Tap-Dancing in the Sticky Stuff
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*** The science fad...
*** HSBC heeds Standard's pleas
*** Cairn's excitement...what will OPEC get upto?...the seven top blue chips...and more..  ------------------- It seems science journals are back in fashion. Or sosaid the world's largest science publisher, ReedElsevier yesterday. According to the Anglo-Dutch group,full-year pre-tax profit increased by nearly 2%, to£1.03bn. This is up from 2003's £1.01bn profit.
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'Our markets have not been easy (in recent years),but are now clearly on the turn,' chief executiveCrispin Davis said yesterday. Turnover may have slippedaround £100m last year due largely to the weak dollar but was 5% up at constant currencies. And investorscertainly didn't mind as Reed closed as the bluechip's top gainer on Thursday, up by 8%.
The FTSE100 traded 4 points up, to close at 5,057.The FTSE250 inched 1 point into the black, to trade at7,301. The All Share index followed suit, closing 0.1%up at 2,535.
It seems HSBC took Standard Chartered's warning thatit wishes to stay independent to heart yesterday. NowHSBC has turned to Korean based credit card firm LGCard and is allegedly in talks with them in a bidattempt.
This follows pleas by Asia-focussed Standard onWednesday that it does not wish to be taken over despite receiving much attention from HSBC. HSBC traded0.5% down at 901p, while Stan fell over 1%.
And drinks group Diageo fell 1% on Thursday, afterreporting a 5% drop in its underlying first-halfprofits. The maker of Cuervo Tequila and Baileys fellfrom £1.3bn to £1.2bn in the six months to endDecember. Despite the fall, the group pushed itsinterim dividend up 7% to 11.35p per share.
So in spite of the dividend hike, why were investorsunimpressed? Well, a merger between rival Allied Domecqand French group Pernod Ricard seems an increasingpossibility. In fact, Allied's share price has gainedover 10% since the end of January on takeover rumours.Not a worry for Diageo, though.
'I'm not unduly concerned about what may happen inthe rest of the industry,' chief executive Paul Walshsaid on CNBC this week. 'Our market shares would stillbe substantially larger than the combined group thatwould be created.'
The oil and gas sector traded nearly 1% in the blackyesterday. BP climbed 0.5%, while Shell traded 1% up at485p. In fact, Shell is but one of seven stocks pickedby MoneyWeek as the best blue chips in Britain. Checkout the rest in your latest MoneyWeek due throughyour postbox anytime now. ------------------ Cairn Energy has forecast higher oil production for2005, in comparison to 2004 in its trading statementyesterday. Yet analysts still reckon 2004's second-halfprofit may be well under that achieved in the group'sfirst half.
'It appears that, in the second half, production andrealized prices were lower than we expected and costs mainly depreciation higher,' broker Numis saidyesterday. The broker cut its price target on Cairn to£11, from £11.35.
In fact, the energy stock may now be in some troublein maintaining its spot in the FTSE100. Cairn onlyentered the index in September last year but its 20%fall in December has jeopardized its blue chip status.
So how did Cairn's share price trade nearly 6% up onThursday? Well, according to the group, a new discoveryhas been made in India, with the company extending itsdrilling into a new area in the country. This has leftanalysts second-guessing the amount of oil available toCairn at the new site. Not telling, Cairn saidyesterday, wait for an update in April. The group'sshare price traded at £11.30p.
Meantime, French rival Total the fourth largest oilgroup in the world said its net income was up 23% to€9bn. The news followed positive results from both BPand Shell in the UK. As did the subsequent dividendhike, as Total also lifted its divi by 15% to €5.40.The company will buy back around 23m shares.
And it's no surprise the oil majors are tap-dancingthrough the sticky stuff, as the price of crude traded0.5% up on Thursday. The price increased as the USEnergy Information Administration admitted that anyoutput cut by OPEC could lead to oil shortages with thesummer driving season approaching.
'Any cut in crude oil production from OPEC willlikely cause crude oil inventories to be drawn uponmuch more than normal, making it difficult for refinersto maintain normal output levels,' the EIA saidyesterday. Yet with OPEC ministers looking likely to dojust that at their next meeting in a month's time,Dated Brent hiked up 21 US cents to trade at $45.92 perbarrel by London's close.
In fact, Nymex crude is now once again approachingthe $50 per barrel mark, trading up at $48.20 by hometime yesterday. And with those darn Americans justpolishing their SUVs for their long summer road-trips,well...don't expect crude's price to plummet anytimesoon.
Have a great weekend.
Back on MondayHeather D'AltonMoney Morning
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