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Economics
Housing market: House prices have further to fall but should bottom out
inside a year, a poll of City economists has suggested. The Reuters survey
showed an average expectation that house prices would remain flat next year
and rise by 2 per cent during 2011, after falling by 8 per cent over the
whole of this year and by 16 per cent in 2008. The crash has so far wiped
about a fifth, or more than £40,000 on average, off home values.
Pay deals: Wage settlements have fallen to new lows not seen since
1971, with annual increases awarded averaging only 1.3 per cent, according
to an analysis by Industrial Relations Services, the consultancy. Its study
of 232 wage settlements in the three months to May revealed that increases
for workers in the private sector averaged 0.9 per cent, down from 1 per
cent for the previous quarter.
Financial stability: The fragile finances of Britain’s banks mean that
they remain in a vulnerable state should new shocks hit the economy,
according to the Bank of England. It said that persistent funding shortfalls
and the huge leverage built up before the economic crisis, with outstanding
loans worth many times UK banks’ capital, still leaves them badly exposed
and reliant on state support.
Eurozone manufacturing: New orders flowing into factories in the
eurozone fell by more than 35 per cent during April, in a record decline led
by falling demand for capital and intermediate goods, official data showed.
Irish economy: Ireland faces the deepest recession of any of the
world’s advanced economies, with the blows from the collapse in its housing
markets and the toll on its banks set to limit growth for five more years,
the International Monetary Fund said. The IMF said that Irish GDP would fall
by 13.5 per cent over the three years to 2010 and forecast that unemployment
would reach 15.5 per cent of the country’s workforce.
Italian sentiment: Business confidence in Italy rose in June for the
third consecutive month to its highest level since November last year,
according to a survey by ISAE, the economic research institute.
US GDP: The US economy shrank slightly less in the first quarter than
had been estimated, official data showed. GDP fell at a revised annualised
pace of 5.5 per cent, compared with the 5.7 per cent that had been
estimated, after shrinking by 6.3 per cent in the fourth quarter of last
year.
Banking &
finance
Standard Chartered: The Asia-focused banking group said that it was in
“very good shape” in relation to average profit forecasts among analysts for
its earnings this year. Analysts expect its full-year pre-tax profits to
drop by 16 per cent to just over $4 billion, (£2.45 billion), compared with
$4.8 billion last time.
Merrill Lynch: Ben Bernanke, the Chairman of the US Federal Reserve,
has denied putting pressure on Bank of America to buy Merrill Lynch, the US
finance group, in testimony to a congressional committee investigating the
$50 billion deal.
Financial advisers: The Financial Services Authority, the City
regulator, says in its consultation paper that it will introduce much
greater transparency into the sale of all investment products. Financial
advisers will see a huge shake-up of their old-style business model, where
about 80 per cent of payments came through commission, and will need to
prepare themselves for a switch to fee-based advice.
Construction
& property
Costain: The construction company, based in Berkshire, said that it had
continued to perform in line with its expectations with a strong order book
and significant new contracts. It added that its forward order book had
risen by 20 per cent to £2.4 billion and included more than £900 million of
work secured for this year.
Consumer
goods
Barry Callebaut: The Swiss chocolate maker has reported stronger
third-quarter demand and said that orders looked good for the coming months.
The optimistic tone from the group, which makes chocolate for companies such
as Nestlé, echoes upbeat comments from Cadbury which said earlier this month
that it had seen a pickup in trading during April and May.
Fine wine sales: The economic recovery in Asia helped the highest
priced lots at the recent Christie’s fine wine auction in New York go to
Asian bidders, while at the Sotheby’s auction in New York a case of 1990 Le
Pin went to an Asian buyer for $48,400, more than double the estimate.
Engineering
Toyota: Akio Toyoda, president of the Japanese carmaker, said that the
company’s product line-up will be reviewed so as to focus more on producing
cars which will be suitable for different global regions.
General Motors: The US carmaker has received final court approval to
borrow up to $33.3 billion (£20.4 billion) from the American, Canadian and
Ontario governments to fund the company through its Chapter 11 bankruptcy
proceedings. GM previously had approval to access $15 billion of funding.
Health
Counterfeit drugs: German customs authorities said they had broken up a
ring selling millions of counterfeit male potency tablets online from India
and other Asian countries after raids in five German cities. The operation
recovered 46,000 pills destined for mail-order distribution.
Industrials
Michelin: The French tyre maker said that it could cut as many as 3,500
jobs in France by 2011.
Corus: Europe’s second-largest steel group revealed that it would cut a
further 2,045 jobs, mostly in Britain, as it struggles to cope with falling
demand for steel. It said that 12 sites in the UK would be affected, with
heavy job losses for engineering and office staff in Scunthorpe,
Stocksbridge, Rotherham and on Teesside.
Leisure
Novus Leisure: The bar and club operator behind the Tiger Tiger chain
said that its operations would be unaffected after completion a
restructuring of its £140 million debt burden that will see Barclays and
Royal Bank of Scotland become majority shareholders and the debt halved.
Cognetas, the private equity group that bought the business for £114 million
four years ago, will emerge with a small stake.
McKever Group: The Scottish hotel, apartment and hostel operator has
been put up for sale after falling into the hands of administrators from BDO
Stoy Hayward. The company has 20 properties and employs about 600 staff.
Bookmakers: Paul Dixon, president of the Racehorse Owners Association,
said the industry faced “disaster and devastation” if the big bookmakers
were forced to move their online and credit betting operations offshore to
avoid tax. He said William Hill was “very serious about moving”.
Fat Duck Group: Heston Blumenthal, owner of the Michelin three-starred
Fat Duck restaurant in Bray, Berkshire, has signed a deal to open a
restaurant at the Mandarin Oriental Hyde Park Hotel in London next year.
Media
Walt Disney Company: Hong Kong said that it has reached a deal with the
American entertainment group to expand the local Disneyland theme park so as
to bolster its long-term prospects against a Shanghai rival.
Natural
resources
BP: The search by the London-based oil and gas group for a new chairman
has ended with the appointment of Carl-Henric Svanberg, chief executive of
Ericsson, the Swedish telecoms equipment maker. This brings to a close a
year-long struggle to find a replacement for Peter Sutherland, the current
chairman.
Retailing
DSG International: The owner of Currys and PC World reported a
full-year underlying pre-tax profit of £50.5 million, compared with £225.6
million last time, and beating City expectations of £43.1 million. Total
like-for-like sales fell by 9 per cent to £8.2 billion.
Clinton Cards: The retailer said that it has bought 196 stores from the
administrator of Birthdays for £3.5 million, safeguarding 1,450 jobs.
Birthdays, which employed 2,100 people and had 232 outlets, was put into
administration by Clinton Cards, its parent company, last month.
Hennes & Mauritz: The Swedish fashion chain said that its
second-quarter net profit had risen to SKr4.2 billion (£322 million) from
SKr3.9 billion a year ago.
Tesco: The personal finance arm of the supermarket group has struck a
deal with Fortis, the Belgian-Dutch financial services group, to sell car
and household insurance policies to its customers.
Support
services
John Menzies: The newspaper distribution and aviation services company
has forecast a higher profit for the half year as lower contributions from
its aviation division were more than offset by improved trading in its
distribution business, adding that this unit had been trading well ahead of
last year.
Dawson: Daily Mail and General Trust, the newspaper publisher, said
that it will sever its contract with Dawson, the news distributor, after it
emerged that Dawson was winding down its news distribution division — owing
DMGT £12 million.
G4S: The London-listed security group, based in West Sussex. has won a
long-term contract worth up to $1.2 billion (£736 million) for protective
services for the US National Aeronautics and Space Administration. The
ten-year deal is a near doubling of the group’s existing services for Nasa
in the United States.
Technology
Micro Focus: The FTSE 250 software group reported a 31 per cent rise in
full-year adjusted pre-tax profits to $115.9 million (£71.1 million), from
$88.6 million last time, broadly in line with expectations and helped by its
high proportion of recurring revenue.
Ericsson: The Swedish telecoms equipment maker said that Hans Vestberg,
its chief financial officer, will become its new chief executive when
Carl-Henric Svanberg moves to head the board of BP, the oil and gas group.
Telecoms
BT: The telecoms group has announced a partnership agreement with Tata
Communications of India that will see the two companies provide one another
with international voice services. BT said that it will also have access to
Tata Communications’ routing capabilities and online management systems and
will become Tata’s main distribution channel for its international direct
dial traffic coming into the UK.
Transport
Lufthansa: The German airline said that demand for its economy class
air tickets had been stabilising over the past few months and to cope with
weak bookings it has cut the number of seats it offers by 2.6 per cent. It
has also retired 23 short and long-haul aircraft.
British Airways: The carrier said that 6,940 of its staff have signed
up for a variety of cost-saving schemes, all of which will amount to a pay
cut, in a move that the airline said would save it as much as £10 million.
Utilities
EU gas and electricity markets: The European Union’s executive has
accused 25 of the bloc’s 27 member countries of breaching rules to boost
competition in energy markets, taking the first step towards possible court
action.
Edison: The Italian utility has approved a new euro medium-term note
programme for a maximum of €2 billion (£1.7 billion) to provide “an
efficient and flexible” source of financing. A spokesman said the facility
was to prepare the company for the expiry of bonds in 2010 and 2011. The
programme will be registered on the Luxembourg stock exchange.
