Dividends to be lower as UK public companies shore up their reserves.

Payouts to shareholders will be few and far between in the UK this year, with prediction that the UK leading publicly listed companies will be cutting back up to £8 billion compared to 2008. The move comes as these company’s take whatever steps necessary to repair their cash balances that has become overstretched since the credit crunch.

The forecast, based on an analysis of more than 650 companies listed on the London Stock Exchange, reveals that dividends from these companies have Fallen by 9 per cent to £28 billion in the first half of 2009, with expectations that they will fall by 13 per cent to £52 billion in 2009

The world’s largest hotel group, InterContinental was not optimistic about the short term future of the hotel industry as they announced a pre-tax loss of £30.3 million for the first half of 2009. A spokesman for the company explained that while occupancy levels were stablising, room rates remained under pressure due to intense competition. The group also owns the Crowne Plaza and Holiday Inn chains.

After a year of consolidation, Greggs bakery chain, have announced expansion plans for the coming year. The announcement came as the company reported a 1.5 per cent increase in first-half turnover.

In the past year Greggs have not only closed down their branches in Belgium, but have also relocated a number of their UK outlets to more attractive sites. Greggs, who now operate almost 1,400 stores throughout the UK, announced total sales for the half year to June 30 were £312.4 million, up from £299.2 million for the first half or 2008.
Pre-tax profits took a slump from £23.4 million to £16.5 million, due entirely to a one-off property gain and pension credits awarded in 2008. In 2009 to date, operating profits at Greggs have risen by 8 percent.

Britain’s biggest pubs group Enterprise Inns came under pressure on the FTSE yesterday amid trading and financing concerns.
Shares in the company dropped 3.2 per cent to 157 pence. Analysts fear that declining rents and drops in sales are liable to bring disappointing full-year results for the company.
Property rental has become an increasingly large part of Enterprise’s turnover, and reports that income from this division has, fallen by 8 per cent in the second quarter to June, with e outlook for the second half of the year looking even grimmer.

Shares in Enterprise have dropped 10.8 per cent this week following the rent data and on the announcement that chief executive Ted Tuppen had disposed of more £500,000 of his stock holdings in the company.

Shares in the IT software and services group Morse, gained 7.7 per cent to 31 pence after increased speculation that the company may be a target for India’s Patni Computer Systems.

Patni are reported to be sitting on a cash balance of around $350 million that they are looking to invest in UK based business software SAP specialists. A spokesman for Morse, who last month reportedly rejected a takeover approach valuing the company at 25 pence per share, stated that in the medium term, the company remains concerned that declining asset values and cash flows will limit the group’s ability to extend its bank facilities and that it will need to raise extra capital from external sources.
.

The FTSE 100 recovered most of its previous day’s losses, up 45.42 points to close on 4,716.76. Meanwhile the FTSE 250 made up for some its previous setbacks, rising 49.27 points to close on 8,351.93.

Sterling has a mixed day on yesterday’s markets, falling slightly against all of the currencies, with the notable exception of the Swiss Franc.
Pound/US dollar 1.6503
Pound/Euro 1.1618
Pound/Japanese Yen 158.6056
Pound/Swiss Franc 1.77754

The Federal Reserve continues to massage the ego of the US economy, again suggesting that the worst hump of the US recession has now been passed. Whilst stressing that economic activity is likely to remain weak for a time, a level of stability had been achieved. Their comments came with the news that the central bank announced that they will be holding US interest rates at their current levels of between 0% and 0.25%, and are likely to be doing so for the foreseeable future to bolster the continuing recovery.

On Wall Street, the Dow Jones index made a fairly spectacular recovery after a couple of days of indifferent trading. It rose 120.16 points to close on 9361.61. The NASDAQ also recovered a little and is again skirting the 2,000 point mark, yesterday it rose 28.99 points to finish the day on 1998.72.

On the US employment front there was bad news and goods news. The bad news was that unemployment rose again last month; however the 247,000 job cuts were far less than had been predicted.

At the same time, figures recently released have indicated consumer spending in the US increased in June, and for a second successive month, US exports also raised by 2% to £76 billion, ($125.8 billion) in June, a further indication that that things were looking up stateside.

It was also a case of good and bad news, when details of the US trade deficit were released by the US Department of Commerce. The gap widened slightly in June as US imports increased, The deficit rose to $27 billion (£16.4 billion), up f $1 billion from May. The good news was that the deficit for the year-to-date is far below 2008’s level

Crude oil prices consolidated ahead of the latest US inventories data while base metals dipped as commodity markets marked time awaiting the outcome of the US Federal Reserve’s monthly meeting

• Galaxie Boat Works Review Galaxie Boat Works was essentially founded in 1968, which is...
• 5 New Ideas for Controversial ETFs That Will Never Exist I often jest that the financial world is moving towards...
• China Buying Gold On The Sly! I just read this interesting article in the Financial Times....

Tags: Credit Crunch, Economics, Economy, Financial News, Money, Money Management, Recession, Stock Markets, Stocks and shares, UK Recession