Wednesday lunchtime business bulletin
The embattled housebuilding sector suffered a further blow today after a dire broker note warned of sliding profits and dividends among the leading firms.
Shares in construction stocks fell by as much as 10% after UBS placed sell ratings on three firms, slashed dividend forecasts by up to two-thirds and said profits would be under ``severe pressure" this year and next.
The sector has been one of the biggest victims of the credit crunch and wider economic slowdown, with tighter mortgage availability squeezing sales by as much as 30% this year.
UBS’s warning that market trends were set to worsen sent shares in Britain’s biggest housebuilder Taylor Wimpey down more than 6%. The stock is now trading around a seventh of its value a year ago. Fellow FTSE 250 members Redrow and Barratt Developments also fell 8% and 7% respectively.
Mobile phone giant Orange said today that it planned to axe up to 450 jobs under an overhaul of the UK business.
The cuts will come in administrative and management areas, although the group said it also planned to create 500 customer-facing roles.
Orange, which is owned by France Telecom, has 15.8 million mobile customers and 1.1 million broadband users in the UK.
Northumbrian Water has warned a "dramatic increase" in energy prices will add more than £8m to costs at its water arm this financial year.
The update came as the company reported better-than-expected profits of £170.3m in the year to March 31, up 15.2% on a year earlier. It was helped by a 6.1% increase in water revenues after the firm was allowed to increase tariffs in order to support future capital investment programmes.
Operating costs in the water arm were £1.4m lower than estimated to regulator Ofwat in 2004, but Northumbrian said a retreat in energy prices during 2007/08 reversed in recent months with prices almost doubling on February 2007.
It added: "This will add more than £8m to Northumbrian Water Limited’s operating costs in 2008/09, despite continuous efforts to minimise energy usage."
The group serves 2.6 million people in the north with water and sewerage services and 1.7 million people in Essex and Suffolk with water services.
The pound at 10am was US$1.9552 compared to US$1.9648 at the previous close while the euro at 10am was £0.7911 compared to £0.7864 at the previous close.
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