The new management team hopes to turn the group’s losses into profits by selling the poorly performing US operations and shaking up the rest. Around 1500 jobs will go in the UK, where Cable & Wireless lost £303m last year. The company has £1.6bn in the bank, but it may need all that and more to pay for the restructuring plans. So the board has decided to suspend dividend payments until this time next year. That’s more bad news for shareholders, who have seen the shares fall by 50% over the last 12 months.
Meanwhile, discount retailer Matalan had yet more bad news to report. Thecompany is facing stiff competition from the supermarkets, who are improving their own-brand clothing ranges. In response, it has revamped its stores, cutting the amount of products on sale to make the shops look less cluttered. But the strategy hasn’t worked so far and sales have fallen, forcing the company to admit that profits this year will be below expectations. Steer clear of the shares.
There was better news though for Kingfisher, the group that owns B&Q and Comet. The DIY stores have had a good spring, thanks to warm weather which fuelled a run on garden furniture. Sales from DIY grew by 4% in February, March and April. Unfortunately, the electrical stores let the side down and posted another poor performance. The two parts of the business are to be separated later this year, but it’s still unclear what the electrical retail operation will be worth.
British Airways has finally managed to offload its ailing German businessDeutsche BA. easyJet took a close look at the company earlier this year butturned it down, citing problems with German labour laws. Deutsche BA hasnow been sold to a German aviation consultancy for just one euro (72p). BritishAirways will continue to invest in the business, and will receive a quarterof Deutsche BA’s profits until 2006.
Finally, the pharmaceutical sector proved that it’s not just financial newsthat moves share prices. Shares in biotechnology company Phytopharm rose 25% this week after its products were profiled in Correspondent on BBC 2 last weekend. The company’s obesity pill is based on a rare South African cactus which is used by bushmen to quell their hunger on lengthy hunting trips. And pharmaceutical company AstraZenca also had a good week after it presented its products at a cancer conference in the US. Its drug – Iressa – is used for treating lung cancer, but it might also be effective for a range of other cancers.
UK senior partner Phil Verity has been elected for a second term at Mazars
Tallat Mahmood appointed to corporate finance team of Top 20 firm
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes
Top Ten firm RSM has appointed Nick Blundell as its head of corporate tax in Birmingham