Comment: Premier makes the most of flying visit to Fife
DAVID Cameron described his trip to Buckhaven in Fife yesterday as a “good intermission” between taking the French president to the Olympic handball and accompanying the Russian president to the judo tomorrow.
However, his flying visit was doubtless more meaningful than that. Burntisland Fabrication (BiFab) was clearly delighted to have won contracts worth £140 million from Premier Oil in a competitive bid that will allow it to double its workforce.
But it was quite an achievement to get the Prime Minister to make such an announcement. While it was a big deal for BiFab and the communities along the Fife coast it is more usual for Downing Street occupants to be on hand for eyecatching investments from the multinationals.
Cameron, of course, is keen to diversify the UK economy and he made the point yesterday that BiFab is a good example of the sort of companies he wants to encourage. To that extent, he would have seized a rare opportunity to put words into action.
But nor was this a mere poke in the eyes of the tainted financial services sector. The unspoken benefit to the Prime Minister of giving this announcement his personal attention was surely the chance to put Alex Salmond’s nose out of joint.
The First Minister has made a play for the oil and gas industry and the emerging renewables sector, claiming both as key planks in his independence campaign.
BiFab is a significant player in these two industries and is enjoying a good run of work at a time when other companies are struggling. Clearly, it will attract those wanting to associate themselves with success.
But unwittingly, yesterday’s announcement represented a good opportunity for the UK government to stake its own claim to the firm’s progress in sectors most cherished by Holyrood.
Pumped up and ready for challenges ahead
Weir Group shares have been stellar performers in the last year as the company has benefited from expansion in growth markets.
Some of the shine has come off in recent weeks as even some of those economies have pared back expectations. On top of that, overcapacity in the US fracking industry will impact on second half revenues in the oil and gas division which accounts for 48 per cent of operating profits.
This overshadowed higher-than-expected interim pre-tax profits and prompted an earnings downgrade. Some profit-taking was, therefore, unsurprising, but should not be interpreted as signalling anything other than a softening in performance.
Weir remains robust, with strong cash flow. It is still targeting a doubling of 2009 profits by 2014.
The shares are likely to remain volatile and in a sector that is consolidating it would be no surprise to see Weir become a target, which will only add to their attraction.
Curious game being played at United
Manchester United’s imminent flotation on the New York Stock Exchange will value the company at more than £2 billion, but the share issue divides followers of one of the biggest names in sport.
There are some among the faithful who would not be happy whatever the controlling Glazer family chose to do short of selling up and returning to Florida. The revelation that they will retain half the £212m proceeds and retain almost 90 per cent control, mainly through the B shares, has only inflamed relations.
The supporters had hoped all proceeds from the flotation would help pay off the estimated £430m of debt accumulated since the Glazers bought the club in 2005. It is a scary figure for those who are anxious to see the club sufficiently well financed that it can compete with its newly-enriched neighbour, Manchester City.
But raising money just to pay off debt is never particularly attractive to investors unless the upside is overwhelmingly positive. In United’s case, the trading figures do not set the heart racing. Total revenues last year were down 5 per cent largely due to being turfed out of European competition.
The decision to float in the US, as opposed to Singapore or Hong Kong, is a curious one, given that the Americans are not seen as particularly enthusiastic to what they prefer to call soccer.
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Weather for Edinburgh
Saturday 25 May 2013
Temperature: 6 C to 17 C
Wind Speed: 13 mph
Wind direction: West
Temperature: 9 C to 16 C
Wind Speed: 14 mph
Wind direction: South west