PRESS DIGEST - Financial Times - Jan 9

The Financial Times

UNIONS WARN BROWN ON PAY STRATEGY

Unions warned Tuesday that Gordon Brown's proposals for a three-year public sector pay deal will put him on a collision course with workers unless he increases the amount of money in the pay pot. The fear is that Brown is attempting to squeeze pay by spreading it over a longer period. A three-year deal risked leaving workers worse off if the level of settlements were too low, said union leaders. Shadow chancellor George Osborne fanned the flames, saying: "The real reason for this pay announcement is that, thanks to Gordon Brown's economic incompetence the government has run out of money. It's as simple as that."

BUY-TO-LET REMAINS RESILIENT SAYS SURVEY

The latest survey by the Association of Residential Letting Agents reveals that four out of ten existing buy-to-let investors are planning further purchases in the market. Landlords appear to have shrugged off the slide in the value of rented houses with nine out of ten saying they have no intention of selling their properties. The findings indicated that problems caused by the credit crisis had not shaken confidence in buy-to-let, said Arla. "This is good news for the housing market, particularly as it comes from surveys carried out well after the credit crunch had begun to bite," said Arla's head of operations, Ian Potter.

SLUGGISH GROWTH IN PERMANENT JOBS

A closely watched December study by the Recruitment and Employment Federation and KPMG shows that businesses have become more cautious in the job market, with permanent appointments rising at their weakest rate for four and a half years. The report, which also revealed that billings for temporary workers increased at their slowest pace for 20 months, has fuelled speculation that the labour market may be reaching its peak. Alan Nolan, director at KPMG, said: "As the full impact of the credit crunch on the economy is still uncertain, businesses are becoming more cautious . There is even speculation of redundancies within specific sectors such as HR and investment banking."

HOCHSCHILD WARNING KNOCKS SHARES BY A QUARTER

Shares in Hochschild Mines (HOCM.L), the family-owned Peruvian gold and silver producer, fell by about a quarter following its warning that profits in the coming year would be lower than expected. The company said that at the current 2008 consensus on gold and silver prices, gross margin and profit would be hit by higher depreciation costs and lower quality ore from its mines. Gross margins could fall by between 10 and 15 percentage points to about 50 percent, it said. But new chief executive Miguel Aramburu was optimistic that gold prices would be well above the conservative forecasts. "I am sure it will bounce back in the next few days," he said.

JOHN LEWIS WARNS OF A TOUGH 2008

John Lewis Partnership performed exceptionally over the Christmas period with market-beating trading figures for its department stores and Waitrose supermarkets, but has warned of a tough year ahead. Despite out-selling most others in the retail sector, John Lewis's sales growth represented a slow-down on last Christmas and chairman Charlie Mayfield was restrained about the Partnership's prospects in 2008. "I'm pleased with the performance of the divisions, particularly in the context of the demanding market conditions we faced during this important trading period," he said. "Looking ahead, we expect the trading environment to continue to be very challenging this year."

DUNELM SETS STORE ON EXPANSION

Dunelm (DNLM.L), the homeware chain, said it was holding up against tough trading conditions and chief executive Will Adderley maintained that the downturn in retail property provided an opportunity to expand the business. More space is expected to be freed up this year in out-of-town retail parks and this would enable the company to "utilise other people's difficulties and grow a bit harder," said Adderley. "The vacancy rates are rising and a more reliable tenant is becoming more valuable for a landlord," he added.

SOLID SALES BOOST TOPPS SHARES

Shares in Topps Tiles (TPT.L) rose nine percent on Tuesday after the tile and flooring specialist reported solid first-quarter sales. The company seems to have weathered the slowdown in consumer spending better than many peers and reassured the market with a 6.9 percent increase in overall revenue in the first 13 weeks of its financial year, with like-for-like sales up 0.8 percent. "This was a solid performance given the tough trading environment," said Andrew Wade, retail analyst at Seymour Pierce. The shares closed up 15 pence at 144 pence, giving a market value of 246 million pounds.

MILLER 'SLIGHTLY BEHIND' PREVIOUS YEAR

A challenging second half meant 2007 profits would be "slightly behind" the previous year, warned Miller Group, the UK's largest privately-owned housebuilding, property development and construction company. Miller experienced profit growth of 26 percent a year compound between 2001 and 2006 and this will be the first time in 15 years that profits have not risen. Keith Miller, chief executive, said: "The second half was dominated by turbulence in the financial markets and illiquidity in the banking sector, which has had an adverse affect on the availability of funds and the confidence of buyers. The public focus on these issues has exacerbated the situation."

SAVILLS DEFIES GLOOM WITH UPBEAT OUTLOOK

Property agent Savills (SVS.L) has reported a record trading year across its business in 2007, defying the prevailing gloom in the market. Results for 2007 would be slightly ahead of expectations following resilient performances in all areas of its business, Savills said in a trading update Tuesday. Aubrey Adams, group chief executive, said: "There are certain amounts of gloom, and some will have had a very challenging 2007, but we are a well-diversified and lean business concentrated on profitable markets." The shares, which dropped more than 60 percent last year over concerns about the property market, rallied by 17.75 pence to close at 257.75 pence.

FIRST RESERVE AND CV STARR BOOST SYNDICATE

First Reserve Corporation, the biggest private equity firm specialising in energy, and CV Starr - the investment vehicle run by Maurice "Hank" Greenberg, the former chairman and chief executive of American International Group - have teamed up to launch and expand an energy syndicate at Lloyd's. The syndicate began trading on November 1 last year with a capacity of 10 million pounds but will be boosted in 2008 with an extra 20 million pounds in capacity. It is writing some of the business of a CV Starr-backed energy syndicate that began trading in 2006 and extends the presence in the energy insurance market of First Reserve, which is capitalising the syndicate entirely.

Prepared for Reuters by Durrants