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Volkswagen profits rise but chip shortage impact not over

By - May 09,2021 - Last updated at May 09,2021

In this file photo taken on February 25, 2020, an employee of German car maker Volkswagen works on an assembly line to produce models of the Volkswagen electric car, the ID.3 model, in Zwickau, eastern Germany (AFP photo)

FRANKFURT — German carmaker Volkswagen (VW) reported a jump in first quarter profits on Thursday but warned that a global shortage of semiconductors that has hurt production would have a "more significant impact" in the coming months.

The auto giant reported net profits of 3.4 billion euros ($4 billion), up from 517 million euros over the January-March period in 2020 when the first wave of the pandemic closed showrooms and factories.

Revenues for the 12-brand group, which includes the Audi, Porsche and Skoda marques, climbed 13 per cent to 62.4 billion euros, it said in a statement.

The hike was driven by a rebound in car sales especially in China, the world's largest auto market, and robust global demand for high-profit luxury models, VW said.

The automaker also highlighted the growing popularity of more environmentally friendly vehicles, with sales of its electric and hybrid cars more than doubling to 133,000 units.

Overall, the group delivered 2.4 million vehicles in the first quarter of the year.

"We started the year with great momentum," said CEO Herbert Diess.

"Our e-offensive continues to gain momentum and we are making good progress with the transformation. There is still much more we can achieve in the remainder of the year."

Chief Finance Officer Arno Antlitz said VW had "managed the effects of COVID-19 and the semiconductor shortages responsibly" over the first quarter.

Like other carmakers, VW has been grappling with a supply crunch of semiconductors as the pandemic boosts demand for crucial microchips also needed for consumer electronics.

The chip shortage has forced VW to trim auto production at some plants and put thousands of workers on shorter hours, delaying car deliveries.

"The shortage of semiconductors throughout the industry is expected to have a more significant impact in the second quarter than before," said Antlitz. 

"Nevertheless, we are confident regarding business development in the full year," he added.

The group lifted its full-year outlook, saying it now expected an operating return on sales of between 5.5 and 7 per cent, compared with an earlier target of 5-6.5 per cent. 

VW had already said in February that it expected group revenue in 2021 to be "significantly higher" than last year, while car deliveries would also be "significantly up" on 2020.

The VW group sold more than 9.2 million vehicles last year. 

Japanese rival Toyota sold 9.5 million vehicles in 2020, taking VW's crown as the world's top-selling carmaker for the first time since 2015.

Copper, iron ore hit records as demand surges

By - May 08,2021 - Last updated at May 08,2021

In this file photo taken on March 01, a worker of the Next Mineral mining company inspects the Comahue copper mine in Antofagasta, Chile (AFP photo)

LONDON — Copper and iron ore prices hit record highs on Friday as demand for the key commodities surges on the back of a powerful recovery in the global economy.

At the same time, stock markets and the dollar traded mixed ahead of a keenly awaited US jobs report.

With major economies led by the United States and China reopening after last year's shutdowns, industries are ramping up production, pushing the cost of materials ever higher as traders also worry about a lack of supply caused by the pandemic.

Copper, a major indicator of the state of the global economy owing to its use in a multitude of products, broke to an all-time high above $10,300 per tonne on Friday, and with the global recovery expected to continue for some time, analysts say the price can continue north.

"It's hard to foresee copper prices turning around amid the current bullish atmosphere," Ji Xianfei, at Guotai Junan Futures Co., said.

Commerzbank AG analyst Daniel Briesemann said "long-term prospects for metals prices... point to higher prices".

He added: "The decarbonisation trends in many countries — which include switching to electric vehicles and expanding wind and solar power — are likely to generate additional demand for metals."

Iron ore also broke to new levels above $200 as commodities prices across the board advance, with lumber, tin, bacon and sugar all sharply higher.

"The global economic recovery is lifting steel demand with China's steelmakers keeping elevated levels of output, despite production curbs aimed at reducing carbon emissions and reining in supply," said National Australia Bank's Rodrigo Catril.

However, that has fanned fears about a spike in inflation around the world that many warn could force central banks to wind back their ultra-loose monetary policies that have helped fire a global markets rally for more than a year.

Top bankers led by the Federal Reserve (Fed) have repeatedly pledged to maintain their accommodative measures for the foreseeable future, though many believe their hand could be forced by a period of excessively high inflation. 

 

US jobs in focus 

 

Eyes are now on the release of US jobs figures later in the day, which will be the latest indicator of the state of the world's top economy.

They come a day after a forecast-beating reading on unemployment benefits that showed claims fell to their lowest since the coronavirus struck last year, and two days on from news that 742,000 new jobs were created in the private sector in April.

"With jobless claims hitting a pandemic-era low, anticipation for the full jobs picture... mounts," said Mike Loewengart, of E*Trade Financial.

The reading "is another proof point that we're one step closer to full economic recovery. As we see some serious momentum building on the jobs front, all eyes will be on how this plays into action taken by the Fed".

IMF 'ready' to help Tunisia — official

By - May 08,2021 - Last updated at May 08,2021

WASHINGTON — The International Monetary Fund (IMF) stands "ready" to offer Tunisia an aid package to deal with the current financial crisis, a fund official said on Thursday.

However, there is "no timeline" for finalising an agreement, spokesman for the IMF Gerry Rice told reporters.

The Washington-based crisis lender's staff met with Tunisian officials in the past few days, and the ongoing technical discussions are focused on understanding "their plans for that economic reform programme", he said.

Rice did not provide details on the size of the loan programme under discussion, but said, "we stand ready to support Tunisia and the Tunisian people to cope with the impact of the crisis, and move forward to an inclusive job-rich recovery and restore sustainable finances."

Tunisia's economy has lurched from crisis to crisis since the country's 2011 revolution, most recently due to the coronavirus pandemic and lockdown measures.

It is the fourth time in a decade the heavily indebted country has turned to the IMF for help, and Tunis is reportedly seeking a three-year loan deal. 

According to Tunisian documents obtained by AFP, one of the key features of the government reform plan is to replace subsidies for staple goods with direct aid to families by 2024. 

Another potentially explosive element is a proposal to slash the public sector workforce, which has swelled due to hiring in the health sector aimed at fighting the pandemic. 

Tunis intends to limit public wages to around 15 per cent of gross domestic product (GDP) in 2022 compared to 17.4 per cent in 2020, the documents show.

The government also intends to restructure state-owned enterprises, most of which rack up heavy losses.

The small North African country’s foreign debt load has soared to 100 billion dinars (around 30 billion euros), equivalent to 100 per cent of gross domestic product, and Tunisia faces debt payments of 4.5 billion euros this year.

The IMF expects the country will see GDP growth of 3.8 per cent this year, after an unprecedented 8.9 per cent contraction in 2020.

New US jobless claims plunged 92,000 last week — gov’t

By - May 06,2021 - Last updated at May 06,2021

WASHINGTON — Americans filed 92,000 fewer applications for unemployment aid last week, the government reported on Thursday, in the latest sign the widespread job losses caused by the Covid-19 pandemic was ebbing as businesses reopen.

The Labour Department data showed there were 498,000 initial claims for jobless benefits made in the week ended May 1, seasonally adjusted, far fewer than expected and a new low since the pandemic began in March 2020 and caused a massive spike in layoffs and the need for aid.

The report is the latest evidence the US labour force is recovering, aided by Covid-19 vaccines that have allowed businesses to return to normal, as well as government stimulus spending.

"The level remains high, but filings are moving in the right direction, indicative of improving labour market conditions," Rubeela Farooqi of High Frequency Economics said.

Claims have been on a downward slope over the last month, however Labour Department said the report for April 24 was revised upwards to show filings actually increased that week by 24,000.

In the latest week, there were 101,214 new applications, not seasonally adjusted, filed under a special programme to help freelance workers who are not eligible for regular jobless benefits, the report said.

All told, nearly 16.2 million people were claiming some form of unemployment benefits as of the week ended April 17, the Labour Department said, a reminder that much remains to be done to restore the record-low unemployment seen before the pandemic.

 

 

Steel giant ArcelorMittal posts 'strongest quarter in a decade'

By - May 06,2021 - Last updated at May 06,2021

This file photo taken on November 27, 2012 shows the logo of ArcelorMittal at a factory in Dunkirk, northern France. (AFP photo)

PARIS — Steel giant ArcelorMittal said on Thursday it recorded its best quarterly performance in a decade as commodity prices have soared due to booming demand fuelled by an economic recovery from the pandemic.

The Luxembourg-based group's net profit nearly doubled to $2.3 billion (1.9 billion euros) in the first quarter compared to the last three months of 2020, according to an earnings statement.

Sales surged by 15 per cent in the first three months of the year to $16.2 billion as steel prices and iron ore revenues rose.

Prices of raw materials ranging from copper to lumber and tin have skyrocketed in recent months as economies have started to bounce back from the coronavirus pandemic.

ArcelorMittal forecast an increase in steel demand of up to 5.5 per cent after a contraction last year.

"The first quarter of this year has been our strongest in a decade," chief executive Aditya Mittal said in a statement.

"While this is naturally a very welcome development following a highly challenging 2020, we are mindful that Covid continues to be a health challenge across the world, especially in developing economies," Mittal said.

The group is present in 60 countries and is listed in stock markets across Europe and New York.

 

 

Lufthansa shareholders approve 5.5b euro capital increase plan

By - May 06,2021 - Last updated at May 06,2021

Lufthansa's shareholders have approved this week a plan for the airline to raise 5.5 billion euros ($6.6 billion) on the market, to start paying down state aid that has kept it aloft during the coronavirus pandemic. (AFP file photo)

FRANKFURT — Lufthansa's shareholders on Tuesday approved a plan for the airline to raise 5.5 billion euros ($6.6 billion) on the market, in order to start paying down state aid that has kept it aloft during the coronavirus pandemic.

The airline group, which also includes Austrian, Swiss and Brussels Airlines, was saved from bankruptcy last June by a German government bailout.

The company is in the throes of a painful restructuring to slash costs that will include thousands of job cuts. 

Calling for the capital hike, chief executive Carsten Spohr said it would help the company "return to financial stability" after a turbulent year.

Most of the sum to be raised would go towards repaying state aid, he added.

The planned new share issuance would take place this or next year, said the company's financial director Remco Steenbergen last week.

Such capital hike programmes are usually unpopular with shareholders as they essentially dilute the value of the shares in circulation.

Lufthansa has so far used 2.5 billion euros of the 6.8 billion euro government bailout. The group repaid a billion euros in February.

Like other airlines around the world, Lufthansa found its planes grounded as governments closed borders to halt the coronavirus early on in the pandemic.

Since then, an early recovery last summer turned out to be shortlived, and passenger demand has remained low.

Underlining the long road to recovery, Lufthansa said in March that capacity will climb to 90 per cent of 2019's level only in "the middle of the decade".

 

 

 

Nissan to sell entire Daimler stake for $1.4b

By - May 05,2021 - Last updated at May 05,2021

TOKYO — Nissan on Wednesday announced the sale of its entire 1.54 per cent stake in German auto giant Daimler for around 1.15 billion euros ($1.4 billion), following a similar move by its French partner Renault.

The Japanese automaker has been trying to become profitable again and recover from the reputational damage caused by the departure of its now-fugitive former leader Carlos Ghosn.

Nissan said the divestment will allow it to "further strengthen and enhance its business competitiveness, including investments to promote electrification".

Its industrial cooperation with Daimler remained unchanged, the company said, adding: "The two groups continue to collaborate in several areas."

In March, Renault also announced the sale of its entire 1.54 per cent stake in Daimler after the French automaker booked a record loss in 2020, its performance hit by the pandemic.

Nissan has upgraded its full-year forecast, projecting a net loss of 530 billion yen ($4.8 billion) for the fiscal year to March, smaller than its earlier estimate.

Nissan, which has maintained its partnership with Renault and Mitsubishi, will announce annual results next week.

 

Twitter bolsters subscription plans with ad-free news

By - May 05,2021 - Last updated at May 05,2021

Twitter on Tuesday said it is buying Scroll and its ad-free news app (AFP photo)

SAN FRANCISCO — Twitter on Tuesday said it is buying Scroll and its ad-free news app to bolster a coming subscription service, and channel money to journalism in the process.

The global one-to-many messaging platform did not disclose how much it is paying for Scroll, which owns the Nuzzel app.

"Scroll will become a meaningful addition to our subscriptions work as we build and shape a future subscription service on Twitter," Twitter Product Manager Mike Park said in a blog post.

US-based Scroll confirmed the acquisition, apologising to users that it will go into a private beta mode as it is integrated into a Twitter subscription play later this year.

"Scroll is at the heart of a coalition of publishers and platforms building a new user experience model that sustainably funds journalism," Chief Executive Tony Haile said in a blog post.

"At the core of that is a simple membership that enables people to fund the sites they love, without having to deal with the ads and trackers they don't."

Subscribers can visit an array of websites such as The Atlantic, The Verge, and USA Today for news stories "with no ads, no dodgy trackers and no chumboxes of clickbait", according to Scroll.

News publishers would get attention and money in the process.

"As a Twitter subscriber, picture getting access to premium features where you can easily read articles from your favorite news outlet, or a writer's newsletter from Revue, with a portion of your subscription going to the publishers and writers creating the content," Park said.

Twitter has been struggling to create ways to make money from its service without disrupting the real-time flow of posts that has been it defining characteristic.

Last week, Twitter reported weaker-than-expected earnings and disappointing user growth.

A key figure of "average monetisable daily active users" was below expectations at 199 million, an increase of 20 per cent from a year ago.

Twitter has struggled to expand beyond its core audience of celebrities, journalists and political leaders, even if it has become an important forum for policy debates.

"People turn to Twitter to see and talk about what's happening, and we are helping them find their interests more quickly while making it easier to follow and participate in conversations," Chief Executive Jack Dorsey said during an earnings call.

Twitter has faced challenges in tackling misinformation and abusive content even as it strives to become a platform for political discourse.

Hard but sweet-smelling slog in Morocco's Valley of the Roses

By - May 04,2021 - Last updated at May 04,2021

By Sophie Pons
Agence France-Presse

KELAAT MGOUNA, Morocco — To earn a dollar, rose picker Izza in Morocco's Atlas Mountains wakes up at dawn to collect three kilos of flowers — eventually distilled into precious oil costing $18,000 per kilo.

"We earn just enough to live on," she says, her hands gloved against the thorns and her head covered against the hot sun bearing down on the Valley of the Roses in the kingdom's south.

The harvest begins at dawn, and it takes about six hours — before the sunshine damages the shocking pink petals — to fill the big bags that the women carry on their heads to the weighing station.

Izza Ait Ammi Mouh, a Berber woman of "about 40" — she doesn't know her exact age and can't spell her name — doesn't complain.

The work allows her to feed her family of five, picking 20 kilos to take home just under $7 a day during the short April-May season.

A kilo of essential oils requires between 4 and 5 tonnes of flowers.

The heady aroma of the Rosa Damascena, a variety introduced in the days of the caravan trade, perfumes hedges and fields irrigated by two wadis between the mountains and the Sahara desert.

Everything revolves around roses: The names of hotels, cosmetics sold in countless stores, necklaces offered by children in the streets.

The annual festival in the town of Kelaat Mgouna — with a rose statue at its centre — attracted thousands of visitors before COVID-19.

 

'Lucky to be poor' 

 

"The rose is the only way to work in the valley," says Najad Hassad.

The 35-year-old happily left her job in a packaging factory to manage the Rosamgoun cooperative, a small distillery set up by two sisters who grow roses.

The work is much better paid, 2,500 dirhams ($280) a month, almost the official minimum wage in Morocco, instead of 400 dirhams a month at the factory. And the unit of five employees feels "like a family".

The distillery produces rose water and essential oils sold in the cooperative's store, along with cosmetic derivatives such as soap, creams, perfumes and ointments.

Rochdi Bouker, head of the Moroccan growers and processors association, Fimarose, sees the rose as "an engine of local development", banking on the global vogue for natural raw materials and organic products.

It aims to register an "organic" label for the valley to boost the value of local roses on a world market dominated by Bulgaria and Turkey, the leaders in rose-based perfumes.

"We are lucky to be poor," he said. "We don't treat our valley, or very little — [it] isn't filled with pesticides or insecticides".

To increase income and combat an exodus from rural areas, Morocco must "develop the derivatives that bring in the most" income, essential oils and "concrete", an extract obtained by solvent which, once filtered, is highly prized by the luxury perfume industry, Bouker added.

 

'Looking for more' 

 

Moroccan rose exports are currently restricted mostly to rose water and dried flowers.

Essential oils account for only about 50 kilos of annual exports and "concrete" for 500 kilos, a fraction of the industrial volumes sold by Bulgaria and Turkey, according to Fimarose.

"Here, the main buyers are tourists passing through," explains Mohamed Kaci.

The 40-year-old started with a still, and he now employs 30 people in his company, "La Valle des Roses", specialising in cosmetics.

But "unfortunately, COVID-19 is blocking everything," he says.

With the pandemic, the price of fresh flowers has sunk by about 30 per cent in the past two years.

The downturn came after a buoyant period, driven by the agriculture ministry's efforts to develop the sector.

"We're looking for more and more investors," says Hafsa Chakibi.

The 30-year-old Franco-Moroccan set up her own business, Flora Sina, in 2016 on the back of a university degree in chemistry, banking on the appeal of organic produce, small volumes and "traditional" distillation in copper stills.

Her "pure and natural" rose water has quickly found customers who are "looking for something more" in Canada, China, Britain, France and The Netherlands.

Saudi Aramco Q1 profits jump 30% on oil market recovery

By - May 04,2021 - Last updated at May 04,2021

This photo, taken on September 15, 2019, shows an Aramco oil facility near Al Khurj area, just south of the Saudi capital Riyadh (AFP file photo)

RIYADH — Energy giant Saudi Aramco on Tuesday posted a 30 per cent jump in first quarter profits, beating forecasts in a sign of recovery from last year's oil market crash fuelled by the coronavirus pandemic.

Aramco said its net profit rose to $21.7 billion in the first three months of the year, compared to $16.7 billion in the same quarter of 2020, owing to a stronger oil market and higher refining and chemicals margins.

The bumper results follow strong profits posted last month by major oil firms — from American giants ExxonMobil and Chevron to Britain's BP and France's Total — as a recovery in crude prices fuelled their rebound from the pandemic.

"The momentum provided by the global economic recovery has strengthened energy markets," Aramco chief executive Amin Nasser said in a statement.

"Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming. And while some headwinds still remain, we are well-positioned... as economies start to recover."

Oil prices tumbled midway through last year's first quarter as the pandemic shuttered large parts of the global economy, piling pressure on petro-states including OPEC kingpin Saudi Arabia.

The strong earnings provide relief to Aramco, Saudi Arabia's cash cow, which has revealed consecutive falls in profits since it began disclosing earnings in 2019.

The company's low earnings last year piled pressure on government finances as Riyadh faces a ballooning budget deficit and pursues multi-billion dollar projects to diversify its oil-reliant economy.

The first quarter profit beat a forecast of around $20 billion by RBC Capital Markets, which said the results highlight "Aramco's leverage to rising commodity prices".

Aramco declared a dividend of $18.8 billion for the first quarter. That is in line with the company's plan to pay an annual dividend of $75 billion — a key revenue source for the government, Aramco's biggest share holder.

Saudi Arabia is currently seeking to monetise its energy assets, as it explores new revenue streams to fund its ambitious diversification drive.

Last month, Aramco said it had struck a $12.4 billion deal to sell a minority stake in a newly formed oil pipeline business to a consortium led by US-based EIG Global Energy Partners.

Long seen as the kingdom's "crown jewel", Aramco and its assets were once tightly government-controlled and considered off-limits to outside investment.

But with the rise of Crown Prince Mohammed bin Salman who is accelerating efforts to implement his "Vision 2030" reform programme, the kingdom has shown readiness to cede some control.

In late April, Prince Mohammed said Saudi Arabia, the world's top crude exporter, was in talks to sell 1 per cent of Aramco to an unnamed foreign energy firm.

Aramco previously sold a sliver of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world's biggest initial public offering.

The energy giant could announce another offering of shares to international investors within the next year or two, the prince said.

In a major new diversification push in March, Saudi Arabia announced plans to pump investments worth $3.2 trillion into the national economy by 2030, roping in the kingdom's biggest companies including Aramco.

Under a programme named "Shareek", or partner, Aramco and other top Saudi companies will lead the investment drive by contributing 5 trillion riyals ($1.3 trillion) over the next decade, Prince Mohammed said.

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