PRESS DIGEST - Financial Times - Nov 28
The Finanical Times
WARNING GIVEN OF "BUMPY RIDE" FOR ECONOMY
Andrew Sentance of the Bank of England monetary policy committee has predicted the economy will suffer a "bumpy ride" over the next year as the impact of global financial upheaval and rising oil prices is felt. Speaking to the Warwick City Alumni Group in London, Sentance said "judging the appropriate monetary response will not be easy". He said the overriding issue was how far the economy would slow compared with inflationary forces. On Tuesday, Alan Castle of Lehman Brothers forecast a slowdown to 1.7 percent next year, with three rate cuts by March. But Sentance said strong and timely evidence would be required before a move to reduce rates was considered.
CITY SUFFERS "DAMAGE" FROM NORTHERN ROCK CRISIS
Confidence in the City has been eroded by the Northern Rock NRK.L crisis, according to Sir David Walker, senior adviser at Morgan Stanley. In a video for FT.Com's View from the Top, Sir David said he supported the Bank of England "doing more to put liquidity into the home market", and that an earlier and better coordinated reaction from the Bank, the Treasury and the Financial Services Authority could have reduced the impact of negative publicity over Northern Rock. Sir David suggested the credit squeeze could last into the spring of 2008, with the commercial paper market "effectively ceasing to exist around the year end". However, he provided a hint of optimism on prospects for the City, saying: "This is all reparable."
ONE BILLION POUND PIPELINE GIVES BOOST TO GAS SUPPLY
Nick Winser, transmission director of National Grid (NG.L: Quote, Profile, Research, Stock Buzz), has applauded the "fantastic job" completed by National Grid and its contractors in opening a new gas pipeline connecting Milford Haven to the network. However, ExxonMobil and BG Group both still have to finish construction of two new LNG terminals to supply the pipeline, and it is unlikely to come online before the first-half of next year. Oxford based energy consultancy Poyry has said Britain will likely enter a period of "capacity excess" as gas supplies from Milford, the BBL and Langeled could overtake consumer demand.
CARPETRIGHT CHIEF PILES ON THE INCENTIVES FOR ACADEMY TEACHERS
Carpetright chairman and chief executive, Lord Harris of Peckham will shortly detail pay packages and benefits to be offered to successful applicants for teaching posts at his academy schools. The "modest inducements", which include 200 pound bonuses and flooring discounts, will be put to the board of the Harris Federation of London Schools. Reaction from the profession has been mixed, with Sir Cyril Taylor, chair of the Specialist Schools and Academies Trust, calling the bonuses "a fantastic idea", while membership secretary of the Headmasters' and Headmistresses' Conference, Roger Peel, indicated payment based on exam results at his school "would have divided the common room at a stroke".
PENDRAGON STALLS ON TIGHT MARGINS AND US FIRES
UK car dealership Pendragon (PDG.L: Quote, Profile, Research, Stock Buzz) saw over a third of its share value wiped out yesterday as shares fell to 35.5 pence on news of a further 12 million pound cut in profit forecasts. Chief executive Trevor Finn said margin erosion, price deflation and the U.S. forest fires had all influenced expectations, but the symptoms were industry wide and not Pendragon specific. Finn said neither the integration of Reg Vardy nor any particular brand or region had weighted the forecast. Markets had predicted a 45 million pound pre-tax profit in 2007, a figure now reduced to around 33 million pounds, with 2008 estimates reduced from 70 million pounds to around 52 million pounds.
JARVIS WARNING DUE TO LACK OF CONTRACT CLARITY
Richard Entwistle, chief executive of rail infrastructure business Jarvis (JRVS.L: Quote, Profile, Research, Stock Buzz), has blamed last week's profit warning on the "opaque" nature of Network Rail contracts. Reporting first-half losses of 3.3 million pounds, Entwistle said procurement rates had been set "without full visibility of the nature of the contracts" and that the problems "could happen again". He was resolved to solve the underlying issues with Network Rail. Jarvis said "overall strategy remains in place" and expects to deliver its best 12 month result since 2003, but Geoff Allum at brokers KBC Peel Hunt further devalued profit forecasts yesterday, downgrading 2008-9 returns from 16 million pounds to 12 million pounds.
S&N HIT BY RECALL OF KNEE IMPLANTS
Europe's largest medical devices company Smith & Nephew (SN.L: Quote, Profile, Research, Stock Buzz) is to recall around 600 knee implants manufactured for subsidiary Plus Orthopedics amid fears they contain high amounts of iron traced to a supplier production error. The recall of the units, which is the second in three months for Smith & Nephew, is not set to have a substantial financial impact but will cause embarrassment for the company which has a good reputation amongst surgeons, says Brett Pollard, an analyst at Numis.
SEVERN TRENT RISES ABOVE FLOODS
Despite taking an 18 million pound hit over the flooding that hit the Midlands in early summer, Severn Trent (SVT.L: Quote, Profile, Research, Stock Buzz) has returned first-half pre-tax profits up 14 percent at 250 million pounds. Chief executive Tony Wray said long-term damage to assets caught in the deluge would need to be assessed, with the group giving the figures of 25 million pounds and 35 million pounds as estimates for the total cost, although around 20 million pounds would be recovered via insurance. However, uncertainty over the nature of charges and potential fines to be levied by the Serious Fraud Office and Ofwat over data errors at Severn Trent leaves the water operator as a potential takeover target. Shares closed up 50 pence at 15.12 pounds with the interim dividend up 6.9 percent at 23.4 pence.
TV CHANNELS BOX CLEVER WITH "KANGAROO" WEB PLAN
The BBC [BBC.UL], ITV (ITV.L: Quote, Profile, Research, Stock Buzz) and Channel 4 have launched a combined offensive against the perceived threat of an iPod style dominance arising in the film and television download market. Dubbed "Project Kangaroo", the new service will initially be Web based with plans to expand later on to broadband, satellite and cable platforms, providing around 10,000 hours worth of free-to-view, rental and sales archive at various definitions. Ian Maude at analysts Enders said the development was essential in the face of on-demand services from BSkyB (BSY.L: Quote, Profile, Research, Stock Buzz) and Google (GOOG.O: Quote, Profile, Research, Stock Buzz). "Kangaroo" will replace the terrestrial operators' current offerings via the BBC iPlayer, ITV.com and 4oD.
DEBT FREE DIRECT CLOSES BOOK ON A "DEFINING YEAR"
Personal insolvency service Debt Free Direct DFD.L is to change its name, appoint a new finance director in Andrew Heath, and move its year-end to mirror the calendar year in an effort to draw a line under "the defining year for the IVA industry". Chief executive Andrew Redmond said he expected Debt Free Direct to benefit from the industry turmoil of the past year, stating that a share buy-back would be postponed due to consolidation openings becoming available. Redmond predicted a strong business flow associated with the knock-on effects of the credit crunch while an EGM next month will see the company seek approval to rename itself Fairpoint. Shares fell 10 pence to 210 pence, while pre-tax profits for the six months to October 31 declined from 5.4 million pounds to 5.2 million pounds.
Prepared for Reuters by Durrants.
WARNING GIVEN OF "BUMPY RIDE" FOR ECONOMY
Andrew Sentance of the Bank of England monetary policy committee has predicted the economy will suffer a "bumpy ride" over the next year as the impact of global financial upheaval and rising oil prices is felt. Speaking to the Warwick City Alumni Group in London, Sentance said "judging the appropriate monetary response will not be easy". He said the overriding issue was how far the economy would slow compared with inflationary forces. On Tuesday, Alan Castle of Lehman Brothers forecast a slowdown to 1.7 percent next year, with three rate cuts by March. But Sentance said strong and timely evidence would be required before a move to reduce rates was considered.
CITY SUFFERS "DAMAGE" FROM NORTHERN ROCK CRISIS
Confidence in the City has been eroded by the Northern Rock NRK.L crisis, according to Sir David Walker, senior adviser at Morgan Stanley. In a video for FT.Com's View from the Top, Sir David said he supported the Bank of England "doing more to put liquidity into the home market", and that an earlier and better coordinated reaction from the Bank, the Treasury and the Financial Services Authority could have reduced the impact of negative publicity over Northern Rock. Sir David suggested the credit squeeze could last into the spring of 2008, with the commercial paper market "effectively ceasing to exist around the year end". However, he provided a hint of optimism on prospects for the City, saying: "This is all reparable."
ONE BILLION POUND PIPELINE GIVES BOOST TO GAS SUPPLY
Nick Winser, transmission director of National Grid (NG.L: Quote, Profile, Research, Stock Buzz), has applauded the "fantastic job" completed by National Grid and its contractors in opening a new gas pipeline connecting Milford Haven to the network. However, ExxonMobil and BG Group both still have to finish construction of two new LNG terminals to supply the pipeline, and it is unlikely to come online before the first-half of next year. Oxford based energy consultancy Poyry has said Britain will likely enter a period of "capacity excess" as gas supplies from Milford, the BBL and Langeled could overtake consumer demand.
CARPETRIGHT CHIEF PILES ON THE INCENTIVES FOR ACADEMY TEACHERS
Carpetright chairman and chief executive, Lord Harris of Peckham will shortly detail pay packages and benefits to be offered to successful applicants for teaching posts at his academy schools. The "modest inducements", which include 200 pound bonuses and flooring discounts, will be put to the board of the Harris Federation of London Schools. Reaction from the profession has been mixed, with Sir Cyril Taylor, chair of the Specialist Schools and Academies Trust, calling the bonuses "a fantastic idea", while membership secretary of the Headmasters' and Headmistresses' Conference, Roger Peel, indicated payment based on exam results at his school "would have divided the common room at a stroke".
PENDRAGON STALLS ON TIGHT MARGINS AND US FIRES
UK car dealership Pendragon (PDG.L: Quote, Profile, Research, Stock Buzz) saw over a third of its share value wiped out yesterday as shares fell to 35.5 pence on news of a further 12 million pound cut in profit forecasts. Chief executive Trevor Finn said margin erosion, price deflation and the U.S. forest fires had all influenced expectations, but the symptoms were industry wide and not Pendragon specific. Finn said neither the integration of Reg Vardy nor any particular brand or region had weighted the forecast. Markets had predicted a 45 million pound pre-tax profit in 2007, a figure now reduced to around 33 million pounds, with 2008 estimates reduced from 70 million pounds to around 52 million pounds.
JARVIS WARNING DUE TO LACK OF CONTRACT CLARITY
Richard Entwistle, chief executive of rail infrastructure business Jarvis (JRVS.L: Quote, Profile, Research, Stock Buzz), has blamed last week's profit warning on the "opaque" nature of Network Rail contracts. Reporting first-half losses of 3.3 million pounds, Entwistle said procurement rates had been set "without full visibility of the nature of the contracts" and that the problems "could happen again". He was resolved to solve the underlying issues with Network Rail. Jarvis said "overall strategy remains in place" and expects to deliver its best 12 month result since 2003, but Geoff Allum at brokers KBC Peel Hunt further devalued profit forecasts yesterday, downgrading 2008-9 returns from 16 million pounds to 12 million pounds.
S&N HIT BY RECALL OF KNEE IMPLANTS
Europe's largest medical devices company Smith & Nephew (SN.L: Quote, Profile, Research, Stock Buzz) is to recall around 600 knee implants manufactured for subsidiary Plus Orthopedics amid fears they contain high amounts of iron traced to a supplier production error. The recall of the units, which is the second in three months for Smith & Nephew, is not set to have a substantial financial impact but will cause embarrassment for the company which has a good reputation amongst surgeons, says Brett Pollard, an analyst at Numis.
SEVERN TRENT RISES ABOVE FLOODS
Despite taking an 18 million pound hit over the flooding that hit the Midlands in early summer, Severn Trent (SVT.L: Quote, Profile, Research, Stock Buzz) has returned first-half pre-tax profits up 14 percent at 250 million pounds. Chief executive Tony Wray said long-term damage to assets caught in the deluge would need to be assessed, with the group giving the figures of 25 million pounds and 35 million pounds as estimates for the total cost, although around 20 million pounds would be recovered via insurance. However, uncertainty over the nature of charges and potential fines to be levied by the Serious Fraud Office and Ofwat over data errors at Severn Trent leaves the water operator as a potential takeover target. Shares closed up 50 pence at 15.12 pounds with the interim dividend up 6.9 percent at 23.4 pence.
TV CHANNELS BOX CLEVER WITH "KANGAROO" WEB PLAN
The BBC [BBC.UL], ITV (ITV.L: Quote, Profile, Research, Stock Buzz) and Channel 4 have launched a combined offensive against the perceived threat of an iPod style dominance arising in the film and television download market. Dubbed "Project Kangaroo", the new service will initially be Web based with plans to expand later on to broadband, satellite and cable platforms, providing around 10,000 hours worth of free-to-view, rental and sales archive at various definitions. Ian Maude at analysts Enders said the development was essential in the face of on-demand services from BSkyB (BSY.L: Quote, Profile, Research, Stock Buzz) and Google (GOOG.O: Quote, Profile, Research, Stock Buzz). "Kangaroo" will replace the terrestrial operators' current offerings via the BBC iPlayer, ITV.com and 4oD.
DEBT FREE DIRECT CLOSES BOOK ON A "DEFINING YEAR"
Personal insolvency service Debt Free Direct DFD.L is to change its name, appoint a new finance director in Andrew Heath, and move its year-end to mirror the calendar year in an effort to draw a line under "the defining year for the IVA industry". Chief executive Andrew Redmond said he expected Debt Free Direct to benefit from the industry turmoil of the past year, stating that a share buy-back would be postponed due to consolidation openings becoming available. Redmond predicted a strong business flow associated with the knock-on effects of the credit crunch while an EGM next month will see the company seek approval to rename itself Fairpoint. Shares fell 10 pence to 210 pence, while pre-tax profits for the six months to October 31 declined from 5.4 million pounds to 5.2 million pounds.
Prepared for Reuters by Durrants.
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