Home | Good Ways to Invest Money | Bank ratings | eCommerce Associate Blog | Corporate Site    

The last safe haven of the credit crunch now under attack

February 19th, 2009 by admin | Filed under Daily News, Recession, UK Small Business.

It would be fair to say that the UK consumer is going through the toughest of times at the moment. What with inflation, deflation, house prices, unemployment and uncertainty, it seemed that all was left was to cry into his beer.

Yet even that illusion has proved to be false with news that the global brewer, Netherlands-based Heineken, whose brands include Kronenbourg, Strongbow and John Smiths will cut its capital expenditure by almost 60% this year are being forced on property, manufacturing equipment and newly acquired businesses.

Heineken is being forced to slash capital expenditure on reports of major falls in profits, and write-downs of more than £660million. Particularly worrying for the company was the dire performance of their Foster’s beer label in the UK, as well as a global slump in the global consumption of alcohol.

Heineken, in conjunction with another European brewery giant, Carlsberg acquired Scottish & Newcastle Breweries in 2008 in a £7.8billion deal. At the time city analysts announced that the deal was speculative as well as extremely complicated. With Heineken receiving the UK assets and Carlsberg taking over the Russian and French operations.

In the UK, sales of Heineken beers in pubs, or on-trade, were down by 10 per cent, while sales in supermarkets and off licences, or off-trade, rose by just 0.5 per cent.

Of its brands, Foster’s was its worst performer, with sales volumes down by 10 per cent in 2008, although Heineken blamed this on a lack of promotional activity. Sales of John Smiths and Kronenbourg fell by 5 per cent, which Heineken said was in line with the declining beer market.

So with sacred cow being thrown into the fire it can be no surprise to anyone that the hard hit car manufacturer Toyota announced yesterday that they will be freezing pay and management bonuses at its UK operation in 2009, as well as setting in motion a voluntary severance programme for staff at their plants, near Derby as well as Deeside in Wales.

A Toyota spokesman said the company had agreed to voluntary redundancies in response to a request from union officials, but said it would still need other cost-cutting measures.

On the FTSE share trading appeared to be steady with mixed fortunes amongst the sectors.

Undisclosed information that Anglo American , the world’s fourth largest mining company and China Investment Corp. are in joint negotiations to acquire a considerable stakes in the Fortescue Metals Group Ltd, saw the company’s shares fall by 5.1 percent ( 65 pence to 1,222. )

On news that Royal Dutch Shell Plc’s Nambe Creek oil field in Nigeria came under attack, albeit unarmed, was enough to see their shares fall by three percent. (52 pence to 1,703.)

The largest U.K. sporting-goods retailer, Sports Direct International Plc reported that sales for the 13 weeks ending Jan. 25 had risen by 12 percent, this news was enough to cause share to remain unchanged at 58.75 pence.

Financial report

On trading Wednesday, the FTSE 250 index fell by 0.32% or 20.14 points to 6,225.63 while the FTSE 100 finished the session down by an insignificant 0.14 per cent, or 5.57 points, at 4,001.26

Sterling continued its steady climb against the dollar and the Euro and also rose slightly against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4368

Pound/Euro 1.346

Pound/Japanese Yen 134.60

Pound/Swiss Franc 1.6917

Wall Street shares had a good day on trading Wednesday

The Dow Jones Average rose 41.5 points to close at 7594.1 with NASDAQ also rising 13.62 points to 1484.28.

These steady increases are despite reports issued by the US Federal Reserve that production at the nation’s factories, mines and utilities fell 1.8 percent in January, with economists expecting a 1.5 percent decline. This fall marked the third straight month where production was cut back, although and December’s performance was reported to be weaker, plunging 2.4 percent.

Other report from the US Commerce Department this time relating to construction of new homes and apartments, announced that new starts had fallen 16.8 percent in January, to an annual rate of 466,000 units, a record low. While being a cause for concern, it seems that builders are cutting back on new home construction as home foreclosures continue to see a constant flow of cut price and ready for occupation properties hit a market that is already glutted.

Further indications that new house starts will continue to stagnate is a fall in applications for building permits by five percent in January.

With damage from the housing collapse piling ever higher, the White House on Wednesday said the government will spend $75 billion to help prevent millions of Americans from losing their homes.

Bank accounts

Related Websites

Tags: , , , , , ,

«
»