...the main business headlines..........
Taylor Wimpey in debt talks delay
Taylor Wimpey, the beleagured housebuilder, is “locked in talks with its bankers” over its debts, said The Times. It needs to revise the terms of its covenants after two massive writedowns pushed it into a £1.54 billion loss in the first half, however it said it didn’t expect talks to be concluded until the end of the year. Investors had hoped for an earlier resolution to the problem of its £1.7bn net debt. The company has scrapped its interim dividend, cut 900 jobs and taken a further £40m restructuring charge, according to today’s announcement.
RBS in boardroom shakeup
Royal Bank of Scotland has announced that it is appointing three new non-executive directors to allay shareholder worries over its business. The trio will join the board in October in the wake of the bank’s announcement of £5.9bn of sub-prime writedowns earlier this month. This provoked shareholder ire as Britain’s second-biggest bank was forced to launch the biggest rights issue in UK history. Investors were already critical of RBS’s takeover of ABN Amro at the outset of the credit crunch.
Mortgage lending at record low
Mortgage lending in the UK fell to record lows last month, down 2.7 per cent from June and 25 per cent year on year. The British Bankers’ Association announced that gross lending was £14.6bn in July and the number of loans slumped 65 per cent, indicating that the country’s housing market is showing few signs of recovery. At the same time it said that the overall number of buy-to-let loans kept growing in the first half, suggesting that fears of a collapse in the sector are as yet unfounded.
Moneysupermarket.com profits up on customer belt-tightening
Consumers looking for the best deals on utilities and savings have contributed to a doubling of first half profits at the price comparison website. As lenders pull in their horns, so consumers are looking to make their money go further, leading to a 113 per cent rise in pre-tax profits in the six month period, on 60 million visits to the company’s website. Chief executive Simon Nixon said he expects slower growth in the second half, but further expansion is planned.
Germany in new recession fears
German business and consumer confidence sank to a new low in August, according to yesterday's IFO business index, sparking worries that Europe’s biggest economy is heading for recession. The index in stood at its lowest level since February 2006 in August, with expectations about the future at their lowest since February 1993. The negative outlook pushed the euro to a new low against the dollar as investors bet that the next move in European interest rates will be down.
US newspaper industry in advertising sales slump
Advertising sales in the US newspaper industry are falling sharply, in the face of a weak economy and increased competition, reported The Independent. The New York Times, the third biggest newspaper group in the US, said that advertising revenues fell 15.3 per cent in July, hit by fewer real estate listings. As a result its share price is at levels “not seen in over a decade”. The Tribune group of newspapers, owner of The Chicago Tribune and Los Angeles Times, has also been forced to confront current problems by selling assets and cutting staff.
...in brief..................
Bovis woes and US bank failures
Bovis Homes has taken the knife to its dividend and cut 400 jobs, as it tries to cope with the slump in the housebuilding market. First half profits collapsed from £58.4m to £9.5m and the number of homes sold fell from 1,256 to only 851. The company plans to make its pricing keener............
Johnston Press highlighted the problems in the local newspaper industry in the UK, with results showing a sharp fall in sales and profits. The owner of The Scotsman scrapped its dividend after revenues in the first half fell 9.5 per cent, with the second half outlook even worse…………
Heineken increased first half profits by 35 per cent, helped by the contribution from its purchase of Scottish & Newcastle in April. Sales were up 17 per cent as S&N brands including Fosters boosted market share, but analysts expect second half growth to suffer from higher financing costs…………
China Mobile, the biggest telephone company in the world based on subscribers, has increased profit more than expected. Second quarter profit was up 51 per cent, after it cut prices to help gain more customers, adding 22.5 million in the 3 months to the end of June…………
India's state-owned oil company ONGC Videsh has won the battle for the Imperial Energy. The British oil explorer, which is active in Western Siberia, had been the subject of a bidding war between ONGC and China's Sinopec, but the former's £12.50 a share offer won the day............
Insolvency group Begbies Traynor is predicting that up to 300 US banks will fail over the next three years. Nick Hood, head of the firm’s international network forecast “an average of 100 banks” failing for three years as Columbia Bank & Trust became the ninth US regional bank to fail in 2008…………
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