Business Magazine: the Echo's monthly supplement

Equity markets have been buoyed this week by higher than expected earnings figures from BP, Royal Dutch Shell and Game Group - yes, good figures from a retailer! Some are also taking the view the bank sector has turned a corner.

With the oil price remaining above $100 a barrel for virtually all of the last quarter it is not surprising BP and Royal Dutch Shell have just announced record quarterly trading figures.

This news has come in the same week as the Grangemouth refinery strike in Scotland and a warning from Opec that geopolitical tensions and speculators could push the oil price over $200 per barrel. These conditions will almost certainly revive speculation of a windfall' tax on the oil companies.

The Chancellor could certainly do with a boost to the government's coffers and, faced with higher fuel and heating costs, such a move would probably be well received by the voting public.

As for Game Group, the company has just announced annual profits have more than doubled thanks to the success of the Wii, PlayStation 3 and Xbox 360 games consoles. Game is based in Basingstoke and the group became the UK's leading video and PC game retailer last year when it acquired Gamestation. Game has also announced plans to open 100 new stores in Europe and Australia.

General retailers such as Argos owner Home Retail Group must be wondering why they have not devoted more shelf space to video and PC games.

Trading for retailers in general has been difficult for some months now as the combination of high levels of consumer debt, rising interest rates and the credit crunch has prompted shoppers to tighten the purse strings.

Against this backdrop the market was already anticipating a less than sparkling set of results from Home Retail Group today.

A similar statement is expected tomorrow from fashion retailer Next, where falling sales in the traditional high street stores are being offset by stronger sales from the Directory business.

On a brighter note, medical devices group Smith & Nephew is expected to deliver a much healthier set of quarterly figures tomorrow. The company manufactures a wide range of medical products from wound dressings and hip joints to surgical tools used in keyhole surgery. Indeed, many of its products are specifically designed for older patients, making Smith & Nephew very well placed to benefit from aging and affluent populations around the world.

This is all a far cry from 1856 when the company was founded by TJ Smith to supply cod liver oil to hospitals.

In 1896 Smith's nephew joined him as a partner and they went on to invent the Elastoplast plaster in 1928.

David Evans, BREWIN DOLPHIN

8:06am Wednesday 30th April 2008

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