Business

SAN FRANCISCO — Google Inc.  announced a surprise overhaul of its operating structure on Monday, creating a holding company called Alphabet to pool its many subsidiaries and separate the core web advertising business from newer ventures like driverless cars.

The move appeared to be an attempt by the search engine giant to focus on its more creative and ambitious projects, while investors cheered the potential for more financial disclosures of its disparate business segments.

“It suggests that in all likelihood, Google is not going to slow the pace of their experimental processes like self-driving cars,” said Michael Yoshikami, head of Destination Wealth Management, which has $1.5 billion under management.

The surprise news sent shares of Google up as much as 7 per cent to $708 in after hours trading.

The new structure could also give Wall Street better insight into Google’s investment in moonshot projects like Google X, a secretive lab that produced the unpopular Google Glass wearable device.

“They are aware that they’ve got this hodgepodge of companies,” said Roger Kay, an analyst at Endpoint Technologies Associates. 

“Maybe it’s better to sort them out a bit and make it clearer which ones are bringing in the bacon and which ones are science projects and which ones are long-term bets,” he added.

The Mountain View-based company co-founded by Larry Page and Sergey Brin in 1998 has grown from an Internet search engine to a far-reaching conglomerate that employs more than 40,000 people worldwide.

Google’s planned structure resembles the way companies like Berkshire Hathaway and General Electric are organised, with a central unit handling corporate-wide activities such as finance and relatively independent business units focused on specific areas.

Under the new corporate structure, the Google unit will encompass the core search engine as well Google Maps and YouTube.

In addition to Google X, the company’s new ventures such as Calico, which focuses on longevity, and connected home products maker Nest will be managed separately. Other units that are part of the new structure include Fiber, for its high-speed Internet efforts, venture capital arm Google Ventures, and Google Capital, which invests in larger tech companies.

New structure

Alphabet Inc. will replace Google as the publicly traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all the same rights.

“This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google,” Page, the current chief executive officer of Google, said in a blogpost. Page will become CEO of Alphabet.

Analysts said the new structure could herald a new era of fiscal discipline and transparency in some of Google’s more experimental and opaque business units.

In a filing with the Securities and Exchange Commission, Google said the new arrangement will take effect later this year and that it will likely result in two reportable, financial segments.

“For example, if a unit is doing well or badly they can dial it up or down, they can form partnerships or different companies,” said Kay.

Some other analysts were cautious, saying the new holding company would need to provide more details on cash flow of the experimental business segments.

“Breaking up into two different segments — well, it’s not a terrible thing. It’s better than not doing it but on the other hand, you’re going to have a tonne of businesses buried inside of a legacy Google,” said Brian Wieser, an analyst for Pivotal Research Group.

The shuffle also looked to have the markings of Ruth Porat, who joined Google as its chief financial officer in March from Morgan Stanley. In Google’s recent quarterly conference call, Porat, will serve as CFO of both Alphabet and Google, repeatedly emphasised keeping expenses under control.

With Page heading up Alphabet, Sundar Pichai, a long-time Google executive who most recently served as the company’s senior vice president of products, will head Google. 

Pichai, a well-liked executive who oversaw Google’s Android and Chrome units, is respected in Silicon Valley for attracting top engineers.

Google co-founder Brin will become president of Alphabet, and Eric Schmidt, chairman of Google, will be executive chairman. The company’s current directors will become directors of Alphabet.

Analysts said the move could be followed by more structural changes in the future.

“This may be step one of several steps,” said Morningstar analyst Rick Summer.

LONDON — The Organisation of Petroleum Exporting Countries (OPEC) on Tuesday raised its forecast of oil supplies from non-member countries in 2015, a sign that crude’s price collapse is taking longer than expected to hit US shale drillers and other competing sources.

In a monthly report, OPEC forecast no extra demand for its crude oil this year despite faster global growth in consumption, because of higher-than-expected production from the United States and other countries outside the group.

Oil is trading below $50 a barrel, close to its 2015 low after an 18 per cent drop in July. But OPEC has refused to cut output, seeking to recover market share by slowing higher-cost production in the United States and elsewhere that had been encouraged by OPEC’s prior policy of keeping prices near $100.

Earlier this year, OPEC slashed its prediction of non-OPEC supply for 2015, expecting lower prices to prompt a slowdown. But on Tuesday, it raised the forecast by about 90,000 barrels per day (bpd), following a 220,000 bpd increase in last month’s report.

“US onshore production from unconventional sources is currently expected to decline marginally in the second half of 2015 through year-end, while US offshore production is expected to grow due to project start-ups,” OPEC said.

“Recent developments in the upstream as well as renewed oil price volatility have made forecasting non-OPEC supply more challenging,” it added.

US energy companies have been adding drilling rigs in recent weeks despite the price drop, and OPEC in the report raised its forecast of US output in 2015 by 20,000 bpd. In March, OPEC was expecting a fall in production possibly by late 2015 as drilling subsided.

“OPEC is starting to recognise the resilience of US shale,” said Jamie Webster, analyst at IHS in Washington and an OPEC expert.

Oil prices fell after the report was released, extending an earlier drop. Brent crude was down $1.34 at $49.07 by 1434 GMT.

Lower costs

A reduction in the cost of oil projects since the price crash is helping non-OPEC supply to compete in the market.

“The OPEC secretariat is indeed re-evaluating non-OPEC supply’s ability to withstand prices,” said Samuel Ciszuk, senior adviser on security of supply to the Swedish Energy Agency.

“Project costs have come down a lot and are continuing to fall, according to recent data. This is particularly so with regards to the US light, tight oil — which has provided most of non-OPEC output growth, or in OPEC’s view the oversupply,” he added.

OPEC also said its members continue to boost supplies. According to secondary sources cited by the report, OPEC produced 31.51 million bpd in July, 1.5 million bpd more than its 30 million bpd target.

With OPEC forecasting demand for its crude will average 29.23 million bpd in 2015, steady from last month, the report points to a 2.28 million bpd supply surplus in the market if the group kept pumping at July’s rate.

But Saudi Arabia, the driving force behind’s OPEC’s refusal to cut output, told OPEC it trimmed production by 200,000 bpd to 10.36 million bpd in July, down from June’s record rate.

Some OPEC members, such as Algeria, are concerned by the drop in prices and want the group to reduce supply. Gulf members, however, have rebuffed calls for an emergency OPEC meeting and show no sign of willingness to consider output cuts.

In the report, OPEC still sees a sizeable slowdown in supply growth from non-OPEC next year and stuck to its view that rising global demand would erode the surplus in the market.

“Crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand fundamentals,” it concluded.

MAFRAQ — Investors and businessmen in Mafraq mentioned red tape, long complicated paperwork and a multitude of official entities they have to deal with as investment impediments. In order to improve the investment process, they recommended the use of technological methods to facilitate the completion of transactions and computerising departments that still work in traditional ways, causing many transactions to be delayed for many months.

Mafraq Chamber of Commerce President Abdullah Shdeifat said the centralisation of decision making without delegation of authority hindered the interests of businessmen and investors, piling up transactions at the headquarters for a long time. Shdeifat stressed the importance of training employees through special workshops to improve performance and to cope with changes.

Mafraq Pharmaceutical Manufacturing Company Director Eid Abu Dalbouh urged the government to support food and medicine institutions to facilitate local pharmaceutical production and improve economy. Mafraq Development Corporation CEO Nayef Al Bakhit underlined the role of the investment window in facilitating investment measures, especially saving time and effort. 

AMMAN — Production and distribution of flavoured molasses is growing Al-Eqbal Investment Company  (EICO) into a roaring success.

According to a disclosure sent to the Jordan Securities Commission this month, the company indicated that midyear sales went up by 25.2 per cent and that gross profit surged by 27.1 per cent.

A summary of the consolidated interim financial results showed that sales during the first half of this year amounted to JD62.5 million, compared to JD49.9 million during the same period of last year.

After deducting production costs, gross profit as of June 30, 2015 came at JD25.8 million, compared to JD20.3 million at the end of June 2014.

The net pretax profit for the first half of this year boiled down to JD17.8 million when further reductions associated with administrative, selling and distribution expenses were taken into consideration, in addition to other earnings.

As of June 30, 2014, the net pretax profit stood at JD13.2 million.

The company's 23rd annual report covering last year's operations indicated that besides local sales in all governorates and cities in Jordan, exports reached 85 countries around the world.

The report said the export list included 10 new markets spread over Asia, Europe, Africa and Latin America. 

Noting that sales in 2014 amounted to JD106.3 million, the company expects sales in 2015 to be 15 per cent higher.

EICO generates most of  the income from its factory in Ajman in the United Arab Emirates, where 536 labourers worked at the end of last year in the production of molasses.

To enhance its leading market position with Al Fakher brand of molasses, the company has added accessories as an extra line of business describing it as an extension and a supplement to the molasses activity.

Al-Eqbal Chairman Samer Tawfiq Fakhouri told a recent general assembly meeting of shareholders that the accessories, as an associated activity, is expected to generate $3.5 million profit.

Shareholders heaped praise on the management for the accomplishments achieved by the company, especially its distribution of cash dividends for a number of years a rate of 100 per cent.

A shareholder went as far as describing the company as a goose that lay golden eggs.

But, noting that staying at the top is harder than climbing to it, he expressed concern about continuing with a subsidiary engaged in renewable energy.

"I am worried that Al Taif International Investment Company is a deviation from Al-Eqbal's basic and customary line of business," the  shareholder said.

The chairman responded that the decision to enter the renewable energy field was taken  more than two and a half years ago trusting that this promising sector  is one of the most important resources that the world relies upon.

"I think that within 3-4 years and with time, experience, knowledge and understanding we undoubtedly shall have a share in this vital sphere," Fakhouri said.

He indicated that the subsidiary does not engage in manufacturing but its activity is rather commercial by transforming the solar energy into electricity.

"Shareholders should not expect a newly established company to generate profit at the start of its operations and we may need a year or two to reap the fruits," the chairman said.

He added: "From a strategic point of view, the renewable energy business will be reviewed and a decision will be taken on whether to continue with it or exit this activity."

Since establishment, the losses of Al Taif amounted to slightly less than JD1 million. 

Another shareholder described Al-Eqbal as a jewel in the Amman Stock Exchange noting that it is the only company that distributed more than JD90 million in cash dividends during four years.

"We at Al Fakher are considered number one in the world and the company that directly come behind us is Egypt's Al Nakhlah owned by Japan Tobacco International," Fakhouri said.

The chairman told the general assembly that any amounts disbursed to shareholders will not be at the expense of achieving new investments in production capacity or in warehouse expansion.

"I assure you that only the surplus is distributed to shareholders," he stressed.

Fakhouri said that recently there was a 25 per cent expansion in the production capacity of molasses at a cost that did not exceed JD2 million.

He added that in the near future there is no need for capital investment and that any expansion in activity can be accomplished without much capital.    

According to summary showing financial results over a period of six years, pretax profit shot up from JD11.4 million in 2009 to JD28.3 million in 2014, total assets climbed from JD86.3 million to JD99.6 million and shareholders equity from JD40.1 million to JD68.6 million.

Four major shareholders who owned 57.4 per cent of Al-Eqbal's capital at the end of last year were: Tawfiq Shaker Khader Fakhouri (17.3 per cent), Bank of Jordan (13.9 per cent), Al-Eqbal Jordanian General Trading Company (9.6 per cent), and Arab Gulf Company for Investment and Transportation (16.5 per cent).

The remaining 42.6 per cent of equity, or 10.6 million shares, belonged to 1,974 shareholders.

AMMAN — Business climate improvement is so crucial now, that Jordan may soon seek the assistance of the International Monetary Fund (IMF).

Finance Minister Umayyah Toukan told a media gathering on Monday that regional chaos provides Jordan with an exceptional chance to be a magnet for Mideast investments.

But he said that improving the business climate is of utmost importance to attract investors because they look for markets where discipline prevails and bureaucracy at its lowest level.

"With the IMF experience in improving the business climate in other countries, the government is weighing whether to arrange for a $1.5 billion, 3-year programme with the global lender to undertake such a task," he indicated.

The minister stressed that the capability of the state treasury to propel economic development was limited and that it was up to the private sector to generate growth and create job opportunities.

The government cannot exceed the allocated capital expenditure of around JD1 billion, Toukan said, noting that without grants and financial support from Gulf Arab countries the Kingdom would not have been able to implement a number of projects.

He remarked that grants in general have shrunk.

The onus is on the savings, capital and resources of the local, Arab and international private sectors to shoulder the drive of economic advancement, the minister emphasised.

Toukan told journalists that the government recently injected around JD200 million in the economy, JD50 million of which were tax refunds and the remaining amount were cash compensations for property expropriations.

The minister also mentioned exemptions to housing developers and lower tourism fees as other measures taken by the government to activate the economy.

He credited the $2 billion 2012-2015 IMF financial reform programme for stabilising public finances and the Kingdom's macro economy mentioning in this regard several indicators, such as an increase in foreign exchange reserves from$6.6 billion in 2012 to $15.4 billion in 2015.

The foreign exchange reserves would now cover  imports of goods and services for seven months instead of 3.5 months.  

The minister indicated that local revenues covered 76 per cent of recurrent spending in 2012 but the rate this year stands at 94 per cent.

Another indicator mentioned by the minister was the annual increase in the rate of indebtedness which in 2015 rose by about 2 per cent of gross domestic product (GDP) compared to 23 per cent in 2012. 

The budget deficit, grants included, declined to JD0.5 million or -1.7 per cent of GDP, this year from JD1.8 million, or -8.3 per cent of GDP in 2012.

Excluding grants, the deficit came at 1.6 billion, or 5.8 per cent of GDP, in 2015, down from JD2.1 billion, or 9.8 per cent of GDP, in 2012.

The data provided by Toukan showed that the annual loss at the National Electric Power Company (NEPCO) is expected to go down from JD1.2 billion in 2012 to JD0.6 million this year due to lower international oil prices and the use of alternative energy sources. 

NEPCO's accumulated losses, however, have reached JD4.5 million and the company is expected to repay its obligations over 10 years after breaking even in 2017.

The minister envisaged the inflation rate dropping from 4.8 per cent in 2012 to 1.9 per cent this year.

He anticipated a 2.9 per cent growth in GDP this year compared to 2.7 per cent in 2012 noting that GDP at fixed prices is expected at JD27.1 million from JD22 million.

The current account deficit, including grants, was projected at $2.8 million, or 7.4 per cent of GDP, this year, down from $4.7 million, or 15.2 per cent of GDP, in 2012. 

With the completion of the 2012-2015 IMF financial reform programme, the government is embarking on a 2015-2018 executive programme for financial reform.

This local programme, in harmony with the first phase of the government's Vision 2025 plan prepared under directives from His Majesty King Adullah, comprises the following seven tasks:

Enhancing general revenues

Rationing and controlling expenditure

Lowering budget deficit

Managing public debt

Directing capital expenditure to enhance economic  growth

Financial oversight

Enhancing transparency and financial disclosure

Journalists heard from several directors the latest measures adopted at various entities operating under the Ministry of Finance

The head of the tax department blamed various parties, such as lawyers and auditors, for having a vested interest in blocking any attempt by the tax authority to arrive at a compromise with individual taxpayers and companies.

He expected the new income tax law to add JD80 million to the JD750 million of total income tax revenue last year.

He indicated that about 18,000 taxpayers provide around 89 per cent of the total income tax revenue. Of those, 1,000 taxpayers are considered key revenue sources.

BEIJING — The once irresistible allure of the Chinese market to foreign multinationals is losing some of its lustre as slowing growth in the world's second-largest economy hits their sales.

The latest figures from firms reporting during the current results season in Europe, the United States and Japan paint a picture of overseas firms facing a worsening of operating conditions in China.

Volkswagen, which has invested heavily in China and has just displaced Toyota as the world's leading car manufacturer, saw sales in the country, which it describes as its "second home market", fall 3.9 per cent in the first half, its first drop in a decade.

"We are keeping a very close watch on global macroeconomic trends," Chief Executive Martin Winterkorn said in a statement, "especially where there are uncertainties such as in the Chinese, Brazilian and Russian markets".

The appeal of nearly 1.4 billion consumers and an economy regularly growing in double digits has brought more than $1.5 trillion of foreign investment to China over the last three decades.

But the economic expansion is slowing, gross domestic product (GDP) grew 7 per cent year-on-year in April-June, matching the worst quarterly result since the first three months of 2009 during the global financial crisis.

Some investors have long seen China as a high risk destination.

Rising costs for labour and more competitive markets as domestic brands gain stature have troubled foreign companies in recent years, as well as a series of anti-monopoly probes which appeared to target overseas firms.

"The industrial competitiveness of Chinese enterprises has improved, making it harder for foreign companies to compete," indicated Li Daxiao, an analyst at Yingda Securities.

'Worse than expected' 

Such challenges have been compounded by the country's slowing economy.

Japan's second-biggest steelmaker JFE Holdings lowered its annual profit forecast in late July because of "the economic slowdown in China and the overproduction of steel" in the country, the world's largest consumer of the metal. 

In the United States, industrial giant UTC, the maker of Otis lifts, revised down its earnings forecast for 2015 partly on the back of what it described as "a slowing China".

As well as lifts, the firm makes heating and cooling systems for buildings, leaving it exposed to a broad slowdown in the real estate sector, which its Chief Executive Gregory Hayes described as "worse than we had expected".

Retail sales are still growing in China, they were up 10.6 per cent year-on-year in June, according to the government, but some foreign firms are struggling to maintain their slice of the cake.

Apple's iPhone sales surged 85 per cent in Greater China, which includes Hong Kong and Taiwan, with revenue from the region more than doubling to $13 billion for the latest quarter ended June 27, according to the company.

But independent analysts Canalys said last week it had been pushed into third place in the quarter by local manufacturers Xiaomi and Huawei, which produce cheaper products, while South Korea's Samsung was relegated to fourth.

Sales of luxury watches and spirits have already been battered by an extended austerity and anti-corruption campaign under President Xi Jinping.

Like nowhere else 

International financial markets have been spooked by a recent rout on China's stock market, which continues to be volatile despite direct intervention by Beijing.

Analysts say that the impact on the real economy has been limited so far, despite reports the auto and property sectors have both taken a hit.

Suspicions grew that the economic slowdown could be more pronounced than official statistics suggest, after second quarter growth exactly met the government's full-year target of around seven per cent, despite a series of disappointing indicators during the period.

But Chinese analysts believe the country still holds a draw for foreign companies.

"Compared with the past, China's economy is slowing down. But compared with other countries, it's still growing quite fast," said Li of Yingda Securities. "You can't find another economy like China."

AMMAN — The Jordanian private sector is looking forward to increasing US investment in the Kingdom, which currently stands at $2.2 billion in different economic sectors, Jordanian Businessmen Association (JBA) President Hamdi Tabbaa said Sunday.

At a meeting with US Ambassador Alice G. Wells, also attended by other JBA members, Tabbaa called for establishing a Jordanian-US business council to form a platform for discussing joint cooperation between business communities in both countries.

The JBA president also noted that there are successful Jordanian investments in the US in the pharmaceutical, engineering and ICT sectors. He stressed the importance of implementing the electric grid project between Jordan and Saudi Arabia to provide part of the Kingdom's electric power needs.

Tabbaa highlighted the JBA's role in enhancing the Kingdom's economic relations at the private sector level through the business council network that connects Jordan with 40 Arab and foreign countries.

Wells expressed her readiness to provide whatever can boost economic relations with Jordan and enhance the ties between both countries' business communities, in addition to benefiting from the joint free trade agreement by having more US partnerships and investments.

AMMAN — Technical meetings to advise the preparatory committee for the Joint Jordanian-Lebanese Higher Committee commenced on Sunday, a Ministry of Industry, Trade, and Supply statement said.

The meetings are chaired by the Secretary General Yousef Shammali and Lebanese general manager Alia Abbas, with representatives of all sectors from both sides.

The Joint Jordanian-Lebanese Higher Committee, chaired by Industry, Trade, and Supply Minister Maha Ali and Lebanese Economy and Trade Minister Alain Hakim, will enhance cooperation in economic, commercial, and investment fields.

AMMAN — Industry, Trade and Supply Minister Maha Ali on Saturday requested comprehensive and updated information about the Common Market for Eastern and Southern Africa (COMESA).

During a meeting with Sindiso Ngwenya, secretary general of COMESA, Ali asked for sufficient information on the countries and the commercial and investment opportunities available in that region, in order to study the data  and pass it to the private sector to choose the fields of cooperation. 

She said boosting economic cooperation requires providing necessary measures to increase commercial exchange, establish investments, stimulate the private sector, and exchange expertise. 

The minister said Jordan looks forward to opening new markets at a number of COMESA countries as well as establish economic partnerships to serve both sides. 

She also referred to accepting Jordan as an observer in the organisation in 2006, which allows it to develop mechanisms to activate economic collaboration with the common market. 

Ali showcased the investment opportunities available in Jordan, enhanced recently through preparing better economic legislations, issuing a new investment law and allowing Jordanian products to reach the biggest and most important international markets under free trade agreements.

Jordanian Businessmen Association (JBA) President Hamdi Tabbaa on Saturday also met with Ngwenya and highlighted that Jordan is seeking to penetrate African countries to compensate for traditional markets lost as a result of regional political and security developments.

Tabbaa said African markets have a lot of opportunities for the Jordanian industry that can meet part of the African needs.

Investment-attracting environment, security, stability, infrastructure and geographical location constitute a good incentive for African investors and businesspeople to run their projects in the Kingdom, Tabbaa added, noting that Africans can also benefit from Jordan’s relations with international economic blocs.

Ngwenya expressed willingness of private sectors in COMESA countries to develop commercial and investment relations with Jordan through signing a memorandum of understanding between COMESA’s business council and the Kingdom’s private sector represented by commercial and industrial chambers.

Ngwenya also invited JBA members to attend the Africa 2015 international conference, which is scheduled to be held in Sharm Al Sheikh late October, and will focus on pharmaceutical products, ICT, commerce and energy.  

AMMAN — Amman Chamber of Industry (ACI) President Ziad Homsi stressed on Saturday that activating real partnership with the private sector was the best approach to improve the Kingdom’s  investment climate and to attract local, Arab and foreign investors.

Underlining His Majesty King Abdullah’s directives to intensify efforts and to speed up procedures aimed at addressing the challenges facing the private sector,  Homsi urged the government to activate amendments on laws relate to income tax, sales tax, development areas, investment promotion, labour, and social security, in order to stimulate the production and  business environment. 

He highlighted the importance of the Income Tax Law and its effects on the industrial sector indicating that industrialists shoulder high investment risks compared to other sectors, because investment returns are no more than 10 per cent due to high capital build up injected in the projects.

According to the ACI chief, “an industrialist needs an average of five years to start receiving a return on investment since projects need time to be constructed and operated.” 

Homsi called for establishing special support funds that offer loans and necessary liquidity for industry at affordable interest to improve machines, upgrade them, and involve technology at a wider rate to arrive at as a “quantum leap” in the Jordanian operations and at a high quality products. 

He also emphasised the importance of reviewing work and recruitment policies to make rehabilitation and training programmes and offer qualified and trained workers to the Jordanian industrial sector, regarded as the most important employment sector with the ability to create new job opportunities.