YP75: Bank's good news on prospects fails to stimulate fresh growth

Whether it was City traders taking time off to visit Cheltenham or investors enjoying the first good weather of the year, the market failed to make any significant ground last week despite Lloyds Banking Group surprisingly stating that it will return to profitability this year.

Despite the continuing struggles of the global economy, the company, 41 per cent owned by the government, said performance for the first 10 weeks of the year has been strong and the shares jumped by 8 per cent on Friday.

While the US Federal Reserve confirmed interest rates will continue to remain at historic lows for some time yet, the Reserve Bank of India surprised markets with a 0.25 per cent rate increase.

Hide Ad
Hide Ad

The move was the first increase since mid 2008 and comes as fears grow that the economy is beginning to overheat, particularly with inflation running at 10 per cent.

In stark contrast to the Lloyds announcement, Sheffield building supplier SIG warned that 2010 will be another difficult year with an increase in construction activity not expected until much later in the year. SIG swung to a full year loss in 2009 as property markets slumped and the major UK house-builders cut construction budgets.

SIG, which supplies insulation and roofing materials, reported losses of 55m compared to a 33m profit a year earlier.

CEO Chris Davies does however expect opportunities to arise should the slowdown continue as smaller rivals struggle to continue trading.

Hide Ad
Hide Ad

While shares in SIG fell by 5 per cent, LSL Property, a leading residential property services company which readers might recognise as estate agency network Your Move, extended recent gains with a 12 per cent rise last week.

The shares have performed well since the results in early March when the group confirmed a swing back to full year profit for 2009 as well

as confirming a 5.4p interim dividend.

Electronic component distributor Premier Farnell announced a drop in pre-tax profit for the full year but did confirm a return to profit growth in the final quarter.

Over the fiscal 2010 year, profit before tax dropped to 55m, down from 72.5m a year earlier, on revenues of 795m.

Hide Ad
Hide Ad

The shares, which have risen by more than 80 per cent in the past 12 months, climbed 10 per cent over the week, closing at 217p

In other news, marine safety equipment supplier Cosalt expects full year results to meet expectations despite a slight fall in revenue in the four months to March 2010 compared with a year earlier.

The group recently announced an extension to its contract

with global engineering firm Aker Solutions and will hope that this, along with other recent wins such as a three-year contract with Babcock Rail, will boost revenues for the full year.

David Cadwallader, Assistant Investment Manager at Brewin Dolphin, Leeds