Business

AMMAN — The Amman Chamber of Commerce (ACC) described His Majesty King Abdullah's recent Royal directives in Aqaba as an enlightening roadmap to address imbalances in the Kingdom.

Noting that the guidelines aim at removing obstacles impeding the expansion of investment and economic activities, the ACC board of directors stressed in a statement that the Royal course of action must quickly be translated into immediate development on the ground so that it can be felt by both the citizens and investors.

"The current economic condition requires non-traditional mechanisms that contribute to stimulating the economy, executing investment transactions, and attracting foreign investors to the Kingdom," ACC President Issa Murad and the board said in the statement.

It added that the King pinpointed the economic hindrances facing local and foreign private sectors, as  impediments include complicated formal procedures that drive away investors and make them view the investment environment in Jordan negatively at a time when he personally strives to lure major world corporations to invest in Jordan. 

Murad and the board stressed His Majesty's efforts to enhance the security and stability of the Kingdom, realising that the biggest challenge facing Jordan is economy, creating job opportunities, and fighting poverty. 

They added that the King urged the government to prioritise economic issues on  top of its work and plans, which requires the government to review all its mechanisms in dealing with the investment environment and investors, as well as enhancing its partnership with the private sector.

The ACC's board of directors considered that the King's clear directives to the government can make Jordan a vital economic model in the region, especially under His Majesty's wise policies that make Jordan a destination for every Arab and foreign tourist and investor.

The ACC called for training employees at official institutions to be able to deal with investment procedures and view investors as partners in the economic and development process instead of dealing treating them with doubt and suspicion.

“This requires official stakeholders to work again, in cooperation with the private sector, to make programmes that enhance the efficiency of public sector employees and conduct regular evaluation of their work,” the statement concluded. 

NEW YORK — US oil giants Chevron and ExxonMobil have signalled further belt-tightening ahead as the industry responds to lower oil prices that slammed earnings in the second quarter.

Chevron indicated it was trimming 1,500 jobs as it cuts 2015 capital spending about $5 billion compared with last year. According to executives, further capital spending cuts are likely in 2016 and 2017.

"We're getting our cost structure down, through renegotiations across the supply chain and by sizing our contractor and employee workforce to reflect lower activity levels going forward," said Chevron Chief Executive John Watson.

ExxonMobil expects a "downward vector" on capital spending in 2015 compared with earlier forecasts, as it pushes efficiencies on contractors, said Vice President Jeff Woodbury. 

"What we are looking for always is to drive the cost structure down in the business," Woodbury said.

Both companies suffered from a drop in oil prices from more than $90 a barrel in the year-ago period to a range of $45-$60 a barrel throughout the quarter.

Factors driving the tumble in oil prices include the US shale production boom, lower economic growth in China and the resistance of the Organisation of Petroleum Exporting Countries (OPEC) to cut crude output in response to the drop in prices.

Major industry figures including BP Chief Executive Bob Dudley and ExxonMobil Chief Executive Rex Tillerson have warned that oil prices could be depressed for at least a few more years.

Cutting back 

At ExxonMobil, net income for the second quarter fell by 52.3 per cent year-over-year to $4.2 billion.

The biggest US oil company's profit-leading upstream division, which explores for and produces crude oil, dived about 75 per cent to $2 billion due to lower oil prices.

However, a bright spot in this business was an increase in upstream output of 3.6 per cent to 4 million barrels of oil-equivalent per day, including an 11.9 per cent rise in oil output to 2.3 million barrels a day.

ExxonMobil's results were boosted by higher profits in both downstream and chemicals, which are based in part on crude oil as an input. Earnings in downstream more than doubled to $1.5 billion, while profits in chemicals rose 48.1 per cent to $1.2 billion.

ExxonMobil spent 12.5 per cent less through the first half of 2015 at $16 billion compared with the 2014 period.

But Woodbury said ExxonMobil aimed to avoid layoffs in response to low oil prices and would take a "very measured approach to manage our head count." 

Chevron reported about a 90 per cent drop in profit to just $571 million following a large write-down on assets and charges related to project suspensions due to a downward revision in the company's long-term oil price. This drag was partially offset by surging earnings in the downstream business.

Chevron said the 1,500 job cuts will affect 24 units and were part of an effort to save $1 billion across its corporate-level operations.

"If a lower price environment persists for longer, you will see even more significant cost savings and even greater cuts in capital," said chief financial officer Pat Yarrington on a conference call with analysts.

Yarrington also sought to reassure investors of the company's commitment to a "competitive and growing dividend" after some observers questioned Chevron's ability to keep payouts high.

Chevron last announced a dividend hike in April 2014, when the payout was lifted to $1.07 per share from $1.00. 

Moves to keep the payout flat in 2015 so far are "prudent", said Yarrington, adding that the company has taken pride in delivering 27 straight years of dividend growth.

Chevron will raise the dividend "as soon as the financials really allow us to get there", she said. "It is our number-one priority."

AMMAN — Bank al Etihad's net profit during the January-June period of 2015 reached JD10.4 million, compared with JD11.6 million profits in the same period of last year.

The bank's data showed gross profit stood at JD16 million in the 2015's period, compared to JD16.5 the bank achieved in last year's period.

The data also showed an increase of impairment provisions for direct credit facilities to JD5.5 million in the first six months of 2015, compared to JD3.2 million during the same period of 2014.

The bank also announced that the total liabilities and shareholders' equity stood at JD2.2 million until the end of June, 2015, compared to JD2.3 million in 2014's January-June period. 

AMMAN — Jordan Commercial Bank generated JD8.7 million profit during the first six months of 2015, compared to JD1.9 loss during the same period last year.

The bank's financial data revealed Sunday that the January-June 2015 net profit stood at JD5.8 million, compared to a loss of JD2.1 million in the same period of the previous year.

The data showed an increase in impairment provisions for direct credit facilities to JD10.7 million, compared to JD3.9 million. Total liabilities and shareholders' equity reached JD1.3 million in the first six months of 2015 compared to JD1.2 million in 2014's January-June period. 

AMMAN — The Housing Bank for Trade and Finance (HBTF) increased midyear pretax profit  by 5.3 per cent, the bank announced Saturday in a press statement. 

HBTF generated JD86.4 million pretax profit during the first six months of this year, the press release indicated, compared to  JD 82.1 million recorded during the first half of 2014. 

"After-tax net profit amounted to JD 61.6 million, compared to JD 61.1 million as the income tax rate on banks increased from 30 per cent in 2014 to 35 per cent at the beginning of 2015," it said, noting that these results are preliminary and subject to the approval by the Central Bank of Jordan"

HBTF Chairman Michel Marto attributed the  results to the bank’s successful strategy, prudent policies and implementation of developed banking standards 

According to the statement, total assets at the end of June 2015 reached JD 7.8 billion, a 3.3 per cent increase over the amount the end of 2014, and customer deposits rose 6.7 per cent to JD 5.8 billion, representing a 16 per cent market share of 16%. 

Net balance of credit facilities portfolio went up by 19.3 per cent to JD3.2 billion, representing a 12.7 per cent market share.

"These results positively reflected on key performance indicators confirming strength and solvency compared with the existing circumstances," the press release said.

"The adequacy capital ratio was 17.8 per cent and the liquidity ratio was 153 per cent, both higher than the rates required by the Central Bank of Jordan," it added. "Return on assets came at 1.6 per cent, return on equity stood at 12 per cent, and credit facilities to client deposits net rate was 55.6 per cent."

HBTF's Jordan network has increased to 125 branches, and 214 ATMs. Local and international branch network covers 176 branches in Jordan, Syria, Algeria, London, Palestine and Bahrain, in addition to representation offices in Iraq, United Arab Emirates and Libya.

AMMAN — Cargo traffic at Queen Alia International Airport (QAIA)  rose by 8.3 per cent to 48,973 tonnes during the first half of this year compared to the same period in 2014, Airport International Group (AIG) announced in a press statement on Saturday.

AIG, the Jordanian company responsible for the rehabilitation, expansion and operation of QAIA also revealed a 9.2 per cent drop in passenger traffic (PAX) to 3,248,413 PAX, and a 6.4 per cent decline in aircraft movements (ACM) to 33,748 ACM. 

“During the past six months, Jordan’s aviation industry has been experiencing route cancellations driven by regional circumstances, which in turn has impacted QAIA’s passenger and aircraft traffic,” AIG Chief Executive Officer Kjeld Binger said in the press release.

“Nonetheless, our outlook remains positive for the remainder of 2015, stemming in part from cargo traffic’s ongoing increase since the beginning of the year, as well as the recent addition of Ukraine International Airlines and the low-cost carrier, Air Arabia Jordan, to QAIA’s airline network.

Expanding our low-cost carrier market is a positive step forward for all, as it will give the tourism sector a much needed boost and will hopefully help offset the drop in passenger traffic seen at QAIA so far. 

AMMAN — The Ministry of Industry, Trade and Supply is currently coordinating with the Jordan Chamber of Industry to open new markets for Jordanian exports, especially to Africa, after the decline of exports to traditional markets such as Iraq and Syria, Industry Minister Maha Ali said Thursday.

During a session on Jordanian exports, held within the Jordanian Expatriates Conference, Ali noted that Jordanian products have penetrated "big" international markets thanks to the bilateral and multilateral free trade agreements the Kingdom has signed. 

National exports have developed in terms of quantity and quality since 1950s, supported by the establishment of major companies to produce phosphate, potash, electric and chemical devices, and pharmaceuticals, highlighted the minister.

Industrial institutions have increased from 2,500 in 1959 to 17,633 institutions in 2014, Ali indicated, pointed out that workers in the industrial sector have also multiplied from 10,000 to 250,000 in the same period.

She said industrial exports witnessed a "big growth" during the 2000-2014 period, with a record of JD5 billion registered in 2014, compared to less than JD1 billion in 2000, adding that the industrial sector contributed to around 89 per cent of total local exports.

The participation of local industries in government tenders has been improved, where public institutions have been obliged to grant a 15 per cent price advantage to local products, Ali said, adding that there might be a special programme to raise the participation of small- and medium-sized enterprises in government tenders.

She also said that the Kingdom's economic reforms have led to providing a competitive investment environment and supporting the national economy pillars through providing regulatory legislation to the economic activity, such as the new Investment Law.

MOSCOW — The Organisation of Petroleum Exporting Countries (OPEC) expects increasing oil demand to prevent a further fall in prices and sees a more balanced market in 2016, its secretary general said on Thursday, the latest sign the group is sticking to its policy of defending market share.

Oil has dropped about 15 per cent this month and halved in value in the past year but neither OPEC nor Russia, the world's top producer, have cut output to support prices, hoping cheaper oil will hit US shale and other rival sources.

"I would not expect they [prices] are going to fall because demand is growing," OPEC Secretary General Abdullah Al Badri  told reporters in Moscow. OPEC pumps around 40 per cent of global oil production.

"The current situation is a test for all producers and investors. While the prices ... no doubt will rebound, it is still too early to say when this will happen," Badri said. He did not indicate what price he expected.

OPEC faces a further challenge from the prospect of rising output from Iran, which has been lobbying for other OPEC members to curb supply to make way for a hoped-for rise in its exports following Tehran's deal with world powers over its nuclear work.

But Badri, indicating confidence in the outlook, was quoted by Russia's Interfax news agency as saying the market could accommodate extra oil from Iran as demand increased, echoing the view of Gulf OPEC members.

Russian Energy Minister Alexander Novak, who met with Badri earlier in the day, said they did not discuss coordination to help the market rebound.

Badri said that even if OPEC had cut output by as much as 2 million barrels per day (bpd), equal to around half of Russian exports, it would not have helped prices.

Novak said earlier that an oil price of between $50 and $65 per barrel, compared to the current level of around $54, was "expected". He estimated that global oil demand would grow by 1.2-1.3 million bpd this year.

While some OPEC delegates have expressed concern over the recent fall in prices, Badri said he had received no request for an extraordinary OPEC meeting before the next scheduled gathering in December, which Russia would be ready to attend if invited.

Russia and OPEC have a history of bumpy relations, with the group having urged Moscow a number of times to join in a market-boosting supply cut. Moscow has never fully cooperated and refused to do so as recently as June.

Withstanding the drop

So far, Russia has withstood low prices, maintaining oil output at a post-Soviet high of 10.71 million bpd as a weak ruble offsets some of its losses.

Saudi Arabia, the world's top oil exporter and largest producer in OPEC with one of the world's lowest costs, ramped up its crude production to a record in June.

"Russian majors' upstream cash flow break-evens are among the lowest in the world at less than $60 per barrel. Costs are largely ruble-denominated and among the lowest in the world," Valentina Kretzschmar, a research director for Wood Mackenzie, indicated in a recent report.

The Russian ruble has lost half of its value since last year due to weak oil and Western sanctions imposed against Russia over its role in the Ukraine crisis.

In a joint statement, Russia and OPEC said they saw the possibility for the market to become more balanced and stable next year, an OPEC position based on expectations that China and the developing world will increase oil consumption.

"Despite current uncertainties, signs of a more balanced market in 2016 may provide much desired stability to the oil market in the longer-term," the statement added.

Novak said in a statement: "We, Russia and OPEC members, being responsible participants on the global oil market, should conduct our policy based on the full... understanding of its [global oil market] key factors and characteristics. Here we are pursuing the common goals of keeping the market in a balanced and stable state."

ISMAILIYA, Egypt — Egypt has finished building its New Suez Canal, its overseer said on Wednesday, a project President Abdel Fattah Al Sisi sees as a symbol of national pride and a major chance to stimulate an economy suffering double-digit unemployment.

The army led work 11 months ago on the $8-billion canal, flanking the existing, 145-year-old waterway and part of a larger undertaking to expand trade along the fastest shipping route between Europe and Asia.

The Suez Canal is a vital source of hard currency for Egypt, particularly since the 2011 uprising that scared off tourists and foreign investment.

"We have finished work on time and even before the specified time," retired Admiral Mohab Mameesh, chairman of the Suez Canal Authority, said at a news conference.

Sisi had ordered that the canal be completed within a year.

The new waterway will be officially unveiled at a lavish event to be attended by Sisi and foreign dignitaries on August 6. The first cargo ships passed through in a test-run last week.

Mameesh stressed the canal's security, saying recent attacks would not have an effect on it.

Daesh's Egypt affiliate said earlier this month it had fired a rocket at an Egyptian naval vessel in the Mediterranean Sea.

Egypt is battling an Islamist insurgency in the Sinai that lies between Israel, the Gaza Strip and the Suez Canal.

Mameesh's remarks came after a visit to the canal by a delegation from the International Chamber of Shipping (ICS),  the trade association for merchant ship owners and operators.

"The important takeaway is one of wonder at the fact this [has been] completed so quickly," said ICS Secretary General Peter Hinchliffe. "More ships will be able to use the canal and most importantly for us the time that ships are taking to get through the canal is being reduced." 

The existing canal earns Egypt around $5 billion per year. The new canal, which will allow two-way traffic of larger ships, is supposed to increase revenues by 2023 to $15 billion. It will reduce navigation time for ships to 11 hours from about 22.

The government also plans to build an international industrial and logistics hub near the Suez Canal that it expects will eventually make up about a third of the Egyptian economy.

Mameesh said work on a new side channel connecting East Port Said to the Mediterranean would begin on August 7.

AMMAN — Despite higher sales and operational profit, Jordan Wood Industries Company (JWICO) posted a JD0.5 million loss during the first quarter of this year.

The loss during the first three months of last year was a few thousand dinars more.

The company, a manufacturer and retailer of wooden kitchens, bedrooms, office furniture and doors, indicated in a disclosure to the Jordan Securities Commission last week that sales from the beginning of this year until March 31, 2015 totalled JD2.3 million, 20.8 per cent higher than the JD1.9 million recorded during the same period of 2014.

JD1.5 million of the sales were in the local market and JD0.8 million were outside the Kingdom.

According to the consolidated interim income statement, reviewed by Ernest & Young/Jordan, operational profit amounted to JD0.4 million during January-March 2015, 101 per cent higher than the JD0.2 million generated during the first quarter of last year

But when taking into account various administrative, selling and general expenses besides a provision for termination of service indemnity and JWICO's share of the loss at a subsidiary, the net result was JD0.5 million loss, a bit less than the loss in the first quarter of 2014.

According to the company's 32nd annual report, 2015 will be a year of thrust to achieve distinguished financial results.

After detailing 2014 achievements, the report indicated that JWICO had secured job contracts in Aqaba, Saudi Arabia, Qatar and others valued at more than JD5 million in addition to stable and promising export markets.

It mentioned that a resident sales agent was appointed in Saudi Arabia, noting that JWICO supplied products to many projects besides other agreements for implementation during 2015.

"In general, the 2015 production schedule requires operating at full capacity," the report said.

It added that after the completion of the company's production and technical capabilities, the management will concentrate on the marketing drive in Jordan and in Gulf Arab countries.

"The main task will not only be meeting the requirements under the contracts signed by the company, but also preparing for fulfilling the additional work that will be provided by key shareholder Arabtech," the report elaborated.

"The management takes it upon itself to markedly raise the volume of sales in 2015 and to take the company back to achieving profits," it stressed.

Last year, JWICO recorded a JD0.1 million profit, ending a series of losses that grew from JD0.5 million in 2011 to JD0.6 million in 2012 and then to JD1.1 million in 2013. In 2010, the company generated JD1.9 million profit.

The company attributed the leap into profitability last year, despite the slight drop in overall sales to JD11.3 million, to lower prices of imported raw materials and the application of a strict cost control mechanism.

Most of the 2014 sales were local and the company was able to increase gross earnings to JD2.9 million from JD2.6 million in 2013.

But selling, administrative and general expenses reduced the figure to a mere JD0.1 million profit. 

Chairman Wassel Issa Fakhoury told the shareholders in the annual report that 2014 was a turning point because JWICO was able to convert the 2013 loss to a profit in 2014.

"Having Arabtech on the board of directors helped increase the opportunities for the company to enter mega projects that will boost its earnings in the coming years," Fakhouri wrote in the foreword.

"The management started in 2014 several initiatives that will contribute to raising operational efficiency through developing cost and pricing systems and applying new computer systems which will have an impact in entrenching a major launch during 2015," the chairman said.

Financially, the balance sheet as of March 31, 2015 showed accumulated losses at JD1.5 million taking into consideration that the shareholders approved during a general assembly meeting in April to write them off from the issuance premium which amounted to JD4.7 million at the end of this year's first quarter.

Cash in hand and at banks as well as cheques under collection totaled over JD1 million, receivables stood at JD2.6 million and inventory was valued at JD4.1 million.

Fixed assets, in terms of property and equipment, amounted to JD7.9 million.

With no bank debt, despite credit facilities extended by Arab Bank and Union Bank for Saving and Investment, the JD4.9 million in liabilities  comprised accounts payable, provisions and other credit accounts.

Capitalised at JD5 million, the shareholders equity included JD2 million in mandatory and voluntary reserves.

Shareholders received JD0.7 million in cash dividends in both 2010 and 

2011.

The annual report put JWICO's capital investment at JD8.1 million.

At the end of last year, JWICO employed 306 workers at its head office and factory in Amman's Muqabalain neighbourhood and its showroom in Mecca Street.

JWICO Investment is a subsidiary (100 per cent) domiciled in Bahrain and engaged in trading securities.

Depa Jordan Investment is an affiliate (30 per cent) also domiciled in Bahrain and engaged in providing advisory services and information to commercial entities.

Key JWICO shareholders who own more than 5 per cent of the capital include: Depa Interiors (36.4 per cent), Arabtech Construction-Jordan (14.6 per cent), American Lebanese Project Development Corp (9.3 per cent), Najib Adel Qubain (5.5 per cent) and Makram Adel Qubain (5.1 per cent).