Business

BEIRUT — Lebanon's land exports to Gulf Arab markets have been choked off, leaving millions of dollars in goods stranded after the closure of a vital crossing on the Syrian-Jordanian border last month.

The Nasib border point was the last remaining gateway for Lebanese truck drivers transporting agricultural and industrial products to Iraq and Gulf countries.

After Syrian rebels seized Nasib on April 1, these exports came to an abrupt halt.

"Exports by land have stopped entirely," said Ahmad Alam, whose company exports Lebanese fruit and vegetables to Arab countries.

Goods transported overland made up 35 per cent of all of Lebanon's exports, economic analyst Nassib Ghobril indicated.

According to customs authorities, Lebanese exports to Gulf Cooperation Council states in 2014 amounted to $920 million (821 million euros). Another $256 million was exported to Iraq.

But all those potential exports are now effectively stuck in Lebanon, he remarked.

"The Nasib crossing was the only way for Lebanese products to be exported by land. Since it closed, there are no more land crossings now," Ghobril said.

Before the Syrian crisis erupted in 2011, Lebanese products travelled frequently through Lebanon's neighbour, then on to Iraq to the east or to Jordan and Saudi Arabia in the Gulf to the south.

The agriculture ministry says that agricultural products make up 6 per cent of gross domestic product and 17 per cent of total exports.

Agriculture hit hardest

As Syria's war worsened, its border crossings with Iraq closed, leaving Lebanese truckers with only one option: Nasib.

Omar Al Ali, head of Lebanon's Refrigerated Truckers Syndicate, indicated that about 250 trucks would cross from Lebanon into Syria every day before the conflict.

That number dropped to 120 daily because of growing instability along Syria's major highways, and with Nasib closed, just a few trucks destined for the shrinking Syrian market only leave Lebanon every day.

Although one crossing along the Syria-Iraq border remains open, Ali said it is too dangerous to use.

According to Ghobril, Lebanon's land exports have been affected the most by the Syrian crisis, apart from tourism.

Road closures have hit agricultural exports the hardest, since they rely predominantly on land routes and cannot be easily transported by air or sea.

"Our trucks transported our agricultural and industrial products. This is what carried Lebanon's economy," Ali said, adding that the losses could be in the millions of dollars.

"Now we have 900 refrigerated trucks that are just sitting inside Lebanon," with others stuck in the Gulf, he told AFP.

Alam said he lost at least $1 million in the three weeks after Nasib's closure.

According to the agriculture ministry, the sector employs 20 to 30 per cent of the Lebanese workforce.

Livelihood on hold

Many truckers can now be found discussing their plight at their syndicate's offices in Bar Elias in east Lebanon.

Khaled Araji, 55, is just one of hundreds of Lebanese who used to drive goods through Syria to the Gulf, and whose livelihood has now on hold indefinitely.

"I just spend my time in the house. I've worked in this business for more than 30 years, and if I don't see the [truck's] refrigerator every day, I can't relax. This job is in my blood," Araji said.

According to Ali, truck drivers made $1,500 a month "to provide for their families by generating activity in other sectors. All of this has stopped now”.

To make up for routes through Syria being closed, the Beirut government is looking at exporting these goods by sea.

According to Ghobril, this alternative "requires more time than by land, and it's definitely more expensive, but it's still better than nothing".

But Alam downplayed the effectiveness of maritime transport, saying some green produce would not stay fresh long enough for the journey.

In his warehouse in Bar Elias, young men and girls pack oranges, apples and fresh lettuce, whose prices have dramatically dropped, into crates and boxes for export by air.

As the peak harvest seasons in August and September draw closer, exporters and truckers are hoping for a speedy solution to the problem.

But Agriculture Minister Akram Chehayeb, speaking after a Cabinet meeting on the crisis last week, was not hopeful.

"Unfortunately, we have become an island," he said.

Separately, hundreds of Jordanian importers and exporters lost millions of dollars worth of goods when rebels pillaged the vast free trade zone that straddled the Jordanian-Syrian border, most of it on the Syrian side.

Car importer Mohammed Bustnje says he was among the lucky ones, losing only tens of thousands of dollars when looters sacked his offices and made off with televisions, air conditioning units, even doors and windows.

Bustnje said he had had a premonition there would be trouble at the 700-hectare Jordanian-Syrian Free Zone, and moved all the vehicles he had warehoused there into Jordan.

"Thank God," he said, "because the rest of the importers lost hundreds of cars" in looting after rebels seized the Syrian side of the crossing.

Nabil Romman, chairman of the Jordanian investment commission for the zone which contains not only warehouses but even assembly plants for some goods, said there were more than 1,000 traders doing business there — Syrians, Jordanians, even Iraqis — with a combined inventory of more than $1 billion (917 million euros).

He estimated that $100 million in goods was stolen.

Knock-on effect 

More recently, however, the security situation has become more stable, there are reports that Jordanian traders are now able to get into the zone and are gradually bringing goods out.

Romman said the "Nasib crossing is a vital artery between us and Europe. Seventy per cent of what we eat, of everything we import and export, passed through Syria”.

Goods were brought in and exported by sea from Lebanon, or even travelled overland through Turkey farther north.

Mohammed Daud, president of the Jordanian truckers' union, estimates that the long-term damage from lost trade with not only Syria, but also Iraq, could reach $500 million.

He said around 2,500 trucks crossed the Syrian border daily before the civil war. That number was down to "a couple hundred when the border was closed. Now it is zero”.

Prime Minister Abdullah Nsur said recently week that Jordan was in a "state of siege".

Not only is it effectively cut off from Syria to the north, it has also seen commerce with Iraq severely curtailed because of the conflict between the government and the Daesh group there.

Economist Mazen Al Rashid said "the longer the borders are closed, the more serious the consequences will be for the Jordanian economy".

"The decline in exports could exacerbate the trade deficit, which would force Jordan to borrow more to cover the difference," he added.

Economist Yussef Mansur said the only solution now is to consider trade by sea.

OMAHA, Nebraska — Billionaire investor Warren Buffett said on Saturday that stock prices would appear expensive if interest rates normalised from their ultra-low levels.

"If we get back to normal interest rates, stocks at these prices will look high," said Buffett, speaking at the annual shareholders' meeting of his sprawling conglomerate Berkshire Hathaway Inc.

Buffett, one of the world's most famous investors, is widely followed for his advice on finance and life. 

While he often emphasizes the importance of not basing long-term investing decisions on short-term economic expectations, his views on the US and global economies carry significant weight well beyond Berkshire Hathaway's shareholders.

Regarding the Federal Reserve's (Fed) loose monetary policy, Buffett said he could not have predicted that rates would remain this low for this long without becoming a problem.

"So far, I have been wrong on interest rates. It's so hard for me to see how, if you toss money from helicopters that eventually you don't have inflation, but we haven't," he indicated.

The Fed is currently weighing raising rates from their near-zero levels of the financial crisis era, even as questions remain about the strength of growth in the world's biggest economy.

The current US economic environment will not influence potential acquisitions at Berkshire Hathaway, Buffett remarked.

Berkshire tends to hold companies for decades, or forever, as Buffett has said in the past, making the short-term economic outlook less valuable as a predictor of a company's success than longer-term trends.

"Any company that has an economist certainly has one employee too many," he added.

He also said about the greenback: "I think the dollar will be the world's reserve currency 50 years from now."

Nevertheless, Buffett praised China as a rising superpower, saying the country's population had "found a way to unlock their potential".

Charlie Munger, Berkshire Hathaway's vice chairman, echoed that sentiment, noting China's drive against corruption and its relationship with the United States.

"It's very important that we like and trust one another," Munger said.

China surpassed Japan to become the world's second-largest economy in 2010. US President Barack Obama has "pivoted" to Asia, placing much of the focus of American foreign policy on that continent as China becomes more influential on the world stage.

Buffett noted problems in the United States, as well, including concerns about income inequality. "I don't have anything against raising the minimum wage but I don't think we can do it in a significant enough way without creating a lot of distortions."

He said he favours using the earned income tax credit to help struggling households.

Income inequality has already emerged as a major issue in the 2016 presidential election, with both Republican and Democratic contenders highlighting middle-class insecurities.

OMAHA, Nebraska — Berkshire Hathaway Inc. shareholders on Saturday celebrated Warren Buffett's 50th anniversary running the conglomerate, as the billionaire expressed optimism the company would thrive over the long haul, even after he is gone.

Buffett and his second-in-command, Charlie Munger, fielded five hours of questions from shareholders, analysts and journalists at Berkshire's annual meeting, including some that criticised the business practices of firms that Berkshire owns or works with, such as Brazil's 3G Capital.

The meeting had a more festive air this year, with one of the more than 40,000 people who attended shouting out "Warren and Charlie, we love you" at the start of the main event of what Buffett calls "Woodstock for capitalists".

"It's not Disneyland, it's Warrenland," said David Rolfe, chief investment officer of Wedgewood Partners Inc.

Berkshire holds more than 80 companies including the Burlington Northern railroad, Geico car insurance, Benjamin Moore paint, Dairy Queen ice cream, Fruit of the Loom underwear, See's candies and owns more than $115 billion of stocks.

Its breadth and depth, which includes $63.7 billion of cash, has given Berkshire a strong balance sheet that Buffett noted will help it thrive should the economy, propped up by low interest rates that many expect to rise soon, heads south.

"We will be very willing to act if economic turbulence of any kind occurs, and will be prepared, and most people won't be," he said. He denied that Berkshire needed special regulatory oversight by possibly having become too big to fail. 

Succession 

Buffett gave no hints about who would succeed him. He also alluded in one answer to his writing another of his popular letters to shareholders next February, suggesting no intention to leave soon.

Yet he said he would not want someone whose sole background is in investments to become chief executive. "I would not want to put someone in charge of Berkshire with only investing experience and not any operational experience."

Buffett also offered ringing praise for the turnaround at Burlington Northern, Berkshire's largest non-insurance unit, which was plagued last year by service delays.

"The improvement has been huge, and I want to thank Matt Rose and Carl Ice for their really extraordinary performance," he said, referring to the railroad's executive chairman and chief executive.

Rose, considered by some a potential Berkshire chief executive officer (CEO) candidate, was not mentioned by Buffett in his annual letter, which led some to believe his standing had been lowered.

Other potential CEO candidates include insurance executive Ajit Jain, whose decision to join Berkshire three decades ago was hailed by Buffett as one of the "luckiest" events he experienced, and Berkshire Hathaway Energy chief Gregory Abel, who talked at the meeting about renewable energy. He was the only person other than Buffett and Munger to field a question.

Ken Shubin Stein, founder of Spencer Capital Management LLC in New York, said having a CEO with an operational background "makes sense since the CEO needs to work with the investment team and understand their use of capital for investments, versus using the capital for investing in acquisitions”.

3G defended 

As is usually the case, no major controversy has been hanging over Berkshire.

But Buffett did get two questions that led him to praise 3G Capital, which critics say ruthlessly cuts jobs at companies it acquires. In 2013, Berkshire and 3G bought H.J. Heinz Co, which is now buying Kraft Foods Group Inc.

"The 3G people have been successful in building marvelous businesses," Buffett said. "I don't know of any company that has a policy that says we're going to have a lot more people than they need."

Buffett also defended Berkshire's Clayton Homes manufactured homes unit, which was criticised in a recent Seattle Times article for predatory sales practices that can trap low-income borrowers in homes they cannot afford.

"I make no apologies whatsoever for Clayton's lending terms," he said, adding that Clayton itself faces losses when borrowers default.

Buffett also said he expects a contentious contract dispute between Berkshire's luxury aircraft unit NetJets and its pilots to be resolved, and said he had "no anti-union agenda whatsoever". Some of the pilots picketed outside the meeting.

Addressing a question about Berkshire's stakes in companies including Coca-Cola Co that sell highly sugared products, Buffett said companies can change as consumer tastes evolve.

Alluding to his own well-publicised fondness for junk food, he said: "If I had been eating broccoli and Brussels sprouts all my life, I don't think I would live as long."

Buffett also said the euro currency "can and probably should survive", but that "real changes" would probably be required.

Munger, for his part, said European leaders created a "flawed system" that was "probably unwise" by letting countries that were too weak adopt the currency. 

Devotees lined up early 

Berkshire's annual meeting is Omaha's top annual draw other than baseball's College World Series — reflected in hotel rooms that can fetch more than $400 a night and that often sell out nearly a year in advance.

Devoted and sleep-deprived shareholders began lining up outside the venue hours before doors opened at 7 am.

Kyle Cleeton, a research analyst for an investment firm, may have gotten there first, saying he showed up at 10 pm the night before.

"I wanted to be first in line," he said. "You're not sure how many more years you're going to have."

Bill Guenther, a state forester from Brattleboro, Vermont, said, "I'm one who likes a good seat." He arrived at 1:04 am despite having last year suffered a major foot injury when he collided with another shareholder as he tried to get that good seat.

"My girlfriend said, 'You're not going to do this again,' and I said, 'I have to, it's the 50th year.'"

AMMAN — Net after-tax profit generated by Jordan Telecom Group (JTG) during the first quarter of 2015 amounted to JD8.6 million, 30.1 per cent lower than the JD12.3 million recorded during the same period of 2014.

According to the financial statement as of March 31,2015 disclosed to the Amman Stock Exchange, the operational income after deducting administrative, selling, marketing and other expenses as well as depreciation and amortisation,  dropped by 27.7 per cent from JD14.8 million at the end of March 2014 to JD10.7 million at the end of March 2015.

Noting that net earnings amounted to JD79.8 million and that cost of services was JD35 million during the first quarter of this year, the gross profit came at JD44.8 million compared to JD45.1 million during the first quarter of 2014 when net earnings totalled JD84.6 million and the cost of services stood at JD39.5 million.

A breakdown of the earnings indicates that Orange Fixed contributed JD32.9 million at the end of March 2015, (JD36.7 million end of March 2014); Orange Mobile supplied JD34 million (JD36.1 million); Orange Internet brought in JD12.8 million (JD11.8 million).

The balance sheet at the end of the first quarter of 2015 shows total assets at JD596 million compared to JD599.3 million at the end of the first quarter of 2014.

Of the total, JD354.7 million are current assets (JD305.9 million) and JD241.2 million (JD293.4 million) are fixed assets.

JTG earned JD1 million in income from its short-term deposits at banks which totaled around JD101.4 million at the end of March 2015. The group earned JD2.1 million from JD190.2 million in bank deposits at the end of March 2014.

The March 2015 balance sheet also showed total liabilities at JD232.8 million of which JD3.9 million were long-term debt, compared to JD4.3 million long-term debt at the end of March 2014 when total liabilities amounted to JD244.8 million.

AMMAN — Jordan Telecom Group (JTG), operating under Orange Jordan brand name, intends to apply wide-ranging initiatives to address several constraints denting its performance.

JTG Chairman Shabib Ammari indicated in the company's annual report that the initiatives include a change in strategy and in the way of operations as well as an amendment to the organisational structure.

Ammari wrote in a foreword that competition, coupled with lower purchasing power of Jordanians and the need to dole out more investments on the networks, were the foremost challenges that dented Jordan Telecom's growth drive.

He also mentioned previous government decisions and others by the Telecommunications Regulatory Commission (TRC) as additional factors that resulted in higher operational costs and reduced earnings.

"The sudden doubling of the special tax on mobile calls [to 24 per cent from 12 per cent] and the sales tax on mobile handsets during the second half of 2013 contributed to lowering the 2014 income," Ammari said.

The annual report showed that JTG's base of subscribers diminished by 2.4 per cent from 4.09 million at the end of 2013 to 3.99 million at the end of 2014. 

The chairman criticised the TRC for not giving JTG's licence renewal an equal treatment similar to the that awarded to another operator in terms of value and period, describing the JD52.7 million paid for the 2G/900MHZ mobile telecom licence as inflated and unfair.

Reiterating that the board of directors and the executive management remain determined not to back down over the amount paid, the change in the type of licence at short notice, and the manner in which the matter was handled, Ammari said there was no option but to take the dispute with the TRC to Jordanian jury.

He added that the Arab Spring repercussions also disrupted JTG's strategy because the crisis in Syria slammed the brakes on the fiber-optic network project, known as JADI, which was "one of our most important plans”.

JADI was  originally set to pass through Jordan, Saudi Arabia, Syria and Turkey and to link the region's east and west through a fiber-optic cable network, the chairman told the shareholders.

"We aim to turn challenges into opportunities by through lowering operational costs to correspond to the new difficult conditions, and to look for new offers and services in order to boost our earnings," he said.

The annual report showed that JTG reduced its labour force by 6.9 per cent from 1939 employees at the end of 2013 to 1805 workers at the end of last year.

Ammari added that JTG's gross investments since the year 2000 have reached around JD1 billion and that the company has allocated the necessary funds in the 2015 budget to establish the G4 network whose services are almost ready to be launched. 

Chief Executive Officer Jean-Francois Thomas stressed innovation as the strength platform of Orange Jordan, listed the company's main achievements in terms of services and products and highlighted three major contracts that JTG signed with Abdali Boulevard, Saraya Aqaba and Royal Jordanian to provide them with an integrated telecom infrastructure within the company's keenness  to support and develop the Jordanian corporate sector.

According to Thomas, 2014 was a year marked by unfavourable market conditions for developing Jordan's telecommunications and information technology industry.

Within this context, he mentioned stiff and rising competition as a result of a market saturated with many services and products.

The annual report estimates the market share of Orange Fixed at 90 per cent, Orange Mobile at 30-35 per cent, and Orange Internet at more than 40 per cent. 

"The continued rise in electricity charges besides higher taxes and repeated regulatory obstacles had a negative impact that weighed on the sector and impeded its advancement and growth," he wrote in the annual report.  

The chief executive officer indicated that the group's earnings declined to JD345 million in 2014, 3.2 per cent lower than the JD356.4 million in the previous year when earnings were 11.7 per cent below the 2012 income.

Operational profit before interest, tax, depreciation and amortisation amounted to JD104.7 million, a 4.1 per cent drop from the JD109.1 million generated in 2013 when the figure was 29.5 per cent lower than the 2012 profit.

Analysing the performance by divisions, Orange Mobile topped the list with the only improvement as its operational earnings rose 2.9 per cent  to JD36 million (JD35 million), despite a decline in total earnings to JD156.4 million (JD160.5 million).

The operational earnings generated by Orange Fixed and Orange Internet dropped by 7.1 per cent to JD68.9 million (JD74.1 million) as total earnings fell 8.1 per cent to JD254.3 million (276.7 million).

Costs related to inter-connections came at JD65.7 million (JD80.9 million).

The annual report showed the cost of services, at JD161.4 million,  as the highest category of expenditures, although it was 5.3 per cent down from the amount in 2013.

An increase in commissions related to sales and distribution raised the spending by 6.6 per cent to JD43 million.

Also administrative expenditure increased by 1.8 per cent reaching JD22.1 million.

As per the agreement signed with the TRC stipulating a 10 per cent government share of the net earnings from the cellular service, JTG will pay the state treasury JD8.3 million in 2014, 7.4 per cent  higher than the previous year..

In lieu of using the Orange trademark in all subsidiaries, JTG will pay JD4.1 million, representing 1.6 per cent of operational earnings, compared to JD4.3 million in 2013.

As per the business support agreement, Orange will also be getting JD3.3 million in fees, unchanged from 2013.     

According to the profit and loss statement as of December 31,2014, JTG's net profit regressed by 18.5 per cent to JD42.1 million (51.7 million at the end of 2013.)

JTG's profitability has been on a downward trajectory since 2010 when net profit stood at JD95.1 million before slipping to JD89.8 million, JD83.1 million, JD51.5 million, and JD42 million in the following years.

Dividends to shareholders were also on the decline from JD97.5 million in 2010 down to JD90 million, JD83.5 million, JD52.5 million, and JD42 million.

AMMAN – Jordan Lafarge Cement Factories Company announced on Wednesday that it generated JD3.4 million in net profit last year, compared to JD26.2 in losses incurred in 2013.

Vice Chairman Ahmad Hishmat  said the company managed to overcome three years of continuous losses after taking "strict" measures, including massive cuts in expenditure and the usage of coal at the Rashadiyeh plant. However, he noted that the company is still suffering due to the closure of the Fuheis Cement Factory for two years now, expecting competition in the cement market to amplify this year because of the severe decline in the global prices of oil. Lafarge's sales stood at around JD114 million last year, compared to JD91 in 2013.

AMMAN — Cairo Amman Bank's gross profit during the first quarter of 2015 amounted to JD14 million, compared to JD15.4 million in the same period of 2014.

Net profit stood at JD9 million during the first three months of 2015, compared to JD10.4 million in the same period of 2014. 

AMMAN — Jordan Ahli Bank generated JD6.2 million net profit during the first three months of 2015, down from JD6.8 million in the same period in 2014.

According to a bank disclosure to the Amman Stock Exchange, total profit amounted to JD9.3 million, compared to JD8.6 million in the 2014's first quarter. 

AMMAN — Jordan Petroleum Refinery Company will be distributing JD11.25 million in cash dividends to shareholders at  a rate of 18 per cent following their endorsement during a general assembly meeting.

Shareholders will also get bonus shares at a rate of 20 per cent as the company capitalises JD12.5 million of retained earnings raising capital to JD75 million. The general assembly also approved allocating JD3.9 million to mandatory reserve. 

AMMAN — Concern over army setbacks against insurgents in recent weeks drove black market rates for the Syrian pound to a record low against the dollar on Wednesday, dealers and bankers said.

Three dealers speaking by phone from Damascus said it cost as much as 315 to 310 Syrian pounds to buy one dollar on the street. The currency hovered even higher in other parts of the country, trading at 324-328 pounds to the dollar, compared with 220 pounds to the dollar at the start of the year.

"People are trying to get as many dollars as they can get their hands on," said one exchange dealer.

From fresh produce vendors to manufacturers, from importers to taxi drivers, the crisis has brought the dollar into wider circulation as people try to protect themselves against currency depreciation and inflation.

The previous record low was in July 2013 when it hit 310 pounds over concerns about possible US military action. This compared to around 47 pounds at the start of the 2011 uprising against President Bashar Assad.

Insurgents have captured strategic territory in the south of the country and in the northwestern Idlib province, where they have edged closer to the government-held Latakia province, one of the most important areas for Assad and the Alawite community.

As anti-government fighters gain more ground, Syrians are less hopeful the economy will improve, dealers and two bankers said, adding people were increasingly hoarding dollars.

"People have been shocked by the recent rapid events on the battlefield and the psychological impact has made people turn to the dollar as a safe haven," indicated one Damascus-based banker who requested anonymity.

The fall has followed a period of relative stability after the United States and allied forces started air strikes in Syria against Daesh militants last year.

The currency was also buoyed by a government crackdown on speculators accused of profiteering by hoarding dollars and blamed for wild currency fluctuations.

Despite widespread devastation caused by the conflict and Western sanctions imposed on Syria, the currency has so far avoided a complete freefall, bankers say, citing large infusions of aid from the country's main regional ally Iran.

Iran is believed to have deposited hundreds of millions of dollars into the country's now depleted reserves that stood at $17 billion before the crisis.

The Syrian government has clamped down on currency exchanges in an effort to close the gap between the official and black market rate with some success. But the effect is wearing off now, according to a banker in a foreign-based bank that is based in Damascus.

Central Bank Governor Adeeb Mayaleh, who has long blamed the pound's fall in the black market on speculators, has recently vowed to take action to support the currency.

"The central bank hopes in the coming phase to support the stability of the exchange rate by taking a series of economic and monetary measures to support exports and production to reduce pressure on the pound in the short term," Mayaleh said.

"This will allow the central bank to intervene more effectively in the exchange market and satisfy the market needs," he added in recent statement to state news agency SANA.

But dealers and bankers contacted in Damascus and in Aleppo said central bank actions, including injecting $100 million into the market, had not been able to prevent the slide.

They also say commercial banks are not making available the quantities of dollars at the fixed price of 260 pounds to the dollar set by the central bank to calm markets.

The dollar's rise has boosted inflation which is at 120 per cent according to official data but probably is much higher, economists say.