Tuesday evening business news

Aug 26 2008 By Andrew Mernin

Housebuilder Bovis Homes has revealed the impact of the credit crunch with an 84% slump in half-year profits and plummeting house sales.

Bovis said pre-tax profits for the six months to June came in at £9.5m, down from £58.4m for the previous year, after its ``toughest period of trading“ as a public company.

House sales dived 32% to 851 during the six months, with average selling prices also slumping 12% to £167,600.

The group warned the market woes - which it blamed on a mortgage famine and higher borrowing costs - would continue for the “foreseeable future“, with further pressure on its house prices and profit margins. Sales volumes have already deteriorated since the half year and stood 39% lower at August 22.

In a bid to cope with the downturn, the company has slashed staff numbers by 40% since the start of the year - a move Bovis said will save 20%, or £10 million, of general overheads per year.

The capture of daytime soap Neighbours and the hiring of newsreader Natasha Kaplinsky have failed to prevent a slide in half-year profits at Five.

The channel, which started showing the long-running Australian soap and a revamped Five News in February, saw profits fall from five million euros (£4m) to zero for the six months to June 30.

Five, which is owned by European media giant RTL and is also home to US shows House and CSI, said its profits were wiped out by 11 million euros (£8m) of start-up and restructuring costs.

Five relaunched digital channel Five Life as youth-targeted Fiver in April, and in June relaunched its video-on-demand service, now called Demand Five.

Packaging and outsourcing group Bunzl has said the “green“ drive by retailers to reduce plastic bag usage had failed to dent its UK business.

The group, which supplies “not for resale“ items for industries including healthcare, retail and catering, said its broad range of goods had allowed it to provide environmentally-friendly products such as bio-degradable bags and ’bags for life’.

Marks & Spencer today reported an 80% fall in the number of bags given out after it began charging 5p per bag in May.

But Bunzl said its retail business continued to make progress despite the voluntary initiatives and a weaker economy, although input costs from the Far East rose.

Overall UK operating profits advanced 17% to £37.8m in the first half of the year.

The pound at 4:30pm was 1.8395 dollars compared to 1.8582 dollars at the previous close.

The euro at 4:30pm was 0.7977 pounds compared to 0.7964 pounds at the previous close.

At the close, the FTSE 100 index was down 20.9 at 5484.7.