PRESS DIGEST-Australian Business News - Nov 27
Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
Department store chain David Jones (DJS.AX) has reconfirmed it expects net profit to grow by 5 percent to 10 percent this financial year despite the financial crisis. The upmarket retailer says it now expects same-store sales to fall by 7.5 percent in each of the next three quarters, following a 6.1 percent fall during the first three months of the year. Despite the decline in sales, David Jones increased net profit by over 5 percent for the first quarter, and expects that a continued focus on reducing costs will enable profit guidance to be met. Page 18.
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Tabcorp Holdings (TAH.AX) has appointed Larry Mullin as chief executive of the gaming company's casino division with an initial four-year contract. Mr Mullin, who will take up the position at the beginning of February, is currently the chief operating officer of the Borgata Hotel Casino and Spa in the United States. Tabcorp is spending A$475 million refurbishing its flagship Star City complex in Sydney, and Tabcorp chief executive Elmer Funke Kupper says the Borgata is one of the models for the Star City's expansion. Page 18.
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The Australian Communications and Media Authority (ACMA) yesterday filed a court application seeking a civil penalty order against radio station 2UE for 13 breaches of the regulator's cash-for-comment rules by broadcaster John Laws. Mr Laws retired at the end of November, three weeks after the station was purchased by Fairfax Media. Fairfax and the ACMA have reached an agreement that media group will pay A$130,000 in penalties; however, the Federal Court will make the final decision on what penalty to apply. Page 18.
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Coca-Cola Amatil ,CCL.AX> chief executive Terry Davis has questioned the ability of brewer Lion Nathan LLN.AX to fund and execute its proposed takeover of the soft drinks group. Speaking at a conference in Sydney yesterday, Mr Davis also warned of the danger of using debt to fund takeovers in the current environment. Lion Nathan and its major shareholder, Japanese brewer Kirin, are continuing to push for the proposal, and are seeking talks with the Coca-Cola Company, whose support would be required for any takeover. Page 19.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Following BHP Billiton's (BHP.AX) withdrawal of its takeover bid for Rio Tinto (RIO.AX), Chinese aluminium producer Chinalco has said it may lift its stake in Rio to the 14.99 percent it is allowed under a Foreign Investment Review Board ruling. Chinalco reacted positively to news that BHP had abandoned its bid, believing it will benefit the Chinese steel industry. Despite having lost 75 percent of its original investment, Chinalco also expressed confidence in 'the fundamental value of the Rio Tinto Group.' Page 17.
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Moody's Investors Service yesterday announced it will conduct a review of Qantas Airways' (QAN.AX) credit rating. Moody's said it was conducting the review due to the airline's 64 percent pre-tax profit downgrade, to an expected A$500 million this year from A$1.4 billion for 2007-08. Analysts are now advising investors not to sell their shares in the airline but to be prepared for more bad news, with several warning that the worst effects of the downturn are yet to confront the airline. Page 18.
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Advertising agency DBB is believed to have won the multi-million dollar account for Coles supermarkets, following a review of Coles' brand strategy, which started two years ago. The appointment of DBB is one of the first major decisions to be taken by new marketing director Joe Blundell since his appointment in August. Coles is expected to announce the appointment tomorrow, after DBB won out over a shortlist which included Leo Burnett, JWT and George Patterson Y&R. Page 18.
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Former Victorian treasurer Alan Stockdale has become the latest ex-politician to experience difficulties after a move to the corporate world. Mr Stockdale, as deputy chairman of technology company Senetas Corporation (SEN.AX) , has seen the company lose 95 percent, or A$235 million, of its value. Mr Stockdale has also been on the board of Mariner Financial since March last year, during which time the company's shares have fallen 99 percent, leading to this week's announcement of Mariner's winding up. Page 18.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Fortescue Metals Group (FMG.AX) has downgraded its production target to between 15 and 16 million tonnes of iron ore this year, down from a target of 20 million tonnes only two weeks ago. Analysts say the revised figure is not unexpected and that Fortecue's initial projections were overly optimistic. Fortescue has also halted construction of a railway line between the Cloudbreak and Christmas Creek deposits in Western Australia despite almost half the work being completed, and will use trucks instead. Page 26.
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QBE Insurance (QBE.AX) yesterday successfully raised A$2 billion from institutional shareholders, which the insurer plans to use to acquire up to five other businesses, including four underwriting agencies and a renewal rights portfolio. QBE offered shares to institutions at a 10 percent discount to yesterday's share price of A$23, and plans to offer retail investors a share purchase plan to raise another A$100 million. QBE said the acquisitions it is targeting will add to earnings per share growth in the first full year. Page 27.
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Babcock & Brown Wind Partners BBW.AX (B&B Wind) is seeking to sever all remaining links with its parent, investment bank Babcock & Brown (B&B), including adopting a new name. The move comes after pressure from investors, who expressed dissatisfaction with an agreement reached last week between the two companies which reduced B&B's hold on the fund, but left senior B&B Wind executives directly employed by B&B. B&B Wind is also looking to purchase a number of wind assets directly from B&B. Page 27.
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Rumours that Macquarie Capital Advisers MCQ.AX and Deutsche Bank may consider delisting or buying out toll-road operator BrisConnections have been downplayed by the company even as further problems arise. Meanwhile, another retail investor, Nicholas Bolton, has bought a substantial 12.2 percent of BrisConnections for A$47,643. Mr Bolton's stake comes with the obligation to pay the next two instalments in the company, which will cost him A$95 million. Page 27.
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THE AGE (www.theage.com.au)
The effect of falling commodity prices is being felt by Victorian industry, with aluminium producer Alcoa (AA) yesterday announcing a 5 percent production cut at its Portland smelter. The cuts at Portland are part of the company's global reduction of 350,000 tonnes of aluminium produced, as it responds to the collapse in prices. Alcoa Australia managing director Alan Cransberg said yesterday the economic environment and the need to reduce emissions meant the company needed to cut costs and become more efficient. Page B1.
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Following a query by the Australian Securities Exchange, Fairfax Media (FXJ.AX) has blamed the company's sharp share price falls on short-selling and 'unfounded rumours.' Fairfax also said it does not require and has no plans to raise equity. At the company's annual meeting this month, Fairfax reported a 15 percent fall in earnings for the first quarter of the financial year, and told investors it expects trading conditions to be difficult for some time. Fairfax Media shares closed at A$1.30 yesterday. Page B2.
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Mitchell Communication Group (MCU.AX) yesterday reported 10 percent growth in billing figures for the four months to October, with billings for October reaching A$115 million. Although the growth figures are less than the 24 percent during the previous 12 months, the growth is at odds with the performance of many of the media buyer's clients. Executive chairman Harold Mitchell said there were no signs clients were reducing spending, but noted that print and outdoor advertising were growing, while television spending was flat. Page B3.
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The Takeovers Panel has ruled that a bid by Manhattan Bidco to take over business software company MYOB is in breach of the Corporations Act. The panel said Manhattan had used unacceptably high-pressure tactics on institutions to get them to commit their support to the takeover. The institutions have now been released from their commitment and must accept a superior offer if one is presented before the current offer ends. MYOB is believed to be in talks with other possible partners. Page B3.
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