Global economic recovery will be ‘LuVVy’-shaped, predicts WPP

WPP’s US like-for-like revenues have improved markedly from a drop of 6pc in the fourth quarter of 2009 to growth of almost 4pc in the first quarter of 2010 and 8pc in the second, with July seeing similar levels.
“In our 25 years of existence, we cannot remember a more speedy recovery or turnaround of a region,” said WPP.
Half-year figures on Tuesday showed a 36pc leap in pre-tax profits to £243.9m and WPP said full-year revenue growth was on course to beat market expectations.
Like-for-like revenues in the first seven months of the year stood at 3.1pc, while the City had pencilled in 2.5pc for the full year.
But WPP added a cautionary tone as it comes up against tougher comparatives in the second half and amid concerns that the US cannot maintain its speedy recovery.
On the wider global picture, it added: “The most likely scenario is a slow growth ’slog’, particularly in the mature geographical markets and traditional media markets, perhaps with inflation and higher interest rates in the long term.
“In some senses, the recovery will not be over for a long time.”
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Antofagasta trims production forecast on Chilean earthquake delays

Full-year copper production is expected to be approximately 530,000 tons, marginally below the original forecast for the full-year, Antofagasta said, after delays to the Los Pelambres expansion project following an earthquake in Chile in February and lower grades at El Tesoro.
Even with the reduced forecast, 2010 output is due to rise 20pc from last year. The group’s new mine Esperanza is on track to launch production in the fourth quarter, Antofagasta said, which together with the Los Pelambres expansion will boost annual output to 700,000 tonnes next year.
The London-listed group reported a 50pc rise in first-half turnover to $1.76bn.
Marcelo Awad, chief executive, said: “We had a very strong first half in 2010 with the successful completion of the Los Pelambres expansion bringing increased production, while costs have remained in line with expectations. Combined with the more positive pricing environment, this has resulted in significantly higher earnings compared with the first half of 2009.”
The medium-term outlook remains “positive”, he said, with demand for commodities expected to stay strong.
Antofagasta declared an interim dividend of 4 cents, up from an interim payout of 3.4 cents last year.
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General Motors in huge share sale

18 August 2010 Last updated at 18:58 ET

General Motors has paved the way for an initial public offering (IPO), expected to be the second largest share sale in US history.
GM, 61%-owned by the US government, has officially filed its proposals with the Securities and Exchange Commission.
The move begins the timetable for the IPO, which analysts believe will raise between $12bn and $16bn (£7.7-10.2bn).
It means the US Treasury can begin selling part of the stake it took after a $50bn bailout of the carmaker.
Company executives have said for months they were planning to re-float GM, as the carmaker seeks to repay the rescue funds received from the US and Canadian governments.
“It signals the return to normalcy, to being able to start paying the taxpayer back… Getting the company back to a traditional publicly traded company,” said Rebecca Lindland, director of consultancy IHS Automotive.
The 700-page filing of the IPO paperwork with the SEC came nearly a week after GM reported second-quarter profits of $1.6bn (£1bn), its biggest profit in six years.
The share sale is expected to take place later this year. The largest US IPO so far is Visa’s 2008 offering that raised $19.7bn.
Unanswered questions
GM, the biggest US carmaker, said it would apply for listings on the New York and Toronto stock exchanges, but did not say exactly how many shares it would sell.
Continue reading the main story

July 10, 2009 - Emerges from bankruptcy protection and becomes private company with US government as largest shareholder.
Nov. 3 - Decides to keep European car company Opel, dropping a deal to sell 55% to Magna.
Nov. 16 - Reports $1.2bn loss for previous three months
Chief executive Fritz Henderson resigns after just eight months; replaced by Ed Whitacre.
Jan. 25 - Sell Saab to Dutch company Spyker for just $74m cash.
April 7 - Reports staggering $3.4bn loss for the fourth quarter of 2009.
April 21 - Repays $8.1bn of loans to US and Canadian governments.
May 17 - Makes first-quarter profit of $865m.
June 17 - Says will keep most of its US factories open through the normal two-week summer shutdown to meet increasing demand.

“The amount of securities offered will be determined by market conditions and other factors at the time of the offering,” GM said in a statement.
“The number of shares to be offered and the price range for the offering have not yet been determined,” it added.
Analysts have speculated that the US Treasury will sell more than 20% of the 304 million GM shares it holds, reducing its stake to under 50%.
The IPO would have to bring in $70bn just to pay back all of the GM’s stakeholders, but analysts are not expecting anything close to that size.
Demand for GM shares in the financial markets is unclear, and its advisers will now begin the job of pitching the company to potential investors around the world.
News of the IPO also comes a week after GM’s chief executive, Edward Whitacre, announced plans to resign.
He will hand over to current board member Dan Akerson, but will stay on as chairman until the end of the year.
Mr Whitacre joined GM in July last year to help restructure the carmaker and prepare its return to full private-sector ownership.
GM has cut more than 65,000 jobs in the US and closed factories in an attempt to cut costs in the last year.
It has also sold its Saab brand and wound down others, though it has retained its European brands, Opel and Vauxhall.
GM has already repaid $8.4bn worth of loans to the US and Canadian governments.
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Questor share-tips: Centamin Egypt is a buy

The group is targeting 2010 gold production of 200,000 oz at a production cost of less than $400 per oz.
Centamin produced 30,236 oz of gold during the last quarter. It sold almost 31,000 oz at a gold price above $1,200 per oz, resulting in an operating profit of $19.1m. The group also has $35m of cash and no debt.
Production was 17pc lower in the latest quarter, its fourth quarter. (Centamin is this year changing from a June year-end to a calendar year financial period, so there is an extra six-month period in the financial “year”.) Lower production means that the average cash cost moved higher – to $569 per oz compared with $403 per oz in the prior quarter.
Production was lower because of a number of unscheduled stoppages to replace prematurely worn or damaged equipment. A new system has been ordered that should prevent further stoppages.
All of this means that the process problems are being solved. When any mine is started there are likely to be technical issues to be ironed out.
Although the fall in production is a disappointment, it is not a disaster and does not derail what is one of the best gold stories around.
When Questor spoke to Mr El-Raghy yesterday, he said that the technical problems meant that about 5,000 oz of production had been lost - but he was confident that he would be able to make up this production shortfall over the rest of the year. Now the two processing plants are up and running, he said the company would “focus on making as much gold as possible”.
The Sukari gold mineral resource increased to 10.99m oz on a measured and indicated basis, plus 3.5m oz inferred. This is an increase of 5pc over the previous disclosed resources.
The gold price has been subdued over the past few months and is sitting near three-month lows at about $1,166. This represents an easing of sovereign debt fears and relief that most of Europe’s banks passed the stress tests.
Questor is not a raging gold bug who believes the price is about to rocket. However, the price is likely to stay at inflated levels for some time as doubts about the creditworthiness of some major countries continue and as concerns about the euro linger.
The shares are trading on a June 2011 earnings multiple of 12.9 times, falling to 9.2 in 2012.
They were first recommended on January 5 last year at 42.5p and they are now 256pc ahead compared with a market up 17pc.
The shares remain a buy.
-
Investing in tobacco companies is not to everyone’s taste – but they are a good share to own for income-seekers.
Earlier this week, British American Tobacco, the world’s largest cigarette group by sales, said that it had seen a recovery in many of its key markets meaning that it should see good growth in earnings and dividends this year. The group’s brands include Dunhill, Kent, Lucky Strike and Pall Mall. The company also claims to be the “most international” of the cigarette groups
In the six months ending in June, pre-tax profits rose 7.3pc to £2.28bn. Revenue after duty and taxes was 8pc higher at £7.3bn, with the weakness of sterling boosting revenue by 4 percentage points.
The interim dividend was raised by 19pc to 33.2p and it will be paid on September 29.
The company sold 348bn cigarettes – just 1bn lower than the equivalent period of last year - but like-for-like volumes fell 3pc after tax increases in some markets.
Turkey increased taxes on cigarettes by 29pc at the end of 2009 and Australia raised its tax by 25pc on April 30. This affects BAT because in countries where VAT increases, the illicit trade in tobacco products becomes more of a problem.
However, good sales came from “commodity-based economies” such as Brazil, South Africa and Canada. These countries have bounced back more rapidly from the downturn than countries where commodities are not mined.
Paul Adams, BAT chief executive, said: “There are signs we are over the worst. More of our economies are returning to growth, but the recovery is fragile and uncertain.”
Mr Adams is retiring in February next year and will be replaced by Nicandro Durante, who is currently chief operating officer. The Italian joined the group in 1981 and has held senior positions in Africa and Middle East, Brazil, the UK and Hong Kong.
BAT shares are trading on a December 2010 earnings multiple of 12.8 times, falling to 11.8 next year. With a solid prospective yield of 56.1pc, which is expected to grow to 5.5pc in 2011, the shares remain attractive for income seekers.
The shares were first recommended as a buy on February 26 this year and they are up 1pc compared with a market that is unchanged. Buy.
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Industry toasts beer sales rise

29 July 2010 Last updated at 19:05 ET

Football’s World Cup is thought to have given a boost to UK beer sales, industry figures suggest.
The equivalent of more than 2.2 billion pints was sold between April and June - up 2.9% on last year, the British Beer and Pub Association (BBPA) said.
This meant quarterly sales were up on 12 months ago for the first time in four years.
Growth was driven by demand at shops and supermarkets, up 4.4%. But sales in Britain’s pubs fell by 6.3%.
Turn a corner?
The UK Quarterly Beer Barometer suggested good weather as well as the World Cup tournament in South Africa, which saw England exit in the last 16, helped bring the best sales in the April to June period since the fourth quarter of 2008. This was also the first quarterly rise since 2006.
Beer sales grew by 625 million pints compared with the first three months of the year, and were up by 63 million pints on the April-June period last year.
“The World Cup has certainly been a benefit to Britain’s beer sector and we can now hope that the market is starting to turn a corner,” said BBPA chief executive Brigid Simmonds.
“However, while there is some reason for cheer, it has to be noted that beer sales in pubs are still falling and the nation’s pubs need support.”
The BBPA called on the government to freeze the tax on beer and support pubs “recognising the economic and social contribution of these vital community assets”.
The figures come ahead of the Great British Beer Festival, held at Earls Court in London next week.
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Halfords sees sales fall flat during sluggish second quarter

By Daily Mail ReporterLast updated at 9:33 AM on 27th July 2010

Cycling and car parts retailer Halfords has blamed the World Cup and the general election for a drop in sales during the second quarter of 2010.
The sluggish summer trading comes off the back of strong year-on-year growth, with operating revenue up 9.6% due to the acquisition of Nationwide Autocentres.
The firm said on Tuesday that it remained on track to deliver full-year earnings growth in line with previous guidance.

On the level: Halfords has reported that consumer demand has stayed weak during the spring and summer

It said sales at Halfords stores in the UK and Ireland open at least a year were down 2.1 percent in the 13 weeks to July 2.
That compares with analysts forecasts of down 0.5 per cent to 3 per cent and a rise of about 0.8 percent in the fourth quarter of the last financial year.
The group said like-for-like sales at the Autocentres car servicing business, acquired in February, were flat over the first-quarter.
 

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UK GDP growth unchanged at 0.3%

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Declan Curry explains just what GDP stands for, and why we should care

The UK economy grew by 0.3% in the quarter from January to March, the latest official figures have confirmed.
The revision of the GDP data is unchanged from that issued by the Office for National Statistics in June.
But the ONS also said that revised figures for last year as a whole show the recession was deeper than first thought.
Release of the numbers was delayed a week while the data was double-checked because of concerns about reliability.
The ONS confirmed that Britain emerged from recession in the fourth quarter of 2009, with the economy growing at a quarterly rate of 0.4%, as earlier estimated.
Deeper recession However, as part of a major revision of previous quarters’ GDP data, the ONS said that Britain’s economy contracted by 6.4% between the second quarter of 2008 and the third quarter of 2009.
This is more than the 6.2% reported previously, suggesting that the recession was deeper than first thought.

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Carpetright sees signs of recovery as profits shoot up 64%

Last updated at 10:43 AM on 29th June 2010

Flooring firm Carpetright reported a 64 per cent rise in annual profits today after seeing a return to sales growth in the UK.Sales rose 3.1 per cent on a like-for-like basis across its 586 stores in the UK and Ireland.But underlying profits of £28.2million for the year to May 1 are still far short of the £62million made in 2008 and the group reiterated warnings over consumer spending outlook.

Chairman and chief executive Lord Harris (left) - a retail veteran with
more than 50 years in the business
Carpetright’s sales staged a marked recovery early last year -
reaching double digit growth before December - but this slipped to 1.5 per cent
in the fourth quarter.
Chairman and chief executive Lord Harris - a retail veteran with
more than 50 years in the business - said it would be a ‘very tough’
year for consumer spending amid Government cuts and tax hikes.
He said the group would push further to secure contracts with
insurance firms and with housebuilding groups to offset weak retail
conditions.

It is also striking deals in the public sector, offering discounts
to the police service and health workers in an attempt to tap into a
vast customer base.
Carpetright is likewise linking up with estate agency Countrywide to offer promotional schemes to customers.
‘It’s difficult and it’s challenging, but on the other side there’s opportunities,’ said Lord Harris.
The group hopes the impending VAT rise to 20 per cent next January
may drive sales at the end of 2010 as customers rush to make purchases
before the hike comes in.
It is also optimistic that Government austerity measures may be less
harsh on lower paid workers - the bulk of its customer base, with 60
per cent of Carpetright customers spending less than £100.
Today’s results come after Carpetright warned over profits in March following worse than expected sales.
The group did not provide any update on trading since the year end, saying only that consumer spending was ’subdued’.
Carpetright has 537 stores and 49 concessions across the UK and Ireland under the Carpetright, Storeys and Sleepright brands.
It also has 117 outlets in the Netherlands and Belgium, where
trading has been improving, with underlying operating profits up 10.3
per cent in the year to May.
The business recently pulled out of Poland after a review last autumn.
Shares in Carpetright slipped more than 5 per cent on the group’s cautious comments.
Singer Capital Markets analysts said the biggest risk facing Carpetright was the threat of another housing slump.
‘Although there are numerous initiatives to deliver growth, these risks could yet impact forecasts adversely,’ they said.

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US economy posts slower than expected growth

Economic growth in the United States slowed in the first quarter of 2010 but a
bounce in consumer spending provided evidence that the recovery could be
sustained.

The economy grew at an annualised rate of 3.2 per cent between January and
March, according to the US Department of Commerce in its first estimates for
the period.

The pace was slower than the 3.4 per cent growth rate economists had forecast
and significantly less than the 5.6 per cent recorded in the fourth quarter,
when growth surged as businesses restocked inventories and the Government
spent heavily to stimulate the economy.

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Britain’s borrowing hits record £163 billion

Government borrowing hit its highest level since records began during the 12
months to March but the figures reveal Labour has undershot its target for
the year.

Public borrowing hit £23.5 billion last month — more than any other March
since the end of the Second World War and an increase on £20.1 billion in
the same month last year.

Total borrowing, including the costs of bailing out the banks, rose to a high
of £152.8 billion. However, the Government still borrowed less than it
forecast in the year, with its preferred measure of borrowing reaching £163
billion, under the £167 billion forecast announced in last month’s Budget.
That figure was revised down from an initial estimate of £178 billion.

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