BT phones hone business

May 14th, 2009 by admin | Filed under Daily News, Recession, Retail, UK Small Business.

An announcement from British Telecom (BT) that it would be cutting 15,000 jobs as well as reducing their final dividend payout to just six and a half pence per share caused no little upset yesterday, The company’s management team insisted that they had no option after their IT services division had a disastrous year. The dividend for 2008/9 was close to 60 percent less than the previous financial year.

According to the Pensions Regulator U.K. companies will be given some breathing space to repair their pension deficits over the long term, a move that will be warmly welcomed in the hard pressed business sector. This concession will allow companies to reduce their annual pension payment, relieving cash flow pressures. The fall in stock values, which thankfully is declining, has meant that billions in pounds of asset values have decreased, meaning companies that many companies have been faced with the prospect of dipping into cash reserves to meet pension commitments.

UK insurance giant Legal & General announced a rise in sales for the first-quarter, apparently aided by an increase in sales of pension schemes. L & G seemed optimistic that the worst of the financial crisis appeared to be behind them, whilst adding that 2009 could still be very difficult. In their first-quarter trading update published Wednesday, Legal & General announced that global sales had risen by three percent to 382 million pounds from 372 million a year ago, coming from a six percent increase in sales of savings products at its UK business and a 32 percent jump in overseas sales, and curtailed by a ten percent drop in sales from its UK Risk business.

The world’s sixth-biggest steel maker in terms of production capacity, Tata Steel Ltd., announced in the last few days their intention to request from their UK bankers reset the debt terms on the loan that the company took to purchase the Anglo-Dutch steel producer Corus Group PLC.

On the flight path, it was announced that a consortium led by Citi Infrastructure Investors have been removed from the list of final bidders take over London Gatwick, the UK’s second largest airport, as their bid was found to be too low.

The consortium, Lysander Gatwick Investment, made a bid of about £1.18billion to acquire the airport. It is unsure whether they will submit a better offer.
Meanwhile, the UK’s largest property company, Land Securities, have added weight their repeated warnings that a recovery in the battered real estate sector are premature. They hit their point home by revealing that their property portfolio had fallen in value by £4.7billion in the last financial year. Land Securities reported a pre-tax loss of £4.8bn, the largest ever in the UK property sector, against losses of only £988m in 2008. Understandably their shares fell in value by 13% on the day (60 pence to 468).

On the FTSE, banks and commodities have begun to slip backwards a little whilst the retail sector is doing better, with reports that sales in April were better than expected.
Shares in Tesco Plc and William Morrison Supermarkets Plc both rose on the days trading. Tesco, Britain’s largest retailer gained 3.7 percent to (14 pence to 352.5 pence). Morrison also, climbed 4.1 percent (10 pence to 245.75)

Dublin based C&C Group, brewers of Magners cider, had a simple explanation why their shares rose by 7.8 percent yesterday (14 cents to 1.94 Euros) they said that Ireland’s rugby team winning its first Grand Slam in 61 years and the resultant celebrations during unseasonal warm weather had pushed sales through the roof. .

U.K. stocks feel backwards overall, and for the second day in succession on Wednesday. The FTSE 100 Index fell 94.17 to close on 4,331.37, while the FTSE 250 dropped to 7,365.10.
The pound receded slightly against the dollar and rose strongly against the Euro on currency markets yesterday.

· Pound/US dollar 1.5149

· Pound/Euro 1.1128

· Pound/Japanese Yen 144.317

· Pound/Swiss Franc 1.67659

On Wall Street, stocks fell back from a high in early trading after data was released showing the U.S. trade deficit had risen only to $27.6 billion in March, yet shares later fell as hopes that the economy had stopped its decline were deflated by the news that April retail sales in the US fell a second month in a row. The Dow Jones closed down 184.22 points to 8284.89 while to NASDAQ share index fell by 51.73 to finish the day on 1664.19 Another sacred cow, electronics giant Sony reported that it had made its first loss in 14 years, after a 12.9%.drop in sales.

Sony reported a loss of 98.9bn yen ($ £685million) for the year to the end of March, reversing a profit of 369.4bn yen the previous year.
Sony had previously announced it would be cutting 8,000 of its 185,000 workforce and closing some of its factories

On commodities, crude oil was up at around $59 a barrel while gold continued to rise steadily, up $4.40 an announce to $828.20. Copper closed down $4.65 at $204.35