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Business News Updates – May 6th 2011

You will have probably heard that this April was the warmest April on record. It is alleged to have helped Next to increased sales for Q1, which were up 5.2% on the previous year. As a result profit expectations are set around £535m-£585m which by my maths is a margin of £50m (nearly 10% scope) but hey, it’s only £50m and about £15m more than previously forecast. I bet they wish that they also sold BBQ sets.

Unilever sales grew by 7% to €10.9bn in Q1 but I doubt that they put this down to the warmer weather and more people eating Walls ice cream and taking a bath or shower…would they? Of course not, this is a global business, a warm April in the UK is decidedly small beer on a global basis with only 25% of revenue derived from Western European markets. Sales is of course only one aspect of good news, profit is the real litmus test.

The Oil spike has of course helped the fortunes of the Oil giants. Take Royal Dutch Shell who have announced a 41% rise in net profits for Q1 of $6.9bn against $4.9bn a year ago. Exxon announced a massive 69% increase in profits for Q1 at a staggering $10.7bn. This is of course good news for those that hold shares in the company, but may be more of an irritant to those that merely fill up at a forecourt.

Keeping with the car theme, Chrysler Group LLC reported a net profit of $116m for Q1, compared with a net loss of $197m a year earlier, due to the success of its newer models and the overall recovery in global demand for vehicles which saw them shift 60,000 vehicles. This is its first quarterly profit since it emerged from bankruptcy protection two years ago. This will be a big boost to Fiat who have increased their stake in Chrysler.

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Business News Updates – May 6th 2011Dominic2023-12-01T12:51:22+00:00

Monthly Market Review

April was a good month for the Royal family and a good month for Oil. Those markets that saw the larger increases in value were Germany, Chile, Thailand, Korea. Russia has risen 14.5% in the year to date compared to the FTSE100 which has risen 2.9% over 4 months.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Monthly Market ReviewDominic2023-12-01T12:51:22+00:00

Tax should be Taxing, that’s actually the point.

Let’s be clear, tax avoidance is permitted, but tax evasion is not. We have all seen the way in which our National Debt has soared. In the current tax year many of us will experience some financial discomfort as result of tax increases and allowance reductions or restrictions. Perhaps it may be odd to say it, but I am not someone that thinks tax is a bad thing, although I would certainly suggest the amount, how the tax is raised and how it is spent needs an awful lot better thought and application. Indeed part of my job is to help clients reduce their tax bill – legitimately. Invariably the sort of tax avoidance that financial advisers like myself do are really a little bit of a gimmick to encourage people to save for their own benefit.

So I hope that I have been clear, I am in favour of tax and also in favour of avoiding tax. It sounds like a contradiction and it is in part. However, what I am not in favour of is tax dodging where multinationals effectively move money around from one tax haven to another in order to reduce their declared profit and as a result pay considerably less tax (if any). This damages poor countries by not remitting the revenue that they are rightly owed. This makes it harder for them to get out of poverty. It also damages our country. Indeed tax doding makes benefit fraudsters look like decidely small fry. As a result of lower tax revenues and the public finance commitments, more tax is needed for UK plc to cope, so the effect is (cuts aside) that more taxes are required, whether these are obvious or not. Politicians merely do there best to move the chairs around, we all know this, but it seems that it is rarely stated. I may be naive, but surely a better way to world peace is to ensure that we all prosper together.

I know of no reasonable person that deliberately makes efforts to keep the worlds poorest in poverty. A poverty that we are rarely exposed to, thankfully. However, unless reasonable people take action, fairly unreasonable things will continue. That is why I am involved with the Christian Aid “Trace the Tax Campaign“. I know that the world is a complex place, I know that we as investors are all seeking good returns and that we often hold shares within funds of companies that have some fairly nasty practices. I’m aware of my own hypocrisy’s. However I don’t think that doing nothing is an option. Have a look at the video and if you feel able, join the campaign. Its not about creating some sort of radical communist ideal, but about giving the poor a chance to get out of poverty and attain some dignity.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Tax should be Taxing, that’s actually the point.Dominic2023-12-01T12:51:23+00:00

Business News Updates 27th April 2011

There has been a flurry of banking news of late, much of it will not alter the general mood of a nation that is still pretty fed up with them. However Bank stocks often form a reasonable part of the main FTSE100 index (or the equivalent on a global basis). Barclays have announced a Q1 decline in profits when compared against 2010. They recorded a 9% fall in profit, predominantly due to declines in corporate and investment banking which fell by 29% to £983m. This must imply that the other sectors (which include retail banking to punters like you and I) made a profit increase of 11% and indeed the figures reveal retail and business banking pre-tax profit was up 21% to £692m. Swiss Bankers UBS also announced a reduced level of profit – down 18% on their 2010 Q1 figures, mind you it is still a fairly hefty £1.2bn of profit for 3 months.

Marketeers will be familiar with the term “Cash Cow” – well there really is a lot of money to be made in the milk business in Europe. There can be fierce rivalry between farmers, something often observed by those that live in the countryside (or who grew up there – as I did). Rivalry took on new scale as the French dairy firm Groupe Lactalis launched a £3bn takeover bid for Italian food group Parmalat (they already own 29% of Parmalat as it is). How this will impact food prices in the region remains to be seen. The French company collect nearly 10bn litres of milk and have a turnover of 9.4bn Euros. Plenty of va-va-voom in les vaches!

Cash cows are probably a thing of the past in the automotive industry, but Ford have managed to deliver their strongest Q1 figures for 13 years, achieving profit of £1.54bn. Ford have warned about getting carried away with this good news (if you are a Ford shareholder or employee) as like many car manufacturers, many parts within a car are made in Japan, as a result supply problems are obviously an issue at the moment. As a guide, Toyota’s Japanese production fell a massive 63% in March compared to March 2010. Even if 99% of a car is made elsewhere, the Tsunami and earthquake in Japan is having a growing economic ripple effect. One is left wondering if outsourcing really is such a good idea.

As we are thinking of Japan, another successful exporter has had problems. Nintendo have revealed reduced annual profits at £570m due to a fall in sales and strong Yen. This is a fall of 66% over the same period. Compare this against the mighty Apple, who have announced their Q1 figures at net profits of £3.6bn, more than they expected due to the continuing rise and rise of the iPhone, if you are techy enough listen to the release here. This is largely without any sales from the new iPad 2 which judging by the queues at various shopping centres will merely add more to the success that Apple enjoy.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Business News Updates 27th April 2011Dominic2023-12-01T12:51:25+00:00

Business News Updates – Small World

Tesco in China

There have been mixed results for UK retailers announced in the past few days. Supermarket giant Tesco announced pre-tax profits of £3.54bn for the 12 months to the end of February, this is an 11.3% increase on the same period for the previous year. Positive results have been accredited to expansion in Asia. There is a short video about Tesco in China here. When you consider all that Tesco now do, this is probably unsettling news for the Home Retail Group who own Argos and Homebase. They reported profits for 2010 of £265.2m which is a reduction of 10% on the previous year.

As if to prove that multinational companies have little observation of national boundaries, Deutsche Telekom and France Telecom have decided to work together on a joint venture to buy telecommunications equipment together. This alliance will save an estimated £1.15bn a year. Staying within the technology arena, Intel have announced record Q1 earnings of $12.8bn. Meanwhile Chinese Huawei, who make telecom equipment that presumably companies like Deutsche Telekom and France Telecom might buy, announced an increase in net profits to £2.23bn for 2010.

JP Morgan Chase announced Q1 net income of $5.6bn, compared to $3.3bn for the same period in 2010. Earnings per share rose to $1.28 from $0.74 (double) for the same period. Goldman Sachs 2010 results saw its net revenue reduce from $45.173bn to $39.161bn to the end of 2010, earnings per share reduced from $22.13 to $13.18.

So some Bankers are doing better than others… but the message to take home is that those firms doing business in Asia are seeing fruit.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Business News Updates – Small WorldDominic2023-12-01T12:51:27+00:00

Panning for Gold or Gold for a Panning?

1925: The Gold Rush – Charlie Chaplin

The financial pages are becoming awash with the news that Glencore is set to float on the London stock exchange. The floatation qualifies for fast-tracking and is expected to burst into the FTSE100 in early May. The company which is owned entirely by its managers and employees, had a turnover of $145bn in 2010. Its main activities are the production and marketing of commodities. Glencore are selling off something like 20% of their own shares. It is estimated that this “floatation” means that the company is worth in the region of $60bn. There’s about $11bn worth of the company up for grabs when it floats, that’s about £6.7bn making it the largest floatation in UK history.

Whatever you read over the coming days remember that a market exists to serve both buyers and sellers. The sale of £6.7bn of shares will make several of the key staff billionaires. A key question that is prompted then is “have commodity prices peaked? – hence the sell off?”

A word of caution – those that really made money in the American gold rush of the 1840’s were the ones selling the shovels. Remember that I’m not a stockbroker, so cannot and do not give advice about individual shares. So please do not call me to ask for an opinion on buying Glencore. What I can tell you is that it will end up in most portfolios by default due to fund managers simply having to hold the stock.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Panning for Gold or Gold for a Panning?Dominic2023-12-01T12:51:32+00:00

Business Updates

Forth Ports, the BAA of shipping in Scotland – indeed the largest port owner in Scotland, has accepted a takeover offer from its largest shareholder, an investment company Arcus Partners, who are buying Forth through the Arcus European Infrastructure Fund 1 for a magnate sized £760m.

It has been a poor start to the new financial year for Allied Irish Bank who posted a loss of £9bn in their preliminary results for 2010. The credit rating agencies, which, let’s face it, are not exactly covered in glory have downgraded AIB and placed the Bank on a negative watch list. At the end of last month, following the completion of stress tests on the bank (Prudential Capital Assessment Review or PCAR) the bank was required to raise a further 9.2bnEuros in addition to the 4.2bn deferred from February. That’s a lot of money and as we all know Ireland has some difficult economic decisions to make, having a bank repair its balance sheet rather than lending money to business is unlikely to help.

This is set in contrast to the Italian bank, Banca Monte dei Paschi di Siena, Italy’s third largest bank, who are raising £2.22bn of capital in preparation for their stress test, this resulted in credit agency Standard & Poor’s upgrading the bank’s credit rating. So not only is the bank set in one of Europe’s most beautiful cities, it is also attracting the right attention, by taking proactive measures.

Staying in Italy, Fiat yesterday announced that they are increasing its stake in the Chrysler Group from 25% to 30%. You may recall that the American car manufacturer based in Detroit filed for Chapter 11(Bankruptcy in English) in June 2009. Fiat was offered a deal for a stake in the company, which could rise to 51% if financial targets are achieved, although this can only happen once the US Government has been fully repaid. Fiat’s increased stake is good news for the United Auto Workers Voluntary Employee Beneficiary Association who have a 60% holding, the US Government owns 8% and the Canadian Government the balance of 2%. Fiat will sell Chrysler cars under its own Fiat badge in Europe and Brazil.

This leads neatly onto the news that the Brazil is benefitting from its relationship with the Chinese, its largest trading partner and foreign investor (one to watch for emerging market funds). Chinese Airlines have placed orders for 20 planes, plus an option to buy 15 more aircraft, in a deal worth £861m with Embraer, (who really are “for the journey”) the Brazilian aircraft manufacturer.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Business UpdatesDominic2023-12-01T12:51:33+00:00

Business News – Gas, Banks and Transport

Qatar Lessons

British Gas who are now significantly more than a gas company, reported a 24% jump in profits to a record £742m for 2010. It would be too easy to put this down to a cold winter and high fuel prices given the diversity of their business. Meanwhile, operating profits at its parent company, Centrica, rose 29% to £2.3bn, also a record; Centrica has also signed a three-year deal with Qatargas to supply the UK with 2.4m tonnes a year of liquefied natural gas, in a deal worth £2bn.

Banks Repairing Balance Sheets

As mentioned previously in this blog Lloyds reported a pre-tax profit of £2.21bn for 2010 compared to a £6.3bn loss the year before, its first profit since it was bailed out by the government in 2009. Other banks have announced their results too and all seem to be making considerable improvements and getting their houses in order. HSBC also saw a positive return for 2010, as it announced a pretax profit of £12bn, almost double the previous year. Meanwhile RBS reported a net loss of £1.1bn in 2010, compared to a loss of £3.6bn in 2009. You can watch Stephen Hester Group CEO discuss the improvements being made by clicking here. Barclays has agreed to purchase 1.2 m U.K. accounts from Egg credit card that is owned by Citigroup, in a deal valued at £2.3bn, as the New York based bank seeks to repay bailout monies from the US government.

Transport – Ready to Go

Cargo and freight also hit the news with Boeing winning a contract from the US Air Force, to replace its fleet of refuelling planes, in a deal worth £22bn; this follows a long dispute with EADS who had originally won the contract.

Other cargo news was that despite a fall in trade and shipping in 2009, AP Moller-Maersk reported its best results ever with net profit of £3.19bn for 2010 against a loss £623m the year before; the Danish shipping container firm warned however that profits for 2011 will not be as good due to uncertain freight rates and the price of oil.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Business News – Gas, Banks and TransportDominic2023-12-01T12:51:59+00:00

Lloyds TSB – back in the black

Lloyds TSB published their 2010 figures today. The key pieces of information are that they returned to profitability – with group profit of £2,212m compared to a £6,300m loss in the previous year. The year really marked a strengthening of their balance sheet (something that we all knew was going on – calling in loans and reducing lending). They term this as “good progress” to reduce “non-core assets” by £105bn and believe that they are on track to achieve the £200bn target over the next three years.

Behind the numbers are the results of Scottish Widows and Clerical Medical who achieved increasing profits which rose 11% and also note that new business has also increased. So those pensions have been selling like… well, er.. pensions.

The numbers are enormous. Perhaps the announcement that they will set aside £500m to meet goodwill payments as a result of Halifax messing up numerous mortgages between 2004-2007 will provide a little comfort to those with Halifax mortgages – this follows a voluntary agreement with the FSA over the review of numerous Halifax mortgages. I do feel a little sorry for the group who have been landed with one “hospital pass” after another – mind you, in 2008 the Lloyds TSB Board failed to notice the problems with HBOS fully and probably wish they had avoided the entire mess. Here is what Mr Daniels had to say in September 2008 when the merger between HBOS and Lloyds TSB, something about which is pretty difficult to find in the investor/media press releases via the lloyds TSB webste. You may remember that he said of HBOS..”We spent a lot of time over the last couple of days getting to know the business…. we think we understand pretty well the risks that we are running”.. anyone convinced?

The BBC website still carries the interview and of course the previous Prime Minister, one Gordon Brown.. remember him? thought it was “the right thing to be doing”. Ah the benefit of hindsight…I’m reminded of that adage about Angels treading carefully….

I don’t wish to be alarmist, but 24 hours after the Lloyds TSB announement of the £12bn HBOS deal, shares in Lloyds TSB closed at £2.375 on Thursday 18 September 2008. Today they are trading around £0.62, on this day in 2008 shares in Lloyds TSB closed at £4.665, whilst these have been “very difficult times” for Banks, it will be interesting to see how much the top dog at the Black Horse will get remunerated this year for bringing them back into profit… albeit with shareholdings nursing an 87% discount of the price they were at just 3 years ago, but hey, who’s counting?…oh… all of us!

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Lloyds TSB – back in the blackDominic2023-12-01T12:52:01+00:00

Business News Updates

Rolls-Royce stated that the one-off cost from the mid-air failure of one of its engines last year contributed to the 76% fall in pre-tax profits to £702m in 2010 from £2.96bn the year before. The firm has announced a £1.4bn service contract with Emirates covering its Trent engines.

Barclays’ pre-tax profits reached £6.07bn in 2010, up from £4.49bn in 2009; the group’s underlying profits for the year rose by 11% to £5.67bn.

Household goods giant Reckitt Benckiser, producers of Cillit Bang and Gaviscon brands, announced a 13% rise in pre-tax profits to £2.1bn in 2010, with sales up 9% to £8.5bn thanks to strong growth in developing markets.

Electricite de France (EDF), Europe’s largest energy provider, revealed a 74% drop in net profits to £857m last year, down from £3.26bn in 2009, as a result of falls in demand.

US biotech company Genzyme is to be bought by French pharmaceutical group Sanofi-Aventis in a £12.4bn deal, which will allow the French firm access to the market in drugs that treat rare diseases.

Net profits for the world’s biggest mining firm BHP Billiton rose by 72% to a record £6.5bn for the six months to the end of December, as a result of higher prices and strong demand.

Rio Tinto reported net profits of £8.9bn for 2010, up from £3.05bn in 2009, due to rising commodity prices and strong growth in emerging markets.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Business News UpdatesDominic2023-12-01T12:52:05+00:00