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Economics
Global outlook: The Organisation for Economic Co-operation and
Development said in its latest Economic Outlook report that the rich
Western economies would now grow by 0.7 per cent next year, against its
previous March projection for stagnation in 2010, with modest recovery led
by the United States and Japan. This year it expects Western GDP to fall by
4.1 per cent, compared with its March forecast of a 4.3 per cent
contraction.
Economic prospects: Britain’s recession will end this year but the
economy will endure a bout of stagnation, failing to grow at all in 2010 as
the recovery proves weak and “sluggish”, the OECD said. It forecast a deeper
slump than it had predicted previously, with GDP tipped to fall by 4.3 per
cent, compared with its March prediction of a 3.7 per cent decline.
Public finances: The Chancellor will be forced to borrow an extra £30
billion or more in the 2010-11 financial year as the Government’s budget
deficit soars to 14 per cent of GDP, or more than £200 billion, compared
with the Treasury’s projection of £173 billion, the OECD concluded.
High street trading: Retail sales continued to slide this month at an
unchanged pace, although orders placed with store groups’ suppliers picked
up, according to a survey by the CBI. The poll’s headline sales balance
showed that 17 per cent more retailers said that sales volumes had fallen
this month, compared with levels a year earlier, than reported an increase.
This was unchanged from May’s headline reading, but above the record low of
minus 55 per cent recorded in December.
Banking regulation: The Governor of the Bank of England inflamed
tensions with the Chancellor when he disclosed to the Commons Treasury
Select Committee that he had not been consulted over Treasury proposals to
shake up banking regulation.
Eurozone banking system: The European Central Bank (ECB)pumped a record
€442.2 billion (£375 billion) in one-year loans into the eurozone banking
system in its first offer of unlimited one-year funds as it stepped up its
fight against recession. A scramble by eurozone banks for the cash led to
the amount borrowed exceeding the €348.6 billion that was taken up from the
ECB in a similar operation last December.
Russian slump: The Russian economy will shrink by 7.9 per cent this
year, the World Bank said, predicting a much sharper contraction than the
4.5 per cent that it had forecast previously.
Banking &
finance
Babcock & Brown: The collapsed Australian investment bank is
reported to have made losses totalling A$5.4 billion (£2.6 billion) in its
final year of operations. B&B became Australia’s highest-profile victim
of the global downturn when it was placed in receivership in March.
Wogen: The London-listed metals trader said that it had received a
revised offer approach of 41p per share from its management team, which it
recommended shareholders to accept. It added that trading volumes in the
second half remained low.
Citigroup: The American investment bank, which had received a $45
billion (£27 billion) bailout from the US Government, said that it would
raise the pay of its employees by up to 50 per cent to try to retain key
staff.
Lehman Brothers: Alvarez & Marsal, the liquidator of Lehman
Brothers, has won approval from a New York bankruptcy court to investigate
whether Barclays had paid too little for the Wall Street bank.
Bradford & Bingley: The Treasury has appointed
PricewaterhouseCoopers, the accountant, to assess what compensation should
be paid to shareholders in Bradford & Bingley, the mortgage bank that
was partly sold by the Government in September last year.
Construction
& property
Savills: The property group said that development land prices had
fallen by an average of 57.8 per cent from their peak in September 2004. The
declines were steepest in towns and cities in the North of England, where
values have fallen by 65.8 per cent since April 2004. The falls were the
least pronounced for greenfield land in the West, where Savills recorded a
drop of 50.5 per cent since prices peaked in September 2007.
Land Securities: Standard & Poor’s, the ratings agency, has placed
notes issued by a division of Land Securities on “downgrade” watch, after
concern about an increase in its debt levels.
Development Securities: The commercial property group said that it
would raise £94 million in a share issue to “capitalise on new opportunities
early in the property development cycle”. It said that the cash call,
underwritten by Collins Stewart, would strengthen its negotiating position.
Consumer
goods
McBride: The London-listed maker of retailers’ own-brand household
products said that its full-year underlying profits would beat analysts’
forecasts after a pick-up in growth during the fourth quarter. The company,
which supplies supermarket chains such as Tesco and Carrefour with own-label
goods ranging from dishwasher tablets to deodorant, said that its full-year
operating profits before one-off items and goodwill would be at least £35
million. Analysts had forecast about £33 million.
Engineering
Sulzer: The Swiss engineering company said that it was cutting 1,400
jobs — or about 11 per cent of its global workforce — because of the
economic downturn. The company said that it hoped to achieve most of the
cuts through voluntary redundancies and aims to save SwFr110 million (£61.5
million) a year in costs.
Piaggio: The Italian scooter manufacturer has opened its first factory
in Vietnam. It said that the $30 million (£18.2 million) plant will make
125cc and 150cc Vespa scooters and will employ about 350 workers. Each year
it is expected to produce about 100,000 Vespa scooters for the local market
and for export to other countries in the region.
Health
Consort Medical: The London-listed inhaled drug specialist, formerly
known as Bespak, which is based in Buckinghamshire, reported full-year
adjusted pre-tax profits up by 15 per cent to £17.9 million and
like-for-like revenues up by 6.9 per cent to £120.3 million, despite
challenging market conditions.
Industrials
Monsanto: The US biotechnology company and producer of genetically
modified seeds said that its third-quarter profits had fallen by 14 per cent
and added that it plans to cut 900 jobs, or about 4 per cent of its
workforce.
Leisure
Internet gambling: A legal challenge to declare America’s Unlawful
Internet Gambling Enforcement Act unconstitutional by the Interactive Media
Entertainment & Gaming Association, a US lobby group, will be heard by
the Court of Apppeal in Philadelphia on July 7, according to the eGaming
Review magazine.
Novus Leisure: The operator of the Tiger Tiger bar and nightclub chain
is close to agreeing a debt-for-equity swap that will see Barclays and Royal
Bank of Scotland become significant shareholders, leaving Cognetas, its
private equity owner, and managment with minority stakes. Barclays Ventures
is expected to provide more than £20 million to fund expansion.
Media
The Boston Globe: The American newspaper said that it had reached a
tentative agreement with its largest union that will save the newspaper
about $10 million (£6.06 million) through salary and benefit cuts. The deal
is scheduled to come to a vote before members of the Boston Newspaper Guild
— comprising 700 editorial, advertising and business employees — on July 20.
Under the agreement, salaries would be cut by 5.94 per cent and contracts
covering job security would be altered.
Independent News & Media: Denis O’Brien, the second-largest
shareholder in the newspaper group, has threatened to pull the plug on a
rescue refinancing planned by the board.
Natural
resources
Eni: The Italian oil group said that some oil deliveries from Nigeria
faced interruption after an attack on a pipeline to an export terminal in
the country. One of Nigeria’s militant groups had destroyed a pipeline to
the Brass terminal, operated by Agip, a unit of Eni, on Friday, the latest
in a series of actions against oil installations in the south of the
country.
Addax Petroleum: The Canadian oil group, which is listed in London and
Toronto, has been bought for C$8.27 billion (£4.4 billion) by Sinopec, the
Chinese state-controlled oil company. The C$52.80-per-share offer is about
16 per cent higher than Addax’s closing price on Tuesday. The deal will
secure access for Sinopec to the Taq Taq oilfield in the Kurdish area of
northern Iraq, as well as promising assets in West Africa.
Avocet Mining: The Londonlisted goldmining company, which has assets in
South-East Asia and West Africa, said that its full-year pre-tax profits had
fallen by 10 per cent to $33.9 million (£20.5 million), from $37.6 million a
year ago, as lower production and higher costs outweighed higher gold
prices. Its total gold production dropped by 33 per cent.
Xstrata: The Anglo-Swiss mining group has stepped up its campaign to
merge with Anglo American, taking its £41 billion proposal to Anglo’s
shareholders in the hope that they will exert pressure on the group to
discuss a deal.
Retailing
Kesa Electricals: The owner of the Comet retail chain reported a
full-year loss of £81.8 million, compared with a profit of £128.8 million a
year ago, and said that it did not expect any recovery this year. It said
that trading conditions across all the group’s markets were difficult
throughout the year, with the UK and Spain particularly badly hit.
Marks & Spencer Sir Stuart Rose was facing shareholder anger after
Pirc, the influential corporate governance body, called on investors to
force him to split his role as chief executive and chairman of the high
street retailer.
Support
services
Celsis International: The life sciences products and laboratory
services company, based in Cambridge, reported full-year pre-tax profits up
by 21.9 per cent to $12.8 million (£7.7 million), helped by cost-control
measures and its focus on higher-margin products and services, and said that
it was well positioned for growth.
Technology
Apple: Steve Jobs, co-founder and chief executive of the US computer
group, has an “excellent prognosis” after receiving a liver transplant, the
doctor in charge has confirmed.
Online fraud: Regional “cybercrime” police units are to be set up to
deal with online criminals who gain bank account information or credit card
numbers and then either sell the information on or use the details to fund
other forms of crime. It is estimated that online fraud costs companies and
individuals more than £50 billion a year worldwide.
Telecoms
Orange: The mobile phone operator, a unit of France Télécom, said that
it would launch its first handset in Britain using Google’s Android
operating software, with the HTC Hero phone. The Android system allows users
to access applications which can be downloaded to the handset.
Transport
Stagecoach: The rail and bus operator, based in Perth, said that
profits at its rail franchise had fallen as the faltering economy hit
passenger growth, particularly at its flagship South West Trains franchise
operating from Waterloo. But full-year group pre-tax profits rose by 2 per
cent to £170.8 million, largely because of a strong performance from its bus
operation.
British Airways: The carrier will learn today how many staff have
signed up to work for the company for free. BA has offered variations on the
theme, including long-term and short-term unpaid leave or switching to
part-time work on a permanent or temporary basis.
Utilities
Utility networks: Electricity and water supplies remain “far too
vulnerable” to disruption and failure because of gaps in the UK’s
infrastructure system, the Institution of Civil Engineers said. Evidence
showed that work to improve utility networks was “piecemeal”.
