Scottish Business Briefing – Friday January 11 2008

Published on Friday 11 January 2008 07:54

WELCOME to scotsman.com's Scottish Business Briefing. Every morning we bring you a comprehensive round-up of all news affecting business in Scotland today.

ECONOMY

Bank holds steady on interest rates

The Bank of England's Monetary Policy Committee has voted to hold interest rates at 5.5% in the face of calls for a further quarter point cut. The decision was met with dismay by business leaders who fear the economy will be further damaged if interest rates are not reduced. Director of Scottish Chambers of Commerce, Liz Cameron commented: "It is disappointing that the Bank of England have failed to take this opportunity to deliver a shot in the arm to the UK economy. Here in Scotland, we have already had news this week of a sharp downturn in manufacturing exports and we cannot afford any further decline in our competitive position this year." Andrew McLaughlin, chief economist at Royal Bank of Scotland, did offer some hope for the business community. He said: "With money markets returning towards some semblance of normality and sterling weakening sharply, the MPC was never likely to opt for back-to-back rate cuts. Nevertheless, with real economy data breaking to the downside, a rate cut is on the cards for February." (The Scotsman)

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ENERGY & UTILITIES

Cairn in Greenland deal

Edinburgh oil and gas explorers Cairn Energy has won licences to survey vast areas of Greenland's offshore waters. Cairn has secured four offshore blocks covering some 45,000 square kilometers in the area known as the last frontier in oil and gas exploration. Greenland's minister for minerals and petroleum Kim Kielsen welcomed the licence award, saying: "Cairn has already proven its capabilities in south Asia, and with its technical, economic and environmental expertise, we are very confident about Cairn's ability to carry out the activities under these licences in the best possible way." (The Herald)

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FOOD, DRINK & AGRICULTURE

Carlsberg claim S&N share slide

The chief executive of Carlsberg Jorgen Buhl Rasmussen has claimed Edinburgh brewing giant Scottish & Newcastle will face a slump in market value after rejecting a third takeover approach. S&N has been a long term target of a consortium of Carlsberg and Heineken and the group yesterday made a new offer of 780p per share – valuing S&N at 7.6 billion. Asked about the possible effect of the offer rejection on the S&N share price, Rasmussen commented: "Of course, I can only guess. But Sainsbury's for example, saw its shares fall about 20% after (the bid approach from the Qataris failed]. That has to be taken into account by (S&N shareholders] and the board." He added: "It is now over to S&N shareholders to make their views clear to the S&N board if they want this transaction to happen." S&N have since revealed they are prepared to speak to the consortium if the offer is increased to 800p per share and on the condition that Carlsberg make public 'proper information about BBH prospects (their joint venture and currently the Russian market leader].' Chief executive of S&N John Dunsmore added: "There's a fear we are intransigent Scots, but we are not. We are pursuing value. This is not about brinkmanship and pushing a price up, or the alternative of having nowhere to go. We are confident we have very good options for pursuing value." (The Scotsman)

Whisky will weather storm

The credit crunch will not hit the whisky industry as badly as other sectors according to the Scotch Whisky Association. Chief executive of the association, and chief exec of Diageo, Paul Walsh explained: "We are not immune from any economic downturn but we will weather it better than most." Strong exposure to developing markets and relative affordability of the product are, according to Walsh, the shields that will protect the whisky industry. He added: "There is no question that the economies of the world have softened. But I don't think it is as calamitous as has been reported. Emerging markets, where whisky is strongly represented, are continuing on the trajectory they were before the credit crunch." (The Scotsman)

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RETAIL

Sainsbury hails a merry Christmas

Supermarket giant Sainsbury saw its share price rise 6.3% on the back of strong sales over the festive period. The retail operator recorded like-for-like sales up 3.7% in the 12 weeks to December 29, in contrast to several other major retailers which took strong hits on like-for-like profits over Christmas. Food sales are generally expected to remain strong in the face of an economic downturn, with consumers reluctant to cut back on such purchases, however, Sainsbury also recorded a rise in non-food sales of between 8% and 10%. Chief executive Justin King commented: "It was a good quarter and we are pleased with it. We see consumer belt-tightening and the market being very tough but we do not subscribe to the view that it is all doom and gloom." (The Herald)

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TECHNOLOGY

Motion detection firm in 2 million boost

Pyreos, the Edinburgh company formed last year to commercialise motion detection technology developed by Siemens, has secured 2 million in funding from Braveheart Investment Group. The Perth venture capitalists have made the move in conjunction with Scottish Enterprise, Scottish Venture Fund and Siemens Technology Accelerator. Pyreos hope to tap into a market expected to be worth 500 million by 2012 with the launch of a range of projects including infrared cameras and spectroscopes. Chief executive Jeff Wright commented: "This will allow us as a company to step up our commercial and manufacturing operations and send our product to market. It is very exciting and we are delighted to have such good investors in Braveheart and STA." (The Scotsman)

NatSemi enjoys profits boost

Computer chip manufacturer National Semiconductor has flown in the face of the current economic downturn to record an increase in pre-tax profits. The American technology giant also insisted the future of its Greenock plant was secure as operating profits increased 26% to 11.8 million. A spokesman for National Semiconductor said: "We have always been committed to investing in the Greenock plant, and over the course of the past year have introduced new equipment to replace outdated, less productive tools, which gives us greater efficiencies, including higher yields. This has enabled us to secure the long-term future of the Greenock site whilst facing the challenges of competing in a dynamic sector of the manufacturing industry." (The Herald)

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