UK Inflation at 4.4%; Cairn, Carnival Net Rise, Punch Taverns in Focus

Arthi Gupta
22 Mar, 2011
New York City

The UK indexes declined after annual inflation accelerated more-than-estimated in February. UK public borrowing rose and manufacturers forecasted robust growth. Cairn Energy fiscal year 2010 net and revenue surged. Punch Taverns plans to cut its pubs portfolio in half.

[R]5:30 PM London – The UK indexes declined after annual inflation accelerated more-than-estimated in February. UK public borrowing rose and manufacturers forecasted robust growth. Cairn Energy fiscal year 2010 net and revenue surged. Punch Taverns plans to cut its pubs portfolio in half.[/R]

The Bank of England Monetary Policy Committee external member Andrew Sentance said today that the UK inflation could breach 5% this year.

He warned that failure to take timely monetary policy action risks a more abrupt and destabilizing rise in interest rates in the future.

In London, FTSE 100 Index declined 27.78 or 0.48% to 5,758.29 and the pound edged higher to close at $1.6371.

UK Annual Inflation Accelerates

British annual inflation rose to 4.4% in February, the highest since October 2008, from 4% in January, the Office for National Statistics said today.

Inflation continues to stay above the central bank's 2% target as the economy struggles and commodities and energy prices rise.

The biggest upward pressure to the change in annual inflation came from domestic heating costs and clothing and footwear. However, alcoholic beverages and tobacco had a downward impact on the annual rate.

On a monthly basis, consumer prices rose 0.7% in February, exceeding the 0.1% rise in January.

Retail price annual inflation rose to 5.5% in February from 5.1% in January.

UK Public Borrowing Rises

The UK public sector net borrowing excluding financial interventions rose £2.3 billion to £11.8 billion, from £9.5 billion a year ago, the Office for National Statistics said. This was the highest recorded for February since the record keeping began in 1993.

Including interventions, public sector net borrowing was £10.3 billion, an increase of £2.2 billion from February 2010.

UK Manufacturers Predict Strong Growth in Output

British manufacturers predict robust growth in output over the coming quarter, the latest monthly Industrial Trends Survey from the Confederation of British Industry showed on Tuesday.

Around 38% of firms predict an increase in output over the next three months, and 11% a fall. The resulting balance of positive 27% was the strongest since February 2007.

The survey showed that nearly 26% of manufacturers said that total orders were above normal, and 21% said they were below. The resulting balance of plus 5% was the highest since March 2008.

Gainers & Losers

Cairn Energy Plc gained 1.69% to 426.80 pence after the oil and gas company reported fiscal year 2010 revenue totaled $1.6 billion, sharply higher than the $233.9 million reported last year, driven by the contribution made by the company's Rajasthan field in India due to the successful startup of piped oil production from the Mangala field.

Profit for the year 2010 surged to $1.08 billion from just $53.4 million last year, with all contribution coming from Cairn India.

Carnival Corp. & plc fell 0.51% to 2,517.00 pence after the cruise operator reported first quarter net revenue increased 8% to $3.42 billion from $3.18 billion a prior year. Net income in the quarter decreased 13% to $152 million or 19 cents per diluted share compared to $175 million or 22 cents per share a year ago.

Essar Energy increased 2.2% to 450 pence after dropping as much as 7% yesterday after it announced sharply higher earnings but warned that sourcing delays will push the start date for two power plants units by at least a quarter.

Exillon Energy PLC increased 4% to 403 pence after it confirmed that one of its oil well found oil in West Siberia.

Grainger plc dropped 1.91% to 102.50 pence after the residential property business said it acquired Genesis Housing Group's 50% share in Grainger GenInvest Partnerships along with associated subordinated loan notes for a total consideration of 15 million pounds, financed out of existing company resources.

Man Group Plc declined 1.18% to 242.60 pence after the asset manager agreed to sell around 25% interest in BlueCrest Capital Management LP to BlueCrest for $633 million.

Punch Taverns PLC soared 3.13% to 75.85 pence after the pub company is to split itself in two by the end of the summer.

The largest pubs operator said it plans to sell 3,000 locations and cut its leased portfolio of pubs in nearly half to restructure its debt of £3 billion.

The company plans to split its cash to two companies in equal amount of £120 million and said it considered defaulting on its debt but it will not be in the best interest of the stakeholders.

Rolls-Royce Group plc decreased 0.92% to 593.00 pence after the integrated power systems company received a order worth $200 million from Turkish Airlines for Trent 700 engines to power three Airbus A330 freighter aircraft.