PRESS DIGEST - British business - Oct 31

The Times

SORRELL FORECASTS THIS YEAR'S CAMPAIGN IS GOING TO BE TOUGH

Sir Martin Sorrell, chief executive of advertising group WPP (WPP.L), has predicted a "very tough" year ahead for global businesses as the group's third-quarter results showed flat revenue in the United States and a 2.9 percent increase in UK turnover. Sorrell said the group would do "whatever is legal to make sure we hit our 15.5 percent margin target". WPP pointed out that revenue from Asia, the Middle East and Latin America continued to soar, growing 16.5 percent. The group expects further divergence between growth in digital and traditional media as advertisers increasingly turn to the Internet.

PUNCH HAS CAUSE TO SAY CHEERS

Shares in Punch Taverns (PUB.L) soared almost 14 percent higher on Thursday after analysts at Morgan Stanley said fears of a covenant breach were exaggerated. The broker said the pubs group had made moves to refinance its debt that saw it cut its dividend and extend its loan facility. Analysts said while they remain cautious on such businesses, Punch's share price already factored in an 80 percent chance of a covenant breach. The company, whose shares were recently hit by fears over the size of its 4.5 billion pound debt, added 17.75 pence to close at 147 pence. Morgan Stanley expects Punch to post pre-tax profits of 265 million pounds when it announces annual results on Tuesday.

LOOKERS ISSUES WARNING

Manchester-based car dealer Lookers (LOOK.L) has said its third quarter trading has decreased by around 20 percent due to the current economic climate and that the outlook for the sector was poor.

The Daily Telegraph

BARCLAYS FIRST TO SIGN UP TO EIB SCHEME

Barclays (BARC.L) is to become the first high street bank to offer small businesses "cheap loans" under the four billion pound scheme provided by the European Investment Bank. Steve Cooper, managing director of local business at Barclays, said the bank plans to accelerate the lending facility it operates on a current 150 million pound facility in an effort to help "hundreds" of firms a month before applying for new loans.

ROLLS ROYCE ON COURSE TO MEET FORECASTS

Shares in Rolls-Royce (RR.L) rose nine percent to close at 314.25 pence on Thursday after the engine manufacturer said in a trading update that it remains on course to meet market expectations and that activity across all divisions "has been good" in the last quarter. Nevertheless, chief executive Sir John Rose said it was still too early to predict what effect the deteriorating global economy would have on the business. The group said its order book continued to grow with the addition of five billion pounds in new projects during the period. Analysts expect full-year pre-tax profits of between 860 and 890 million pounds, up from the 800 million pounds it made last year.

The Independent

LUMINAR SHARES HIT BY LIGHTER FOOTFALL

Nightclubs operator Luminar (LMR.L) saw its shares lose almost 11 percent of their value after it reported a drop in sales and analysts reduced their profit forecasts. The company said profits before tax and exceptionals dropped to 8.4 million pounds for the six months to August 28, down from 13.4 million last year. Like-for-like sales shrank by 5.2 percent across its clubs for the eight weeks to October 22, while those of its branded clubs dropped by 2.7 percent. The group blamed the late start of the college term, but said it was well-placed for the Christmas season with the addition of 12 branded sites and 2.5 million pounds in cost savings. Luminar expects its core 18 to 24-year-old customer segment to remain resilient and added that more steps would be taken to boost footfall.

WHOLESALE BOOST GIVES BOOTS A SHOT IN THE ARM

Alliance Boots [AB.UL] posted flat underlying UK sales in the weakening trading environment, yet its wholesale unit reported an increase in global half-year sales. UK sales grew 1.8 percent, but like-for-like sales remained flat in the six months to September 30. The group's total sales soared 11.3 percent higher to 8.07 billion pounds, due mostly to a 17.3 percent rise in revenue growth at its pharmaceutical wholesale business. Chief executive Stefano Pessina said the group's recent trading remained "relatively resilient".

ASTRAZENECA BEATS EXPECTATIONS IN Q3

AstraZeneca (AZN.L) has posted third-quarter results that have surpassed expectations as sales of Crestor and favourable currency movements brought about a three percent increase in revenues. The group said sales of the anti-cholesterol drug soared 28 percent higher in the three months to the end of September. The group also benefited from sales in emerging markets, with sales in non-traditional markets up 28 percent. Pharmaceutical firms are increasingly looking to emerging markets amid increasing competition from generics companies and a fall in the production of blockbuster drugs.

The Guardian

M&S EXPECTS LESS CHRISTMAS FRIVOLITY

Sir Stuart Rose, executive chairman of Marks & Spencer (MKS.L), has said he hopes for a "decent" Christmas season, but added that shoppers would be more likely to spend their money on useful items rather than "frivolities" as the country falls into recession. The retailer announced the launch of a new womenswear range in February called Portfolio aimed at the filling the gap in the 45-plus market. Rose said the business was holding its share in all departments, except for food, and had increased its share of the lingerie and children's markets. The City expects the group to post half-year pre-tax profits of 290 million pounds next week, down from 452 million pounds last year.

BAT PROFITS FROM DEMAND IN EMERGING MARKETS

British American Tobacco (BATS.L) said on Thursday sales in emerging markets helped boost net profit by 9.5 percent to 657 million pounds in the third quarter. The cigarette maker said its expansion in emerging markets had been driven by favourable exchange rates and growing sales that helped offset falling sales in some developed countries. This year, the group took over the cigarette assets of Turkey's Tekel and bought most of Denmark's Skandinavisk Tobakskompagni, whose markets include the Dominican Republic and Indonesia.

UNILEVER'S 8.3 PERCENT SALES RISE PROMPTS 2008 UPGRADE

Unilever (ULVR.L) boasted an 8.3 percent increase in third-quarter underlying sales and upgraded its sales outlook for 2008. The group's performance fuelled a five percent rise in its share price. Chief executive Patrick Cescau said the group now anticipates sales growth "well in excess" of its long-term target range of three to five percent. The company's sales were pushed higher by price rises to offset the rising commodity costs. Unilever has been unable to keep its growth on a par with that of rivals Nestle and Danone.

Prepared for Reuters by Durrants.