![]()
The continued pressure on UK households will be highlighted this week when inflation figures for July are released by the Office for National Statistics.
Inflation is set to show a rise to around 4.4% on Tuesday after a short-lived decline in the rate to 4.2% in the previous month’s figures.
The increase for July is part of a trend that the Bank of England expects will see inflation reach 5% by the end of the year as steep rises in electricity and gas prices come into effect.
With the UK facing a period of continued sluggish growth, the Bank then expects inflation to fall below the 2% target to 1.8% in two years time, particularly as the impact of this year’s VAT increase falls out.
Tuesday’s figures will be closely watched by rail travellers as July’s Retail Price Index (RPI) number, which unlike CPI also includes housing costs, is the basis on which rail fares for next year are based.
The formula is RPI plus 3% and it sets the price for regulated fares which includes season tickets. RPI is set to remain at around 5%.
The bigger-than-expected fall in last month’s figure reflected retailers cutting prices in response to the tightening squeeze on household incomes.
While there has been little respite on the high street, the comparative figure for July 2010 was weak and will force up this year’s rate.
Victoria Cadman, an economist at Investec Securities, says lower food and petrol prices will limit the rise this month, with recent data from the British Retail Consortium showing prices fell by 0.6% in July from June.
Oil prices have also fallen, with some of the main supermarkets cutting their forecourt prices, while motoring organisation the AA indicated prices of both petrol and diesel had eased a little.
If the figures come in as expected, July will be the 20th month running that CPI will have missed the Bank of England’s target of 2%.
Construction giant Balfour Beatty has completed some big projects in the first half of 2011, including the aquatic centre for the 2012 Olympics and the Hindhead tunnel on the A3.
And in March it said it had done a good job replacing that work as its order book stood at a record of ?15.2 billion.
Other major projects include the rebuilding of Blackfriars station in London, road widening work on the M25 and terminal 2B at Heathrow airport.
The group has also moved heavily into renewable energy with the group winning the contracts to build and operate the transmission systems for several new offshore windfarm projects, including Greater Gabbard, off the coast of Suffolk.
Orders are likely to be higher when it reveals its interim figures on Wednesday, helped by the inclusion of US acquisition Howard S Wright, However, with construction work likely to slow in the UK over the next six months the underlying position will be keenly watched.
A trading statement last month indicated the UK had been resilient, but economic news since then has been poor both in the UK, which accounts for half of its business, and also overseas, especially in the US.
City forecasts are for the group to make profits of ?330 million, up from ?319 million, in the full year to December, with the bulk of that to be generated in the second six months.
In the first half of 2010, Balfour posted profits of ?133 million on sales of ?5.1 billion but analysts suggest the split this year could be 40/60 in favour of the second half, pointing to flat half year profits.
Shares in Exeter-based airline Flybe have tumbled since a warning in May that trading had been hit by high oil prices, the weak economy and severe weather conditions.
Flybe, which flies from airports including Birmingham, Bristol, Cardiff, Doncaster, Edinburgh and East Midlands, said while business travel, which makes up 45% of its passengers, was resilient, the number of passengers flying on holiday or to visit friends and family had dropped.
The airline, which joined the stock market in December, added a ?3 fuel surcharge per passenger to combat soaring fuel costs but eventually posted a pre-tax loss of ?4.3 million, as the additional impact of volcanic ash cloud and winter freeze all helped wipe out underlying profits of ?22 million.
Brokers expect the group to be more upbeat with its trading update on Wednesday.
It has completed the acquisition of Finnish Commuter Airlines, in partnership with Finnair, Finland’s flag carrier. Flybe will take a 60% stake in the joint venture, to be known as Flybe Nordic, while Finnair will hold the remaining 40% stake.
Oil prices have started to come down following the economic turmoil in the US and elsewhere, though the group had already hedged four-fifths of its requirements for 2012.
In June, Flybe, which carried 7.2 million passengers last year, said forward ticket sales revenue was 8.4% up year-on-year on broadly flat capacity and added it expected a profit for the current year similar to the ?22 million underlying profit made in 2010/11.
Broker forecasts are for full-year profits of between ?22.9 million and ?25.3 million.
The impact of the hugely successful final film in the Harry Potter series will be the talking point when cinema owner Cineworld reveals interim figures next week, even though it was released after the period ended.
Harry Potter and the Deathly Hallows: Part 2 was the biggest grossing global film opening in history and played to packed cinemas across the country.
That should translate into good news for Cineworld, especially as a string of other potentially big hitting film launches have followed, including Transformers: dark of the Moon, Cars 2 and the yet to be released Puss in Boots and Tintin.
The final Harry Potter instalment was also released in 3D, a format which commands higher prices but also boosts the cinema’s revenues as customers buy special glasses. Audiences for 3D films also tend to be younger and spend more money on food and drink.
Cineworld has already revealed box office takings recovered over the first six months of 2011 thanks to a strong run of 3D films, including the latest in the Pirates of the Caribbean series and The Hangover part two.
The group, which runs 78 sites including four out of the ten highest grossing cinemas in the UK, said box office revenues rose 1.1% in the 26 weeks to June 30, a near 9% pick up from the same six months in 2010.
Cineworld also said the strong line-up of upcoming films meant it was confident of meeting City expectations for the full year for a 5% rise in revenues to about ?360 million. Consensus broker forecasts are for underlying profits for the full year of about ?63 million.
Pennon is one of only three major water suppliers still independent after the recent acquisition of Northumbrian Water by a Hong Kong-based consortium.
The company, which supplies Devon, Cornwall and parts of Somerset and Dorset through South West Water, is also seen as a potential takeover target by many in the City, especially with the good recent performances of Viridor, its non-regulated waste division.
Viridor has recently started to move from landfill into the energy-from-waste (EfW) power market. The group has earmarked six EfW projects over the next four years, which broker JP Morgan estimates could add two-thirds to earnings if they all go to plan.
The division, which already runs the Lakeside EfW plant near Heathrow, recently signed a deal to handle 60,000 tonnes of Devon’s residual municipal waste at a new plant in Exeter, a project that will involve a capital investment of ?45.6 million.
Brokers expect Tuesday’s trading update to be brief and to confirm that South West Water is meeting regulatory obligations and that Viridor is on track to produce growth in profits before tax.
In May, South-West Water told its customers it did not expect to enforce a hosepipe ban this summer. The group has developed two disused china clay pits, known as Park and Stannon Lakes, in Cornwall to help maintain supplies.
The company also met its annual leakage target last year, as set by industry regulator Ofwat, despite severe weather in December which burst pipes across the region.
In the year to last March, Pennon reported a 1.5% increase in pre-tax profits to ?188.5 million, boosted by waste management arm Viridor, as South West Water posted a 0.5% decline in profits to ?189.8 million.
Car dealership Lookers has leant heavily on its parts and after-sales business to weather the impact of the economic downturn on new car sales.
The group, which operates 124 showrooms selling marques such as Ford, Vauxhall, Nissan and Toyota, has had to deal with a new car market that has fallen by more than 18% in the first six months of 2011.
Lookers has also faced a takeover approach from a consortium led by veteran investor and 17% shareholder Jack Petchey’s Trefick group.
Talks ended in June after the consortium lowered its original offer from 80p per share to 70p due to issues surrounding the values of freehold property and pensions.
Last month, Lookers, which also owns the Charles Hurst brand in Northern Ireland and Taggarts in Scotland, said trading had been solid despite the weakness of the car market, with Wednesday’s interim figures expected to be close to the record first half seen last year.
Lookers’ parts division, which works with 2,500 suppliers through a number of UK sites, had a record three months to June. The Manchester-based firm had said previously the parts business was being helped by motorists focused on keeping their vehicles on the road in the current tough economic climate.
New car sales were down by 12.7% but it continued to pick up market share. Used car sales increased by 5%, while after-sales were also said to be on track with margins up on the previous year.
Mike Allen an analyst at broker Panmure Gordon stockbrokers, expects interim profits of ?22.5 million against ?22.7 million last time, but Andrew Wade at Numis has edged down his full-year forecast due to concerns over the trend for both new and used car sales over the remainder of the year.
<a href="http://www.waste-management-world.com/index/from-the-wires/wire-news-display/1478601292.htmltag:news.google.com,2005:cluster=http://www.waste-management-world.com/index/from-the-wires/wire-news-display/1478601292.htmlSun, 14 Aug 2011 10:33:43 GMT 00:00″>WEEK AHEAD
Bus lane awarded?
