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Thursday's news and tips

Created:

9 October 2008

Written by:

Tanya Malick

■ Newsagent WH Smith delivered strong gains today as a 15% hike in full year underlying profit just beat market forecasts.

■ Care home operator Southern Cross expects full year adjusted EBITDA to be in line with previous guidance and said it is scheduled to resolve its debt finance with its banking syndicate by the end of October.

■ Oilfield services company Wood Group said its trading performance for the year to date has been strong and it expects growth to continue.

■ Construction and support services firm Carillion continues to expect strong progress in 2008 and to deliver materially enhanced earnings in 2009.

■ Zenith Hygiene, which provides and distributes cleaning products, has recommended a 12p per share cash offer.

Continues below...

■ Recruitment firm Robert Walters said it had performed satisfactorily in the third quarter, with net fee income up 6% from the same time last year.

■ Dublin based drinks group C&C reported a drop in first half profit and confirmed chief executive officer Maurice Pratt will resign after his strategy to boost sales failed to meet expectations.

■ Shares in Invocas fell sharply after the personal debt solutions provider warned half-year profits will be "significantly behind" last year while the outcome for the whole year could also miss expectations.

■ Pre-tax profit jumped almost 29% at wholesaler Booker during the first half, although the smoking ban continued to hurt the tobacco business.

■ Engineer Weir expects profits from continuing operations before intangibles to be slightly ahead of guidance thanks to foreign exchange benefits.

■ Insurer Aviva said is capital position remains strong in the face of the recent market turmoil, adding that it has protected itself against further falls in the equity markets through increased hedges.

■ Production for the nine months ended 30 September met expectations at Fresnillo and the Mexican silver miner and recent FTSE entrant is confident of hitting its 2008 production target.

■ Bakery chain Greggs has cut its full-year operating profit forecasts by some £3m following a period of slower sales growth and higher costs.

■ Recruitment firm Hays said the 10% net fee growth, 4% on a like-for-like basis, for the quarter to September represents a solid start to the year despite the increasing difficult economic environment.

■ Communications technology group Spirent has traded as predicted during the second half of the year.

■ Education and training specialist ILX Group expects interim results to be in line with forecasts but is aware the current business climate is uncertain.

■ IT services company Phoenix IT expects to increase pre-tax profit by 18% to around £13m after growth in all of its divisions.

■ Precision optical components maker Gooch & Housego said trading for the year to end September was in line with expectations, adding that it is well positioned to deliver its full potential.

FOR A SUMMARY OF LATEST MOVEMENTS IN EQUITY, COMMODITY AND CURRENCY MARKETS, SEE FT.COM'S MARKETS PAGE.

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NEWSPAPER SHARE TIPS (9 OCTOBER 2008)

Full round-up of newspaper share tips (sourced from Sharecast)

PRESS SUMMARY:

Pressure was mounting on Sir Fred Goodwin to resign as chief executive of Royal Bank of Scotland (RBS) last night as the bank prepares to tap the Government's £500 billion rescue fund. The Government is thought to be reluctant to consent to RBS's participation in the bailout unless the chief executive relinquishes his role, says the Times.

Asian central banks joined their western counterparts today in coordinated cuts to interest rates in an effort to curb the risk of the credit crisis sparking a severe global recession. Six of the world's most important central banks, including the Federal Reserve, the European Central Bank and the Bank of England, on Wednesday announced unprecedented simultaneous emergency interest rate cuts of half a percentage point, writes the FT.

One of Britain's biggest lenders withdrew some of its most popular mortgage deals last night after the Bank of England cut its base rate, reports the Times.

Anti-terrorism powers were used yesterday to recoup money owed to UK depositors in a failed Icelandic bank in a move that risked sending Britain's relations with Reykjavik to their lowest since the 1970s "cod wars". UK taxpayers are likely to pay out at least £2.4bn as part of a £4.6bn scheme to compensate hundreds of thousands of account holders at Landsbanki, the Icelandic lender, according to Whitehall sources, says the FT.

Dozens of local authorities are facing the prospect of losing hundreds of millions of pounds after it was revealed that many had sizeable deposits with the failed Icelandic banks Landsbanki and Kaupthing, according to the Independent.

The Telegraph adds that hundreds of British jobs are under threat after the Kaupthing, Singer and Friedlander, the UK division of Iceland's largest bank, was put into administration. Icelandic Prime Minister Geir Haarde last night refused to rule out the seizure of Kaupthing, saying it was "unlikely" but possible. This would put almost the entire Icelandic banking system under state control.

The City watchdog has insisted on vetting new bank directors, amid concerns that a lack of expertise in boardrooms contributed to the financial crisis. The Financial Services Authority (FSA) recently abandoned its rubber-stamping approach and insisted on face-to-face interviews with all new bank directors, the Times has learnt.

Amid the chaos that was sweeping across global markets yesterday, the UK's largest retail banks won an elusive sliver of good news in their long-running legal battle over overdraft charges. The High Court backed most lenders' arguments that fees levied over the past several years when customers exceeded their agreed account limits or bounced a cheque could not be classified as unlawful "penalty" charges, according to the FT.

Gordon Brown and Alistair Darling will begin an international drive today to persuade other countries to implement a British-style rescue package for their banks, writes the Independent.

The Federal Reserve is preparing to lend American International Group a further $37.8 billion just three weeks after the ailing insurance giant received an $85 billion US government loan to prevent it going bankrupt, reports the Times.

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