Welcome to today's round-up of business news from The Times: what we're
saying, what they're saying, what you should be thinking
Thursday, October 11, 0730 BST
HEADLINES
Cadbury forced to spin off US drinks
Boeing faces Dreamliner delay compensation
Tax rise threat to 'save as you earn'
Resolution spurns Pearl's £8.4bn bid
Bank shakeup amid $100bn bad loans
China drives shipping costs to record
Madonna 'to quit Warner Music'
TOP STORIES IN FULL
Schwoops
The fizz gone from the credit markets, Cadbury
Schweppes has formally scrapped the sale of its £6.5 billion American
drinks arm. The Times says that it will spin off the unit instead,
probably in the second quarter next year, on the New York Stock Exchange.
Having twisted the top off that one, it was the perfect time for Cadbury to
announce that its chairman, Sir John Sunderland, is to step down from the
board following the demerger. There have been rumours of a widening rift
between Sir John and Todd Stitzer, the chief executive, over strategy.
The Times comments that Mr Stitzer has left two questions hanging: what
now for the rump of the confectionery business? And is he the man to
lead the company?
Low blow
Airbus executives may just manage a smirk. Boeing
admitted on Wednesday that the 787 Dreamliner will be delayed by a further
six months as it struggles to assemble the revolutionary new aircraft.
Boeing, whose shares fell 3 per cent, says that first deliveries of the
aircraft will now be in late November or December 2008 rather than May. The
787 is the largest industrial project in the world with orders worth more
than $120 billion (£59 billion).
The Times comments that the delay is likely to cost Boeing heavy
compensation payments to customers. All Nippon Airways was hoping to have
the 787 in its fleet in time for the Beijing Olympics, which would have
given it maximum exposure and bragging rights.
Budget backlash
The wider effects of Labour's sweeping tax changes are emerging, says the Financial
Times. Thousands of employees participating in company "save as you
earn" schemes could be landed with bigger tax bills.
As Gordon Brown faces accusations of treating people "like fools" over his
general election retreat, Alistair Darling, the Chancellor, faces business
anger over contentious reforms to capital gains tax.
That's not where it ends. Businesses including Marks and Spencer and BT Group
say that the replacement of tapered relief with a single 18 per cent rate
risks "unintended consequences" for ordinary workers in share-save schemes.
The fear is that the changes could deter staff from holding on to shares and
discourage long-term saving.
Resolute
The huge "zombie fund" business Resolution
rejected a £4.5 billion cash takeover bid from Pearl, its rival, and vowed
to press ahead with its controversial merger with Friends Provident.
The Times reports that a "disappointed" Pearl renewed its assault on
the logic of the £8.4 billion Friends deal, saying that Resolution's
investors shared its view.
Pearl also revealed that it had struck a £1.25 billion deal with Royal London
in which the mutual firm will pay cash for Resolution's small open book of
life business if a takeover ever takes flight.
The China propeller
The cost
of shipping raw materials such as iron ore and coal has soared to a
fresh record. The Daily Telegraph says that the impetus is you
guessed it China's ferocious hunger.
On Wednesday the benchmark Baltic Dry Freight Index, which tracks daily
charter rates for dry bulk ships, broke through 10,000 for the first time,
closing at 10,218. It is 150 per cent higher than a year ago and has almost
doubled since June.
The strength of the global economy is also evident in the charter price of
ships. One London broker says that the price of the biggest ships has risen
to $227,000 (£112,000) a day compared with $137,000 as recently as August. A
year ago it was as little as $60,000 a day.
China
The consequence of those growth fireworks is evident at Agricultural
Bank of China. Bloomberg reports that the institution, saddled with $100
billion (£49 billion) of bad loans, may move some of its 14,500 rural
branches to independent companies to speed up a government bailout and sell
shares for the first time.
The country's fourth-largest bank, established in 1979 to serve China's 800
million farmers, plans to reduce its ownership in unprofitable offices to
trim delinquent debt.
China has spent about $500 billion bailing out its biggest lenders over the
past decade. Agricultural Bank's cleanup has been delayed because a whopping
23 per cent of its loans are not being paid.
Material Girl
Confessions from the dancefloor. Madonna is to sever her ties with Warner Bros
and sign a landmark $120 million ten-year deal with Live Nation, the concert
promoters, according to The Wall Street Journal.
The newspaper's online edition reports that the 49-year-old pop diva is close
to finalising the details of a deal that embodies the shifting landscape of
a fracturing industry.
It is also a measure of Madonna's business savvy. She cements her status as
one of the highest paid entertainers, giving her a lucrative mix of cash and
stock, in exchange for the rights to sell three studio albums, promote
concert tours, sell merchandise and licence her name.
MARKETS
FTSE 100 (Wednesday close): up 17.60, or 0.3%, at 6,633.00
Dow (close): down 85.84, or 0.6%, at 14,078.69
S&P 500 (close): down 2.68, or 0.2%, at 1,562.47
Nasdaq (close): up 7.70, or 0.3%, at 2,811.61
Nikkei (latest): up 34.76, or 0.2%, at 17,212.65
Hang Seng (latest): up 157.23, or 0.6%, at 28,726.56
Sterling (latest): $2.0382
Oil (latest): West Texas crude up 15 cents at $81.45
Gold (latest): up $1.10 at $747.10
NEW YORK
Wall
Street retreated as rising concern that profits will trail estimates at
the largest US companies sent the Dow Jones industrial average to its
biggest fall in a month.
Alcoa, the first member of the Dow average to report results, declined
the most in a week after sales slipped 3.2 per cent. Monsanto, the
largest seed producer, fell after its loss widened on lower-than-expected
sales. Boeing reported its steepest tumble since August after saying
it needs six more months to finish building its new 787 Dreamliners.
The broad-based S&P 500 index lost 0.2 per cent, the Dow fell 0.6 per cent and
the technology-laden Nasdaq added 0.3 per cent.
ASIA
Resources producers and shipping lines led Asian
stocks higher on confidence that global demand for commodities will
withstand a US economic slowdown.
Rio Tinto and Mitsubishi led commodity-related shares higher
after copper rose the most in three weeks and crude oil breached $81 a
barrel. Mitsui O.S.K., Japan's second-largest shipping line, and Hanjin
Shipping, South Korea's biggest, advanced after the Baltic Dry Index
exceeded 10,000 for the first time.
The Morgan Stanley Capital International Asia Pacific index was up 0.1 per
cent, while Japan's Nikkei had risen 0.2 per cent in intraday trading.
Paul Larter
paul.larter@thetimes.co.uk
AGENDA
FINALS
Air Partner
WH Smith
AGMs
Uruguay Mineral Exploration
EGMs
Cosalt
TRADING STATEMENTS
Hays
Sage Group
Thorntons
ECONOMICS
UK RICS Sept house price survey (0001 BST)
BCC UK economic survey (0930 BST)
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