Economics
Manufacturing industry suffered another fall in orders and export
demand, but continued to eke out small gains in output, according to the
latest CIPS purchasing managers’ survey. Its headline index slipped to 51 in
April, from 51.3 in March. Any reading above 50 indicates expansion. Total
new orders fell for the fourth month in a row and export orders continued a
recent decline.
Price pressures in industry continued to mount, the CIPS data also
revealed. Output prices for goods leaving factories set a record pace of
increase last month, with the survey’s gauge rising to 61.9, the highest
since 1999, from 60.6 in March.
UK economic prospects The National Institute of Economic and Social
Research, in its latest quarterly forecasts, predicts UK growth this year of
1.8 per cent, and the same in 2009, marking a 0.5 percentage point downgrade
from its previous 2009 projection. It also forecasts that consumer spending
growth will more than halve over 2008 to 1.2 per cent, and halve again next
year to 0.6 per cent.
US manufacturing continued to shrink last month, according to the
Institute of Supply Management.
US consumer spending rose by a stronger than expected 0.4 per cent in
March, twice Wall Street’s expectations and despite lacklustre growth in
households’ incomes.
Gold prices slipped to a four-month low below $850 an ounce as a rise
in the dollar lowered the metal’s appeal as an alternative investment and
triggered a sell-off in precious metals.
Banking
& finance
Northern Rock confirmed plans to lay off nearly a third of its staff,
with the majority of job cuts expected this year. The bank said that it
would cut 2,000 of its 6,500 employees, as it attempts to reduce costs and
return the company to private ownership.
Irish Life & Permanent, the insurance group, said that it saw group
operating earnings broadly in line with consensus estimates, despite the
more challenging environment with volatile investment markets and tightening
credit conditions.
HSBC, said that police were investigating an alleged €90 million (£70.4
million) attempted fraud. Last night City of London police said that they
had charged Jagmeet Channa, 25, of Ilford, East London, with conspiracy to
defraud, money laundering and abusing a position of trust. The police
declined to confirm whether their investigation was linked to HSBC.
Bankruptcy laws should be tightened to deter consumers from becoming
overindebted, the National Institute for Economic Reform said.
Berkshire Hathaway, the US investment vehicle of Warren Buffett, is
under investigation over a potential conflict of interest between its
part-ownership of the Moody’s credit ratings agency and his newly formed
local government bond insurer.
Barclays Paul Idzik, the chief operating officer of Barclays, is to
announce his departure from Britain’s third-largest bank. He will leave this
year and is not expected to be replaced.
Construction
& property
New construction The Office for National Statistics said that demand
for new construction fell from £8.3 billion in the fourth quarter of 2007 to
£7.7 billion in January to March this year.
Hammerson John Richards, chief executive of Hammerson, the FTSE 100
shopping centre and London office developer, said that City rents on new
lettings this year would fall by about 10 per cent compared with last year.
Equest Balkan Properties, the AIM-listed developer, is looking to sell
up to €150 million (£117.4 million) of property, starting with a shopping
centre in Sofia last valued at €96 million.
Balfour Beatty, the construction group, has completed the acquisition
of the military public private partnership accommodation business of GMH
Communities Trust, the US property investment trust, for $350.5 million
(£177.6 million).
Capital & Regional, one of Britain’s largest commercial property
companies, suffered a brutal share sell-off amid concerns that its flagship
Mall fund had breached its banking covenants.
Consumer
goods
Hornby, the model train maker, has vowed to breathe new life into a
classic British brand after buying Corgi, the toy vehicles manufacturer, for
£7.5 million.
Kraft, the US foods group, said that it planned to cut portion sizes in
an effort to keep prices down and reported a 13 per cent fall in
first-quarter profits to $608 million (£308 million).
Engineering
GKN, the car and aerospace parts group, said that it had enjoyed good
growth in first-quarter sales and profits, adding that it expected its 2008
performance to be in line with expectations.
Tomkins, the engineering group that is based in West London, said that
its outlook for this year remained the same as forecast, despite weakening
US markets, adding that positive momentum in emerging markets would offset
any North American decline.
General Motors, the US carmaker, said that it had taken an ownership
stake in Mascoma, the US renewable energy company that is working to develop
ethanol from wood chips, waste paper sludge and switch grass.
Health
Smith & Nephew, the FTSE 100 medical equipment group, gave warning
that “unacceptable” sales practices in a business it bought last year would
cost it more than £50 million in lost sales this year. Europe’s largest
medical devices company had paid $889 million (£450 million) for Plus
Orthopedics, a Swiss company. Smith & Nephew also said that profits
would fall by about $25 million this year.
Consort Medical, the inhaled drug device specialist, said in a
pre-close trading statement that it was continuing to perform in line with
management expectations.
Industrials
Rexam, the cans maker, reported first-quarter results at constant
currency in line with its expectations and said that its trading outlook for
2008 was unchanged. The company added that its beverage can business had
performed well because of pricing in Europe coupled with strong volume
growth, offsetting higher input costs.
Leisure
Starbucks, the world’s largest coffee shop chain, said it was seeing
“some early signs of softness in traffic in our UK stores” and announced
that it was cutting its US expansion plans after second-quarter profits fell
by 28 per cent amid fragile consumer confidence and rising food and fuel
prices.
Media
GCap Media, the commercial radio group, saw Capital 95.8, its key
London station, pushed into fourth place behind Bauer’s Kiss 100 for the
first time, according to the latest quarterly audience figures from Rajar.
Global Radio’s Heart and Heinrich Bauer Verlag’s Magic tied for top radio
spot with a 5.8 per cent share of London audiences.
Five Jane Lighting is set to step down as chief executive of Five, the
commercial broadcaster, with the announcement that Mark White, Five’s
executive director of sales, will serve as interim chief executive until
Dawn Airey arrives from ITV.
Natural
resources
ExxonMobil, the world’s largest publicly traded oil company, said that
record crude prices helped its first-quarter net income to grow by 17 per
cent, but this was below Wall Street forecasts.
Randgold Resources, the South African goldminer, suffered a sharp stock
market sell-off with its shares falling by 15 per cent because of a
corporate governance row over the independence of the company’s
non-executive directors. Two members of the Randgold remuneration committee
were described as non-independent by a leading US proxy firm. The criticism
forced the miner to postpone a vote on a share scheme for directors.
Retailing
Marks & Spencer Sir Stuart Rose, chief executive of Marks &
Spencer, will sell his £100,000 stake in Martha Lane Fox’s karaoke business
in an attempt to defuse the rift over boardroom standards at Britain’s
largest clothing retailer.
Land of Leather, the struggling sofa retailer, said that it did not
expect any recovery on the high street this year after reporting a 32.1 per
cent fall in like-for-like sales over the 13 weeks to April 27.
MK One Baugur, the Icelandic investment group, has sold MK One, the
struggling fashion chain, to Hilco, the retail restructuring specialist, for
an undisclosed sum.
Home Depot, the US DIY retailer, announced the closure of 15
superstores and scrapped plans to open 50 others as it sought to prop up its
profits amid the US housing crisis.
Support
services
Galiform, the owner of Howden Joinery, said that it had continued to
trade in line with management’s expectations. In a trading update it said in
the first four periods of 2008, ending on April 19, Howden’s sales had
increased by 11 per cent and were up by 5.9 per cent on a same-depot basis.
Hydrogen Group, the specialist recruitment consultancy, said that its
proposed acquisition of Imprint, the subject of a bidding war with
recruitment rivals OPD and Premier Group, had lapsed after it decided not to
revise its 100.1p-a-share proposal for Imprint.
Blackwater Worldwide, the American private security group that has been
accused of killing 17 civilians in Baghdad, said that it was seeking a
financial backer after its talks with Cerberus Capital fell through. It said
it needed financing to expand operations and was thought to be looking for
about $200 million (£101 million).
Technology
CSR, the Bluetooth specialist, has reported a first-quarter pre-tax
loss of $44.2 million (£22.4 million), reinforcing its cautious outlook for
2008 based on reduced demand for its customers’ end products, particularly
headsets and consumer electronics.
Apple, the computer group, said that US customers would be able to
download films from the iTunes website on the same day that they are
released on DVD.
Telecoms
Vodafone, the mobile phone operator, is offering unlimited internet
access on its new monthly mobile price plans, driven by an increasing number
of people accessing social networking sites and e-mail from their phones.
Reliance Globalcom, the Indian telecoms group, is preparing to list in
London with a market valuation of as much as £6 billion. It is understood
that the company has approached Deutsche Bank and Goldman Sachs to advise on
the deal.
Entel President Morales of Bolivia, announced the nationalisation of
Entel, the country’s largest telecoms company and a unit of Telecom Italia.
Transport
National Express, the bus and train operator, said that it had made a
good start to the year and was trading in line with management expectations.
The company added that it had provided increased certainty over its fuel
cost exposure by increasing its fuel hedge position, and was 85 per cent
hedged for 2008 and 40 per cent hedged for 2009.
Utilities
US power companies could get free carbon credits worth billions of
dollars under global warming legislation being considered by Congress,
according to reports.
