US new home sales leap 9.6%

WASHINGTON – Sales of new US homes surged 9.6 per cent in July, according to government data on Wednesday that showed further signs of recovery in the troubled housing sector.

Sales of new single-family homes rose to a seasonally adjusted annual rate of 433,000, the Commerce Department said. That was well above analyst estimates of 390,000.

Nonetheless, the figure was 13.4 per cent below the sales pace of a year ago, and gains came amid price cuts.

The median sales price of new houses sold in July 2009 was US$210,100 (S$304,000), down slightly from US$210,400 in June and 11 per cent below last year’s median price.

The average sales price of US$269,200 was down 2.7 per cent from a month earlier and off 10 per cent from a year earlier.

Inventory levels came down in July, reducing the glut of new homes for sale.

The seasonally adjusted estimate of new houses for sale at the end of July was 271,000, a supply of 7.5 months at the current sales rate

Boeing may expand plant

Boeing spokesman Russ Young said the company is notifying state and local officials about applying for permits at the North Charleston plant, but noted there will be no decision on where to locate a second line until year’s end.

The Chicago-based company has been evaluating potential sites for a second assembly line for the 787, a next-generation aircraft built for fuel efficiency with lightweight carbon composite parts and its best-selling new model to date.

But production of the 787 has been hampered by problems stemming partly from Boeing’s reliance on global suppliers to build large sections of the aircraft. Those sections are later assembled at its commercial aircraft facilities in Everett, Washington.

The production glitches and an eight-week strike by union workers last fall have led to repeated delays of the 787’s first test flight and deliveries.

The troubles with the 787 program have cost Boeing credibility and billions of dollars in anticipated expenses and penalties. First deliveries are now about two years behind schedule.

Still, the 787 remains a priority for Boeing, which has struggled with sharply lower orders as the global economic slowdown has eroded demand for air travel and cargo services.

The North Charleston plant, which Boeing bought last month from Vought for US$580 million (S$838 million) plus about US$420 million in debt forgiveness, makes fuselage sections for the 787.

Analysts saw the acquisition of the plant, which was built in 2005, as an effort by Boeing to exert greater control over the production process and resolve supplier problems.

Because of the lead time required to get building permits, the company may also seek them for other locations, Mr Young said. Boeing has declined to specify other sites being considered

Profits jump at Credit Agricole

Credit Agricole, France’s largest retail bank, has announced better-than-expected profits as fewer losses on bad loans helped to boost performance.

The bank made 201m euros ($286m; £177m) between April and June, more than double the 76m euros it made in the same period a year ago.

But despite the results, the bank said the financial crisis would not be over until the second half of 2010.

Banks across the world have reported mixed results for the second quarter.

‘Resilient results’

“All our historic business lines are producing good results, which allows us to deal with the impact of the current crisis,” said Georges Pauget, Credit Agricole’s chief executive officer.

“Retail banking, insurance, asset management and consumer finance delivered very good performances, despite the adverse economic climate,” he added.

Christoph Bossmann, an analyst at West LB, said: “The results are resilient in retail banking and asset management.”

Earlier this month, French banks BNP Paribas and Societe Generale reported increases in profits, while Swiss bank UBS reported a loss.

Major banks in the UK have also reported mixed results, with Barclays and HSBC posting bumper profits and Northern Rock and Lloyds Banking Group announcing big losses.

Banks in the US have had similarly mixed fortunes, with Goldman Sachs and JP Morgan in the money and Morgan Stanley posting losses.

News Corp puts Dow Jones index business up for sale

The Wall Street Journal, which is also owned by Dow Jones publishing group, part of Rupert Murdoch’s News Corporation, reported over the weekend that the company was in discussions with potential buyers of the business.

Goldman Sachs has been appointed to lead the talks.

News Corp bought Dow Jones for $5.7bn (£3.45bn) in 2007 but was recently forced to write down $2.8bn of the purchase price after its publishing operations were hit by the fall in advertising.

Potential buyers of the indices business have been named as Bloomberg, FTSE – which is a joint venture between the Financial Times Group and the London Stock Exchange, MSCI Barra, Russell, Thomson Reuters or McGraw-Hill – the owner of index provider Standard & Poor’s.

The Wall Street Journal said negotiations are still at an early stage and the talks could also result in an arrangement other than an outright sale, such as a joint venture.

As well as the famous industrial average, the company also compiles more than 130,000 indices and licences the data to market professionals.

Should any new acquirer decide to change or scrap any of the indices, it could have a strong effect of providers of exchange traded funds (ETFs) as many of these investment vehicles track specific Dow Jones indices.

The industrial average was introduced in 1884 by Charles Dow and Edward Jones. Initially it contained 12 stocks, but this was raised to 30 in 1928. Included in the index today, are companies such as IBM, Wal-Mart, Caterpillar and ExxonMobil. General Electric is the only company that has been listed since the index was founded.

American Woodmark Posts Loss; Sales Slump For Cabinet Maker

American Woodmark Corp. (AMWD) swung to a fiscal first-quarter loss as the vanity and cabinet maker posted results far below analysts’ expectations amid the ongoing slump in house construction and home improvement.

President and Chief Executive Kent Guichard called the results “disappointing, but in line with our expectations, when considering the difficult market conditions confronting our industry.”

He noted the company somewhat offset those impacts in the prior two quarters with promotions. Guichard went on to say that with record levels of cash on hand and despite market conditions, “we remain confident about the long-term prospects for our industry and for our company in particular.”

Building-product makers of all types have suffered for sometime amid the years-long construction decline. American Woodmark’s stock has been halved since early 2007, but has nearly doubled from a 7 1/2-year low in November. Shares fell 3.2% in light premarket trading to $23.50.

The company posted a loss for the quarter ended July 31 of $6.4 million, or 45 cents a share, compared with a prior-year profit of $156,000, or 1 cent a share. The latest quarter included 11 cents of restructuring costs. Revenue dropped 28% to $100.8 million.

The mean estimates of analysts surveyed by Thomson Reuters was a 4-cent loss and revenue of $121 million.

Gross margin fell to 11.7% from 15.9% amid the sales slump.

AP Source: Talks to sell GM’s Opel hit rough patch

GM’s board, in a telephone conference call meeting Friday, made no decision between bids from a consortium led by Canada’s Magna International Inc.and Brussels-based investor RHJ International SA.

The board instead questioned the aid package offered by the German government in the deal because it only included an option to fund the Magna group, said the person, who didn’t want to be identified because the talks are ongoing.

The government has been clear it wants the Magna group, which includes Russian lender Sberbank, to gain controlling interest in Opel. GM has said it would prefer RHJ because the Magna-Sperbank bid raises the possibility of GM patents and other intellectual property falling into competitors’ hands.

A German government official said the government “regrets” that the board didn’t make a decision and said talks will continue next week. The person, who requested anonymity because the talks are private, said officials are confident that solutions will be found.

German Chancellor Angela Merkel, in an interview published Friday, renewed backing for Magna, saying its bid is “the better concept.”

“As things stand, I view the chances for the financial investor RHJI very critically,” Merkel was quoted as telling the daily Frankfurter Allgemeine Zeitung.

“We must find a common solution together with GM,” she added. But “our preferences lie clearly with Magna. Magna has experience in car building and the better concept.”

“Without doubt, the Russian component definitely makes sense,” Merkel said, according to the report. “And I see many chances there.”

GM has yet to choose its favored bidder, but has in recent weeks signaled concerns over questions raised by the Magna-Sberbank bid, among them Opel’s potential cooperation with Chevrolet in Russia and intellectual property transfer rights in the country.

GM’s global small and midsize cars, for instance, now are built on underpinnings designed by Opel, and future vehicles are based on them as well.

Economy Minister Karl-Theodor zu Guttenberg told the Financial Times Deutschland newspaper that he expected a “basic assessment” on the bids but it is a “matter for GM” whether it makes a decision yet.

BMO Financial Group reports decrease in third-quarter earnings per share

TORONTO — BMO Financial Group (TSX:BMO) says strong performances in its personal and commercial banking sectors helped boost profits in the third quarter even as earnings per share edged down a penny.

The bank is reporting net income of $557 million for the quarter ended July 31, up from $521 million recorded the year before.

Earnings per share slipped one cent to 97 cents per share from 98 cents posted in the same quarter of 2008.

Excluding one-time items, BMO says adjusted cash earnings per share totalled $1.05.

Quarterly revenue climbed eight per cent to $2.97 billion, while the bank’s tier one capital ratio rose to 11.71 per cent.

The bank says it is keeping its quarterly dividend fixed at 70 cents per share.