Friday morning business bulletin

Aug 22 2008 By Andrew Mernin

Transport group Arriva today said half-year profits rose 40% after the addition of CrossCountry services boosted its UK trains division.

The Sunderland-based firm, which runs more than 13,000 buses and trains across the UK and Europe, said operating profits for the UK rail arm jumped to £14.8m from £1.1m a year earlier.

Revenues from the division surged after it took on the CrossCountry franchise - the most extensive in the UK, stretching from Aberdeen to Penzance - and saw passenger numbers on the service improve 10% year-on-year.

Overall, group revenues were 59% higher at £1.44bn, with profits up to £66.3m from £47.3m a year earlier.

Arriva warned higher fuel prices and the economic downturn presented challenges, but said its fuel costs this year were ``substantially fixed" with two-thirds of the requirement for 2009 also secured in advance.

Department store chain John Lewis today said sales fell 4.2% last week after shoppers stayed at home to follow Britain’s gold medal push in Beijing.

The group, which has 26 branches, described trading as subdued after it took £47.2m in the week to last Saturday. As well as the Olympics, John Lewis said the release of A-level exam results impacted on business.

The fall in sales compared with a 9.3% improvement seen in the previous week, when trading was boosted by favourable weather conditions.

The company’s flagship London Oxford Street outlet produced the best trading performance of last week, with sales ahead 6% on a year earlier. In contrast, out of town stores had a poor time with Bluewater down 14.6%, Bristol’s Cribbs Causeway off 13% and Milton Keynes down 18.2%.

Pest control-to-hygiene firm Rentokil Initial today said first-half profits slumped by more than half as it battles to revive its ailing City Link business in a worsening economic climate.

The firm, which has issued four profits warnings since December, said the troubled delivery arm had stabilised but warned losses would continue for the rest of the year.

The economic slowdown is also hitting its UK pest-control business - with falling revenues in June and July and enquiries tailing off in recent weeks - with further issues in its washrooms division.

Chief executive Alan Brown - one of a trio of former ICI bosses drafted in to turnaround Rentokil in March - said: ``We have a lot to do and will have to deliver it in increasingly difficult economic circumstances."

The pound at 8am was US$1.8760 compared to US$1.8753 at the previous close while the euro at 8am was £0.7933  compared to £0.7931 at the previous close.