UK Retail Sales Up 1.9%, Home Loans Fall 11.3%; Rentokil Swings to Loss

Arthi Gupta
18 Feb, 2011
New York City

The UK indexes declined after mortgage lending plunged and retail sales exceeded expectations in January. The BoE Governor King reiterated that tackling global imbalances is the key for economic recovery. Anglo American profit surges and Rentokil swings to loss.

[R]3:30 PM London – The UK indexes declined after mortgage lending plunged and retail sales exceeded expectations in January. The BoE Governor King reiterated that tackling global imbalances is the key for economic recovery. Anglo American profit surges and Rentokil swings to loss.[/R]

In London, FTSE 100 Index declined 28.39 or 0.47% to 6,058.99 and the pound edged higher to close at $1.6233. For the week, the FTSE 100 Index gained 1.03%.

In a write-up for the Banque de France financial stability review launched today, the Bank of England Governor Mervyn King wrote global imbalances are a reflection of today''s decentralized international monetary and financial system.

In order to tackle global imbalances, King said policymakers should reach an agreement on the right speed of adjustment to the real pattern of spending and should take many policies in addition to exchange rate changes.

""If agreement is not reached on these two principles, at best there will be a weak world recovery; at worst, the seeds of the next financial crisis will be sown,"" King said.

UK Mortgage Lending Falls

Lending for home purchases in the UK plummeted 11.3% from a month earlier to £4.7 billion in January, data released by the Bank of England showed on Friday. This compares to a 3.6% drop in December.

Remortgage lending surged 36.7% on a monthly basis to £4.1 billion pounds in January.

In another report, the UK mortgage lending declined 13% on a monthly basis in January to £9.2 billion, the Council of Mortgage Lenders said on Friday and rose 5% from the same month a year earlier.

UK Retail Sales Surge

UK retail sales including automotive fuel grew 1.9% on a monthly basis in January following a 1.4% fall in December, the Office for National Statistics said today. Food stores sales climbed 0.3% on a monthly basis in January, while non-food stores sales grew 2.4%.

Annually, retail sales volume rose 5.3% in January following a 0.7% drop in December.

Anglo American Forms JV with Lafarge

Anglo American plc announced a joint venture with French cement giant Lafarge SA to combine their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the United Kingdom, comprising Tarmac Limited and Lafarge Cement UK, Lafarge Aggregates and Concrete UK.

Craneware Acquires ClaimTrust

Craneware PLC announced the acquisition of ClaimTrust, Inc. for an initial consideration of $15 million and a maximum total consideration of $19.5 million, subject to certain performance criteria and working capital adjustments.

Craneware believes the acquisition will be earnings accretive in the first fiscal year.

Gainers & Losers

Anglo American plc fell 2.90% to 3,198.50 pence after the mining company said fiscal year 2010 group revenue increased 34% to $27.96 billion from $20.86 billion in the prior year. Profit for the period surged 169% to $6.54 billion or $5.18 per share from $2.43 billion or $1.98 per share in the previous year on higher metal prices.

BAE Systems plc fell 0.23% to 340.10 pence after the defense and security company stated that its offer for Norkom has become wholly unconditional. The company had last month announced a €217 million deal to acquire financial crime and compliance solutions provider Norkom Group plc.

Go-Ahead Group Plc surged 6.69% to 1,404.00 pence after the public transport operator reported first-half revenues rose 6% to £1.13 billion from £1.07 billion a year ago. The company attributes the increase in revenues mainly to like-for-like passenger revenue growth of 7% in bus and 9.1% in the rail business.

Profit attributable to equity holders was £31.2 million or 72.7 pence per share compared to loss of £0.7 million or 1.6 pence per share in the prior year.

Rentokil Initial plc plunged 5.87% to 92.25 pence after the pest control and cleaning company reported fiscal year 2010 revenue declined 1.4% to £2.5 billion from £2.53 billion in the previous year.

Annual loss was £23.4 million or 1.29 pence per share compared with a profit of £47.6 million or 2.63 pence per share in the previous year, hurt mainly by an impairment of goodwill in its courier service City Link and lower revenues.

Tricorn Group plc surged 23.53% to 21.00 pence after the precision engineering company said it now expects full year pre-tax profits to be “significantly ahead of market expectations.”