Business

FRANKFURT AM MAIN — The acquisition of seeds and pesticides maker Monsanto remained both boon and burden for German chemical and pharma giant Bayer in 2019, ensuring bumper profits but miring the company in tens of thousands of legal disputes over a key weedkiller.

“We met our financial goals, even though we had to battle a difficult market environment, especially in the agricultural sector,” Chief Executive Werner Baumann said on Thursday as he presented Bayer’s annual results.

Net profit leaped 141 per cent year-on-year, to 4.1 billion euros ($4.5 billion), beating forecasts from analysts surveyed by Factset.

Much of the effect was down to the full integration of Monsanto into Bayer’s business after the mid-2018 takeover.

Operating profit at the group’s crop science unit jumped 80 per cent.

But Bayer also reported it had been served with around 48,600 American lawsuits — up from 42,700 in October — over Monsanto weedkiller glyphosate, a vital ingredient in widely-used products like Roundup.

Plaintiffs argue glyphosate caused their cancers, but Bayer insists the science shows its chemical is safe and is “vigorously” appealing first-instance court decisions against it.

“If necessary, we will appeal through every court,” Chief Executive Baumann said, noting that the US Environmental Protection Agency in January reiterated its judgement that glyphosate presents no health risks.

Bayer did not report setting any cash aside in provisions to cover potential court-ordered payouts or a settlement in the glyphosate cases, which analysts have reckoned at up to $20 billion.

The group is in court-ordered mediation talks with plaintiffs and bosses “want to reach as far as possible a solution that closes this issue for good”, Baumann said.

He would not be drawn on how much a settlement might cost, or on media reports it could include an end to sales of Roundup to private individuals.

The group also plans to appeal a court ruling that its herbicide dicamba destroyed a US farmer’s peach orchards, one of 140 lawsuits pending in America over the chemical.

Chairman quits early 

In a separate press release, Bayer said it would publish expert legal opinions on its acquisition of Monsanto and bosses’ judgements of the associated risks, in response to shareholder pressure.

The group suffered an unprecedented slap when investors voted against executives at last year’s annual shareholder meeting.

On Wednesday Bayer had announced that Supervisory Board Chairman Werner Wenning will step down early.

The 73-year-old, who was chief executive until 2010, was seen as a key backer of the Monsanto merger and mentor to present CEO Baumann.

Trade war headwinds 

North America was the focus of headwinds for Bayer’s agriculture business in 2019, as falling acreage of soybeans, competition, adverse weather and trade conflicts weighed on revenues.

Worldwide, sales were down slightly on 2018 when presented as if Monsanto had been part of the business since January 1 that year.

Aside from the US, drought in Australia and African swine fever weighed on business, Finance Director Wolfgang Nickl said, while Latin America was a bright spot.

Elsewhere in the business, operating profit grew in pharmaceuticals “driven by higher volumes and a decrease in the cost of goods sold”, notably in China.

Pharma chief Stefan Oelrich said Bayer had “a large number of new products” in development and trials to replace its two revenue workhorses, anticoagulant Xarelto and eye medication Eylea, whose patents will expire in the coming years.

Meanwhile profit was flat at the group’s over-the-counter medicines unit despite rising sales.

Coronavirus impact uncertain 

Looking ahead to 2020, Bayer said it expected to increase revenue from 2019’s 43.5 billion euros by “about 3 to 4 per cent” to between 44 and 45 billion, adjusting for currency and portfolio effects.

Earnings per share should grow to between 7 and 7.20 euros, also in adjusted terms, up from 6.40 last year.

Finance chief Nickl said Bayer had donated medicines in China to help combat the coronavirus disease outbreak, but added that “we will only be able to estimate the impact on our business after the end of the first quarter”.

PARIS — French car giant PSA Peugeot-Citroen, currently in the process of merging with rival Fiat Chrysler, said on Wednesday it shook off a drop in sales to notch up record profits in 2019.

“We have achieved record results in 2019,” Chief Executive Carlos Tavares said in a statement.

The group, whose brands include Opel in Germany and Vauxhall in Britain, booked bottom-line net profit of 3.2 billion euros ($3.5 billion) last year, an increase of 13.2 per cent over the figure for 2018.

Despite a 10.3 per cent drop in unit sales to 3.5 million vehicles worldwide, revenues inched up 1 per cent to 74.7 billion euros.

PSA said its operating margin — which measures underlying profit as a proportion of sales — increased by 0.8 percentage points to 8.5 per cent. 

In terms of vehicles sold, PSA suffered from its absence from the key US market and a shrinking market share in China. 

But the group attributed the modest increase in revenues to an improved product mix and higher prices, which it said helped offset negative exchange rate effects and falling volumes. 

Looking ahead to anticipated market developments in the current year, PSA said it forecast a decline of around 3 per cent in Europe but no change in Latin America.

RIYADH — Burdened by a bank loan, Ibrahim Ahmed searched for years for a second job before opting for something once seen as menial in oil-rich Saudi Arabia — driving for a ride-hailing app.

Such blue-collar occupations have largely been the preserve of low-income foreign workers in the formerly tax-free petrostate, which long offered its citizens cradle-to-grave welfare.

But Saudis are increasingly taking on what are widely seen as low status jobs in an age of dipping oil prices, as the government trims subsidies amid sluggish economic growth and high unemployment.

Like tens of thousands of Saudis looking to make extra money, 31 year-old Ahmed turned to the global giant Uber, whose drivers in the conservative kingdom had always been predominantly foreign workers.

For the father of three, a salary of 8,000 riyals ($2,133) as an employee at a private company in Riyadh was not enough to support his family and cover a monthly housing loan of 4,000 riyals.

“I finish my job at 2 o’clock in the afternoon, and this is what made it difficult to find a second job,” said Ahmed, clad in a white traditional thobe.

“My income after paying the monthly loan would be so limited, and we went through four years of this drought.”

In 2017, Ahmed sold his car to put a down payment on a new vehicle and enrolled with Uber.

The company’s spokesman says it is available in 20 cities in the kingdom and that more than 200,000 Saudis have driven for the app-based business since it launched in 2014.

“I work for seven hours a day, five days a week, and make an average of 6,000 riyals per month from Uber,” said Ahmed, adding the second job had helped ease his financial burden. 

‘Flexible economic opportunity’ 

Nearly two-thirds of all Saudis are employed by the government in secure and often undemanding white-collar jobs.

But as the public sector wage bill balloons, the kingdom — pushing reforms for a post-oil era — is seeking to wean citizens off government largesse.

Cultural attitudes to work are slowly changing in a country where 40 per cent of Saudis are aged between 20 and 40, with a new crop of citizens working in food trucks and gas stations for the first time.

Often these are second jobs to augment their incomes as high costs of living push many into debt.

“A large number of Saudis have joined Uber for the part-time, flexible economic opportunity it provides,” a company spokesman said.

Uber, which launched in the kingdom in 2014, acquired Dubai-based Careem in 2019 for $3.1 billion.

Both Uber and Careem have hired women since the kingdom lifted its ban on female motorists in 2018.

“I have paid off a third of [my wedding and car] loans thanks to Uber,” said Khaled, a 27 year-old newly-wed.

“I work 10 hours a day in addition to my other job to quickly settle my two loans.” 

For years, the kingdom has been struggling to pursue “Saudisation” — a programme to get firms to employ more citizens.

Unemployment in Saudi Arabia for the third quarter of 2019 stood at 12 per cent, a marginal improvement from 12.7 per cent in 2018, according to official figures.

“Young Saudis are accepting jobs they previously would not have accepted,” Abdullah Al Maghlouth, a member of the Saudi Economic Association, told AFP. 

“The presence of foreign companies, such as Uber and Careem, give young Saudis the opportunity to pursue these jobs... and increase their income,” he added.

There appears to be somewhat more prestige in working for a ride-hailing app than driving an ordinary taxi, largely reserved for foreign workers. 

But there remains a stigma in the conservative kingdom attached to blue-collar jobs in general.

Turki Al Oneizi says he does not care about dirty looks.

“With Uber, I’m my own boss,” the 33 year-old said.

“There is no shame as long as I’m doing something that does not violate my morals and ethics. This is something that improves my social and economic situation.”

AMMAN — The 2020 Arab Aviation Summit (AAS), one of the region’s leading aviation industry events, has announced an array of top executives for its eighth edition, to be held on March 16 & 17 at Al Hamra International Exhibition & Conference Centre in Ras Al Khaimah, UAE.

Themed, “Linking cultures, driving economies”, the summit will bring together an audience of key industry stakeholders and experts to participate in high-level dialogue on the latest trends, challenges and opportunities facing Arab travel and tourism. Global and regional industry experts will also discuss the contribution of the aviation and tourism sector to economies, and how it adds value to the economic diversification narrative of the region. 

They will evaluate sector challenges and share ideas and strategies on the best ways to address them.  

Amongst the aviation and tourism leaders participating in the event are Adel Al Ali, Air Arabia Group CEO; Raki Phillips, CEO of Ras Al Khaimah Tourism Development Authority; Hussain Omar Bin Alawi Al Ibrahim, head of Air Transportation (Aviation) of the Arab Gulf Countries Cooperation Council; Aradhana Khowala, CEO & founder of Aptamind Partners. 

Endorsed by Arab governments and previously held in several Arab countries, the Arab Aviation Summit 2020 is hosted by Ras Al Khaimah Tourism Development Authority with the support of global industry partners such as Airbus, CFM, Alpha Aviation Academy.

Hailed as the “voice of the industry” and representing an ideal partnership of the three key players in the travel and tourism industry: Public sector, Private sector and the Media community — the Arab Aviation Summit is an industry initiative organised annually to shed light on trends, insights and opportunities driving the continuous growth and development of the Arab aviation and tourism industry.

A white paper, based on participants’ suggestions and discussions, will be presented at the conclusion of the 2020 AAS.

AMMAN — Orange Jordan on Wednesday celebrated the graduation of the first group of Orange Coding Academy students who have received training to help them join the labour market, according to a company statement.

The ceremony, held at the Cultural Palace in Amman, was attended by Minister of Digital Economy and Entrepreneurship Muthana Gharaibeh, Chief Commissioner of Telecommunications Regulatory Commission Ghazi Jbour, and Orange Jordan’s CEO Thierry Marigny. 

Addressing the attendees, Marigny congratulated the 46 graduates, voicing hope that their “intensive” training would pave the way for a fresh start in their professional lives.

The academy’s students received training in coding languages and personal development courses, followed by a one-month internship in local ICT companies. 

The Coding Academy serves Orange Jordan’s belief in the “Training for Employment concept”, Marigny said, noting that 70 per cent of the academy’s students have got jobs before completing their internships, marking a milestone in the journey of, both, Orange’s Coding Academy and its students.

The academy is the first of its kind in the Middle East that was established by Orange Group, in partnership with Simplon.Co, following the footsteps of Orange’s coding academies in Senegal and France, he indicated.

Marigny said the academy will welcome the second batch of students soon, expecting strong competition between applicants who seek educational opportunity in this “distinguished” academy.

BUENOS AIRES — Argentina and the IMF announced on Saturday that they have agreed to start talks aimed at reaching a new financing agreement for the heavily indebted south American country. 

The announcement in statements by both parties came after a meeting between IMF Managing Director Kristalina Georgieva and Argentine Economy Minister Martin Guzman on the sidelines of a G-20 meeting in Riyadh.

The meeting came days after IMF experts concluded that Argentina’s debt is unsustainable.

Argentine President Alberto Fernandez hopes to renegotiate $195 billion of its $311 billion foreign debt, including a deeply unpopular $57 billion IMF bailout loan in 2018.

Fernandez, who took office in December, has refused the final $13 billion disbursement of the loan, leaving Argentina’s exposure at $44 billion.

“Minister Guzman and I had a very fruitful exchange of views on the country’s challenges, and the path forward to ensure a more sustainable and inclusive growth for Argentina,” Georgieva said in a statement. 

“I commended the efforts thus far, under the leadership of... Fernandez, to put in place a set of policies to stabilise the economy and to reduce poverty.”

Georgieva said she discussed with Guzman plans “to secure a sustainable and orderly resolution” to his country’s debt situation, and welcomed Argentina’s commitment “to deepen our engagement including through an Article IV Consultation and steps toward a Fund-supported programme in the future. 

“The modalities of these next steps will continue to be discussed,” Georgieva said.

Argentina’s economy ministry issued a similar statement on engaging in talks with the global financing institution.

Negotiations will continue on Monday as Guzman meets with IMF experts in Washington, an economy ministry spokesman told AFP.

Argentina’s economy shrank by 2.1 per cent in 2019, the state statistics institute said on Friday. The country has been in recession since mid-2018 as poverty and unemployment rise, with inflation surpassing 50 per cent over the last year.

Argentina’s ability to service its debt deteriorated markedly compared to the IMF’s last analysis in July 2019, the fund said earlier, when the amount owed was manageable.

Since then the peso had depreciated by over 40 per cent, international reserves declined by about $20 billion, and real gross domestic product (GDP) contracted more than previously projected. 

Argentina is battling to avoid another situation like 2001 when it defaulted on $100 billion, becoming a market pariah.

The country currently owes $311 billion — more than 90 per cent of its GDP.

BRUSSELS — An EU summit called to set the bloc’s next seven-year budget ended in impasse late Friday, riven by competing groups among the 27 member states and pressure to fill a funding gap left by Brexit.

Differences were “still too great to reach an agreement,” German Chancellor Angela Merkel told reporters at the end of the two days of talks in Brussels.

No date had yet been set for another summit to try again, but Merkel added that “we are going to have to return to the subject”.

The trillion-euro-plus budget, the multiannual financial framework, is meant to be operational from next year and run to the end of 2027.

But the summit revealed stubborn differences between a handful of wealthy “frugal” states and a larger group wanting more money to meet both big European ambitions and to fill the 75-billion-euro shortfall left by Britain’s exit from the EU last month.

“Unfortunately we have observed it was not possible to reach an agreement, we observed we need more time,” said European Council President Charles Michel, who had called the extraordinary summit and stewarded the talks.

He said, however, he was right to make the effort: “As my grandmother said, to succeed you first have to try.”

‘Goup vs group’ 

European Commission President Ursula von der Leyen, who is counting on a big enough budget to meet her executive’s “geopolitical” ambitions, said the EU discord was sign of “democracy”.

Despite Merkel and French President Emmanuel Macron teaming up to back Michel in his search for an acceptable compromise, two groups of countries dug in their heels.

One was the so-called “frugal four” made up of Austria, Denmark, The Netherlands and Sweden, which wanted the budget reined in to reflect the UK’s absence and to avoid them having to shoulder a bigger budgetary burden.

The other was the “friends of cohesion”, 16 member states including Italy, Spain, Portugal, Greece, Poland and Hungary that want to ringfence EU spending on things like infrastructure as well as farm subsidies.

“We ended up in a situation of group versus group. That’s why it failed,” a source close to the negotiations told AFP.

Germany and France stood apart from those groups but had their own interests to defend. 

Merkel is determined to retain a budget rebate her country has received ever since Britain wrangled one for itself while a member. Macron, who is against the rebates, is resolute that the farm subsides — from the Common Agricultural Policy (CAP) — not be cut.

“The CAP cannot go to pay for Brexit,” Macron said as the summit broke up. The French president was to visit a national farm show in Paris on Saturday.

He has sought to push the EU to be more united and more ambitious and insisted on Thursday that Britain’s departure should not clip the bloc’s wings.

A battle over percentages 

Much of the summit’s haggling focused on how much of a percentage of gross domestic product (GDP) the member states would have to cough up.

The “frugals” were entrenched at paying no more than 1 per cent. 

Dutch Prime Minister Mark Rutte said that position was “reasonable”, addressing inflation and economic growth.

But, he said, the hole left by Brexit “is now a fact has to be reflected in the budget”.

Italian Prime Minister Giuseppe Conte said his rival group was working on “counterproposition” with a vision of a “more ambitious” European Union that would require a higher GDP target.

Macron expressed frustration with the situation, saying “I don’t think it’s a good method, to try to break away in groups and to block things, to get together and form types of blocking coalitions”.

Michel’s revised proposal made on Friday was for 1.07 per cent, which would have resulted in a seven-year budget of 1.09 trillion euros. 

That would be just a bit above the previous one of 1.08 trillion euros while covering the Brexit hole. But it found no takers.

Far above the figures thrown around at the summit is the one proposed by the European Parliament, pressing for 1.3 per cent of GDP.

That would be to cover Brexit, fund all current programmes and go to ambitious new ones such as fighting climate change, increasing EU investment in space and technology, and boosting the bloc’s external borders.

Almost all leaders at the summit view the MEPs’ ask as way too much. But they are also aware that the parliament has to give its assent to a budget deal among member states, whenever that might be worked out.

BRUSSELS — EU leaders gathered on Thursday for a stormy summit to decide the bloc’s seven-year budget, with bitter divisions between parsimonious rich nations, poorer ones wanting to preserve spending and others wanting to fund grand global ambitions.

The tussle for money, hard-fought at the best of times, is especially problematic this time around because of Britain’s departure from the EU.

The “Brexit gap” caused by the loss of the UK’s contribution is 75 billion euros ($81 billion) over the 2021-2027 period.

On the eve of the summit, German Chancellor Angela Merkel had predicted “very tough and difficult negotiations”, with some officials bracing for talks to drag into the weekend.

Summit host Charles Michel, the EU Council president, kicked off the day with one-on-one meetings with leaders of the 27 states starting with Sweden, one of the so-called “frugal four” opposed to big budget increases.

“I am convinced that it will be possible to make progress in the next hours or in the next days,” Michel told reporters.

“The last steps to finding a compromise are always the most difficult, but I think everything is on the table to let us take a decision.”

But not everyone shares Michel’s optimism, with some EU sources suggesting differences are so great the summit could end quickly and the can kicked down the road to another summit — or two — in the coming months.

An analyst at the European Policy Centre, Marta Pilati, agreed, saying: “There likely won’t be agreement at this summit. All the member states aren’t showing much willingness to compromise.”

The minimum spending in the multiannual financial framework (MFF), as the long-term budget is called, is just over 1 trillion euros.

Different goals 

The discord is over how much this budget should increase by, how spending might be shifted between priorities and how much each member state should pay as a per centage of its gross domestic product.

Another touchy issue is whether budget rebates pocketed by a few wealthier countries should still exist.

The last MFF came in at 1.08 trillion euros (in 2018 prices).

The “frugal four” — Austria, Denmark, The Netherlands and Sweden — want to rein in the budget and make up only some of the ground of the Brexit gap. They also want to keep their rebates, as does Germany.

Austrian Chancellor Sebastian Kurz struck a tough note on Twitter at the start of the day, insisting Vienna’s budget contributions must not “grow immeasurably” and rejecting a compromise proposed by Michel.

At the high end of spending demands is the European Parliament, which wants the MFF expanded to 1.32 trillion euros to pay for costly goals such as turning the European Union into a carbon-neutral economy within three decades.

The legislature, which has to sign off on the final MFF, believes more money can be raised from EU-wide taxes on plastics and on the carbon emissions trading scheme.

A “friends of cohesion” group of mostly eastern and southern EU nations wants to ringfence money it gets to help bring infrastructure and society up to the level of wealthier counterparts.

Agriculturally sensitive countries such as France, Spain and Poland are also looking to preserve farmers’ subsidies. France would like to also see extra money for common security and defence and the “unfair” rebates scrapped.

The European Commission, which aims for a “geopolitical” mantle under President Ursula von der Leyen, is trying for a target of 1.13 trillion euros

Clinching a deal 

Ahead of the summit Michel proposed an MFF of 1.09 trillion euros, making cuts to cohesion funds and farm subsidies to finance other priority areas.

A senior EU official said Michel’s plan would re-allocate “about eight billion euros from richer to poorer member states”.

His plan, though, has little support.

The European Parliament has rejected it as too little. Germany says it is a “step backwards” and Spain has criticised it for “not recognising the role of agriculture” in EU cohesion.

But the senior EU official said Michel believes the splits will not change over the coming months and he “is very determined to clinch a deal in the coming days”.

WASHINGTON — At their national convention in 2012, Republicans mounted a clock counting the growing US national debt on the wall, a warning of the looming financial catastrophe they said imperiled Americans.

Eight years later, the clock has stopped under Republican President Donald Trump, and the "fiscal hawks" whose strident calls for action to contain the trillions of dollars in US government debt have either lost their influence, or are keeping quiet.

The latest sign of this shift away from fiscal discipline was on full display as White House acting Chief of Staff Mick Mulvaney said as much in a speech in Britain.

"My party is very interested in deficits when there is a Democrat in the White House. The worst thing in the whole world is deficits when Barack Obama was the president," Mulvaney said according to a report by The Washington Post late Wednesday.

But with Trump in office, "we're a lot less interested as a party", the former budget chief said, calling the growing deficit "extraordinarily disturbing".

The White House budget proposal released last week abandons Trump's deficit cutting promises and relies on economic growth assumptions most economists dismiss as unrealistic to pay down the debt.

The Congressional Budget Office predicts the deficit will surpass $1 trillion and government debt will reach 81 per cent of GDP by the end of September.

"The fiscal hawks are clearly an endangered species," Bill Hoagland, a former Senate budget staffer, told AFP. "I really can't pinpoint anybody that's willing to step up and clear the plate."

Though the budget proposal is unlikely to ever be implemented as Trump fights for re-election in November against Democrats who have their own radically different spending priorities, analysts worry that there is no will in Washington to address debt and deficit.

But economists warn the swelling levels are increasingly risky and could leave the US unprepared to fight the next recession.

"Ultimately, interest [on the debt] could become the largest federal government programme," warned Marc Goldwein of the Committee for a Responsible Federal Budget.

"Your debt cannot rise faster than the economy forever."

'Tidal wave of debt' 

While they have remained silent under Trump, Republicans repeatedly hammered Obama at every turn, from his plan to stimulate the economy out of recession in 2009 to his reform of the health care system.

Former House Speaker Paul Ryan, one of Obama's most prominent opponents in Congress, once warned the president's fiscal policies would unleash a "red tidal wave of debt".

Republicans blocked Obama's attempt to stimulate infrastructure spending, and put the debt clock front and centre at their national convention ahead of the 2012 election, where voters ended up giving Obama a second term.

But the Republican-led Congress had a change of heart in late 2017 approving Trump's massive tax cut for corporations and the richest Americans that has been credited with boosting growth but also piling on government debt.

"The fiscal hawks that were the loudest and most vocal during the Obama administration have been largely silent," said Romina Boccia of Heritage Foundation, a conservative Washington think tank.

Sending signals 

Trump's $4.8 trillion budget proposal does address the deficit, but abandons his pledge to eliminate the budget gap in 10 years, pushing the goal back to 2035.

And even the extended deadline achieves balance by projecting the US economy will grow by around 3 per cent annually for years to come — a feat almost unheard of.

The spending blueprint has no chance of getting through Congress unaltered, and Democratic and Republican lawmakers are seen as unlikely to take up a budget during election season.

But Ben Ritz of the left-leaning Progressive Policy Institute said the cavalier attitude towards spending betrays "political opportunism" by Republicans who wielded the debt and deficit as a cudgel against Obama.

"We're seeing these people who criticised Obama for much lower debt levels suddenly being ok with much higher levels under President Trump," he said.

Who cares? 

And Trump himself has shown pronounced disregard for the future consequences of running debts so high.

On the campaign trail in 2016, he called himself "the king of debt". In January, The Washington Post reported Trump quipping in a behind-closed-doors speech, "Who the hell cares about the budget?"

Yet, the record-long US economic expansion has to end sometime, and in testimony to Congress this month, Federal Reserve Chairman Jerome Powell once again called for a "more sustainable budget".

With the key lending rate holding at a very low 1.5-1.75 per cent, the central bank does not have much space to manoeuvre should a downturn hit.

But the growing deficit and debt, will make it harder for the government to boost spending to support a slowing economy.

Financed by the sale of US government bonds, that could be the force that brings the economic expansion to a halt, Goldwein said.

"I think there's kind of a slow-burn consequence," he said. "The more bonds we keep selling, the less investment there's going to be in the private sector. Over time, that's going to slow growth."