Economics
Inflation The Bank of England, in its latest quarterly Inflation
Report, dampened prospects that interest rates will fall as quickly as
markets hope. The Bank gave warning that inflation could rise to near 4 per
cent if interest rates fell in line with market expectations.
Unemployment The claimant count went up by 7,200 in March to 806,300,
the third consecutive monthly rise and the biggest monthly increase since
April 2006. The internationally recognised ILO unemployment level also rose,
up 14,000 to 1.612 million in the three months to March, the first rise in
more than a year.
Headline average earnings, which include bonuses, rose by 4 per cent in
the three months to March, up from 3.7 per cent in the three months to
February and above analysts’ forecasts. Earnings growth excluding bonuses
remained at 3.8 per cent over the same period. The year-on-year rate for
March was 4.7 per cent.
Eurozone industrial production fell in March by 0.2 per cent, taking
the annual increase to 2 per cent, down from an upwardly revised 3.2 per
cent in February.
French inflation rose by 0.3 per cent in April, taking the annual rate
of price growth to 3 per cent, down from 3.2 per cent in March on an annual
basis. Prices in April rose by 0.3 per cent from March, above the
Government’s target of 2.2 per cent.
US consumer prices rose in April by 0.2 per cent, taking the annual
rate to 3.9 per cent. After stripping out food and energy costs, the “core”
Consumer Price Index rose by 0.1 per cent, taking the annual rate to 2.3 per
cent.
Banking
& finance
Bradford & Bingley has raised £300 million in an emergency rights
issue to shore up the mortgage bank’s balance sheet. Only weeks ago it
denied that it was contemplating such a move.
Merrill Lynch, the Wall Street investment bank, is to demand that its
army of equity analysts identify far more companies whose shares they
believe will fall over a 12-month period.
UBS Bradley Birkenfeld, formerly a director in the wealth management
division of UBS, the Swiss bank, has been charged over allegations that he
helped a property developer to evade millions of dollars in US income taxes.
BNP Paribas, the French bank, reported a 21 per cent fall in
first-quarter net profits to €1.9 billion (£1.5 billion).
Construction
& property
Land Securities, Britain’s largest commercial property company, has
written down the value of its shops and offices by £1.28 billion, as it
slumped to an £888 million loss.
Costain, the construction group, said that its order book had topped £2
billion after it won a contract from Hutchison Ports to build two new berths
at the Felixstowe container port, the biggest in Britain.
Barratt Developments said that total housebuilding revenues in the
19-week period to May 11 fell by 7.6 per cent to £825 million, as market
conditions have deteriorated significantly since the end of March.
Sale and rent-back The Office of Fair Trading has launched an
investigation into the fairness of the sale and rent-back industry in the
housing market. This system is separate from the highly regulated equity
release industry.
Consumer
goods
Duchy Originals Andrew Baker, the new chief executive of Duchy
Originals, the Prince of Wales’s organic food company, plans to quadruple
the size of the business over the next five years through new products and
international expansion.
Fortune Brands, the US drinks group behind Jim Beam bourbon, has
initiated legal action to prevent a 10 per cent stake in its Beam Global
Brands subsidiary passing from Vin & Sprit, the owner of Absolut vodka,
to the Swedish state, when V&S is sold to Pernod Ricard, of France.
Fortune wants to buy back the stake but, according to court papers, has been
unable to agree on a “fair market value”.
SABMiller, which has just acquired Grolsch, the Dutch brewer, has
announced that Anheuser-Busch, its American rival, had agreed to hand over
the US importation rights for the Grolsch brand for an undisclosed sum.
Carlsberg, the Danish brewer, is considering selling water and soft
drinks brands worth 1.1 billion Danish crowns (£117 million) to Coca-Cola,
the American soft drinks group, to help to cover the high interest costs
after the takeover of Scottish & Newcastle, according to local reports.
Engineering
EADS, the European aerospace group, reported a first-quarter net profit
of €285 million (£226.8 million), from a loss of €10 million last year,
beating analysts’ forecasts and driven by higher Airbus deliveries.
Health
AstraZeneca, the Anglo-Swedish drugs group, has announced that the US
Food and Drug Administration has approved its Seroquel treatment for
patients with bipolar I disorder.
Industrials
ArcelorMittal, the world’s largest steelmaker, said that strong global
demand and higher prices had helped to lift net profits by 5 per cent in the
first quarter to $2.37 billion (£1.22 billion), from $2.25 billion a year
earlier. The company shipped 29.2 million tonnes of steel in the first
quarter, up from 27 million tonnes last time.
Severfield-Rowen, the structural steel group, said its financial
position remains strong and in line with management expectations.
Leisure
Ascott Group, the Singapore-based serviced apartments operator, has
bought out the freehold of its Citadines apartment-hotel in Holborn, Central
London, from Land Securities for £43.5 million.
Punch Taverns, Britain’s biggest pub company, is seeking to amend the
terms of £900 million of bonds taken out against Spirit, its managed pub
division, in a move that would make it easier to separate Spirit from its
tenanted pub arm or refinance it. However, Punch said that it had “no
current intention to redeem any of the bonds”.
Paramount Restaurants, operator of the Chez Gérard, Bertorelli and
Caffè Uno brands, has appointed Mark Phillips, former managing director of
Whitbread Restaurants, as chief executive, succeeding Nick Basing, who is to
become a director at Dawnay Day, the former owner of Paramount.
Media
Johnston Press, the regional newspaper group with more than 200 years
of ties to Scotland’s Johnston family, has turned to Ananda Krishnan, the
Malaysian billionaire, to help to raise £212 million.
BSkyB, the satellite broadcaster, has complained that Ofcom, the
regulator, had held off deciding on whether to approve its Picnic cut-price,
Freeview-based pay television service. The approval is now being linked to a
separate regulatory examination of the entire pay-television market and may
not conclude until 2009. News Corporation, parent company of The Times,
has a 39.1 per cent stake in BSkyB.
Natural
resources
Eurasian Natural Resources, the Kazakh mining group, said that high
commodity prices had boosted first-quarter revenue, which should result in a
robust full-year performance.
Amec, the oil services group, said it had made a “slightly better than
expected” start to 2008 and was on track to achieve underlying margins of 6
per cent this year.
Tullow Oil said that its oil and gas production for the first quarter
had been in line with expectations and that the business had benefited from
increasing oil and gas prices. Growth has come mainly from the focus on
exploration and production in Ghana and Uganda, the centre of the company’s
operations.
Retailing
J Sainsbury, the UK’s third-biggest supermarket group, reported an
expected 28.4 per cent increase in full-year underlying pretax profit to
£488 million, driven by increased sales and an improved operating margin.
However, it cautioned that it expected the market to remain “intensely
competitive”.
Tesco has acquired 36 Homever stores in South Korea from the ELand
Group for £958 million. The supermarket chain said that most of the stores
were formerly Carrefour hypermarkets.
Amway (UK), the British subsidiary of one of the world’s largest
marketing groups, has been cleared in the High Court of “dream selling”, of
operating an unlawful lottery and of being an unlawful trading scheme.
Support
services
Bunzl, the distribution group, said that its strong performance had
continued since the start of the year, because of a combination of organic
growth, the positive impact of acquisitions and a strengthened euro. The
company added that its revenues were 12 per cent ahead of last year and that
it was well positioned for the future.
Technology
LogicaCMG, the IT services group, reported first-quarter revenue of
£856 million, against £826 million last time, and reaffirmed its guidance
for this year.
Yahoo! Carl Icahn, the billionaire activist shareholder, is understood
to have decided to launch a boardroom coup at Yahoo! to force the internet
search engine to restart talks with Microsoft. Mr Icahn has lined up at
least 12 potential board candidates.
Telecoms
Virgin Mobile USA, the telecoms company that has lost Sir Richard
Branson’s Virgin Group more than $200 million (£103 million), said that it
was in talks with SK Telecom about a “strategic partnership”.
Transport
BAA Ferrovial, the Spanish owner of BAA, the UK airports operator, said
that it wanted profits from BAA almost to treble to $1.3 billion (£670
million) in the next four years. Heathrow is expected to return full-year
profits up from £172 million this year to £848 million by 2012.
FirstGroup, the bus and train operator, is issuing up to 43.7 million
new shares to institutional investors to help to pay for the $3.5 billion
purchase of Laidlaw, the US transport group that operates the 92-year-old
Greyhound bus network. The deal was completed in October.
Utilities
British Energy, the nuclear power group, will meet to consider a
takeover approach from EDF, the French state-owned electricity group, but
board members are believed to favour holding out for a higher offer.
