Transport group Arriva says the addition of Cross Country rail services has helped its UK trains division boost half-year profits by 40%.

The Sunderland-based firm’s rail operating profits increased to £14.8m from £1.1m since acquiring the Aberdeen to Penzance franchise in 2007.

Arriva said it had also bucked rising fuel prices by securing supplies on fixed deals in advance.

The company runs more than 16,000 buses and trains across the UK and Europe.

Overall, group revenues were 59% higher at £1.44bn, with profits up to £66.3m from £47.3m a year earlier.

New vehicles

Chief executive David Martin said: “Our focus on Europe’s diverse transport markets gives us resilience and great potential for further growth.”

Arriva has warned that higher fuel prices and the economic downturn presents challenges for the future, but says its fuel costs this year have been “substantially fixed”, with two-thirds of the requirement for 2009 also secured in advance.

The company’s UK bus division increased operating profits by 20% to £45.5m, based on a 14% rise in revenues to £454.5m.

The firm is planning to bring more than 460 new vehicles into service on its regional bus network during this year.

The Arriva Trains Wales operation also contributed to the improved performance of the UK rail division.

Arriva shares closed up nearly 7% at 509.5 pence on Friday.

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Chinese brewer Tsingtao has reported that half-year profits jumped 42% helped by added publicity due to its 2008 Beijing Olympics sponsorship.

The firm, which is 27% owned by US beer giant Anheuser Busch, said net income rose to 381.13m yuan ($55.4m; £29.8m).

Under pressure from higher raw material and labour costs, Tsingtao said it was forced to raise the prices of some of its brands during the period.

Brewers worldwide are suffering higher barley, hops and packaging costs.

China’s beer market is the largest in the world by consumption, but it is a fragmented industry and competition from domestic and Western brewers is rife.

Tsingtao is China’s second-largest brewer, behind China Resources Snow Breweries, which is co-owned by London-based SABMiller and owns the best-selling Snow brand.

It is hoping to tackle Snow’s dominance through its Olympic campaign, on which it spent 1.6bn yuan in the first six months of 2008 – a 20.5% increase on last year.

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Hewlett-Packard (HP), the world’s largest computer computer, has seen its quarterly profits boosted by robust international sales.

The firm saw profits for the three months to 31 July reach $2.5bn (£1.3bn), up from $1.78bn in the same period a year earlier.

Revenue from outside the US accounted for some 68% of the total, with particular strength in Asia.

Computer firms have targeted overseas markets as the US economy has cooled.

Lou Miscioscia of Cowen said: “Many had expressed concerns that HP’s results were going to start to be affected by the economy, but HP had solid numbers.”

Europe, Middle East and Africa saw revenue climb 5%, while revenue in Asia Pacific was 8% higher.

The Americas saw revenue up 3%.

The personal systems group saw revenue of $10.3bn, marking a rise of 15% and revenue from notebooks was 26% higher year-on-year.

Jason Pride of Haverford Trust said HP seemed to be “a standout”.

“The only other company that has a similar ability to stand out is IBM, but that’s a very different story, a story of transitioning to a more service-oriented approach.

“But HP is still primarily a hardware provider, and in that space, they are absolutely a standout.”

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British Energy has reported a 66% drop in quarterly profits, hit by falls in production from the group’s ageing nuclear power stations.

The firm made profit before tax of £101m for the three months to 29 June, compared with £296m a year ago.

British Energy said it had benefited from higher power prices but output fell because of plant closures.

The firm said that “advanced discussions” in connection with a potential offer for the firm continued.

A takeover of British Energy, which is 35%-owned by the government, is viewed as the best way of supporting the UK’s plans to build a new generation of nuclear plants over the next 20 years.

“We have continued to make good progress towards resolving the plant issues that have significantly impacted our performance in the year to date” Bill Coley, chief executive

However, the sale process has faltered.

France’s EDF had been poised to buy British Energy for £12bn but talks stalled over the price.

Centrica has also said it is talking to an unnamed third party about taking a minority stake in British Energy if that firm bought the nuclear operator. It has also said it would consider a merger with British Energy.

Plant problems

British Energy said boiler unit closures at Hartlepool and Heysham 1 plants had hit output and would cost more than thought to repair.

The company said the timetable for bringing the reactors back online was unchanged, but costs are now estimated to be around £115m in the 2008/09 financial year, compared with a previous estimate of £50m.

“We have continued to make good progress towards resolving the plant issues that have significantly impacted our performance in the year to date,” said chief executive Bill Coley.

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Broadcaster ITV says profits fell 28% in the first half of the year, and that its advertising revenues will be flat across the first eight months of 2008.

It also says advertising revenues will fall 20% in September against 2007, when it broadcast the Rugby World Cup.

Adjusted pre-tax profit was £91m for the six-month period, but allowing for one-off charges it made a £1.54bn loss.

ITV boss Michael Grade said that the firm may give up its public service broadcaster status to help cut costs.

“I think we have a future as a public service broadcaster provided that we can get Ofcom and the government to realise very, very quickly that we cannot afford to pay more than the licence and the public service broadcaster (PSB) status is worth,” he said.

He added that the regulator Ofcom estimated the cost to be about £45m a year.

“It’s presently costing us over £220m a year,” Mr Grade said.

“If we can’t get quick resolution to that then, obviously, as Ofcom itself outlined in its recent consultation paper, there is an option for ITV to give up its public service status,” he continued.

“We don’t want to do that.”

ITV’s shares fell 5.8% to close at 43.6 pence in London.

Ad revenue ‘holding up’

The broadcaster is facing severe advertising budget cuts in the UK, and is having to deal with significant shifts in market conditions.

It said that the 28% drop in profit was largely due to a charge of £1.6bn made as it wrote down the value of assets bought in 2000 and 2004.

“Multi-channel competition against ITV has been a nightmare for this founder of commercial broadcasting for years” Robert Peston, BBC business editor

As a result the company has targeted an extra £35m of cost savings by the end of 2010.

ITV executive chairman Mr Grade said ITV was “not immune to wider economic pressures”.

He added: “Despite some dire predictions UK television advertising held up relatively well over the first half of the year and through the summer.”

ITV estimates that total net advertising revenue for the eight months to August will be down 1% year-on-year, with ITV plc net advertising revenue flat.

“However, on current estimates the television advertising market has weakened significantly in September, where trading is impacted by tough comparisons with the successful Rugby World Cup in 2007,” Mr Grade said.

ITV’s sports costs were up £29m compared with last year, primarily due to the cost of broadcasting Euro 2008 football matches.

However, sport was one of the areas where ITV continued to perform well, with the UEFA Champions League final between Manchester United and Chelsea achieving an audience of 10 million viewers.

ITV’s net advertising was actually up 1% over the first six months of the year, and its viewing share up 2.5%.

Tough competition

BBC business editor Robert Peston said cost-cutting was now the order of the day at ITV, as it finds the bill for living up to its obligations as the leading licensed commercial broadcaster financially onerous.

“Multi-channel competition against ITV has been a nightmare for this founder of commercial broadcasting for years,” he said.

“What makes this nightmare almost unbearable is the economic slowdown we’re all experiencing – manifest in ITV’s expectation that its net TV advertising revenue will be 20% lower in September.”

And our correspondent said that the impairment charge of £1.6bn was “simply the unavoidable recognition that the businesses brought together to create ITV in 2000 and 2004 are worth a great deal less now than they were”.

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Barclays has seen pre-tax profits drop 33% in the first half of 2008 following more credit crunch related write-downs.

The bank made £2.75bn, down from £4.1bn, which it said was “acutely disappointing” but which beat many analysts’ expectations.

The fall in profits was less than that seen by most of its competitors.

Barclays said it had taken charges of £2.45bn for bad debts, including exposure to US sub-prime mortgages and other credit market problems.

“Barclays has done particularly well, given that so much of its growth over the past few years has come from an investment bank” Robert Peston BBC Business Editor

‘Tough’ conditions

Barclays said the outlook would remain difficult.

“It would be wrong… to suggest that the market conditions over the foreseeable future will be anything other than tough,” said chief executive John Varley – pointing to slowing economies around the world.

“That means that we must remain very vigilant to managing risk.”

He added that some parts of the business “may take quite some time” to return to the profitability of previous years.

The £2.45bn of charges in the first six months of 2008 compared with £959m of write-downs in the same period a year ago.

Barclays’ investment banking arm – Barclays Capital – saw profits fall 68% to £524m, after it took nearly £2bn in write-downs as a result of the credit crunch

Capital raising

BBC business editor Robert Peston said that Barclays had done well, especially given that so much of its growth over the past few years has come from Barclays Capital (Barcap) – which remained profitable.

TOP WRITE-DOWNS
Billions of dollars
Citigroup 46.40
Merrill Lynch 36.80
UBS 36.70
AIG 20.23
HSBC 18.70
RBS 16.50
IKB 14.73
Bank of America 14.60
Morgan Stanley 11.70
Deutsche Bank 11.40
Ambac 9.22
Barclays 9.20
Wachovia 8.90
MBIA 8.41
Credit Suisse 8.13
Wasington Mutual 8.10
HBOS 7.50
Source: Reuters

“More-or-less every analyst on the planet expected Barcap to be the pre-eminent credit-crunch victim,” he said.

“But, to date, Barcap has not suffered credit losses anywhere near as big as Merrill, or UBS, or even Royal Bank of Scotland”

Barclays has 11.5 million UK customer accounts, and 786,000 mortgage accounts.

At its credit card operation Barclaycard, bad debt charges increased 10%, partly because of its recent purchase of Goldfish.

Barclays recently raised £4.5bn from investors to boost its balance sheet.

The bulk of shares were sold to major overseas and institutional investors, led by Qatar, China and Singapore.

And earlier this week Barclays agreed to sell its life assurance arm to Swiss Re for £753m as part of its capital raising efforts.

News reported by The BBC