LVMH shares hit record high as China demand boosts luxury group

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The group, which owns other labels, including Christian Dior and Krug Champagne, sets the bar high for competitors who pursue the same clientele, although not everyone gets the same benefit as Chinese spending moves from the capitals of foreign stores to homes.
The LVMH's solid impulse, however, was still enough to raise stocks across the sector, despite fears of a deterioration in the Chinese economy.

French groups rose 4.3 percent in the second half of the day after they reached a record high early in the day, which helped raise the rankings of such companies as the owner Gucci Kering, Hermes, Burberry and Moncler.
LVMH reported ahead of schedule on Wednesday. First-quarter revenue rose 16 percent to 12.5 billion euros ($ 14.10 billion), up 11 percent over the same period, eliminating currency fluctuations and the effect of acquisitions or disposals.

In general, slower growth is expected when LVMH competitors report numbers for the first quarter, and the group "should be above the average this year,” analysts say at SocGen, as the bank raised the company's rating to "buy” from "hold”.

LVMH’s bullish comments about the appeal of its brands to Chinese consumers were even more supported by its actions during a conference call with analysts on Thursday.
"In the case of the Chinese, the business is really getting stronger and stronger,” said CFO Jean-Jacques Gioni about LVMH Louis Vuitton, the main driver of profits, adding that it also sold well to Japanese and American customers.

Guiony confirmed that Chinese buyers, who still mostly buy luxury goods on foreign trips and which account for more than a third of sales in this sector, are gradually spending more on home lawn, which is partly stimulated by the government’s efforts to reduce fuel consumption by reducing VAT or import duties.

Shopping in nearby areas, such as Hong Kong or Macau, was hit hardest by this trend, he added, while Chinese spending in Europe remained high, despite constant street protests in France.

"There is stability in Europe, demand is growing in China, and a decline is observed outside China in the rest of Asia,” said Gioni.


U.S. business borrowing for equipment falls 24 percent in February: ELFA

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Last month, companies signed up for new loans, leases and lines of credit for $ 5.9 billion against $ 7.7 billion a year ago. The fall was 18 percent compared with the previous month.

"The monthly volume of new business declined for the first time in almost two years ... The fundamentals of the US economy seem to be holding on,” said ELFA Executive Director Ralph Pett.

"As the Fed keeps interest rates unchanged, these and other economic data will be monitored in the coming months to better understand the fall in equipment financing in February."

Washington-based ELFA, a trade association that reports economic activity in the equipment financing sector worth $ 1 trillion, reported that the number of loans approved in February was 76 percent, compared to 76.1 percent in the previous month.

US business borrowing data was based on a survey among 25 members, including Bank of America Corp., BB & T Corp., CIT Group Inc. and financial subsidiaries Caterpillar Inc., Deere & Co, Verizon Communications Inc., Siemens AG, Canon Inc. and Volvo AB. ,

The equipment and finance leasing fund, a non-profit subsidiary of ELFA, said that the March confidence index is 60.4 against 56.7 in February. Any reading above 50 indicates a positive outlook.

Deutsche Bank merger talks heighten uncertainty for U.S. staff

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The future of banking presence in the United States in the field of trade and investment has already been questioned, as some shareholders are calling for additional cuts in addition to those announced last year, and speculation intensified after the confirmation of the merger talks on Sunday.

It is expected that the German government, which owns a 15 percent stake in Commerzbank, will retain a stake in the merged business if the transaction is completed. Some employees fear that this may cause the bank to focus on its domestic market.

Both banks warn that the outcome of the negotiations remains uncertain, and the process may drag on for months. At the same time, key employees could compete with Wall Street banks and hedge funds, which would further weaken a business that has been ineffective for many years. In recent months, several bank executives have ceased operations in the United States.

"We do not know what is happening. Everything is in the air, ”said one senior employee of the bank’s US equity department who asked not to be named because of the sensitivity of the issue.

Chief executive Christian Shiving on Sunday reminded employees that Deutsche intends to remain "a global bank with a strong business in capital markets,” and a source familiar with this issue said that the merger will not change the bank’s commitment to a strong US presence. ,

Deutsche Bank declined to comment on Wednesday.

German Finance Minister Olaf Scholz, who is reportedly a supporter of the merger, previously stressed the need for the German banking sector to support German companies that want to go abroad for export.

After the financial crisis of 2007-2009. Deutsche maintained a broad presence on Wall Street, despite the fact that European competitors, such as Credit Suisse Group AG, significantly reduced the amount of investment banking operations in the United States.

Deutsche Bank's US business brought about half of its income to its total investment banking unit, which includes corporate and investment banking, as well as trade, even though it had a relatively high cost of capital.

However, due to judicial and regulatory investigations of past misconduct, businesses fought against Wall Street rivals.

Last May, Deutsche said it would reduce the number of staff around the world to below 90,000 from 97,000. This included a 25 percent reduction in sales of stocks and jobs, much of which was in New York, where it was lagging behind competitors.

According to banking analysts, job cuts in the United States will not cause the same political breakthrough that both banks will face if they fire jobs in Germany.
Even if Deutsche Bank maintains its operations in the US mostly intact after a deal with Commerzbank, some employees fear that payments and bonuses will decrease because the combined organization will face a negative reaction from German taxpayers if its remuneration is deemed excessive.

Commercebank, which specializes in personal and commercial lending, usually pays its employees less than Deutsche Bank. If the German government had retained a stake in the unified union, lawmakers would most likely have argued that it should tightly control wages.

Sources said traders in Deutsche Bank shares in the US are already under pressure, as some get significantly lower bonuses by 2018.

This contributed to a decrease in morale, which was aggravated by the departure of senior employees, including Brad Kurzman, co-chairman of the equity trading department in North and South America, who leaves at the end of this month, sources said.

The recent efforts to recruit college graduates, which senior management proclaims as a confirmation of the bank’s long-term commitment to the sales department, have done little to ease concerns, they added.
One employee, who asked not to be named, said that further desertions are considered probable, as employees hope to prevent further reductions in the event of a Commerzbank transaction.

(This story corrects a typo in the first paragraph.)


Volvo expects electric car margins to match conventional vehicles by 2025

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Global automakers are planning to increase the cost of electric vehicle technology by $ 300 billion over the next five to ten years, but recognized that higher parts costs and limited use in the early years will be profitable.

Volvo invests about 5 percent of its annual income, which is just over $ 1 billion a year, in the production of cars without electric cars and electric cars, and promised to release five all-electric cars to the market in the next few years.

He demonstrated the first, less than a month ago, made by the luxury brand Polestar, competing with the 3 Tesla model. This year, he also plans to launch an electric compact SUV under the Volvo brand, so that the company will receive 50% of its sales from all-electric cars by 2025.

"It’s very difficult to say whether we’ll have the same margin in 2025 as in 2015 ... because electric cars are very expensive,” said CEO Hakan Samuelsson told Reuters on the sidelines of the company's security exhibition. in Gothenburg.

"But I would be absolutely sure that we would have the same profit with electric vehicles as conventional combustion vehicles in 2025."

Samuelsson said lowering the cost of components such as batteries and lowering profits on conventional cars would help bring people closer together.


U.S. airlines stand by 737 MAX as some customers, nations reject it

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The US Federal Aviation Administration is one of the main regulators who do not suspend 737 MAX flights after Britain and the European Union joined the wave of other suspensions after two crashes for several months with the same aircraft on Tuesday.

Southwest Airlines Co, American Airlines Group Inc and United Airlines have stated that they are still confident in their aircraft. Both the south-west and the Americans reported that the data of their fleet showed that the aircraft was safe.

Many potential passengers turned to social networks to express their concern, asking if they could change their flights, and some even asked for cancellation. Southwest Airlines Twitter account (@SouthwestAir) was occupied by hundreds of plane-worried customers.

Andrea Cal (@andi_call) tweeted southwest that she traveled with her daughter in May. "I don't want to get on a Boeing Max 8,” she said. The airline responded that it focused on safety, adding that "our fleet of Boeing 737 MAX 8 is working as planned today, and we plan to operate these aircraft in the future." Call will have to wait until 24 hours before the flight finds which plane will be used. ”

Twitter user Sandy (@nycsandygirl) tweeted that she called American Airlines to change her flight, but she was told that the refusals were unavailable for non-refundable fares.

"I have the right to demand a change of aircraft without a fee for a change, if there were concerns about the safety of a particular aircraft. China, Indonesia, Ethiopian airlines and Cayman Airways substantiated these aircraft, so it is obvious that there is a problem, ”wrote a Twitter user.

Unions representing American Airlines flight attendants and pilots called for Doug Parker, Executive Director of American Airlines, to consider grounding the aircraft, pending a thorough investigation. The flight attendants said they would not be forced to fly the plane if they felt safe.

A separate union representing United Airlines flight attendants also called on the FAA to ground the planes and investigate 737 MAX.

Pilot unions have not yet joined such requests.

US senators Mitt Romney and Elizabeth Warren were the latest politicians to encourage the FAA to act.

The FAA and Boeing said the planes are safe to fly.

Southwest is the largest operator of an aircraft with 34,737 MAX 8 aircraft, which, according to her, produces thousands of data points during each flight, which are constantly monitored.

"To date, we have completed more than 41,000 flights and have relevant aircraft data that indicate the effectiveness of our operational standards, procedures and training,” said spokeswoman Michelle Agnew.

The Southwest Pilot Association said Tuesday that it supported the airline’s decision to continue flying the aircraft, as well as the FAA’s findings to date.

On Monday, American Airlines issued a similar statement saying that extensive flight data from its fleet instilled confidence in the safe operation of all aircraft, including the 737 MAX 8.

A US official said Tuesday that the airline’s position remained the same.

The American, who has 24 MAX 8 aircraft, said he shares his data with the FAA in coordination with the Allied Pilots Union, an association that represents American pilots.
United Airlines, which does not control MAX 8, but operates another model in the series, MAX 9, also confirmed its confidence in the ability of pilots to fly an aircraft safely.

"(...) we still believe that the aircraft will be deemed safe, and the impact on Boeing’s long-term operations, backlog, business course and order flow will be limited,” said Jim Corridor, an investment analyst for research firm CFRA, which adhered to her opinion about Boeing.


Chinese firm behind the 'Amazon Coat' hits jackpot in U.S., eschews China

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It never occurred to him that his Orolay down jacket would be a huge hit, hailed as "Amazon Coat” in the US social and traditional media — and supported by the budding rival of the premium brand Canada Goose.

Polyester coats cost between $ 80 and $ 139 using duck down from the Chinese provinces of Hebei and Anhui. For comparison, Canada Goose jackets cost from $ 575 in the United States.
"In January, we made more money than in the whole of 2017,” said 32-year-old Chiu in an interview with Reuters at his factory in the eastern Chinese city of Jiaxing.

According to his estimates, the volume of sales of his company last month amounted to $ 5 million, and this year it counts on $ 30–40 million. Sales in the US - almost all of which are sold through Amazon.com Inc. - account for 70 percent of total revenue.

However, the success of Orolay is not just a story about competitive prices, but also a design that has gained popularity among consumers in the United States.
Chiu is one of many Chinese merchants who have taken advantage of measures introduced by Amazon in recent years that have allowed overseas merchants to easily sell on their website.

This raised concerns among American merchants on Amazon that they were deprived of weapons. And in industries such as clothing, experts say that retailers cannot ignore the threat posed by the influx of small brands, many of which are based in China.

"In general, this is the influence that is happening in the industry on the part of all these brands. When you add them, they just take market share, ”said Robert D'Loren, executive director of Xcel Brands Inc., whose products are sold at Macy's Inc. and on Amazon.com.

Amazon declined to comment on the view that American firms are undermining Chinese merchants using their website. It does not break the number of sellers on their websites by country.
Analysts point out that the number of Chinese merchants on Amazon will continue to grow, as fierce competition and rising prices have made it less attractive for sale on local e-commerce sites such as Tmall Alibaba Group Holding Ltd.

Indeed, Chiu is no longer sold in China. Other Orolay markets are Europe, Japan, Taiwan and Australia.

"We were selling on Alibaba in the early days ... but the competition in China is tougher,” he said, adding that the increase in costs of using local sites is also a factor.

In addition to paying for using Chinese e-commerce sites, merchants also face other costs, such as investing in customer service groups. Alibaba declined to answer Reuters questions about whether spending has increased for suppliers.
Analysts say that the number of Chinese merchants selling on the American Amazon site has increased over the past five years after the introduction of measures that allowed sellers around the world to store goods in Amazon warehouses and assisted in delivering these goods to buyers.

At the end of last year, the retail giant also launched a program that guides Chinese sellers to local lenders. For comparison, Amazon offers loans to individual small businesses in the US, UK and Japan, which sell on its website.

Chiu credits Amazon for most of the firm’s success, but intends to expand it, saying that retailer offers include invitations to online sales from Walmart Inc. and the US shopping site Rue La La.

A Walmart spokeswoman said the company has no agreement with Orolay. Rue La La does not respond to requests for comments.
Expansion plans include expanding the range of Orolay products to cotton and men's outerwear. But for now, Chiu is still surprised at how his business has become so successful in a market that he barely knows about.

"Last year I went on vacation to New York twice and was so excited to see people wearing our jackets on the street,” he said.

"I really wanted to ask them how they like our jackets, but I did not do it because I do not speak English."


Exclusive: Boeing nears $3.5 billion 737 MAX jet deal with Japan's ANA - sources

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This transaction is the first sale in Japan of the newest version of the Boeing 737 family, which was a turning point for European Airbus, five years after the same airline became the first Japanese carrier to choose the competing A320neo.
This also coincides with negotiations between Washington and Tokyo over a potential trade pact, when Japan faces pressure from the administration of US President Donald Trump to reduce its trade surplus with the US.

Boeing declined to comment. ANA cannot be reached immediately for comment. Sources said the deal could be announced on Tuesday, subject to final approval by the airline, subject to anonymity.
The Boeing 737 MAX and Airbus A320neo have collected thousands of orders due to the significant fuel savings offered by the new generation of engines.

But the world's largest aircraft manufacturers continue to conduct fierce market battles, while Boeing refuses Airbus's recent leadership in the market for such medium-range aircraft.

Trump and other senior US officials criticized Japan for trade, arguing that Tokyo is unfair to the United States, sending millions of vehicles to North America, while at the same time blocking imports of cars and agricultural products to the United States.
Japan says its markets for manufactured goods are open, although it protects politically sensitive agricultural products.

In September, Trump and Japanese Prime Minister Shinzo Abe agreed to start trade negotiations on an agreement that appeared, at least temporarily, to protect Japanese automakers from further tariffs on their exports, which account for about two-thirds of Japan's trade surplus of 69 billion dollars from United States.

Japan insists that the new trade agreement on goods will not be a comprehensive free trade agreement, but US Trade Representative Robert Leithizer said that last year he sought to conclude a free trade agreement requiring Congress approval.


United Tech profit beats forecasts on aerospace jump

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Like other major manufacturers in the United States, UTC, a manufacturer of aircraft engines Pratt & Whitney, Carrier air conditioners and Otis elevators, benefited from the air traffic boom and record global sales of commercial aircraft.

Revenue growth of 24% and 29%, respectively, for Pratt & Whitney and parts manufacturer for aircraft Rockwell Collins, heralds a good planned division next year, reducing the company to its main aerospace business and highlighting the rest.

"We are seeing truly steady trends in the aerospace industry with continued growth (air traffic) and an increase in production on both Boeing and Airbus aircraft,” said Greg Hayes, CEO.
Investors met the plan to split into three parts with skepticism, when it was made public last November along with the completion of Collins’s purchase. Since then, stocks have fallen by 14 percent.

Wednesday results raised shares by 7.4 percent.

Analysts say that good results and a full-year outlook are likely to increase confidence in UTC's ability to improve cash generation and profits ahead of the collapse next year.

"Expectations were low, stocks did not justify themselves, and we believe that street forecasts for 2019 (earnings per share) should increase by 5–10 cents,” said Nigel Coe, analyst for Wolfe Research.

The company predicts adjusted earnings per share in 2019 between $ 7.70 and $ 8.00, the midpoint of which significantly exceeds the average price of $ 7.80, according to IBES data from Refinitiv.

Collins' contribution to earnings in 2019 is currently expected to be 35 cents per share, compared with 15-25 cents per share earlier, largely due to better operating efficiency.

The company expects sales growth in 2019 in the range from low to high single digits in all directions.

While Otis has suffered in the past from demand-related problems in China, the company said that the ongoing infrastructure spending by the Chinese government will help Otis, as well as Carrier, in the upcoming quarters.

"We believe that the government’s attention to infrastructure spending will help the market as a whole. It is in their interest to try to achieve a growth in gross domestic product above six percent, ”said financial director Ahil Johri.
On an adjusted basis, United Technologies earned $ 1.95 per share, up from $ 1.53.

Net sales grew by 15.1 percent to $ 18.04 billion, surpassing estimates of $ 16.91 billion.


U.S. sanctions on Venezuela would reroute crude, leave refiners short

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US refineries, which depend on Venezuela’s heavy oil, will have even more problems with supplying supplies, as Canadian and Mexican reserves are often not as depreciated and limited in stock.

The United States views steps to curb Venezuela’s oil supplies, which account for almost all of the country's exports, in response to the re-election of President Nicolas Maduro, which was widely perceived as a hoax.

Washington recognized opposition leader Juan Guaydo as president of Venezuela when protests against Maduro erupted across the country. He is also considering sanctions on oil supplies, and this step has not yet been carried out, sources in an energy company told Reuters on Wednesday.
According to the US Department of Energy, in 2018, Venezuela, on average, exported about 500,000 barrels of oil per day to the United States. The share of the United States in its exports in recent years has declined, as more and more supplies go to Russia and China.

SCHEDULE: Venezuelan oil exports to the USA: tmsnrt.rs/2S4YIXB

These deliveries are carried out mainly through debt repayment structures for oil, since the output of the state-owned oil company Petróleos de Venezuela, SA, known as PDVSA [PDVSA.UL], fell to almost 70-year lows during the national economic crisis. According to OPEC secondary sources, production in Venezuela has halved from 2016 to less than 1.2 million barrels per day.

After the introduction of sanctions, the country may seek additional agreements with Turkey, India or other Asian countries, said one of the Venezuelan oil traders.
"It will be costly for Venezuela, but ultimately they will be able to sell this oil to Asia at a discount. There will be a period in the middle when they have difficulty selling these barrels, ”said Francisco Monaldi, a research fellow for Latin American energy policy at the Baker Institute of Public Policy at Rice University in Houston.

SCHEDULE: Leading US Importers of Venezuelan Oil: tmsnrt.rs/2RYGk2E

Although the United States produces almost 12 million barrels of oil per day, complex refineries on the Gulf Coast need more heavy oil to produce diesel fuel and other high-yield products and cannot simply process light oil.

Prices for heavier US grades, such as Mars Sour WTC-MRS, American crude produced on the shelf, and heavy crude Louisiana sweet oil WTC-HLS, have increased as buyers compete for supplies. According to Refinitiv Eikon, on Tuesday, Mars was trading at a premium of $ 6.25 in relation to crude oil on Tuesday - a five-year high.

"This would make a limited market even tougher. If this happens, it will be an unequivocal obstacle for refiners who are already trying to find supplies, ”said Bob McNally, president of Rapidan Energy Group, an energy consulting company in Bethesda, Maryland.
SCHEDULE: Venezuelan oil exports to US refineries: tmsnrt.rs/2S42EI5.

According to traders, the United States may need to sell oil from the US Strategic Oil Reserve to cover supply shortages, since additional supplies are provided through Canada or Mexico.

Sanctions may also include the export of petroleum products from the United States to Venezuela, used for blending with Venezuelan heavy oil.


Airbus loses annual jet order race to rival Boeing

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Airbus placed 747 orders for 2018, which is 33 percent less than the previous year, including 135 on the A220, which he took over from Bombardier in July. Boeing won the order race for the first time since 2012 with 893 net orders.

Airbus delivered 800 aircraft, an increase of 11 percent, including 20 A220 models, leaving Boeing the world's largest aircraft manufacturer in terms of production for the seventh consecutive year.

Despite the fact that Boeing did not reach its supply target, and Airbus previously lowered its target due to tensions in the industry’s global supply chain, high demand for passenger aircraft increased total shipments by 8 percent, which was the fastest pace in six years. .