BP board set for big shake-up as quarterly profit reahces $4.7bn$

Carl-Henric Svanberg, BP’s new chairman, has embarked on a boardroom shake-up at the oil group as it prepares to announce an expected 80 per cent surge in quarterly profits to $4.7 billion (£2.9 billion) next week.
The company’s board met this week for the first time under the leadership of Mr Svanberg, who took up the role on January 1, to approve a replacement for Sir Tom McKillop, the former chairman of RBS who was forced to step down as a non-executive director of BP last year. His successor could be named as early as today, marking the first of many new board appointments at BP this year. Three other non-executive directors are set to retire either this year or early in 2011.
The announcement comes as BP prepares to unveil a sharp rise in profits at its fourth-quarter results on Tuesday.
City analysts expect the company, Britain’s second biggest by market value, to record profits of about $4.7 billion for the final three months of 2009 — equivalent to about $51 million every day.

That would represent a more than 80 per cent increase from $2.6 billion during the same period a year ago and would be vindication of a stringent cost-cutting programme led by Tony Hayward, the chief executive.
Andrew Whittock, oil and gas analyst at Oriel Securities, said BP’s results were likely to have been boosted by higher oil prices, strong growth in crude production and big improvements in efficiency.
He said: “The general picture is that BP has all its main plants and fields operating now and is benefiting from a higher oil price.”
Benchmark crude prices have risen from an average $55.50 in the final quarter of 2008 to $74.50 during the fourth quarter of last year.
Peter Hitchens, oil and gas analyst at Panmure Gordon, said: “Tony Hayward is gradually asserting himself. He is starting to turn things around … it is all looking pretty good.”
He cautioned that BP and the other oil majors are still struggling to cope with weak refining margins, which across the industry remain mired at the lowest level in 20 years.
Average profit margins for refining a barrel of crude oil have fallen from about $5 in 2008 to about $1.50.
The headline results are also expected to be little changed from the previous quarter.
The new appointments at BP will follow the retirement of deputy chairman Sir Ian Prosser, DeAnne Julius, chairman of BP’s remuneration committee, and Erroll Davis, who serves on the group’s safety committee.
Tony Hayward, chief executive, and Mr Svanberg are expected to use the appointments as an opportunity to tighten their grip on the company’s leadership.
“There are quite a few changes coming up … so this is an opportunity for Tony to stamp his mark on the boardroom,” one insider said.
Mr Svanberg, the former chief executive of Ericsson, the Swedish telecoms group, started at BP on January 1 and has replaced Peter Sutherland.
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From Tiny acorns … Lonrho hopes for giant growth

Lonrho, the conglomerate once led by Tiny Rowland, and which was nearly wound up four years ago, is seeking to restore some of the wealth and power it enjoyed during its heyday in the 1980s.
It is building an African business empire of plantations, airlines, ports and agribusiness, and has raised £25 million with two share placings in the past fortnight.
The money will be used to buy out the minority interests in two Lonrho businesses — Rollex, the South African fresh produce distributor, which supplies Marks & Spencer and Tesco in Britain, and Kwikbuild, a construction company that makes prefabricated buildings.
David Lenigas, chairman of Lonrho, has said that he wants to increase the size of the group quickly, doubling its revenues every year, by transforming it into a leading African food exporter, taking fresh produce from company-owned farms in Angola to supermarket shelves in South Africa, Europe and the United States. He said: “Africa has land, water and cheap labour; it will be the bread basket of the world.”

The company broke even with £40 million in turnover in the half-year to June, but Mr Lenigas said it was now making quarterly profits before interest and tax of £9 million on £30 million in revenues. He said: “Our mandate is to bring Lonrho back, creating a strong company in the African services sector. We want to bring it back to £1 billion in revenues within three to four years. Then we will be a significant business in Africa.”
Mr Lenigas, who took command at Lonrho in 2005, and Geoffrey White, his chief executive, see infrastructure as the key to rebuilding a Lonrho empire.
Instead of investing in resources or mining, Lonrho is piggybacking on the oil and minerals boom in sub-Saharan Africa. The company owns a majority share in Luba Freeport, a logistics and supply base in Equatorial Guinea, used by the oil multinationals for their West African drilling campaigns.
Lonrho also owns Fly540, an airline that runs domestic services in Kenya and which Mr Lenigas hopes to take into Angola and then into Ghana. The key to Lonrho’s rapid expansion will be food: a farming, processing and exporting business integrated through Rollex.
The logistics company owns a processing plant at Johannesburg airport. A fleet of refrigerated trucks bring produce from Zambia, Zimbabwe, Malawi and the Democratic Republic of Congo (DRC) to Johannesburg, where fresh fruit, vegetables and flowers are processed, washed and bagged, then airfreighted to Europe. The company will begin to export produce to the United States next year.
Lonrho moved into food production in January, acquiring 99-year leases on 25,000 hectares of paddy fields in Angola. Talks on a further 25,000 hectares on the shores of Lake Malawi are under way with the Malawi Government and in Mali, Lonrho hopes to secure 100,000 hectares to grow crops.
Mr Lenigas is keen to expand into farming to reduce supply risk. To keep volumes growing, the company must secure new sources of produce and the ideal balance, Mr Lenigas said, would be to source 40 per cent of its food supplies from company-owned farms, buying the rest from independent farmers. By sourcing food from a wide geographic canvas, from Mali to Zimbabwe, Mr Lenigas hopes to reduce the risk of supply interruptions from droughts and crop failures.
The three river systems that flow north in the DRC make Angola ideal for growing food, Mr Lenigas said. Lonrho will employ farm workers to grow the crops, mainly vegetables and fruit, rather than commodity crops such as grain. Additional processing plants will be built in Angola, Mali, Malawi and and Zimbabwe.
Fly540, the regional airline, is already being closely watched by international carriers. There have been general talks with potential partners, such as BA and Emirates.
A deal is probably three to four years away as the airline develops a sub-Saharan Africa route network. However, eventually, it will need a link to a big carrier.
“We can only take it so far,” Mr Lenigas said. “At some point, we will need a partner to hook it into long-haul routes.”

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No cash bonuses for top Goldman Sachs executives, but 31,000 other employees could still be rewarded

By
Daily Mail Reporter
Last updated at 9:52 AM on 11th December 2009

Changes: New York bank Goldman Sachs is not paying cash bonuses to its 30 top executives this year
Top executives at Goldman Sachs Group Inc. will not receive cash bonuses this year, as the Wall Street giant bows to sharp criticism over its pay practices.The 30 high-ranking executives will instead receive stock that cannot be sold for at least five years, the New York-based bank said today.But the restrictions won’t affect the more than 31,000 other employees, potentially including some of its top traders, who could be rewarded handsomely for helping the bank turn big profits this year.The bonus culture in banks has been a controversial political issue both in the USA and the UK this year. Especially since financial markets have recovered much faster than the broader economy which is still seeing unemployment rise. The surging financial markets have allowed companies like Goldman Sachs to rebound and start posting big quarterly profits, while setting aside billions of dollars to pay out year-end bonuses.Goldman has also been criticised for using $10 billion - £6 billion - in government bailout money to help ramp up its aggressive trading practices. Goldman received the money late last year as part of the $700 billion - £430 billion - bank rescue program similar to Gordon Brown’s bailout in the UK. But the bank paid back the money this summer, allowing it to escape restrictions on compensation.Trying to stem the negative publicity over the issue, Goldman has said in recent months it was reviewing its pay policies.’The measures that we are announcing today reflect the compensation principles that we articulated at our shareholders’ meeting in May,’ Goldman CEO Lloyd Blankfein said in a statement.Goldman had set aside about 47 per cent of its net revenue valued at $16.71 billion - around £9.9 billion - during the first nine months of the year for compensation. That includes not only bonuses, but also salaries and associated costs such as benefits and payroll taxes.The majority of compensation for Goldman’s senior management, which includes top managers across all its business units, has traditionally been paid out in year-end bonuses.Aside from not being able to sell the stock for five years, the 30 executives’ stock awards could be taken back by the bank in cases where the employees took too large a risk or failed to raise concerns about risk in the company, Goldman said.Politicians have chastised Wall Street bankers for taking excessive risk, which resulted in big bonuses but also helped lead to the credit crisis and recession.Shares of Goldman rose 41 cents to $166.85 in afternoon trading.

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Petrol ‘to hit £5 a gallon’ as motorists face record fuel bills at the pumps this Christmas

By
Daily Mail Reporter
Last updated at 10:48 AM on 16th November 2009

Motorists are facing record fuel bills as they fill up their cars in the run up to Christmas, a report warned today.The RAC said petrol prices are set to reach 110p per litre by the middle of next month – the equivalent of £5 a gallon.The price hike mean an increase of more than 26 per cent on last year when unleaded fuel cost 87p a litre.
Eye on the bill: Oil costs and the value of the pound have pushed up pump prices
It means that filling up an average family car will cost pounds £60.50 this December - £12.15 more than a year ago.But the UK’s 30million motorists need to brace themselves for more pump misery in the New Year as a planned 2.5 per cent VAT increase on January 1 will add a further £1.50 to the cost of a tank. The latest price rises - blamed on worldwide oil costs and the falling value of the pound - will come into force just as millions of families plan Christmas visits by car to family and friends.RAC spokesman John Franklin said: ‘The festive season is traditionally a very expensive time and this has been made worse by petrol prices rising by around 26 per cent from last year.‘With the £5 a gallon mark likely to be hit before Christmas, many families are likely to think twice about visiting family and friends.’ The price warning comes after oil giant BP revealed bumper quarterly profits of more than £3billion - a 60 per cent rise on the £1.9bn profits it made between April and June.Motoring groups have accused the oil companies of being quick to hike prices when the cost of crude oil rises and slow to lower them when it falls.Average petrol prices have already jumped from 105.1p a litre to 108.5p a litre in just a month.The last time petrol was so high the cost of crude oil was around $100 a barrel. Yet the price of crude has remained between $75 and $80 a barrel over the last month.The RAC added: ‘It’s about time oil companies became more transparent with their pricing so that motorists can clearly understand why these price rises happen - otherwise they will continue feel like an easy target that keeps the profits flowing in.’  

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Abercrombie beats forecasts after cost cuts

Abercrombie & Fitch, the preppy US clothing retailer, reported quarterly
profits ahead of Wall Street expectations, driven largely by cost cuts as
the company worked to close its higher-priced Ruehl line.

The company has suffered a prolonged sales slump since the recession as it
took a decision to protect its brand by not discounting its prices and lost
out to lower-priced competitors.

Profit for the three months ending October 31 fell 39 per cent to $38.8
million, or 44 cents per share. This was significantly ahead of analysts
expectations of 20 cents a share and compares with profits of $63.9 million,
or 72 cents per share, during the same period last year. Excluding charges
related to closing Ruehl and a tax benefit, profit was 30 cents per share.

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Postal company TNT suffers mixed fortunes in UK strike

By Roland Gribben

Published: 6:33PM GMT 02 Nov 2009

Its express business is picking up customers in Britain but its postal
operation is suffering because it depends on the Royal Mail for final
delivery.

TNT, one of the mail business eager to take a stake in Royal Mail before the
Government about turn on a partial flotation, believes it will end up
benefiting from the disruption in Britain.

Henk van Dalen, chief financial officer, said that while the strikes were
creating difficulties in the short-term “in the long-term customers
might switch to TNT because they think Royal Mail isn’t reliable”.

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Michael Page faces surprise £40m tax bill

Michael Page International, the FTSE 250 recruitment consultancy, is facing an
unexpected £40 million tax bill, it emerged today, as it unveiled a sharp
drop in quarterly profits.

The group, Britain’s second-biggest recruiter, was warned by the Inland
Revenue last month that it was “considering taking steps” to
recover £37.4 million which it had handed over as a part settlement of an
alleged overpaid VAT bill.

Details of the case emerged as the group unveiled a third-quarter trading
update which showed a 41.8 per cent drop in profits to £82.2 million for the
three months to the end of September with income falling in every region.

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Skype could be cut off for good over dispute

Skype might have to shut down because of a dispute over the core technology
used to make the internet telephone system work.

EBay, which paid $2.6 billion (£1.6 billion) for the voice-over-the-internet
system in 2005, is facing a court battle with the original founders of the
company who retained the rights to the technology at the heart of the
system.

EBay admitted in a regulatory filing that it might have to close down the
company. It said it was trying to develop alternative software but if that
did not work, or if eBay lost the right to the original software: “Skype
would be severely and adversely affected and the continued operation of
Skype’s business as currently conducted would likely not be possible.”

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PC-maker Dell’s profits slump 63%

Dell has seen its latest quarterly profits decline by almost two-thirds as the worldwide recession continues to hit sales of computers.

The world’s second-largest maker of personal computers made a net profit of $290m (£182m) in the three months to 1 May, down 63% from $784m a year ago.

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Lower spending hits US retailers

Leading US retailers have been hit as consumers continue to tighten their belts, sending quarterly profits lower.

Abercrombie & Fitch saw a net loss of $26.8m (£17.6m) in the fiscal quarter to May 2, down from a profit of $62.1m in the same period a year earlier.

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