Tuesday morning business bulletin

Aug 26 2008 By Karen Dent

Housebuilder Bovis Homes said today it was braced for further tough conditions after reporting a 80% slump in half-year profits.

The group’s pre-tax surplus for the six months to June came in at £9.5m, down from £58.4m for the previous year, after what it described as its toughest trading period as a public company.

Revenues were down 43% at £149.3m, driven by a 32% drop in house sales to 851. This trend worsened since the half year end, the company added, with completions down 39% during the year to August 22.

The firm said: "The group considers that the current difficult trading environment will continue for the foreseeable future with continued poor mortgage liquidity limiting housing market activity."

Rio Tinto today unveiled a 55% jump in earnings and said prices for its products remained strong in the face of the global economic downturn.

The group, which became the world’s biggest aluminium company following the acquisition of Alcan in 2007, said demand from China and India meant the impact of the credit crunch had been modest in its key markets.

Rio reported underlying earnings of US$5.47bn (£2.96bn) in the six months to June 30, with half-year production records achieved in areas including iron ore, bauxite, aluminium and thermal coal.

Chairman Paul Skinner said: "The driver of demand for our products is urbanisation and industrialisation in heavily populated countries like China and India, and these economies continue to grow strongly. Prices for our products remain high by historic standards."

A sizeable sell-off for Wall Street markets left London traders nursing a hangover after the 2% rally seen on Friday afternoon.

Fears for the financial sector following the collapse of another regional bank meant the Dow Jones Industrial Average closed more than 2% lower yesterday.

The FTSE 100 Index fell 107.9 points to 5397.7 with banks and insurers among the biggest casualties, while miners were also lower despite better-than-expected figures from aluminium giant Rio Tinto.

Housebuilders were also under pressure in the FTSE 250 Index after Bovis Homes kicked off a busy week for the industry. It said it did not expect an improvement in the foreseeable future and warned sales and margins were likely to remain under pressure.

The pound at 9am was US$1.8451 compared to US$1.8582 at the previous close, while the euro at 9am was £0.7968 compared to £0.7964 at the previous close.