29 April 2011
Last updated at 08:46
Beer will remain big business at Foster’s, as it spins off its troubled wine division.
Investors in Foster’s have voted for an amicable divorce at the Australian drinks company.
At a meeting in Melbourne, more than 99% of votes were cast in favour of a demerger, creating two stand-alone companies.
Foster’s will keep its profitable beer business, which sells the Carlton and United Breweries brands.
A newly-created company called Treasury Wine Estates will take over Foster’s troubled wine division.
The company will control assets and vineyards in Australia, Europe and the US.
Both firms will be listed in Australia.
Analysts expect each to attract considerable interest from potential bidders such as drinks conglomerates and private equity groups.
“Theoretically, the split makes sense, but we won’t know for sure until the stocks have traded independently for a while,” said Donald Williams, portfolio manager at Platypus Asset Management.
“The wine business needs a better pricing environment before it is likely to perform,” he added.
Foster’s, Australia’s largest brewer, expanded into the wine business 15 years ago with the acquisition of the Mildara Blass brand.
But the wine division, with labels such as Penfolds, Wolf Blass and Beringer, has for years been a financial drain on the more successful beer business.
Analysts say an oversupply of grapes over the past decade has forced wine prices to fall.
Not all analysts agree the demerger will create value, as Foster’s board believes.
Greg Dring, an equities analyst at Macquarie, reckons the divorce could cost as much as 1bn Australian dollars ($1.1bn).
“Their claim about value creation appears to lack substance,” he wrote in a research report. “In fact, in the short term, the demerger would likely destroy value.”
Mr Dring said it was unclear whether the two companies would be able to make more money separately.
Besides low wine prices, Foster’s has been hurt by the strength of the Australian dollar, which makes its products more expensive overseas compared with competitors.
The demerger is expected to come into effect on 9 May. Shares in both firms may start trading in Australia as early as 10 May.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/13235143
29 April 2011
Last updated at 10:46
Food prices have been a big contributor to Russian inflation
Russia is to raise its key interest rates for the second time this year as it attempts to control inflation.
The Russian Central Bank will increase the refinancing rate from 8% to 8.25% and the deposit rate from 3% to 3.25% on Tuesday.
Inflation in the year to 25 April stood at 9.6%.
“Everything is directed to battling inflation. That is set as the number one task,” said Olga Sterina at Uralsib.
“The central bank decided to take a pre-emptive step. Before there were a lot of concerns about the slowdown in economic growth but… our monetary authorities are not concerned about a slowing economy against the backdrop of high oil prices,” she added.
A similar rate rise in February was the first since 2008.
The rouble has risen against the dollar to its highest since December 2008.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13238176
27 April 2011
Last updated at 00:20
Access to cash, rather than a lender, has become the key to buying a home
There has been a huge rise in the proportion of home buyers paying for their new homes in cash.
Figures compiled by the Council of Mortgage Lenders (CML) show that in January 2011, nearly 40% of buyers did not need a loan to buy their home.
This means the proportion of cash buyers has more then doubled since 2005, when the records began.
This in turn suggests the market is increasingly the domain of the cash-rich, with many other buyers shut out.
Robert Bartlett, the chief executive of Chesterton Humberts estate agency, says the number of cash deals being done in the housing market is historically high.
“In certain regions, the proportion of cash buyers will be even higher than these figures suggest,” he says.
“For example, in south-west England, I would say it is probably more like 50 to 55%.
“In some areas of London, it can be up to 80%,” he adds.
The people driving this trend are “typically the Saga generation”, according to independent housing expert, Henry Pryor.
“They are downsizing and pocketing a profit from previous housing booms, divorcees benefiting from financial settlements and foreigners or expats returning to the UK,” he says.
He believes cash buyers are investing in property because they see it as one of the few investments which they can make money from and use at the same time.
“Putting the money in a bank account may be safe, but you will get a woeful return on it, while stocks and shares look like the two ugly sisters – leaving property as the Cinderella of the investment world,” Mr Pryor says.
The CML estimates the total number of cash buyers in the market.
Fussy lenders have driven away many potential home buyers
It compares its own lending figures with those from HM Revenue and Customs (HMRC), which records the total number of house sales over the same period.
This analysis shows that the total number of cash deals has been rising sharply since 2005.
As lenders have tightened their loan criteria and asked for bigger deposits from borrowers, cash buyers have become an increasingly big force in the market.
In April 2005, when the figures begin, 16,457 homes were sold to cash buyers, equivalent to 15% of the market.
In January 2011, the latest figure, there were 27,600 cash transactions, equivalent to nearly 40% of the market.
Teaching assistant Teresa Taylor, aged 54, paid £113,000 in cash for a two-bedroom apartment in Ashford, Kent.
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If only we’d bought then”
She plans to rent the flat out so she has an income from it when she retires.
Ms Taylor is confident in her investment despite the recent fall in house prices.
“We’ve seen it all before and when we look back, we say, ‘If only we’d bought then,’” she says.
“I’m not looking to sell in the short term and who knows what is going to happen in the long term – I could lose it all on the stock market instead.”
Ray Boulger, of mortgage broker John Charcol, says the increase in cash transactions has both positive and negative implications.
“If there’s cash coming in, no matter where it comes from, it will support the market,” Mr Boulger says.
“And if you have a bigger slice of the market that’s not dependent on debt, there’s no risk of default on that 40%.”
He warns it will also mean the social divide is significantly increased.
“Those without access to family money will be increasingly squeezed out of the market if this continues,” he says.
The government says it recognises the problem and is taking steps to help.
Long-term renting is firmly on the way back, says Robert Bartlett
It cites the new First Buy scheme, under which the government and house builders offer loans to help first-time buyers purchase newly built homes.
However, conflicting demands on lenders mean those looking to borrow to get on to the housing ladder are unlikely to see a significantly easing in credit conditions soon.
There may be calls for increased mortgage availability, but at the same time, regulators are calling on lenders to hold more capital and be more risk-averse.
“A 90% loan requires lenders to hold around six to eight times more regulatory capital than a 60% loan; it should be no surprise that the rates charged on such lending are higher,” says a CML spokeswoman.
While the influence of cash buyers may be socially divisive, these buyers are not just helping to prop up the housing market, but also the wider economy.
“It’s not just estate agents who suffer when the housing market turns sour,” Mr Pryor says.
“The housing market is often referred to as the engine room of the High Street economy as people use their increasing housing wealth to spend on white goods, second cars or home improvements.
“A healthy housing market makes for a happy High Street,” he adds.
The difficulty many find in getting on the housing ladder could cause a sea-change in the way Britons view home ownership.
The proportion of people owning and actually living in their properties has been steadily falling, having peaked at 71% in 2004 and fallen back to 67% last year.
Robert Bartlett says this has led to a big increase in the private rented sector and a greater acceptance that an Englishman’s home may no longer be his castle.
“We are heading towards a more European set-up where we rent all our lives and people have their wealth tied up in other things,” he says.
However, this raises the spectre of increased competition for the available rented properties, pushing up the level of rents.
“There is a finite stock and a desperate need to build new housing in the UK,” Mr Bartlett says.
“There is a real danger people who cannot afford [rental prices] will become marginalised.”
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13116262
27 April 2011
Last updated at 09:52
The UK economy has recovered ground lost in the last quarter of 2010 but construction remains a worry
The UK economy grew by 0.5% in the first three months of the year.
The Office for National Statistics’ (ONS) first estimate of economic activity shows a recovery from the 0.5% contraction recorded for the last three months of 2010.
The news alleviates fears of a so-called double dip recession.
However, the Chancellor, George Osborne, who saw the figures on Tuesday, has already warned “we are not out of the woods yet”.
Although activity in both the manufacturing and service sectors increased during the first three months of the year, construction – one of the worst hit areas in the last quarter of 2010 – was down by 4.7%.
Economists had previously warned that growth of less than 1% in the first quarter would be disappointing and raise concerns over the economy’s ability to withstand the coalition government’s austerity measures.
However, the low rate of growth is likely to ease the chance of an interest rate rise to combat inflation.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13206430
25 April 2011
Last updated at 03:00
Asian economies have been looking to increase trade among themselves
The trade ministers of China, Japan and South Korea have agreed to step up efforts towards forming a trilateral free trade agreement.
The ministers said that free flow of trade and investment between their countries was key to sustaining growth.
Asian economies have been looking to increase trade among themselves.
Demand from key markets like the US and Europe has fallen as countries on both sides of the Atlantic try to recover from the financial crisis.
The trade ministers met in Tokyo.
The three countries have already set up a Joint Study Committee (JSC) involving government officials, businesses and academic participants to look into the feasibility of a trilateral free trade agreement.
China and South Korea are among Japan’s largest trading partners and a speedy recovery in Japan’s economy is vital to their growth.
A decline in demand from Japan, in addition to a shortage of some manufactured products, has had a big effect on their economies.
The disruption caused to Japan’s supply chain by last month’s earthquake and tsunami has seen many Japanese firms curb production, both at domestic plants and factories abroad, because of disruption to supplies of parts.
Toyota has already announced that its factories in China will function at 30-50% of capacity until 3 June because of a shortage of parts.
While the trade ministers from China and South Korea urged their Japanese counterpart to restore the supply chain as soon as possible, they stressed that increased trade between the three countries will play a vital role in Japan’s recovery process.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/13184570
25 April 2011
Last updated at 06:32
Production at Japanese car makers has suffered severe disruption after the tsunami
Toyota Motors has said that its Japanese production fell by 63% in March compared with the same month last year, as its production cuts continued.
The company has been facing shortages in supplies of parts as production has been disrupted because of last month’s earthquake and tsunami.
While it has restarted production in Japan, its factories have been working at a reduced output.
The firm has said output would return to normal only by the end of 2011.
The world’s biggest car manufacturer also announced more cuts in production at its factories in Asia.
The automaker said plants in eight Asian countries, including Thailand and India, will operate at 50% capacity from 25 April to 4 June.
It also said that factories in these countries will operate for just three days a week during the period.
The company had already announced that its factories in China will operate at 30-50% of capacity until 3 June.
Meanwhile, another Japanese automaker, Nissan Motors also announced that output at its Japanese plants had slumped by 52% in March compared with last year.
Last month’s earthquake and tsunami in Japan has caused widespread disruption to the supply chain in the country.
As a result manufacturers, especially car makers, have been facing increasing shortages of parts.
While the recovery process in Japan has been taking place, the company said it is likely that these cuts could be extended further.
“So far we have announced cuts until 4 June,” Paul Nolasco of Toyota told the BBC.
“However, given the current situation it is highly likely that these cuts may be extended into the summer,” he added.
The company has already extended cuts at its factories in North America because of similar shortages of components made in Japan.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/13184575
25 April 2011
Last updated at 07:53
Analysts believe the price of gold is set to surge even higher.
The price of gold hit a new record high, driven up by a weaker US dollar and continuing tensions in the Middle East and North Africa.
Spot gold rose as high as $1,513.70 (£917.60) an ounce during early trading in Asia, before retreating.
Investors have been buying the precious metal as a safe haven investment to guard against inflation and recent geopolitical turmoil.
Dealers say gold could even trade as high as $1,520 an ounce.
Monday was the seventh consecutive trading session that saw the price of gold rise.
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The dollar could be even weaker, unless there were game-changing comments from Bernanke”
Ong Yin Ling
“It’s the dollar play,” said a Singapore-based dealer. “There is more room for prices to go even higher.”
A weak US dollar generally correlates with higher gold prices, as both are seen as safe investments.
On Wednesday, the chairman of the US Federal Reserve, Ben Bernanke, is expected to affirm the commitment of America’s central bank to quantitative easing, a programme to flood money markets with liquidity.
That also tends to drive down the value of the greenback.
Analysts say the prospect of low interest rates in the US is driving investors seeking higher returns towards gold.
“Investors expect the Fed to continue with low rates, which means the dollar could be even weaker, unless there were game-changing comments from Bernanke,” said Ong Yin Ling of Phillip Futures.
Investors continue to react nervously to the uncertainty in the Middle East. An escalation in violence in Yemen and Syria over the weekend has also helped the price of gold strengthen.
Gold is not the only precious metal enjoying a rally, as silver is also on the rise.
Spot silver, sometimes called the poor man’s gold, hit $47.88 an ounce, the highest price since 1980.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13184951
22 April 2011
Last updated at 18:01
Nine people have been arrested and eight police officers hurt after violent clashes in Bristol sparked by a raid on opponents of a new Tesco store.
They broke out after police raided a property being used by squatters opposed to the store in Stokes Croft.
Eyewitnesses said police fought running battles with hundreds of protesters, who threw bricks and bottles at them.
Police carried out the raid because they feared the controversial newly-opened store was to be petrol bombed.
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I saw people throwing bricks and bottles at the police and trashing a police car which is obviously very unacceptable”
Labour MP Bristol East
However, the raid led to trouble in nearby streets with bins and skips being set alight.
Assistant Chief Constable Rod Hansen said: “This was not an eviction but positive action to protect the store.
“During the course of yesterday [Thursday] afternoon we were made aware of a group of individuals squatting in a house nearby claiming their intention to petrol bomb the nearby Tesco.
“Members of the public actually saw petrol bombs go into the building and officers saw an individual with what looked like a can of petrol on the roof which could have been thrown across the street to the shop.
“[Later] when 300 people congregated and a small minority from that group started small fires and throwing bottles, stones and other items at officers, we used well-rehearsed plans, which involved the use of officers from neighbouring forces to control what had become a volatile situation.”
More than 160 officers were involved in the operation, including 66 from neighbouring forces.
Labour MP for Bristol East Kerry McCarthy visited the scene in the early hours of Friday after reading reports of the disturbances on Twitter.
“I do question why the police op was carried out last night in an area full of bars where a lot of people were out drinking,” she said.
“It didn’t seem to be a particularly sensible time to carry out an eviction of a squat that’s been there for a long time.”
Ms McCarthy said she had been watching from a empty patch of land.
“Three police officers in riot gear passed us by and one of them shoved me out the way, there was absolutely no reason for that, they could have quite easily walked by.
“Earlier it had been a very ‘Stokes Crofts atmosphere’ with people playing musical instruments.
“At one stage people laid down bikes and sat down in the road and the police steamed in pulling everyone out the way and dogs were used.
“There were people being pulled up and roughly treated.
“On the other hand I saw people throwing bricks and bottles at the police and trashing a police car which is obviously very unacceptable,” she added.
‘Swift arrest operation’
In a statement, Avon and Somerset Constabulary said its “robust operation was fully justified” after police carried out an operation in Cheltenham Road to arrest four people who represented “a very real threat to the local community”.
It added: “The safety of the public is paramount in any situation of this kind and we took the decision to carry out a swift arrest operation, following intelligence received about the criminal intentions of those who were occupying the building.
The store – which had been opposed by many locals – opened on 15 April
“The fact that we seized petrol bombs illustrates the seriousness of this situation and the reason why we took this positive action.”
A Tesco spokesman said the store would work hard to reopen as soon as possible.
“We strongly condemn the violence in Stokes Croft and the injuries caused to the members of the police who worked courageously to protect the public and businesses in the area, including ours.”
The Tesco Express store in Cheltenham Road had been the subject of protests before its opening.
Last March bailiffs evicted nine of the 10 squatters occupying the building where the store was planned.
Four people were arrested for public order offences and 70 police officers quelled the disturbance.
People living in the area opposing the store said they did not want Stokes Croft to lose its local character and feared smaller shops would be threatened.
Speaking then, Tesco said opening a store there would bring back shoppers to the area and help local traders.
24 April 2011
Last updated at 00:50
Nick Reilly said the UK lost many of its small component-making firms decades ago
The future of car making in the UK could be in danger if the industry fails to develop a British-based supply chain, the boss of Vauxhall has said.
Nick Reilly, chief executive of General Motors in Europe, said a lack of home-based parts manufacturers was the most critical issue facing the industry.
Mr Reilly told the BBC that car makers in the UK such as Nissan and Toyota were finding it difficult to compete.
This was because they had to import so many vehicle components, he said.
Mr Reilly said the situation added to shipping costs and created currency risks as well as a longer supply chain.
‘Lack of suppliers’
The current government understood the problem but decisions taken decades ago meant the UK had lost many of its small component-making firms, Mr Reilly added.
“Our biggest issue is lack of suppliers in the UK,” he said.
“In the 70s to 90s we gave up a lot of business. What it means is that at Luton [Vauxhall factory] we import a lot of components.
“If we don’t have a decent amount of local suppliers it makes this place more difficult to be competitive.”
He continued: “Frankly, I think it’s the most critical issue facing the automotive industry in the UK.
“It’s not enough to have Nissan, Toyota, Vauxhall manufacturing the products because we’ll never be able to compete with another country where the suppliers are surrounding the car plants.”
General Motors was forced into bankruptcy two years ago during the recession and is now majority controlled by the US and Canadian governments.
Car manufacturing at GM Europe’s plants in Luton and Cheshire have since been secured for the medium term.
It was confirmed in March that the Luton plant would build the new Vivaro van, produced jointly with Renault.
Article source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13179589
22 April 2011
Last updated at 23:20
Deepwater Horizon owner Transocean was drilling an oil well for BP when the explosion occurred
A lax safety culture and poorly working kit aboard the Deepwater Horizon oil rig contributed to last year’s explosion, the US Coast Guard says.
In a report on the incident, which killed 11 and caused a massive spill, the agency criticised the practices and training of rig owner Transocean.
It said equipment was poorly maintained and alarms and automatic shutdown systems did not work properly.
A Transocean spokesman on Friday rejected the findings.
In a 288-page report released just over a year after the accident, the Coast Guard found actions by Transocean and the oil rig crew hindered their ability to prevent or contain the disaster.
“Deepwater Horizon and its owner, Transocean, had serious safety management system failures and a poor safety culture,” the report said.
“Collectively, this record raises serious questions whether Transocean’s safety culture was a factor that contributed to the disaster.”
Transocean spokesman Brian Kennedy told the Associated Press that the Coast Guard had inspected the Deepwater Horizon seven months before the blowout and deemed it in compliance with safety standards.
“We strongly disagree with – and documentary evidence in the Coast Guard’s possession refutes – key findings in this report,” he said in a statement.
Overnight on 20 April 2010, Transocean’s Deepwater Horizon burst into flames while drilling a well for BP.
In the months that followed, more than 200 million gallons (780 million litres) of oil flowed in the Gulf of Mexico from the well, soiling hundreds of miles of coastline in the worst US oil spill in history.
The Coast Guard also cited lax oversight by the Republic of the Marshall Islands, the nation in the Pacific where Transocean had registered the rig.
It said national regulators had effectively “abdicated” their inspection responsibilities by contracting them out to third parties.
The Coast Guard report said evidence indicated the explosion occurred when electrical equipment ignited a cloud of flammable gas that had flowed up from the well.
It said electrical equipment may have been incapable of preventing ignition, and cited a 2010 inspection audit that found some equipment on board was in “bad condition” and was “seriously corroded”.
“Because of these deficiencies, there is no assurance that the electrical equipment was safe and could not have caused the explosions,” the Coast Guard said.
Among other contributing shortcomings, the report found:
- Gas detectors on the oil rig were not set up to shut down the flow from the well automatically in an emergency, nor to shut down the air flow into the rig’s engine room
- Audible alarms on some gas detectors had been turned off to avoid disturbing the crew with false alarms
- The rig’s fire-fighting system depended on electricity to power water pumps and was rendered useless when the explosions caused a loss of power
- Rig crew had become complacent following routine fire drills from which drilling crew were sometimes excused
- The crew had not held training drills on how to respond to a well blowout requiring rig evacuation
On Wednesday, the first anniversary of the explosion, BP sued Transocean for $40bn (£24.37bn) in damages in an attempt to defray the oil firm’s tens of billions of dollars in liabilities associated with clean-up and compensation.
In federal court in New Orleans, BP said safety systems on Transocean’s Deepwater Horizon rig had failed. BP also sued the maker of the rig’s blowout preventer, alleging the device failed to stop the huge oil spill that followed the explosion.
Transocean has also demanded court judgements against BP and other companies.