Thursday lunchtime business bulletin

Aug 28 2008 By Karen Dent

A "summer to forget" for the high street saw retail sales plunge to yet another record low in the first half of August, the CBI said today.

The business group’s distributive trade survey showed a balance of 46% of firms reporting weaker sales volumes than a year ago - the worst result in the survey’s 25-year history for the second successive month.

Sales were weak across all sectors except food as shoppers faced with soaring bills reined in to pay for essentials, while wet weather also deterred spending.

The ailing housing market hit household goods sales as building society Nationwide reported the biggest annual fall in house prices for almost 18 years.

UK Coal today said a 45% rise in the market price of coal since the start of the year had transformed the outlook for its mining operation.

The operator of four deep pits reported half-year losses but said "significantly higher production at a significantly higher sales price" left it on course to meet market hopes for full-year profits of around £70m.

The company is Britain’s biggest producer of coal, supplying around 15% of all the coal burned - equivalent to the energy needed to provide 5% of the country’s electricity needs. It also owns 46,500 acres of land, of which around 3,700 acres are currently targeted for development.

UK Coal said demand remained strong because UK electricity generators viewed coal as more profitable to burn than gas. Total sales of 3.7 million tonnes was down in the first half, which UK Coal said reflected the timing of face changes at Kellingley, West Yorkshire and Welbeck, Nottinghamshire. Output was also committed to satisfying older contracts, limiting the benefit of higher prices.

Bottom-line losses for the half year were £9.9m against profits of £40.6m in the same period a year earlier.

Specialist consumer lender Cattles today said arrears crept higher in the first half of this year as household budgets came under mounting pressure.

The firm, which lends in the sub-prime market, said its share of customer balances with some proportion of arrears had risen to 31.4% from 29.2% in the first half of 2008.

The company has tightened its lending criteria in response to the more difficult climate, leading to lower acceptance rates and broadly flat new business volumes at £661m.

But shares in the firm fell more than 3% as investors fretted over the increase in bad debts, despite a 17% rise in pre-tax profits to £70.2m in the first half.

The pound at midday was US$1.8354 compared to US$1.8306 at the previous close, while the euro at midday was £0.8049 compared to £0.8018 at the previous close.