Heineken’s number two status brings marginal costs 12 Feb 2018 The Dutch brewer is one of the few global groups still increasing beer volumes. However, acquisitions will weigh on operating margins in 2018. Heineken needs to invest in its new Brazilian brands to take on market leader AB Inbev. That limits the scope for boosting profitability.
Voter frustration is Italian election’s trump card 12 Feb 2018 Five years of centre-left governments are ending on a high: growth has returned and 1 mln more Italians are employed. Yet prosperity is unevenly distributed and key economic reforms poorly understood. The country's Economy Minister walks Breakingviews through his priorities.
Market turmoil increases the attraction of cash 9 Feb 2018 Despite the global stock market selloff, investors are showing little interest in the safest government bonds. That’s because U.S. fiscal and monetary policies have diminished the safe-haven appeal of Treasuries. When neither debt nor equity is appealing, cash becomes king.
Atlantia can just afford to up the ante on Abertis 9 Feb 2018 The Italian toll-road operator may raise its offer for the Spanish peer to at least 19 euros a share in cash, trumping a bid by German rival Hochtief. Despite the lack of clear cost savings, cheap funding makes the combined group’s increased leverage just about manageable.
Hadas: Brexit trial could go worse than expected 9 Feb 2018 Are economists biased against Brexit? If anything, their estimates, which rely on imperfect precedents, are too optimistic. Leaving the EU will impair UK growth by hitting long-term confidence, institutional strength and workforce quality – all hard to capture in a spreadsheet.
The Exchange: Italy’s finance boss 8 Feb 2018 Pier Carlo Padoan, who has run Rome's Ministry of Economy and Finance for the past four years and under its last two prime ministers, says Italy must continue economic reforms no matter who wins elections in March. Padoan also predicts no "Italian surprise" at the polls.
Predictions are hard, especially about the future 7 Feb 2018 Even so, Reuters Breakingviews attempts it each year. The latest effort, “Froth and Frustration,” inspired a series of events and discussions. We also polled audiences from North America to Asia and beyond on key issues. Here’s the outlook for 2018 in text, video and graphics.
Mark Carney’s next rate rise rests on Theresa May 8 Feb 2018 The Bank of England boss says UK interest rates may rise further and sooner than previously anticipated. But that assumes a smooth exit from the European Union. If the prime minister fails to secure a transition deal in the next few months he will have to backtrack.
Chancellor: Beware the volatility bubble’s popping 8 Feb 2018 Shorting volatility has been one of the most prevalent and conspicuous features of the markets since the financial crisis. A crack has now appeared in the so-called "short vol" boom. Investors should take note. The froth wasn't just confined to speculators trading XIV notes.
TDC has narrow bandwidth for takeover defence 8 Feb 2018 Denmark’s biggest telco rebuffed a $6 bln approach from a buyout group including local pension funds and Macquarie. The infrastructure-focused consortium’s logic is odd: TDC has been through private equity ownership, and is moving into media. But the chunky premium may be enough.
Rocky 2017 leaves SocGen with a mountain to climb 8 Feb 2018 Tax reforms and other one-off costs dragged the French bank’s return on equity down to 4.9 percent last year. But even underlying expenses grew faster than core banking revenue. CEO Frédéric Oudéa needs revenue growth at home to have any hope of hitting ambitious 2020 targets.
UniCredit’s next task is to kick-start growth 8 Feb 2018 The Italian bank is back in the black with an adjusted net profit of 3.7 bln euros. With the balance sheet fixed and much cost-cutting complete, CEO Jean Pierre Mustier can focus on boosting revenue. But ramping up product sales could be harder without its asset management arm.
Commerzbank now merits suitors as well as pity 8 Feb 2018 Normally, potential buyers would look askance at the German bank’s falling profits, rising costs and 1 pct return on tangible equity. But Commerzbank’s commitment to a 2018 dividend is a strong positive. Throw in potential deal synergies, and it should attract interest.
Tesco pay showdown contains a wider warning 8 Feb 2018 A claim that female shop workers should get the same wage as male warehouse staff could cost the UK grocer up to 4 billion pounds. It’s a lesser-known twist on equal pay. While retailers Asda and Sainsbury’s face similar legal challenges, all sectors may be exposed.
SoftBank’s new interest is anything but reassuring 7 Feb 2018 The Japanese firm has already invested $27 bln to fulfill Masayoshi Son’s vision of building a technology giant for the ages. A stake in Swiss Re might add float, but he would be piling into an overcapitalized industry. That’s hardly a recipe for ensuring financial success.
Volatility good and bad for Europe’s bank chiefs 7 Feb 2018 For the past two years Deutsche Bank’s John Cryan, Credit Suisse’s Tidjane Thiam and Barclays’ Jes Staley have been able to blame poor performance on becalmed markets. Higher volatility undermines that excuse. Trading revenues must grow or they risk shareholder revolt.
Europe is biggest winner of German coalition deal 7 Feb 2018 Chancellor Angela Merkel has offered the Social Democrats the finance ministry to persuade them to join a government. Even so, the SPD rank and file may not like it. But the accord implies less fiscal rigour, which could help forge better ties across the European Union.
Zuma exit spat exposes South Africa reform hurdles 7 Feb 2018 Thursday’s state of the nation address should have been delivered by President-elect Cyril Ramaphosa. Instead it was postponed because scandal-hit incumbent Jacob Zuma refused to step down. Even after he goes, political divisions could continue to hamper vital reforms.
Rio Tinto is due to unearth new growth ideas 7 Feb 2018 The $100 bln miner's latest results reveal a company cranking on all cylinders. Decade-high profitability led to nearly $10 bln in dividends and buybacks last year. Before long, though, investors may want boss Jean-Sébastien Jacques to find some other smart uses for the money.
Unlocking TIM’s network value requires extra step 7 Feb 2018 Italy’s biggest telco is looking to spin off its fixed-line network. This will shed light on the network’s cash-generating potential. Listing a minority stake further down the line could add value to TIM’s depressed shares and help the holding company lower its debt mountain.