Thames Water seen looking to increase water prices

If, as expected, a review of water bills comes lower than their expectations, Thames Water look as if they will be appealing to the Competition Commission to demand better terms from the UK’s water regulator, Ofwat. According to reports Thames Water believes it could face a credit downgrade if Ofwat estimates its cost of capital at less than 5.25 per cent.

Most analysts expect Ofwat to come in with a figure of about 4.85 per cent, in line with lower estimates from the UK’s other privatised water companies. But this increase may not be sufficient to finance Thames Water’s £5.5 billion expansion programme as the company deals with rising bad debts from both industrial and domestic customers.

As the company’s annual general meeting approaches, Sir Stuart Rose, executive chairman of Marks and Spencer, has announced that he will not be taking up the shares option due to him valued at more than £1 million as part of his contract. The move is seen as an attempt to prevent a public showdown with some of M&S’s largest shareholders at the meeting.

Sir Stuart has borne the brunt of concerted criticism from investors over his combined role as both chairman and chief executive of the leading high street retailer after shareholders had announced that the bonus was “exceptional rewards for a median performance”.

The German airline Lufthansa have reached an out-of-court settlement in their legal battle over the future ownership of British Midland Airlines. The
deal which will make the German carrier the majority owner and the second largest airline operating running out of London Heathrow has been struck with principal shareholder, Sir Michael Bishop. Sir Michael who acts as the BMI chairman has called up a deal struck in November 1999 with Lufthansa in which Sir Michael could exercise right to sell his controlling stake in the loss making airline to Lufthansa for a sum of £298 million.

On the stock exchange, the largest supplier of vending machines in the UK, Bunzl Plc advanced two percent to 495 pence on the announcement that their first first-half sales rose about 17 percent and trading is “in line with full-year expectations.”

Britain’s largest luxury- goods company, Burberry Group Plc saw their shares rise by 3.5 percent to 382.25 pence, its highest level for more than a week. Market analysts announced that the company’s strong retail presence is likely to be an asset to performance during the recession.

London’s FTSE 100 fell again but just by 4.03 points to close on 4230.02. The FTSE 250 actually climbed a little, up 18.12 points to close on 7192.96.
Sterling rose slightly against dollar as well as the Swiss Franc whilst retreating against the other two major currencies on a mixed day for trading.

Pound/US dollar 1.6429
Pound/Euro 1.1681
Pound/Japanese Yen 156.6881
Pound/Swiss Franc 1.7552

On Wall Street, share values fell for the second day but less dramatically than on Monday. The Dow Jones was down 16.1 points to 8322.91, while the NASDAQ more or less stood its ground, or down just 1.27 points to close on 1764.92,

The news of a marriage made in cyberspace has set the communications industry rocking. Intel the world’s largest chip maker are due to put their creative talents together with those Nokia the world’s largest mobile phone maker. The baby that they are looking to produce will be a “new exciting industry. A spokesman for Nokia predicted that their collaboration would produce an entire new generation that would go beyond the current one dominated by smart phones, net books and notebooks, while neither company could be drawn about specific product plans.

Creating considerably less enthusiasm among Nokia watchers was news that Nokia Siemens Networks are to acquire his core operations of Nortel, the Canadian telecoms equipment manufacturer now under bankruptcy court protection for $650 million. Nokia’s shares fell by four percent in Helsinki and Siemens dropped by 3.4 percent on the German stock exchange. However the move, met by skepticism by most leading European financial analysts saw principal competitor Alcatel-Lucent’s shares fall by nine percent after analysts warned the deal would increase competition.

Oil prices appeared to be steadying on Tuesday as the European Union’s energy commissioner announced that a price of $70 a barrel was “the fairest price” during a joint summit held between the EU and OPEC.

Meanwhile, copper prices dropped to a three-week low on evidence that yearly demand may have peaked.

Chinese imports of refined copper rose to an all-time high for the fourth consecutive month in May, whilst domestic demand for copper wire was considerably slower.

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Tags: Employment, Marks and Spencer, Nokia, Recession, Retail, Thames Water, UK Recession