Total new home sales in Australia fell for a second consecutive month in May 2016 but experts say it is cyclical downturn and nothing to worry about. Total seasonally adjusted new home sales declined by 4.4% following a 4.7% fall in April 2016. The sale of detached houses fell by 6.7% but apartments were up by 4.9%. The data also shows that detached house sales declined in three of the five mainland states with a fall of 11.5% in New South Wales, a fall of 8.2% in Victoria and a fall of 11% in Queensland. But detached house sales increased by 3.8% in South Australia and by 5.4% in Western Australia. The figures should not cause alarm, according to the Housing Industry Association. ‘There is a cyclical downturn ahead for new residential construction activity, as new home sales signal, but the early pull-back will be mild by historical standards,’ said HIA chief economist Harley Dale. ‘We remain of the view that a decline in new dwelling commencements will gather momentum in 2016/2017 and 2017/2018, following four years of growth which has delivered enormous benefits to the broader Australian economy,’ he explained. ‘This economic benefit delivered by new home construction in recent years is unprecedented. It creates a platform for the Federal government to provide leadership on the key issues of new housing supply, affordability and home ownership, which will in turn benefit Australia’s economic growth and future standard of living,’ he added. Meanwhile the HIA’s regular review of Australia’s $30 billion home renovations market show that the sector is very much in recovery mode with 2015 marking the second consecutive year of growth. This followed a deep slump during the early years of the decade. The Renovations Roundup report projects that renovations activity will increase by 2.5% this year with growth of 1.7% forecast for 2017. The HIA also projects that activity will grow by 2.8% in 2018 followed by a 2% increase in 2019, bringing the total volume of renovations activity to $33.30 billion. According to Shane Garrett, HIA senior economist, the recovery in renovations activity is being supported by the environment of remarkably low interest rates and very strong dwelling price growth in key markets. ‘In this context, many home owners have decided to shelve plans to move house and instead conduct major renovations work on their existing homes. The large pool of available home equity has made this possible,’ he explained. ‘However, the pace is growth is being held back by the weakness of earnings growth in the economy and the fragile condition of consumer sentiment. The importance of home renovations activity is often underestimated and it accounted for about 35% of total residential construction during 2015,’ he said. ‘With new home building set to decline over the coming years, the expansion of the renovations market means that its importance will only increase. The revival in renovations activity will provide a welcome offset to the more challenging situation emerging on the new home building side of the industry,’ he added. Source link

The social licence that a business leader needs to operate is no less real for lacking a physical form. It seems Mike Ashley, maverick founder of sportswear retailer Sports Direct, is about to lose his permit. Investors, politicians, unions and business groups are demanding Sports Direct changes its ways after allegations of sharp labour practices. The newest broadside against Mr Ashley comes from one of his oldest critics: the City of London. The Investor Forum has called on Sports Direct to launch an independent review of corporate governance at the company, whose shares have fallen 62 per cent in a year. So far, so toothless. One of the few sanctions City investors can muster is to vote against the reappointment of three independent non-executive directors at Sports Direct’s annual meeting on September 7. Even then, Mr Ashley is free to deploy his 55 per cent shareholding to keep them on board. A controlling stake has permitted the burly former squash coach to thumb his nose at the Square Mile ever since Sports Direct listed in 2007. He holds the weird title of executive deputy chairman so he can run the company with little direct accountability. The intervention of the Investor Forum matters, however, because the forces massing against Mr Ashley are beginning to look overwhelming. Last month, a committee of MPs likened conditions at Sports Direct’s Shirebrook warehouse to “a Victorian workhouse”. The British media is in gleeful pursuit of Mr Ashley, too. Opprobrium for controversial bankers, energy bosses and manufacturing chiefs have in the past forced them to withdraw from public life. Mr Ashley’s appearance before MPs showed how vulnerable he is. He stumbled red-faced through the hearing, admitting his knowledge of his business was often poor. Mr Ashley’s licence to operate depended on two bargains. First, he had to sell clothes at rock-bottom prices without extreme or visible nickel-and-diming of workers. Second, he had to deliver financial performance good enough for minority investors to put up with Sports Direct’s unconventional governance. Having failed on both counts, he should step back to an advisory role at Sports Direct. Old lieutenants, such as chief executive David Forsey, should give way to managers with the experience needed to regularise governance and employment practices. If Mr Ashley decides instead to fight it out, the UK establishment will make life very hot indeed for him. Rock star CRH is a lean, green M&A machine. The Irish building materials group has specialised in buying small “mom ’n’ pop” rivals affordably, then cutting their costs. It is less risky than making big acquisitions. So investors held their breath when CRH bought a bunch of assets for €6.5bn from Lafarge and Holcim last year. CRH is avoiding value traps, judging from full-year results. Pro-forma underlying earnings were 20 per cent higher at €1.1bn. Debt was a steep €7bn, but should fall to two times earnings by year end. Next year the company will be back to bolt-on buying, says chief executive Albert Manifold, a big man running a big company for big rewards. Lombard opined CRH was the kind of business you could invite home to meet the family when it switched its primary listing to London in 2011. So it has proved. The shares have doubled. At more than 17 times earnings they are now expensive, given the vulnerability of US construction to rate rises and the feebleness of European growth. Pork talk Cheery kids character Peppa Pig is the key asset of media group EntertainmentOne. But ITV’s decision to walk away from a £1bn takeover suggests the film and TV company draws greater inspiration from Miss Piggy, who once said: “I would like everyone to take a moment, a single moment out of their busy day, to think how lucky they are to know ME!” Related article Shares in Entertainment One drop more than 10% on abandoned bid ITV, whose shares have been depressed by worries over terrestrial advertising revenue, had mooted an offer at 236p per share. A statement from the broadcaster implies it was ready to go higher, given a look at eOne’s books, but this was not forthcoming. However it seems unlikely ITV would have contemplated bidding at 260p-280p, the takeout range suggested by Peel Hunt. While eOne has produced steadily rising earnings of the kind that strip out all manner of expenses, its generation of free cash has been disappointing. That will have been a mood killer for ITV. The gap between the expectations of chief executive Adam Crozier and eOne investors who bought in at around 290p, before shares slumped, was too wide to bridge. Mr Crozier can be forgiven for failing to bring home the bacon. jonathan.guthrie@ft.com Source link

The government has revealed which organisations will be eligible to take part in the first phase of its competition to find the “best value” small modular reactor (SMR) design for the UK. Artist’s impression of NuScale SMR being transported The first phase will seek to gauge market interest among developers, utilities, investors and funders in “developing, commercialising and financing SMRs in the UK”. Out of 38 bidders the government deemed 33 eligible to participate. The list includes a number of major players in the development of new larger nuclear plants in the UK: EDF, the developer of Hinkley Point C; China National Nuclear Corporation, which is expected to buy a stake in Hinkley if it goes ahead; GE-Hitachi Nuclear Energy, the supplier of two Advanced Boiling Water Reactors (ABWR) for the Wylfa Newydd plant in North Wales; and Westinghouse, the supplier of two AP-1000 reactors for the Moorside plant in Cumbria. It also features NuScale Power, which plans to deploy its first SMR in the state of Idaho in the US in 2024, and Sheffield Forgemasters, which NuScale recently commissioned to forge a demonstration reactor vessel in Britain by the end of 2017. Manufacturing giant Rolls-Royce, accountancy firm EY and the National Nuclear Laboratory – which published a major study into the feasibility of SMRs in 2014 – are among the other notable inclusions. In its 2015 autumn budget statement, the government announced it would invest £250 million in an “ambitious nuclear research and development programme”, including in the SMR competition which was launched in March. The newly formed Department of Business, Energy and Industrial Strategy will put together a roadmap for the development of SMRs in the UK in parallel with the first phase of the competition. The roadmap will be published after the first phase concludes. The idea behind SMRs is that, by virtue of being small and modular, large numbers of them can be pre-fabricated in factories to a single design before being transported on site and combined together to form larger plants. The hope is that constructing reactors in this way will bring down costs.   Last month the Welsh Affairs Committee urged the government not to support the development of SMRs unless it can show there is enough demand for the reactors to make them economically viable.  Source link