RAMSEY CROOKALL & CO

MORNING REPORT 20th January 2011

The top share index is lower after a disappointing session in the US yesterday, with updates getting a poor reception here.

In company news, Associated British Foods (ABF) falls back after saying that it grew revenue by 10% in the first 16 weeks of the financial year, in line with expectations, but that rising commodity prices are hitting margins and the weather-hit sugar crop will trim annual profits. Revenue at constant exchange rates was up 7%. Higher prices boosted profits at the sugar business where revenue rose 7%, but the recent increase in temperatures following the pre-Christmas freeze is damaging the 25% of this year’s sugar beet crop still to be processed. Higher commodity costs are forcing the firm to raise prices at all businesses.

Elsewhere, insurance group RSA Insurance is also lower. It had a tough winter, with losses relating to the weather in November and December £142m more than normal. For the year as a whole the weather impact was around £255m above normal levels. Despite the effects of hurricanes, earthquakes and the big freeze, the chief executive officer Andy Haste said the group had still posted a “strong result” for 2010, with 11% growth in net written premiums, a combined operating ratio (COR) of between 96.5% and 97% and an operating profit of £600m-£640m.

Finally, the extreme weather over Christmas kept drinkers at home, taking an estimated £2m off Enterprise Inns’ first quarter operating profit, Britain’s biggest pub owner said. Enterprise said the disappointing trading came after a solid start to the year. Net income was down by 1% during the quarter, with net income per pub down by about 2%.

THE FTSE 100 AT 9.25 IS DOWN 36 @ 5940

THE DOW JONES CLOSED DOWN 12 @ 11,825

THE NASDAQ COMP CLOSED DOWN 39 @ 2725

Exchange Rates

GBP – USD 1.59 GBP - EURO 1.18