Northgate Share News (NTG)

LONDON (Alliance News) - It's all about retailers Thursday, with the listed supermarkets all down sharply due to even weaker-than-expected results and a warning about this year from Wm Morrison Supermarkets, while Argos and Homebase parent Home Retail rose sharply as it showed how a turnaround can be achieved.

As expected, Morrisons joined the growing sector price war, warned that its underlying profits this year could halve as its margins are hit by investments of GBP300 million in "customer propositions," including price cuts. Rivals Tesco and Asda have both announced price cuts, and Morrison, more than any of its rivals, is being hit by competition from heavy discounters like Aldi and Lidl.

"We held our own against the big three supermarkets, but lost share against big discounters," Chief Executive Dalton Philips said.

The supermarket, which is also trying to catch up with rivals already well ahead in online sales and in the fast-growing convenience store sector, announced a series of measures aimed at turning around the ailing business.

It will dispose of about GBP1 billion of property, sell its "disappointing" Kiddicare business and its stake in US online grocer Fresh Direct, cut working capital by GBP600 million over the next three years, and capital expenditure to GBP550 million in the current year, and GBP400 million thereafter.

Analysts at Jefferies said the supermarket was "getting the bazooka out" as it hoped for a strong recovery from the year after the current one.

Morrisons management could do worse than look at Home Retail for tips on how to turn around an ailing retail business.

The company has struggled in recent years, with its Homebase home improvement products chain hit hard by the economic downturn that followed the financial crisis and its Argos retail warehouse stores hit by the shift to online shopping. It has embarked on a revamp of Argos, boosting its own online presence, and that is showing clear signs of working.

Home Retail shares hit the highest level for nearly three years after it reported strong like-for-like sales growth from both Argos and Homebase in its last financial year, including a big acceleration in the last couple of months of the year.

Argos reported 5.2% like-for-like sales growth in the last eight weeks of the year, accelerating from 3.3% for the year as a whole. The chain's total sales were GBP4.05 billion, up 3%, driven by strong sales for its electrical products. Homebase like-for-like sales rose 9.3% in the last eight weeks of the year, more than double the 4.1% growth for the year as a whole. Total sales rose 5.9% to GBP1.49 billion, driven by further growth in big ticket sales and expensive items.

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FTSE 100: Down 0.1% at 6,614.33
FTSE 250: Down 0.3% at 16,275.92
AIM ALL-SHARE: Down 0.4% at 883.52
GBP-USD: 1.6700
EUR-USD: 1.3950
GOLD: USD1,365.20 an ounce
OIL (Brent): USD107.80 a barrel

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Key UK Corporate News

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FTSE 100: Royal Dutch Shell Chief Executive Ben van Beurden has reinforced his priorities for the company in presentations to financial markets. Beurden said that the company will drive sharper performance management of the company's portfolio than in the past, through a more detailed segmentation of the business into performance units. GlaxoSmithKline has completed the enrolment of 16,000 patients into the mortality and morbidity study for its Relvar/Breo and Ellipta combined treatment.

FTSE 250: Bwin.party Digital Entertainment's decision to focus on only the most lucrative online betting and gaming markets is showing signs of paying off, as it said it swung to a profit it 2013 thanks partly to much bigger cost reductions than it had targeted. Northgate said UK vehicle rentals are still up on the year, with the usual winter slowdown less marked than last year, while its Spanish rentals are still contracting, although it is seeing signs of stabilisation in the market. Riverstone Energy has invested up to USD82 million in Fieldwood Energy LLC and up to USD83 million in Rock Oil Holdings LLC. Xaar has launched its new Xaar 1002 printhead. F&C Asset Management reported a swing to annual pretax profit but warned that it continues to face "significant headwinds in the short-term" after reporting GBP19.0 billion in net outflows during 2013, with a shareholders' vote on the Bank of Montreal's takeover offer looming. Salamander Energy said its pretax profit jumped significantly in its full year, as increased revenues and lower costs offset a large exploration write-off charge. SIG's 2013 pretax profit slid as restructuring charges and other losses more than offset a 4.4% rise in revenues. Still, it raised its dividend and was positive on its prospects this year and next.

AIM: Webis Holdings is up after subsidiary WatchandWager.com signed an agreement with the Hong Kong Jockey Club Horse Race Betting Ltd. Webis said that both parties have the option to renew the agreement for the 2014/15 racing season. MDM Engineering Group is a big gainer after it received a GBP65.3 million cash takeover offer from Foster Wheeler AG, which it is recommending shareholders to accept. Eland Oil & Gas is doing well after it aid its Nigerian joint venture is set to get a significant reduction in its underlying tax rates after it made good progress in talks about its tax status with the relevant Nigerian government departments. Premier African Minerals is up as assay results from drilling on the RHA Tungsten Project in Zimbabwe showed high-grade tungsten oxide results. Triple Plate Junction is down after it signed an exploration information database agreement with Newmont Exploration Pty Ltd. Under the deal, Triple Plate will be granted access to Newmont's proprietary database covering various exploration activities in Myanmar, Laos, Malaysia, Indonesia and Cambodia for an initial period of two years in return for certain royalty payments. Gulf Keystone Petroleum is a big faller after the latest report on its Kurdistan reserves and contingent resources indicated a baseline of 12.5 billion barrels of oil in place, at the lower end of previous estimates. Previous estimates put Shaikan’s oil in place between 12.4 billion and 15 billion barrels.

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Top Economics And General

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UK house price growth slowed in February, the latest survey from the Royal Institute of Chartered Surveyors revealed, posting a six-month low score of +45. That was well shy of forecasts for +52, which would have been unchanged from the revised January reading.
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British Prime Minister David Cameron was due to meet Palestinian President Mahmoud Abbas, with his visit to the West Bank coming on the back of the worst exchange of fire between Israel and Palestinians since a 2012 ceasefire. The radical Islamic Jihad faction said it had launched a barrage of 130 rockets at Israel on Wednesday to avenge the killing of three of its fighters the previous day.
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China's industrial production and retail sales grew less than expected in the first two months of 2014. Industrial production increased 8.6% in January to February period from last year, the National Bureau of Statistics said. Production was forecast to grow 9.5%, following a 9.7% rise in December. Another report from the statistical office showed that retail sales grew by a double-digit 11.8% year-on-year in January to February, but below the 13.5% increase forecast by economists.
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China's Premier Li Keqiang said the government's 7.5% economic growth target for 2014 is flexible. Job creation and income generations are the key determinants of policies, he said at a press conference Thursday. "We can tolerate a bit higher or lower growth," he added. Further, Li said some loan defaults are unavoidable but overall risks are under control. China should step up supervision and handle such cases in a timely way to ensure that there are no systemic risks, he said. He observed that China's government debt to GDP is below international averages and risks are under control.
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France's EU measure of inflation accelerated at a slightly faster-than-expected pace in February, figures from the statistical office INSEE revealed. The harmonized index of consumer prices, or HICP, rose 1.1% year-on-year, following a 0.8% increase in January. Economists had expected an inflation figure of 1%.
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EU negotiators failed to strike a deal Wednesday on a new scheme to shield taxpayers from bank bailouts, despite the clock ticking on the much-touted measure. "We are not yet there," negotiators from the European Parliament said in a joint statement, following six hours of talks with representatives from the EU's governments. "Some progress has been made," they added. "It is clear to us though that there is still much work to be done."
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Italian Prime Minister Matteo Renzi announced a headline-grabbing package of economic reforms, including a EUR10 billion cut on labour taxes, but failed to write the measures into law. Some 10 million workers - those earning up to around EUR1,500 net a month - will benefit from the tax break, effective from May, Renzi said. It would boost pay packets by about EUR1,000 per year, he added. He told reporters he was "defeated" in attempts to introduce the tax cut from April, because of technical difficulties.
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German Chancellor Angela Merkel warned Russia that it risked significant economic and political consequences it shunned a political solution to the crisis in Ukraine. "In a period of enormous uncertainty in the Ukraine, Russia has not proven to be a partner for stability for neighbouring countries," Merkel told the German parliament. "The territorial integrity of Ukraine cannot be overridden." Merkel also said that Europe was ready to stand by former Soviet republics in the face of possible Russian aggression. Whether it is Moldova or Georgia, "we will show them solidarity."
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The Organization for Economic Cooperation and Development in Paris has suspended Russia's membership process. At the same time, the OECD, a club of 34 developed and emerging economies, says it plans to step up its cooperation with non-member Ukraine.
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Just hours after western leaders jointly warned Moscow against the accession of Ukraine's region of Crimea, the leaders of the US and Ukraine gave an added push for dialogue. US President Barack Obama and Ukraine's interim Prime Minister Arseniy Yatsenyuk met Wednesday at the White House and appealed to Russia to resume dialogue in order to avoid what Obama called high "costs" if it stays on its current path in Crimea. Yatsenyuk declared that his government was "absolutely ready and open for talks with the Russian Federation" and urged Moscow to "start the dialogue" without guns and tanks.
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The latest lead to a missing Malaysian airliner came to nothing after rescuers did not locate any parts of the jet in an area of the South China Sea picked out by a Chinese satellite. "Our plane did not find anything there," said Azharuddin Abdul Rahman, chief of the Department of Civil Aviation, of the area south of Vietnam where the satellite had spotted floating objects a day after the plane disappeared last weekend. Vietnamese search officials also said they had not found anything of significance in the area.
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Protests against Venezuela's leftist government turned violent again Wednesday, claiming four lives in the western city of Valencia. The victims include a member of the country's national guard. The exact circumstances surrounding the deaths was unclear, news reports said.
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Former Goldman Sachs banker Fabrice Tourre was ordered Wednesday to pay USD825,000 for defrauding investors who bought sub-prime mortgage-backed securities from his bank prior to the collapse of the housing market. The former Goldman Sachs Group vice president was found liable in August for his role in a failed USD1 billion investment in a civil case brought by the US Securities and Exchange Commission, the agency that oversees Wall Street. The court found that the banker with the nickname Fabulous Fab provided false marketing materials to investors. In email to his girlfriend he callously joked that he even sold the junk "widows and orphans."
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Afternoon Watchlist:

14:00 US Business Inventories
14:30 US EIA Natural Gas Storage change
18:00 US Monthly Budget Statement
23:50 Japan BoJ Monetary Policy Meeting Minutes

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Friday's Key UK Corporate Events

Tribal Group Full Year Results
JD Wetherspoon Interim Results
SThree Interim Management Statement

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Friday's Key Economic Events

04:00 China Foreign Direct Investment
04:30 Japan Industrial Production
07:00 Germany Consumer Price Index
09:30 EU Construction Output
09:30 UK Total Trade Balance
10:00 EU Employment Change
12:30 US Producer Price Index
13:55 US Reuters/Michigan Consumer Sentiment Index Preliminary

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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

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