PRESS DIGEST - Financial Times - Aug 12

FIRST DROP IN FACTORY COSTS YIELDS HOPE

On Monday, data from the Office of National Statistics (ONS) showed that manufacturers' costs fell last month for the first time in almost a year, boosting hopes that the pressures fuelling inflation will eventually ease to reflect the recent drop in oil prices.

The ONS said that the input prices producers paid for fuels and raw materials fell by 0.6 per cent between June and July. The drop is encouraging because the figures are averaged over a month in which oil prices hit a record high before falling back. Input prices are therefore likely to fall further if oil prices remain at their current level.

SPENDING CUT ON INESSENTIALS

The British Retail Consortium (BRC) will report on Tuesday that total retail sales values were 1.7 per cent higher last month than in July 2007. Over the last three months the values were 2.9 per cent higher than a year earlier.

The survey shows that consumers are reining in their spending on all but essential purchases with retail sales outside the grocery sector contracting in July for a second consecutive month. Stephen Robertson, the BRC's director general, said: 'Frivolous shopping is off the agenda as most consumers concentrate on value and durability and there are few signs the slowdown has yet bottomed out'.

SLIDE IN HOME DEALS SHOWS SIGN OF EASING

A report by the Royal Institution of Chartered Surveyors (Rics) suggests that while house prices have further to fall there are some signs that the slide in housing transactions is starting to level out.

The ratio of completed sales to stocks of unsold property fell again from 18.2 per cent in May to 17 per cent in June, the lowest level since 1995 and Rics said a net balance of 83.9 per cent of surveyors thought prices had fallen in the past three months, and a balance of 68 per cent expected further declines.

The Rics survey did however find a slower rate of decline in new buyer enquiries and a slightly smaller proportion expecting sales volumes to drop further.

SENTIMENT WORSENS FOR EUROPEAN MANUFACTURERS

The latest KPMG/Market survey reveals that optimism amongst European manufacturers has fallen sharply since the beginning of the year as rapid input price inflation and the global economic slowdown depress business outlook.

The survey's results were based on about 3,700 manufacturers, with values ranging from -100 to +100. The net balance of companies forecasting a growth in activity fell to just +14.1 from +43.5 in January.

Prospects for company profits dropped to -13.2 from +15.8 six months earlier. Manufacturers particularly noted the strong increases in the prices of raw materials and energy as threats to their output.

COMMERCIAL TV HOLDS ITS GROUND

Despite the growing popularity of internet video sites, figures published on Tuesday by the Broadcasters' Audience Research Board reveal that the number of advertisements seen on television increased six per cent in the first six months of the year compared with the same period for 2007.

Audiences watched an average of 2.34 hours of commercial broadcasts a day between January and June, up four per cent on last year. A total of 2.4 billion advertisements were seen every day, which averages out at 42 per person.

BAA AIRPORT MONOPOLY AT RISK

In a move which increases the likelihood that BAA FER.MC will be forced to sell some of its airport operations, the Competition Commission has concluded that the company's monopoly in south-east England and Scotland is harming passenger interests.

Next week, the watchdog is to unveil plans for possible reforms to ownership and regulation and will focus on the lack of rivals to BAA. Airlines and business leaders have been calling for the break-up of BAA in order to address a record of delays, overcrowding and underinvestment which they say threatens London's pre-eminence as a global centre.

SOUTHERN CROSS TO MEET FORECASTS

Southern Cross (SCHE.L) is on track to meet its revised earnings forecasts. The largest provider of care homes in the UK says that it is about to report earnings before interest, tax depreciation and amortisation for the year ending in September of around 80 million pounds.

For the 14-week period to July 6, revenue was 245.6 million pounds, 18 per cent higher than for the same period last year. Adjusted ebitda were 24.4 million pounds, seven per cent higher year-on-year. Average occupancy rates for the period were 89.2 per cent. Shares closed at 129.5 pence, up 5.5 pence.

HEATH LAMBERT SHOWS EIGHT PER CENT LIFT

Heath Lambert, the privately owned insurance broker, has revealed that trading profit rose more than eight per cent to 9.2 million pounds in the six months to June 30. Income from its UK network of regional insurance brokers rose three per cent.

The company has been restructuring its business to focus on UK retail broking and certain specialist sectors of the wholesale broking market, selling its businesses dealing with non-specialist commercial broking such as aviation, international property and casualty and reinsurance.

MAPELEY IN 54 MILLION POUND LOSS AFTER PROPERTY VALUE EBBS

Mapeley MAY.L has posted a half-year loss owing to a fall in value of its properties. The Guernsey-based property investment and outsourcing company reported a pre-tax loss of 53.8 million pounds in the six months to June, against a profit of 30.2 million pounds last year.

Total asset value fell from 2.31 billion pounds at December 31 to 2.23 billion pounds. The company said funds from operations rose to 63.1 million pounds, compared to 27.5 million pounds for the same period last year. Shares closed at 10.70 pounds, up 52 pence.

BRANDED SWITCH BUOYS XP POWER

XP Power (XPP.L) has reported pre-tax profits for the six months to June 30 of 6.4 million pounds, up from two million pounds. The company, which provides power supply products to the electronics industry saw lower sales to semiconductor manufacturers but more than made up for this with higher sales to the medical and defence sectors.

XP Power has been moving away from third-party business to concentrate on its branded products. Shares rose 19 pence to close at 217.25 pence.

Prepared for Reuters by Durrants