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The Business Matrix: Monday 21 March 2011
The beleaguered retail chain Clinton Cards will reveal the impact of a snow-hit Christmas for the group when it reports interim figures on Thursday. The group issued a profits warning early in the new year saying profits for the year to 31 July would be “significantly” short of City expectations following the severe weather during its key festive season.
The India-focused Essar Energy kicks off the week with its full year results on Monday, the first for the group since it listed in London last April. Nomura expects Essar’s earnings will come in at about £681m and says that it is “concerned by some of the underlying themes that are affecting the progress of power plant development”.
Fourth-quarter sales figures from supermarket Sainsbury’s will be studied on Wednesday for fall-out from the price war involving its two closest rivals, Tesco and Asda. Sainsbury’s outperformed its “big four” peers in Christmas trading, but its latest sales figures will reveal whether it has been able to maintain this lead given the pressure on consumer spending.
Next is expected to defy the gloom on the high street by revealing growth in its full-year profits on Thursday. Analysts expect the fashion retailer, which accounts for about 7 per cent of clothes sales in the UK, to post profits of £552m, up 9 per cent. It has already warned rising costs will squeeze margins and trigger price rises, and investors will be on the look out for more inflation in the pipeline.
B&Q’s parent company, Kingfisher, has already set the scene for decent annual results on Thursday, but the market will also be keen for an update on the final year of a strategy overhaul. The group said last month it expected a 20 per cent rise in profits after strong international growth offset tough trading in the UK. The City has since raised its forecasts to £668m for the year to the end of January.
The City expects the specialist engineering group Smiths to unveil solid interim results on Wednesday as its cost-saving programme pays off. In January, it rebuffed a £2.5bn bid from Apax for its medical unit, and many analysts believe the conglomerate – whose interests span oil and gas, electronics, defence, medical and aerospace sectors – is a strong target for break-up bidders.
BAE signs £22.5m contract with MoD
The Ministry of Defence has awarded BAE Systems a £22.5m, seven-year contract to support the Royal Navy’s Submarine and Mine Warfare Command Team training systems. Under the IT contract BAE engineers will work with the Royal Navy’s teams at three UK naval bases to ensure that the submarine and mine warfare training systems are ready and available to meet training schedules.
House prices up but terraces fall
The asking price of an average home climbed by £58 a day in the past month, a rise of 0.8 per cent to £231,790. But owners of terraced homes are being squeezed out of the market as first-time buyers are unable to move because of the high deposits being demanded by lenders. The March Rightmove House Price Index shows that asking prices have risen by 0.9 per cent during the past 12 months.
Hilton starts long haul to flotation
The private equity owner of the Hilton Worldwide hotel chain is in the early stages of preparing the business for a billion-dollar flotation in New York or London. Accountants acting for Blackstone, one of the world’s biggest buyout firms, are running a slide rule over the hotel company’s books to bring them up to international financial reporting standards, a prerequisite for listing.
Japan’s carmakers face $1bn profit hit
Toyota, Honda and Nissan could take a combined hit of $1bn to profits from the disruption caused by the tsunami and earthquake in Japan. Its three biggest carmakers shut their domestic production plants last Monday. Kota Yuzawa, an analyst at Goldman Sachs, estimated the cost of halting production for one day at $74m for Toyota, and $25m each for Honda and Nissan.
Landlord backs JJB Sports plan
JJB Sports received a boost over the weekend when one of the troubled sportswear retailer’s landlords said it would vote in favour of its controversial insolvency procedure tomorrow. The property company Hammerson said it would back the company voluntary arrangement.
HMV meets banks for crunch talks
The entertainment group HMV will submit its recovery plan to banks this week, as it seeks to raise up to £75m to bolster its financial position. HMV, which owns the eponymous retailer and the bookseller Waterstone’s, expects to breach a banking covenant test and its debts have soared to £130m.
Punch Taverns maybe split up
Punch Taverns is considering breaking up the debt-laden UK pub group into two separate listed companies ahead of the strategic review to be unveiled on Tuesday. Ian Dyson, the chief executive, is thought to be mulling spinning off its better-performing Spirit division and handing shares in the new group to existing investors.
Diageo may line up bid for Jose Cuervo
The drinks giant Diageo is mulling a $2bn takeover bid for Jose Cuervo, the world’s biggest tequila brand. The Beckmann family, which controls the tequila maker, has reportedly held talks with Barclays about a potential sale. Diageo, Bacardi and Pernod Ricard are all seen as potential buyers for Jose Cuervo.
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