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07 February 2011
U.K.
The Economic Monitor Series. Free Edition.
Stock recommendations and price targets from top Britain's top share index fell with energy shares lower after results
brokerage firms from Royal Dutch Shell disappointed investors and dented sector
sentiment. The FTSE 100 was down 16.73 points, or 0.28 percent,
Analysis and views on U.K. car sales and Randgold FY at 5,983.34
profits
The yield on 10-year gilts hit a fresh eight-month high after a
solid auction of 2040 gilts and a stronger-than-expected PMI
Economic Indicator Watch survey of Britain's dominant services sector. At 1439 GMT, the 10-
year yield hit 3.799 percent
Important Events Scheduled on 08 February
Sterling pared gains versus the dollar in a move driven largely by
Economic Events & Indicators a sharp drop in the euro after European Central Bank President
Jean-Claude Trichet dampened expectations for a rate hike in the
euro zone. Sterling traded down around 0.3 percent at $1.6140 in
UK finance minister George Osborne takes questions in afternoon dealing after rising as high as $1.6279 on the UK PMI
parliament data.
BG Group Q4 results
STOCK INDICES
Wolfson Microelectronics Q4 and full year results INDEX LAST CHNG % CHNG
* CLOSING VALUES
Kofax interim results hit records
CURRENCIES
Randgold FY profits surge, sees 70 pct jump in production
INDEX LAST PRIOR
St. Modwen Properties returns to profitability
Euro (EUR/USD) 1.3647 1.381
Another disappointment for AstraZeneca UK Pound (GBP/USD) 1.6157 1.6189
Japanese Yen (USD/JPY) 81.49 81.55
888 Holdings Q4 income jumps 18%
All prices are at 11:52 AM EST
FUTURES
LAST CHANGE
New car registrations in the UK in January fell by 11.5 percent compared to the same period year ago, The Society of Motor Manufacturers and
Traders said in a statement today.
The Society of Motor Manufacturers and Traders (SMMT) said the decline was in line with its forecast and partly
reflected the ending of the car scrappage scheme.
The loss of the scrappage incentive scheme is expected to adversely affect the market during the first half of 2011.
Overall volumes are forecast to decline by 5% in 2011 to 1.93 million cars.
"New car registrations fell by 11.5% in January. This is in line with SMMT forecasts and marks the beginning of a challenging year for the UK motor
industry," said Paul Everitt, SMMT Chief Executive.
"Consumer confidence is low and it is important that the government uses the March Budget to help relieve some of the financial pressure on
motorists by freezing fuel duty, while providing stability and certainty on motoring taxes. Despite the challenging conditions, the demand for low
CO2 emitting and highly fuel efficient cars continues to grow."
Over 65,000 new diesel cars were sold in the UK last month compared with close to 62,000 petrol models, said the SMMT. The Ford Focus was the
best selling new car in January and also the top selling diesel model in the month followed by Vauxhall with 12 percent.
Randgold Resources sees a surge in production for 2011 as it reported a 43 percent rise in full-year profit in spite of operational and political
setbacks.
The West Africa-focused miner, which boosted its annual dividend by 18 percent to 20 cents, forecasts production to be between 750,000 and
790,000 ounces for 2011, up more than 70 percent on last year.
For the year ended Dec. 31, profit increased to $120.6 million from $84.3 million. Gold sales rose 12 percent to $487.7 million lifted by a rise in price.
Attributable production fell 10 percent to 440,107 ounces from 488,255 ounces.
Chief executive Mark Bristow said "given the scale and complexity of the projects the company was developing, 2010 was always going to be a
tough year, and it proved even more difficult than expected due to technical problems related to the expansion of the Loulo complex in Mali and the
unsettled situation in Cote d'Ivoire."
For the fourth quarter, the company's profit fell to $32.2 million from $38.7 million in the year-ago period. Earnings would have increased 40 percent
had it been able to sell all the gold produced at the Tongon mine in the Ivory Coast, Randgold said.
The Tongon mine was commissioned on schedule despite difficult circumstances, pouring its first gold on November and producing 28,126 ounces
by the end of the year, the company said, adding that 23,428 ounces remained unsold at Tongon at year end resulting from disruptions in Cote
d'Ivoire following the disputed presidential elections in November.
Randgold expects Tongon to contribute 260,000 to 270,000 ounces for the year, provided the political situation in Cote d'Ivoire does not impact on
the mine much longer. Loulo complex's production for 2011 was expected to be in line with the forecast of 420, 000 to 440, 000 ounces.
The Intelligent Investor - U.K.
Economic Events
Company Events
McBride which is due to report its first half yearly results had earlier warned at the beginning of January that full year performance could be at the lower end
of its expectations because of an uncertain retail outlook. Analysts expect the interim result to give a clue as to how close to the bottom end the full year
results are likely to be. Panmure Gordon has forecasted a 1% decline in revenues to £408m and a 26.5% fall in profit before tax to £16.5m, giving an earnings
per share of 6.8p.
“Input cost pressures are likely to remain a significant headwind for McBride and should provide a test of the recently implemented procedures to recover
costs more quickly. Promotional activity remains high in personal care and in some categories in Household such as “Auto dish wash” but any further insight
into the current promotional environment would be useful,” Panmure Gordon said.
Investec analyst says that "Given the cautious outlook, we are trimming numbers by 3 million pounds -- this is not as a result of under-recovery of cost
inflation seen to date, but more a reflection of the tougher environment and the likelihood that this could trigger further brander price action as well as the
possibility of some new inflation emerging."
Specialist materials group Low & Bonar which is due to report its preliminary results, forecast a full-year pretax profit to be at the upper end of market view
on improved sales across the board. The company predicts its fiscal 2010 sales growth of over 10 percent on increased exposure to high-growth markets.
The company which is restructuring its loss-making technical yarns business, also stated that it expected to close its Ostend facility by June 2011 and the
manufacturing output of the Ostend facility in Belgium will be transferred to a new facility in Abu Dhabi. The company said it had refinanced its banking
facilities on favourable terms through to February 2015.
Lloyd's of London insurer Beazley, which will report its preliminary results on Tuesday had recently dropped its bid interest in rival Hardy Underwriting,
saying that it would consider handing back more cash to shareholders. In its latest interim management, the company Chief Executive Officer Andrew
Horton said that the profit-focused underwriting underpinned a continuing strong performance at Beazley in the third quarter. He further added that the
company remains on track to achieve an excellent result in 2010 despite increasing competition for business and catastrophes in Chile and New Zealand. He
said that the company recorded a strong trading performance in the first nine months of 2010 and their investment performance was satisfactory in the third
quarter, with the annualised yield increasing from 0.5%, as reported in July, to 0.8%.
House prices in England and Wales fell in December, but fewer new houses coming on to the market helped the pace of decline to moderate for a second
consecutive month.
The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance nudged up to -39 from -44 in November, improving more than the
consensus forecast of -42. The index hit an 18-month low of -49 in October. New buyer enquiries fell in December, but at a slower pace than November.
Heavy snowfall in December kept transaction volumes subdued but surveyors were hopeful turnover would pick up in the spring.
The Intelligent Investor - U.K.
TOP STORIES
Small- and medium-sized UK manufacturers reported a rise in output in the three months through January, but they also saw a marked rise in input
costs and passed on some of the price rise. Confederation of British Industry's latest SME trends survey revealed that net 13% of respondents
reported an increase in output in the three months through January, up from a net 9% in the previous quarter. A net 28% reported unit costs rose,
with net 6% reporting a rise in domestic prices and a net 6% a rise in export prices. Output was driven up by an improvement in both domestic and
export orders growth. CBI expects the unit costs to rise further, with a net 24% expecting a rise, the highest balance since July 2008.
A new figure from the analyst BDO revealed that the High Street sales rose for the month of January by 9.1% as compared to a year ago. The rise in
retail sales was despite worries on VAT rise and worries over the government’s austerity programme which is likely to hit consumer sentiment. BDO
said that there were strong fashion and homewares sales during the month and with 49% surge in online purchases. It also stated that mid-market
retailers were driven by milder weather and continued discounting. Don Williams, National Head of Retail and Wholesale at BDO however warned
on the outlook saying that “Now the New Year buzz has worn off, retailers will be preparing for a tough first quarter.”
Kofax, a scanning software specialist reported a record first half yearly results, lifted by strong performance at its software business and expects 14%
revenue growth for the full year. The group adjusted EBITA for the six months ended 31 December jumped to $23.5m from $8m in 2009. Revenues
increased 20% to $121.7m. Chief executive officer Reynolds Bish said that the first half of fiscal year 2011 yielded exceptional results, however he
added that as the global economic environment continues to be fragile, hence the sustainability of any recovery is still difficult to predict.
Randgold Resources sees a surge in production for 2011 as it reported a 43 percent rise in full-year profit in spite of operational and political set-
backs. The West Africa-focused miner, which boosted its annual dividend by 18 percent to 20 cents, forecasts production to be between 750,000 and
790,000 ounces for 2011, up more than 70 percent on last year. For the year ended Dec. 31, profit increased to $120.6 million from $84.3 million.
Gold sales rose 12 percent to $487.7 million lifted by a rise in price. Attributable production fell 10 percent to 440,107 ounces from 488,255 ounces.
St. Modwen Properties returned to profitability in the full year ended 30 November 2010. The group went from a pre-tax loss of £119.4 million in
the previous year to pre-tax profits of £37.5 million. Property profits were reported as rising from £7.6 million to £21.9 million. During the period St.
Modwen embarked on a new joint venture with housebuilder Persimmon, aimed at developing 2,000 houses at seven sites. Following the return to
profitability the group said it would be resuming final dividends of two pence per share. Bill Oliver, Chief Executive of St. Modwen Properties, said,
"Looking ahead, we are confident that St. Modwen's long-established strategy will once again give us the opportunity to provide sector-leading
returns to shareholders. "We have a strong balance sheet and a landbank that is full of latent value. Our development pipeline for 2011 and beyond
is strengthening and a number of significant schemes are being marshalled for delivery in future years, he added."
AstraZeneca faced another disappointing drug development results as the advanced trial on the drug's impact on men with non-metastatic, cas-
trate resistant prostate cancer exposed that it had no benefit to the patient. The company said that a trial is still in progress assessing zibotentan's
effectiveness with chemotherapy in more advanced cases. The company said that this trial will continue and full results are expected in the second
half of 2011.
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