Archive for August, 2009

Carrefour books first-half loss of $82.75 million (AP)

Friday, August 28th, 2009 | Finance News

PARIS – Carrefour SA, the world's second-largest retailer, said Friday it made a euro58 million ($82.75 million) loss in the first half, hit by a one-off charge writing down the value of Italian assets and as recession-shy shoppers cut back on spending.

The company, second only to U.S.-based Wal-Mart Stores Inc. among the world's biggest retailers, said it made the net loss in the six months through June, compared to a net profit of euro744 million a year earlier.

Revenue fell 1.6 percent in the first half to euro41.27 billion ($58.88 billion).

New CEO Lars Olofsson, appointed last year to improve performance, said Carrefour is operating in a "challenging environment," but that sales were "resilient," and the company is on track to meet its 2009 targets.

Carrefour is targeting full-year operating profit of up to euro2.8 billion ($4 billion) "if current sales trends continue." In the first half, operating profit — what Carrefour calls "activity contribution" — fell 28 percent to euro1 billion ($1.43 billion).

Results from July and August showed "no change" in the economic environment, Chief Financial Officer Pierre Bouchut said on a conference call.

In the first half, Carrefour said it gained market share in France, which accounts for about 40 percent of sales, even through revenue fell by 3.6 percent there.

The world's No. 2 retailer plans to spend euro600 million ($856 million) this year on promotions and other discounting to build market share. Olofsson has said his priority is to improve performance in France, where it launched a new low-cost range of products called "Carrefour Discount" this year.

Carrefour booked euro511 million ($730 million) in charges in the first half, including euro60 million ($85 million) in restructuring charges and a euro400 million ($570 million) impairment charge after adjusting for the market value of Italian company Finiper, in which Carrefour owns a 20 percent stake and which it may be forced to buy under a put option.

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Asia stocks rise but China bank lending nags (Reuters)

Thursday, August 27th, 2009 | Finance News

HONG KONG (Reuters) –
Asian stocks rose on Friday, led by consumer and technology-related shares as confidence in a sustainable recovery grew, though stocks in Shanghai bucked the trend and dropped 3 percent on worries about a fall in bank lending.

The U.S. economic contraction in the second quarter was not as bad as expected, and gross domestic product actually grew if inventories were stripped out, raising hopes that pent-up demand for Asia's exports would return slowly.

Indeed, despite weakness on Chinese markets, modest gains on Wall Street helped support Asian stocks.

Stocks of companies involved in making parts for technology exports, such as Shin-Etsu Chemical in Japan, Taiwan Semiconductor and Samsung Electronics in South Korea, gave a big boost to their domestic indices.

Japan's Nikkei share average (.N225) rose 0.5 percent, just below the highest intraday level since Oct 6, which was hit on Wednesday. Shares of Kyocera (6971.T) and Canon Inc (7751.T) were among the biggest supports to the index.

Japanese stock market gains came despite a record decline in core consumer prices and an all-time high in the domestic jobless rate. Some analysts looked toward this weekend's elections and a likely win by the opposition.

"All these negative trends can be turned around if DPJ does win Sunday elections, inspires confidence, and successfully implements its plans to boost domestic consumption," said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong in a note.

The MSCI index of Asia Pacific stocks outside Japan rose 0.6 percent (.MIAPJ0000PUS), near the top of a narrow range maintained in August. However, the technology sector index for the region rose 1.5 percent (.MIAPJIT00PUS).

Hong Kong's Hang Seng index (.HSI) underperformed the region, slipping 0.6 percent, and dragged down Shanghai stocks (.SSEC), which fell as much as 3 percent on the day before paring some losses.

The decline in China's domestic market caused the Australian dollar to weaken. China is Australia's top trade partner.

Local media reported new loans extended by four of China's biggest state-owned banks in August slowed sharply from July.

"The market now expects new lending in August by all banks will be at most a little more than 200 billion yuan," said analyst Cao Xuefeng at Western Securities in Chengdu.

The lending estimate compares with an average monthly total of more than 1 trillion yuan in the first half of this year.

Despite declines on Thursday in Asian and European stocks, Wall Street posted small gains, thanks to strength in the energy sector. That helped Asian markets gain momentum early in the session.

While the global equity rally that has been lasted since March sputtered a bit in August, investors have been steadily putting their piles of cash to work.

Money market funds, a cash equivalent, saw a net outflow of $5.75 billion in the latest week, bringing year-to-date redemptions to around $250 billion, about half of what was committed in 2008 to these funds, fund tracker EPFR Global said in a note.

In the week to Wednesday, all equity funds tracked by EPFR took in a net $7.32 billion and fixed income funds saw net inflows of $4.59 billion.

CURRENCIES

The Australian dollar was largely unchanged on the day at US$0.8386 after a 1.6 percent climb overnight, remaining around a cent from an 11-month high around US$0.8480 reached two weeks ago.

A steady flow of solid economic data has led dealers to price in at least one quarter percentage point rise in the Reserve Bank of Australia's base rate by November and speculate on a possible move in October.

"The data from Australia has been pretty strong, suggesting the economy has a fair bit of momentum," said John Kyriakopoulos, currency strategist at National Australia Bank. "Interest rate markets are now bringing forward the prospects of a rate hike to as early as October and that is helping the Aussie."

The ICE Futures U.S. dollar index (.DXY) was subdued after a 0.7 percent decline overnight kept it in a downward trend.

U.S. crude for October delivery rose 26 cents to $72.75 a barrel after jumping $1.06 on Thursday.

U.S. economic data released on Wednesday was a shot in the arm and helped confidence that energy demand will recover further, overshadowing reports showing an increase in inventories.

Metals prices also reflected optimism about the demand for raw materials. Three-month copper on the London Metals Exchange was up 2.4 percent to $6,425 a ton.

(Additional reporting by Anirban Nag in SYDNEY and Claire Zhang and Edmund Klamann in SHANGHAI)

(Editing by Don Durfee)

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Toyota to end California plant production (Reuters)

Thursday, August 27th, 2009 | Finance News

WASHINGTON (Reuters) –
Toyota Motor Corp will end production at a California plant it has shared with General Motors for 25 years, prompting regret and criticism from labor and politicians facing more job losses in an industry and a state pummeled by recession.

The move to cease operations at the plant in Fremont by March 31 puts at risk more than 4,500 jobs and highlights significant overcapacity global carmakers are facing as they try to shake a recession-fueled sales downturn.

The decision on the venture with GM known as New United Motor Manufacturing Inc, or NUMMI, was part of the Japanese automaker's plans announced earlier this week to slash production more broadly to stem losses.

GM pulled out of the partnership in June as part of its bankruptcy reorganization, prompting Toyota to follow suit.

Atsushi Niimi, Toyota's executive vice president responsible for North America, said in a statement that it was not "economically viable" to continue production.

"This is most unfortunate and we deeply regret having to take this action," Niimi said.

California production will shift to Texas, Canada and Japan.

The United Auto Workers, which represents workers at the facility, called the decision devastating and accused Toyota of abandoning workers and the state.

"This is no time to close a highly successful manufacturing facility," Jimmy Settles, a United Auto Workers vice president, said in a statement. "California is one of the most important markets for Toyota."

It was the only UAW facility operated by Toyota.

The decision stung even more for labor and lawmakers in light of news this week that Toyota was the biggest beneficiary of the $3 billion U.S. government "cash for clunkers" incentive program designed to jump-start industry sales.

Officials say up to 35,000 supplier and other jobs in California are indirectly related to the plant's operations. California's unemployment rate was 11.9 percent in July, according to the U.S. Labor Department.

California Governor Arnold Schwarzenegger called it a "sad day" and said efforts were underway to transform the site to alternative uses. The state offered Toyota a package of tax breaks and other business enhancements to keep it open.

Senator Dianne Feinstein said Toyota told her staff that GM's decision to pull out of the venture in June left Toyota operating a facility at less than full capacity "with no demand to justify" expanded production.

"I'm profoundly disappointed," Feinstein said. "I very much regret this."

Feinstein said she was also told by Toyota the Fremont plant was aging and could not compete with two other plants in the South, and that production costs were too high in California.

Feinstein said Toyota grew "more remote and less transparent" over attempts by her office to determine NUMMI's fate and weigh options.

Her staff has met with the Obama administration's autos task force to discuss other manufacturing options for the facility.

Niimi said the decision to close its California operation followed a "thorough review of its alternatives in light of current market conditions."

The plant had been a ground-breaking venture that brought Toyota's "lean" manufacturing techniques to a U.S. workforce.

Toyota builds the Corolla compact car and the Tacoma pickup truck at the NUMMI plant.

Tacoma production will shift to Toyota's San Antonio, Texas, plant, which specializes in trucks. Corolla output will move to Cambridge, Ontario, and Japan to meet near-term demand, the company said.

"This will enable an uninterrupted supply of vehicles to dealers and customers in North America," Toyota said.

Niimi said Toyota would consider moving back more of the Corolla production to North America over time.

GM, which had built the Pontiac Vibe at the plant until August 17, plans to wind down the Pontiac brand in its restructuring and left its stake in the joint venture with other assets to be liquidated in bankruptcy, in an entity known as Motors Liquidation Co.

Toyota employs about 40,000 people in North America at more than a dozen wholly owned plants.

(Reporting by David Bailey and Soyoung Kim in Detroit, John Crawley in Washington, and Jim Christie in San Francisco; Editing by Leslie Gevirtz, Gerald E. McCormick, Matthew Lewis and Richard Chang)

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