At 2.8 per cent Greene King on Monday reported what for many retailers would be an enviable rate of like-for-like sales growth over the past six weeks. Within the tenanted pubs, the performance was more pedestrian. But average earnings per pub were up by 4.2 per cent over the 36 weeks since the April start of the financial year, helped by the continuing sale of underperforming sites, 65 in the financial year to date. The shares have been strong performers since the spring and sell on a justified premium to the sector. But the outlook for any business reliant on discretionary consumer spending cannot be encouraging; on about 11.6 times' this year's earnings, there does not seem to be any reason to buy for the short term, The Times' Tempus column says (Last IC rating: Buy, 4 Dec).
The sale of Cable & Wireless Communications' Macau operation, for the equivalent of £465 m, means the company has raised £887m from disposals, including the sale of the Monaco and Islands business last month. Furthermore, another $345m will come if the rest of Monaco is sold, though this is by no means certain. The question is what the company plans on doing with the money. As well, although the company has already indicated that the dividend for the year to the end of March will be halved to four cents, this still provides the shares with the support of a dividend yield of above 6 per cent. In any case, the main attraction is the belief that, in its tidied-up form, and with a clear focus in Panama and the Carribean, Cable & Wireless Communications will also attract the attention of a purchaser, Tempus says (Last IC rating: Hold, 8 Nov).
Waste management group Shanks has finally signed its £750m, 25-year contract with Wakefield council. This is a strategic success for the company as it aims to increase its exposure to the UK and win better quality contracts, with returns linked to rises in inflation. Shanks processes waste in the UK and in Europe's Benelux region. The majority of its earnings are generated in continental Europe, but this is expected to change over the next few years as its UK investments increase. Shanks' market backdrop is challenging, but the group continues to position itself well. The shares are trading on a March 2013 multiple of 19.2, falling to 14.2 then 11.2 over the next two years. The prospective yield is 3.8 per cent and the shares remain a buy for future growth in a market that is underpinned by regulation, The Telegraph's Questor team says (Last IC rating: Sell, 9 Nov).
Business press headlines:
HMV, the high-street music and DVD store, is set to collapse into administration today, putting 4,000 jobs at risk. The looming failure of the entertainment chain, which was founded in 1921 and has 235 stores, emerged tonight as directors held a last-ditch meeting after failing to reach a new deal with the company's banks. HMV has been battered by the rise of digital downloads and the flight of physical DVD and CD sales to the internet. [The Times]
George Osborne is facing pressure to take action in the Budget on bank bonuses after it emerged that Goldman Sachs is considering delaying big payouts to UK staff until after the 50p top rate of tax is abolished in April. The bank is looking at pushing back the payout date for deferred bonuses awarded in shares in 2009, 2010 and 2011 until after April 6 when the top rate of income tax drops to 45p. This mirrors behaviour at the turn of the the year, when Goldman Sachs organised payments to staff on the US on December 31, amid fears the fiscal cliff negotiations would rise personal taxation rates. [The Times]
US regulators on Monday night ordered JP Morgan to improve its control functions after multimillion-dollar losses on trading positions. After the losses, which eventually reached $6bn (£3.7bn), were first announced by the US bank in May, it became known as the "London Whale" incident and was said to have taken place in a trading operation known as the bank's "chief investment office"(CIO).
The Financial Services Authority said it had referred the matter to its enforcement division as regulators in the US ordered the Wall Street bank to strengthen its internal systems and controls. The FSA, the City regulator, said: "In addition to its extensive supervisory agenda, the FSA is continuing to conduct a formal enforcement investigation into the trading losses. Conclusions will be reached in the enforcement investigation in due course and any further appropriate action determined at that time". [The Guardian]
Up to 1,000 independent forecourts could be "wiped out" by 2017 as they lose custom to new supermarket petrol stations, the Petrol Retailers' Association (PRA) has warned. An average of 40 super-market forecourts were granted planning permission each year since 2009, a study by Christie & Co on behalf of the trade body found. Steve Rodell, head of retail at Christie & Co, said: "If applications continue at the same rate, and there is no reason to believe that will not be the case, there will be another 160 supermarket sites by the end of 2016." [The Telegraph]
The European Commission has concluded that China is providing illegal subsidies to its steel manufacturers, paving the way for European companies to seek higher import tariffs on a wide range of Chinese products. The EU executive arm said Beijing was helping makers of organic coated steel - used in construction and to make household appliances - to obtain materials at below market prices, according to a report obtained by the Financial Times. [Financial Times]
An influential cross-party committee of MPs accused the Government of environmental hypocrisy for refusing to push for a moratorium on drilling for oil and gas in the Arctic. Two weeks after Shell reignited concerns about the safety of Arctic exploration when its offshore Alaskan rig Kulluk ran aground, the Government rejected a call by the Environmental Audit Committee for a blanket ban on drilling around the North Pole. Joan Walley, who chairs the committee, said: "A few years ago the Prime Minister rode with huskies in the Arctic to demonstrate his commitment on environmental issues, but now he is being asked to protect that pristine wilderness for real he has refused to take a lead on the issue." [The Independent]
Abu Dhabi's national oil company has set a North Sea record by delivering first oil from the Cormorant East field to the east of Shetland just 85 days after it was discovered. Taqa Bratani operates the Cormorant East well and the nearby North Cormorant platform, from where the oil will be pumped to the Sullom Voe terminal on Shetland. The discovery was made in October and its name was subsequently changed from the Contender exploration well to the Cormorant East production well. Taqa entered the British sector of the North Sea in 2009 after buying assets from BP, including the Brent system, which delivers oil from 20 fields to Sullom Voe. [The Scotsman]
