TSB malaise is spreading at Sabadell 27 Jul 2018 The Spanish bank reported a 196 mln euro loss in the second quarter and its capital ratio sunk. Problems at UK arm TSB are not going away, a bet on Italian bonds misfired, and its domestic business is weak. The litany of woes means Sabadell’s discount to peers may widen.
Baby food will only briefly sate consumer giants 27 Jul 2018 The best second-quarter sales performer for Reckitt Benckiser and Danone was infant formula. Demographics are favourable in China, and parents are less tempted by cut-price brands. But with so many companies homing in on this lucrative market, competitive pressures are growing.
Pinduoduo polishes New York’s tech IPO crown 27 Jul 2018 The shopping app’s shares rose 40 pct in their U.S. debut, valuing it at $34 bln. New York has lost some marquee China tech floats to Hong Kong of late, but those it won have mostly outperformed Fragrant Harbour debutants. The Big Apple is still the host with the most.
Yum China deserves more than a cheap takeout 27 Jul 2018 Hillhouse is reportedly in talks to buy the KFC operator. It looks opportunistic given Yum’s knockdown valuation. If successful, the Beijing investment outfit gets a China consumption play with Western-style governance, and its tech savvy could supersize the $14 bln company.
Australian media mega-merger price looks generous 27 Jul 2018 Newspaper publisher Fairfax Media agreed to a $1.6 billion buyout bid from broadcaster Nine Entertainment. Consolidation in the country’s media industry was inevitable given recent liberalisations. But Nine shareholders have reason to be displeased by the premium offered.
Amazon’s growth is leaving the shop behind 26 Jul 2018 Jeff Bezos's outfit gets only about half its revenue from its online stores, down from two-thirds two years ago. E-commerce is growing, but the businesses Amazon has built around it are expanding faster and producing much more profit. That makes its valuation a little less crazy.
Viewsroom: Sergio Marchionne’s legacy 26 Jul 2018 The sudden death of Fiat Chrysler’s CEO has robbed the car industry of one of its most colorful – and successful – leaders. Antony Currie, Rob Cox and Lisa Jucca look back over his 14 years at the wheel and discuss what’s on the road ahead for his successor Mike Manley.
UNFI mixes organic food and financial steroids 26 Jul 2018 The natural-food distributor is paying $2.9 billion for grocery wholesaler Supervalu – a clear attempt to bulk up in response to Amazon’s foray into food retail. UNFI is getting a good deal thanks to generous cost cuts, but the amount of debt it is taking on makes this risky.
Conoco escapes squeeze on Big Oil’s golden goose 26 Jul 2018 Infrastructure bottlenecks are depressing oil prices in America’s resource-rich Permian Basin. New pipelines should be running by next year if labor and steel problems don’t cause delays. While the $84 bln Conoco’s U.S. business is holding up, others may not be so fortunate.
New Facebook pessimism overshoots reality 26 Jul 2018 Forecasts of reduced growth and margins wiped nearly 20 pct, or about $120 bln, off the social network’s valuation. That’s an astonishing hit. Investors now implicitly expect growth to be run-of-the-mill within a few years. That’s replacing excessive optimism with undue glumness.
Indian tycoon winner of Trump-China metals scrap 26 Jul 2018 Hindalco is snagging aluminium producer Aleris for $2.6 bln after CFIUS concerns torpedoed a previous bid from a Chinese buyer. Hindalco’s U.S. arm Novelis is paying more, but the numbers stack up. Mogul Kumar Mangalam Birla is smartly taking advantage of the trade war for now.
Tariff truce leaves EU carmakers stuck in low gear 26 Jul 2018 Volkswagen, BMW and Daimler’s collective value rose about $7 bln after U.S. President Donald Trump seemed to relent on auto tariffs. It’s a minor victory. Transatlantic peace may not last, while Trump’s trade battle with China will still prove disruptive for the German trio.
KKR points way to Delawarean conversion 26 Jul 2018 The $23 bln buyout firm’s shares are up nearly 30 pct since it decided to change from a partnership to a company. That suggests it’s attracting greater investor interest, as hoped. Rivals like Blackstone and Carlyle, whose performance has lagged, can’t help but get the message.
Hadas: U.S. radicals are a fit for EU mainstream 26 Jul 2018 Alexandria Ocasio-Cortez is considered ultra-left wing in her home country, but the New York politician’s economic leanings are standard centrist policies in much of Europe. Americans would gain from a globalization of their debates about healthcare, jobs, housing and education.
Lazard falls between three stools 26 Jul 2018 The advisory firm’s 22 pct earnings growth shows all cylinders firing, yet its valuation is in the slow lane. Lazard lacks the M&A heft of a Morgan Stanley, the rapid growth of an Evercore, or the scale of big asset managers like BlackRock. It nonetheless deserves more credit.
Orange and Telefonica tech credentials need proof 26 Jul 2018 The price of the pair’s shares have fallen this year despite rising cash flows. Plans to use automation to cut costs and make more money from customer’s spiralling data demands have yet to be reflected in their valuations. The companies only merit more credit if they deliver.
Shell and Total can hand investors even more cash 26 Jul 2018 The Anglo-Dutch major has begun a $25 bln share buyback, months after its French peer. That may signal Shell lacks growth ideas, yet investing in new oil projects and green energy is also risky. Sharing windfalls from high oil prices with shareholders is the lesser of the evils.
Disney can still play hardball with Comcast on Sky 26 Jul 2018 Shares in the UK pay-TV group have sunk since Comcast ceded Fox to the House of Mouse. Investors may think that means Magic Kingdom boss Bob Iger will not bid for Sky, which Comcast also wants. He would be missing out on a prize business, or a cheap opportunity to hurt a rival.
Nestlé has easier wins ahead in activist battle 26 Jul 2018 New products in the U.S. and an overhaul of baby foods boosted growth in the first half. There are early signs that CEO Mark Schneider’s strategy is working, in the face of pressure from investor Dan Loeb. Yet to keep Loeb at bay Schneider needs to do more to prune tired brands.
Nomura trading loss exposes delusions of adequacy 26 Jul 2018 The Japanese bank reported a 91 percent decline in first quarter earnings thanks to a $67 mln pre-tax loss at its investment bank. Unless boss Koji Nagai can tame trading volatility, his 10 percent return on equity target by 2020 looks increasingly far-fetched.
Xi takes trade war gloves off by blocking Qualcomm 26 Jul 2018 Beijing's effective veto of the chipmaker's bid for NXP likely wasn't what President Trump expected when he lifted a ban on China's ZTE. But in weaponising monopoly law, President Xi has found a blunt response to security-based U.S. tariffs. Escalation is getting ugly quickly.
Ford’s pain deserves more blame than GM’s 25 Jul 2018 While the largest U.S. automaker’s stock lost almost 5 pct after it said tariffs helped make commodities pricier, Ford has been warning about these costs for a while. But its deeper-seated problems in Europe, China and elsewhere warrant more severe punishment from shareholders.
Trump and Juncker revive Obama-era trade goals 25 Jul 2018 The EU will buy more American soybeans and LNG while U.S. steel tariffs may be resolved. The two also want to cut barriers in services and harmonize rules. Such issues featured with the last White House. Revisiting them in a new guise offers hope but auto levies may still loom.
Investors hit brakes on record-high Facebook 25 Jul 2018 The social network’s stock closed at a new top on Wednesday, valuing it at $630 bln. Then came a sharp after-hours slide following earnings. Fake-news scandals, potential regulation and Mark Zuckerberg’s tin ear all raise big questions. The news feed could get a lot worse.
Rising U.S. non-bank mortgage risk recalls crisis 25 Jul 2018 As the likes of Citigroup have cut lending specialists have stepped in, but they lack bank-like capital cushions. Government-owned Ginnie Mae, guarantor of $2 trln in mortgage-backed paper, is exposed. It’s a reminder that swaths of the home-loan market escaped post-2008 reform.
Qualcomm is set to pitch life without NXP 25 Jul 2018 The $90 bln chipmaker’s $44 bln purchase of its rival could die on Wednesday unless Beijing gives it an 11th-hour nod. Traders seem to think that’s unlikely. Going it alone won’t be easy for Qualcomm, but in the 21 months since striking the NXP deal it has not stood still.
China problems could be the making of new FCA boss 25 Jul 2018 Mike Manley’s first challenge is to complete Sergio Marchionne’s unfinished business in the Middle Kingdom. His predecessor failed to make inroads in the world’s biggest car market and the U.S. trade war has hit sales. FCA’s Jeep division could be helpful in turning the tide.
GM’s Mary Barra has a new yardstick 25 Jul 2018 The carmaker’s decent earnings seem to justify its CEO’s decision to eschew a big merger, sell GM’s Europe unit and focus on electric and autonomous cars. But Opel’s rapid recovery under new owner Peugeot could return to haunt Barra if her Autos 2.0 strategy careers off the road.
GSK can do without distraction of a breakup 25 Jul 2018 Boss Emma Walmsley plans to cut costs and invest more in research. It’s a neat riposte to critics who reckon the sprawling drugs and consumer group should split itself up. Such a move would be risky and may not create much value. She still has time to prove the naysayers wrong.
Cox: The Agnellis will miss Marchionne most of all 25 Jul 2018 Tragedy and a wise call by John Elkann, the family’s then-28-year-old figurehead, put the Italian-Canadian in charge at Fiat in 2004. Marchionne, who has died at 66, turned assets worth 5.5 bln euros into nearly 60 bln. As a CEO he may be replaceable; as Elkann’s mentor he’s not.