Fears are growing that J Sainsbury will accompany next week’s interim figures with a highly
Posted in General on 18. Aug, 2010
Fears are growing that J Sainsbury will accompany next week’s interim figures with a highly competitive promotional campaign, a belated response to Tesco’s so- called New Deal Pricing, which materialised last month.
Worries of another profit margins crunch prompted Nick Bubb, an analyst with Morgan Stanley, to reduce his current year’s Sainsbury forecast by pounds 20m to pounds 770m and next year’s by pounds 30m to pounds 820m.He has moved his recommendation from hold to sell; Kwik Save, due to report final results next week, suffered the same fate, with the forecast reduced from pounds 135m to pounds 127m.Mr Bubb believes the already hard-pressed industry has had a difficult month, with the Tesco initiative creating considerable strain.He is, at least for the time being, holding his Tesco forecast at pounds 580m and Asda at pounds 220m.Supermarkets have had a rough time as low inflation and fierce competition have eroded margins. London Northern Bus, which has a turnover of pounds 27.5m, employs more than 1,000 people and operates 320 buses in Barnet, Camden and South Hertfordshire.The bus and coach operators Stagecoach and Go-Ahead have also bought a London franchise each.. Smaller operations, owned by management teams that bought them out of local authority control, are also likely to be bought by the bigger operators.The MTH deal marks the first acquisition the Liverpool- based company has made outside the North-west.The acquisition will increase its turnover to pounds 90m, and give MTH a 1,620 bus fleet. Merseyside Transport Holdings has paid pounds 20.5m for one of the 10 London Buses companies being privatised, writes Russell Hotten. The purchase of London Northern Bus marks the seventh London operation to be sold into private hands, and secures MTH’s position as Britain’s fifth-largest bus company.
The sale takes the proceeds raised from the privatisation of the London Buses divisions over the pounds 150m mark, Steven Norris, Minister for Transport in London, said yesterday.The 10 London bus companies had a turnover of pounds 440m.The remaining three companies are expected to be sold by the end of the year.Over the next two years most of the remaining 21 local authority-owned bus operations will also be privatised. He will be replaced on 1 November by Richard Parham, currently assistant managing director.
Analysts were surprised by yesterday’s announcement, but one said that Mr Whalen’s task of transforming the company was largely complete and he ‘could leave while he was ahead’.Mr Whalen said he was talking to several companies about future employment, but this would not necessarily be in the car industry.. Geoffrey Whalen, 58, the Coventry-based company’s deputy chairman and a high- profile spokesman for the motor industry, said he wanted to take on new challenges before he grew too old.
The man credited with turning Peugeot Talbot from a car industry joke into one of Britain’s most successful companies is stepping down, writes Russell Hotten. ‘There should be plenty of life left in the cycle,’ the company said.Cost-cutting contributed to the record US profit, Mr McCammon said, ‘but volume was the big driver here’.. But while the company picked up some market share in Europe during the quarter – to 12.7 per cent from 12.5 per cent – its sales here continue to be below trend and ’still have a long way to go’.Ford has not made a profit in Europe since 1990, when it earned dollars 145m.In the US, Ford expects sales to remain healthy at least to the end of the year. But the company’s continuing improvement could be hindered by threats of industrial unrest after workers rejected a pay offer against the advice of their unions.Ford’s third-quarter earnings were a record thanks to large sales volumes in the US and a return to profitability in Europe.The results were above forecasts by industry analysts, but Ford’s share price was unchanged on the news, having risen steadily since its Detroit rivals reported unexpectedly large profits a week ago.Ford’s worldwide car-making operations accounted for dollars 600m of the profit, dollars 578m of that from the US.For the year, Ford is now expected to make money in Europe, Mr McCammon said. He did not think its results were bad, given the fact that it launched a new model in the third quarter and had costs to lower inventories of its old model.He was encouraged by the reception new Jaguar models had received in the US.’If we continue to see growth in major markets, we could see a turnaround very soon.’Jaguar is hoping to get a multi-million-pound grant package from the Government to keep production of a new model in Britain.
Ford reported earlier that in the third quarter Jaguar had an operating loss of dollars 53m against dollars 108m.Ford itself made dollars 1.12bn on worldwide sales of dollars 30.6bn during the summer quarter, compared with dollars 463m on sales of dollars 24.6bn a year ago.Mr McCammon said Jaguar continued to improve. Ford, which bought Jaguar in 1989 for pounds 1.56bn, said yesterday that its luxury subsidiary was on course to make annual profits next year after losses totalling pounds 776m from 1989 to 1993.
David McCammon, Ford’s president and treasurer, said Jaguar was going to see a turnaround in profitability in the fourth quarter. Jaguar, which has made losses in the last six years, is expected to return to profit in the fourth quarter on the back of strong US sales. He said there would be further price changes in 1995 to reflect the cost of transporting gas. The result would be regional variations in prices of plus or minus 2 per cent. Mr Giordano said it was impossible to say how many losers there would be.(Photograph omitted). London’s Docklands Light Railway is to be privatised, the Environment Secretary, John Gummer, announced yesterday.
The first stage in the process, a franchising of the operation to a private sector company, will take place in 1996, with a full transfer to the private sector seven years later.
As part of the ‘private finance initiative’, the Government is also seeking tenders to build an extension of the railway from the Isle of Dogs under the Thames to Lewisham.Answering a written parliamentary question, Mr Gummer said: ‘Through privatisation the Government aims to ensure that the DLR will continue to develop as a highly efficient, customer-oriented and market-driven passenger service to Docklands, with reduced dependence on public subsidy.’Since its completion in the late 1980s the DLR has suffered a series of breakdowns and has struggled to cope with the numbers of passengers.It was designed in the early 1980s when plans for the Docklands enterprise zone were focused on light industrial buildings, not the high-density office developments that emerged after the intervention of Olympia & York, the property company of the Canadian Reichmann Brothers.Ever since it opened, evening and weekend services have been disrupted to enable the line to be upgraded to take more traffic.The inadequacy of the railway is often cited as a reason for the problems offices in Docklands have had in attracting tenants.. It is likely that some sort of levy on all suppliers will be introduced to compensate any company left with a disproportionate share of less lucrative customers, including those with difficulty in paying bills.Richard Giordano, British Gas chairman, earlier told the committee that the company plans to clamp down on almost six million customers who fail to pay their bills on time, through price increases at the end of this year.Mr Giordano said the company would impose price increases for all domestic consumers, roughly in line with inflation but would also introduce discounts for those who pay by direct debit. There is speculation that if the Cabinet makes time for gas it will not go ahead with privatisation of the Post Office.Mr Eggar said that the new gas supply licences would ensure that rivals, including North Sea producers and electricity firms, would bear the same social and universal service obligations as British Gas. However, he said the Government believed that any delay in competition was undesirable.
He said he intended to produce draft licences for new suppliers at the same time as a bill, ‘assuming the right words are in the Queen’s Speech’.He said later that any delay would be due to lack of parliamentary time rather than opposition within government. A year later it will be extended to cover two million customers in one or more areas, with full competition for 18 million households introduced by the end of 1998.
Speaking before the House of Commons Trade and Industry Select Committee, Mr Eggar refused to say whether the legislation would be introduced in the next session of Parliament. The Government is expected to forge ahead with legislation for competition in the domestic gas market in 1996, and a decision could be made by the Cabinet today. Tim Eggar, Minister for Industry and Energy, said that competition would first be introduced in April 1996 in an area the size of a large city or a county, serving about 500,000 gas customers. Names will have to pay a premium for letters of credit and excess of loss insurance policies.Citibank expects the scheme to be approved by Lloyd’s regulatory board next week.. These allow names to pool their investments and spread their underwriting across a wide range of syndicates in a similar way to unit trusts.Patrick Hanratty, of Citibank, said: ‘There is a trade- off between limited liability and investment return. Who knows what disasters lie around the corner? For many the extra return will not be worth the risk from unlimited liability.’Citibank expects set-up costs to be pounds 300 per Nameco, with annual administration charges of pounds 500.