London open: Footsie eases back
Early gains for London's blue chips have been pulled back by concerns over the housing market after downbeat statements from Alliance & Leicester and two houebuilders.
Alliance & Leicester's mortgage lending has fallen sharply in the first four months of 2008. Mortgage balances at 30 April 2008 were £41.2bn, £1.5bn lower than at 31 December 2007. Gross lending of £1.7bn was £2.0bn lower than in the first four months of 2007. A&L added that mortgage arrears were stable and core operating profit excluding Treasury in the first four months of 2008 was similar to the same period in 2007. The group took impairment charges of £388m in the first four months of 2008, including £192m to the P&L.
Meanwhile housebuilder Redrow warned the conditions in the housing market have worsened faster than it expected with reservations down 50% on this time last year due to a lack of mortgage availability. Galliford Try was similarly gloomy over the housing market as it lowered guidance for the year to £60m profit.
Pub operator Enterprise Inns served up an 11% decline in first half profit, in line with expectations, as it warned of a tough trading environment. "Consumer leisure spend is likely to remain under pressure for some time," the group said in a company statement.
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Support services group Serco says that its increased pipeline of opportunities and strong performance so far in 2008 leaves it confident of delivering double-digit revenue growth for the foreseeable future. The group reiterated it also expects to see a 30 basis point increase in adjusted PBT margin for both this year and next.
Travel group TUI Travel's underlying loss fell sharply in the first half of the year to £294m, compared with a £339m loss last year. The improvement reflected strong performances in the UK and Nordics and a "significant turnaround" in France, it said. "Current trading for Summer 2008 remains strong, with UK Mainstream sales up 8%, 21% less product left to sell and strong pricing achieved over the last six weeks," TUI added.
Security group GFS's underlying performance is now running slightly ahead of overall management expectations, aided in part by a small benefit from recent euro strength. In the year to March overall organic growth improved strongly to 11% with around 9% in developed markets and around 17% in New Markets. GFS remains very confident in the performance of the group for 2008.
