, the chief
executive of HBOS until 2006, is to become a non-executive chairman. The
company said pre-tax profits were £67 million for the six months to the end
of November, up from £21.4 million. The London-based company said 55 per
cent of its revenues now came from the American healthcare market aiding its
growth.
Telecoms
KCOM: The communications company said it was cutting 150 jobs at a
division which provides IT services to corporate customers. The company,
which used to be called Kingston Communications, said this amounted to more
than 10 per cent of the workforce at the managed services arm. The division
has been hit hard by the global economic crisis, particularly since the
collapse of Lehman Brothers, which had been a customer.
Transport
Bmi: The UK’s second-largest airline has broken a promise to 5,000
staff that it would honour a pay increase this year and has warned of
possible redundancies. Nigel Turner, the chief executive, promised that the
pay deal would be honoured. Staff were due to get an increase of inflation
plus 0.5 per cent, but will instead have their pay frozen.
Austrian Airlines: The airline unveiled a €425 million (£376 million)
cost-cutting programme to be implemented by 2012 to withstand a projected
fall in passenger volume. Some €225 million in cost reductions will be
implemented this year and a further €200 million by 2012, said the
money-losing airline, which is to be taken over by Germany’s Lufthansa after
a deal was signed last month.
Utilities
Novera Energy: The renewable energy company has withdrawn its planning
application for a 10MW wind farm in west Cumbria. The company said that it
was addressing aviation radar concerns relating to the plans.
