Virgin demonstrates that forward planning brings profit

May 27th, 2009 by admin | Filed under Daily News, Recession, Stocks and shares.

stocksandshares1 Officials at BA as well as most of all the major carriers must be scratching their heads in disbelief and asking themselves” How did they manage to do that?” The “they” in question are Virgin Atlantic, who has just announced that they have made a substantial profit for their financial year to the end of February. A spokesman for Virgin announced that the company’s results had been aided by a by a rise in premium fare passenger traffic and more substantially by Virgin having the foresight to pre-purchase their fuel and therefore not falling victim to price fluctuations which saw oil rise to $147 a barrel during the financial year.

Group turnover, including input from the tour operation offshoot, Virgin Holidays, increased by 8.4% to £2.579billion from £2.38billion in the previous financial year. Annual pre-tax profits for Virgin Airlines reached £68.4milion compared to £34.8million in the 2007/2008 financial year.

The political manoeuvring regarding the uncertain future of the GM owned car manufacturers has become hot enough that UK business secretary. Lord Mandelson, has seen fit to intervene, Mandelson announced that the UK government’s commitment to all of Vauxhall’s plants should be regarded as clear.

Producer of frozen Yorkshire puddings as well as a variety of ready- made foods Greencore, have announced that they will “rebasing” their dividend that will see it drop by 50 per cent of earnings per share this year for the half-year to March, Greencore announced a pre-tax loss of £23.8million compared with a profit of £19.8million the previous year, on revenue that fell 15 per cent to £450 million. Greencore’s swing from profit to loss was caused by restructuring costs.

As the FTSE returned to work after the holiday weekend, consumers favourite, Tesco led a rally in consumer-related shares, climbing 3.5 percent to 363.3 pence. Sainsburys, the U.K.’s third-largest supermarket chain, increased 1.8 percent to 318.5 pence. The world’s largest catering company Compass Group Plc rallied 2.3 percent to close on 369.25 pence.

Bank shares did less well with Royal Bank of Scotland declining 1.7 percent to 40.2 pence, while Lloyds dropped by 2.6 percent to 66.8 pence. The declines were largely due to the reports that they reputedly made to the U.K. treasury that they are liable to fail to meet the lending targets set this year which were a condition of receiving further financial support.

All in all, shares on the FTSE made a minor recovery after heavy falls before the holiday weekend and early falls as the market opened. The U.K. FTSE 100 index rose 46.43 points, to close at 4,411.72, and the FTSE250 closed on 7,530.02 down 11 points from Friday. The pound was almost static against the dollar yesterday, and rose sharply against the Euro as well as the Yen and the Swiss Franc.

· Pound/US dollar 1.5938
· Pound/Euro 1.1433
· Pound/Japanese Yen 152.3512
· Pound/Swiss Franc 1.735

In New York, U.S. stocks surged, with a sharp rise in consumer confidence to its highest level since September last year, despite a further fall in house prices.

Optimism soared as the dollar recovered some ground against the euro on Tuesday, pulling away from a five-month low.

The Dow Jones closed on Tuesday on 8473.49 surging a massive 196.17 points on the day, while the NASDAQ climbed 71.8 points to 1750.43

General Motors continues to struggle to find respite from possible chapter 11. The company announced that they have failed to persuade sufficient bondholders to accept a debt-for-equity swap, setting the stage for what looks like being the USA’s largest-ever industrial bankruptcy. Final decision on the tender offer has to be made by midnight Wednesday.

Fast growing internet based social network, Facebook announced on Tuesday that they had accepted a $200million investment offer from a, a private Russian internet investment group Digital Sky Technologies. The, 1.96% equity stake investment, gives Facebook a preferred stock valuation of $10billion. There must have been few smiles at Microsoft, who paid $240million for the same 1.96% equity stake as recently as 18 months ago.

In Europe, the announcement that French and German consumers are keeping up their spending in the face of the severe recession has provided some comfort to investors, with this latest evidence suggesting that the sharp contraction in European industrial production has yet to filter through to the broader economy.
Consumer spending in the sixteen member eurozone has been helped along by government measures that allow companies to maintain labour levels, as well as encouraging consumer spending, particularly on new cars.