PRESS TIPS:
Contracting firm Balfour Beatty is on the slow road to recovery, despite the dismal state of the UK construction industry, reckons Tempus in The Times. Its results were in line and are expected to remain that way for the full year.
A £258 million reduction in net cash from £292 million to £34 million during the period is more than a little unnerving, but is explained away as the result of changes to the group's construction contracts and supply chain payment terms. Balfour Beatty said that the cash reduction was about capitalising the group to deliver workloads that would deliver profits. Investors should be reassured, Tempus asserts, that it has increased its interim divided by 6 per cent to 5.6p a share. Balfour Beatty is doing as well as can be expected in a tough environment. Hold, is the recommendation of the tipster from The Times (Last IC rating: Buy, 15 Aug).
Mining royalties company Anglo Pacific Group had a difficult first quarter. However, things were much better in the second three months, notes Questor in the Daily Telegraph.
In the first quarter of 2012 royalty income plunged to £1.5m from £9.9m in the same period last year. This was caused by problems at Kestrel, Rio Tinto's coking and thermal coal mine in Australia, from which Anglo gets the majority of its royalty income at the moment. However, things got back to normal in the second quarter. The shares have fallen 10 per cent since Questor last said buy in May at 278.1p as mining sentiment waned. Yielding 4.1 per cent, Questor maintains the buy rating on Anglo (Last IC rating: Buy, 14 Aug).
Building materials groups are among the first to suffer when things get tough, Lex in the Financial Times (FT) notes. The global downturn has not been uniform however. While there are fewer cranes on the European skyline, half-year results this week from Swiss group Holcim (No recent IC rating) and CRH of Ireland (Last IC rating: Sell, 14 Aug) show their Americas operations pumping. The same goes for Holcim in emerging markets. Both companies have been in cost cutting mode, but things could slow further. CRH shares fell 7.5 per cent on Tuesday after it said sales in Europe could fall harder in the second half, and slow in the Americas. Holcim's also edged lower. Yet both trade at 14 times forecast 2013 earnings, a premium to peers. Prudent responses to the downturn still count for something, Lex concludes.
Business press headlines:
Standard Chartered was attacked by one of the top lawyers in the City last night for agreeing a quick settlement of the money-laundering allegations that threatened to destroy the bank and warned that it could be forced to pay out billions more before it can properly settle the scandal.
[…] City observers with experience of Wall Street say the deal may ramp up the appetite of the other watchdogs for greater amounts of blood, with the more senior regulators unlikely to settle for less than Standard Chartered paid to the DFS over allegations that it violated US laws in $250bn worth of trades with Iran. Although the bank's shares jumped on investor relief that the issue may be resolved quickly, experienced City lawyers warn otherwise. [The Independent]
A senior Bank of England policymaker said quantitative easing was a better way of kickstarting the economy than further interest rate cuts. On a visit to Northern Ireland, monetary policy committee (MPC) member Paul Fisher told the Belfast Telegraph: "If we thought [rate cuts] would add more stimulus we would do it but asset purchase through quantitative easing is a more powerful way of aiding the economy … but we're keeping that under review."
His comments came as minutes of the MPC's last meeting a fortnight ago showed that it had voted unanimously to keep its interest rate at 0.5 per cent and its quantitative easing (QE) programme unchanged at £375m. Despite the unanimous vote on QE, the minutes point to a continued split on the committee. [The Guardian]
George Osborne has been urged to abandon his austerity plans and boost infrastructure spending to rescue the economy by a group of top economists who backed his deficit cutting plans just two years ago. The revolt by the same experts whose support for the Tory economic strategy was a pivotal moment in the pre-election debate in 2010 will be acutely embarrassing for the Chancellor. He is already facing calls from institutions such as the International Monetary Fund and employers body the CBI to take action on growth in the wake of the double-dip recession. [The Telegraph]
Brazil's president Dilma Rousseff has launched a R$133bn ($65.6bn) stimulus package to spur investment in the country's creaking infrastructure and shore up ailing investor confidence in the world's second-largest emerging market economy. In the first of what are expected to be a series of announcements in the coming weeks, Ms Rousseff said the government would sell concessions in nine highways and 12 railways before moving onto other areas of infrastructure. [Financial Times]
A majority stake in world's largest photography and video agency has been sold for $3.3 billion to the Carlyle Group. Getty Images, which supplies images to media companies and advertising groups, said that the sale would enable it to develop its operations and invest in new technologies, such as 3-D pictures. The purchase price is significantly lower than the $4 billion that the previous private equity owner, Hellman & Friedman, is said to have been seeking. However, sources familiar with the deal said that the buyout firm had managed to double its investment in the four years since it acquired Getty. [The Times]
Reed Elsevier, the Anglo-Dutch legal and scientific publisher, has picked Duncan Palmer, chief financial officer of Owens Corning, to replace its long-serving finance director, Mark Armour, according to people familiar with the decision. Under pressure from investors over lacklustre growth, Reed announced last October that Mr Armour would step down at the end of this year. It is set to announce on Thursday that Mr Palmer will join the company as chief financial officer designate this month and take over from Mr Armour in November. [Financial Times]
