GROWING

16 INTERNATIONAL
OMANDAILYOBSERVER BUSINESS SATURDAY l FEBRUARY 18 l 2017
Business Briefs
Allianz warns year ahead
uncertain after strong 2016
Asia shares ease after run of gains;
oil lifted by Opec supply cut hopes
Business Briefs
Business Briefs
Business Briefs
Business Briefs
Business Briefs
FRANKFURT AM MAIN: German insurance giant Allianz reported
a rise in profits for 2016 and increased its dividend, but warned that
political and market uncertainty could make for an unpredictable 2017.
Allianz increased net profit by 4 per cent to 6.9 billion euros ($7.4
billion) in 2016, it said in a statement, slightly overshooting analysts’
forecasts. The firm notched up 122 billion euros in revenues last year,
down 2.2 per cent from 2015, but still beating its own forecast.
Operating, or underlying profit edged up 0.9 per cent 10.8 billion
euros. In the fourth quarter alone, Allianz booked a 23 per cent increase
in net profit to 1.7 billion euros.
“Positive developments in all business segments” had put the group
“on track” to meet its goals for 2018, said chief financial officer Dieter
Wemmer.
The life and health insurance unit put in the best performance
among the group’s divisions, with operating profit there growing by
9.3 per cent. By contrast, operating profit at the property and casualty
insurance arm fall back 4.2 per cent and underlying earnings in its asset
management division were down 4 per cent. — AFP
26pc on integration woes
LONDON: Essentra Plc, a supplier of speciality plastic and packaging
components, said full-year profit fell 26 per cent on flagging sales at its
health and personal care packaging unit, due to integration issues from
an acquisition completed in 2015. This reiterates the challenges the
company has been facing, prompting it to issue profit warnings three
times in the past 12 months.
Essentra shares opened 3.9 per cent lower at 405 pence at 0805 GMT
on Friday on the London Stock Exchange. The health and personal
care packaging unit, which bought the specialist packaging division of
the Clondalkin Group, is the company’s biggest business, accounting
for about 40 per cent of total revenue. Operating profit at the unit fell
44 per cent. Milton Keynes, Buckinghamshire-based Essentra had
indicated on January 23 that sales at the business were more challenging
than previously expected. The company had said in January that its new
chief executive had initiated a strategic review of the company and that
the health and personal care unit would be receiving “specific shortterm
focus and remedial attention” from him. — Reuters
S&P downgrade warning
sends Toshiba shares falling
The logo of Toshiba Corp is seen at its headquarters in Tokyo. — Reuters
TOKYO: S&P Global Inc said in a report on Friday it could cut its
rating of Toshiba Corp (6502.T) credit by several notches should the
Japanese firm receive financial support that includes debt restructuring,
sending Toshiba stock down 9 per cent.
S&P rates Toshiba credit as junk, at CCC+, following downgrades in
December and January, after the conglomerate flagged a multi-billion
dollar writedown in its nuclear power business. The credit-rating firm
expects banks to help Toshiba, including by extending deadlines for
loan repayments.
Any further downgrade would prompt banks to charge Toshiba even
higher rates for credit, at a time when the conglomerate is dealing with
the crippling writedown while still working to recover from a financial
scandal in 2015. — Reuters
SINGAPORE: Asian stock markets took a breather
on Friday from their recent surge as investors booked
profits, while the dollar inched up after Thursday’s
slide and optimism over possible renewed supply cuts
by Opec lifted oil prices.
Financial spreadbetter CMC Markets expects
Britain’s FTSE 100 to start the day flat, Germany’s
DAX to be slightly higher and France’s CAC 40 to
be marginally lower, with markets failing to recover
Thursday’s losses.
MSCI’s broadest index of Asia-Pacific shares
outside Japan pulled back 0.2 per cent, on track to end
the week up 1.2 per cent, its fourth straight weekly
gain.
Overnight, Wall Street lost momentum, with the
Dow Jones Industrial Average barely eking out its sixth
straight record high, while the S&P 500 and Nasdaq
snapped a seven-day winning streak as investors
slowed buying to digest recent gains.
US President Donald Trump’s first solo news
conference on Thursday, where he adopted a combative
stance against the news media and deflected questions
about contacts between his presidential campaign and
Russian operatives, also gave investors pause.
“Apart from a reflection of the slight easing in
US market momentum after several strong days,
investors are making some greater allowance for
rising risk,” said Angus Gluskie, managing director
of White Funds Management in Sydney. “Trump’s
erratic performance in the press conference has had a
destabilising influence on investor confidence.”
The arrest of Samsung Group chief Jay Y Lee over
his alleged role in a government corruption scandal is
also a source of concern, Gluskie said.
Until Thursday, the index had beaten its previous
intraday highs for seven consecutive sessions, and
closed at 19-month highs in the past two.
A batch of positive economic data out of Asia
this week, driven by improving exports and rising
commodity prices, has bolstered shares, although
concerns linger that any protectionist threats posed by
Trump could reverse the recovery.
On Friday, Singapore revised its fourth-quarter
gross domestic product growth sharply higher. Earlier
in the week, Taiwan raised its 2017 economic growth
target to a three-year high, Indonesia’s January exports
rose at the fastest pace in more than five years and
China’s January inflation picked up by more than
expected to near six-year highs.
Japan’s Nikkei closed 0.6 per cent lower, down 0.7
per cent for the week. Australian shares fell 0.2 per
cent at the close, shrinking the week’s gains to 1.5 per
cent.
Chinese shares slipped after earlier touching a near
two-month high after the securities regulator said
that, starting on Friday, it will relax certain rules on
stock index futures trading as restrictions imposed
during the 2015 stock market crash are unwound.
The CSI 300 index lost 0.4 per cent after gaining as
much as 0.5 per cent, on track for a weekly advance of
the same magnitude.
Hong Kong shares dropped 0.7 per cent, but are
still poised to close up 1.6 per cent for the week.
The dollar edged up, but remained near the oneweek
low hit on Thursday, when it posted its biggest
one-day drop in more than two weeks, as uncertainty
about the timing of the next Federal Reserve rate hike
offset the impact of stronger economic data.
The dollar climbed almost 0.2 per cent on Friday
— to 113.41 yen, up by the same percentage for the
week. It lost about 0.8 per cent on Thursday.
The dollar index, which tracks the greenback
against a basket of trade-weighted peers, was
fractionally higher at 100.49, on track to end the week
0.3 per cent lower. It tumbled 0.7 per cent on Thursday.
The euro was little changed at $1.0671 on Friday,
retaining Thursday’s 0.7 per cent gain, and set to end
the week 0.3 per cent higher.
The stronger dollar on Friday weighed on gold,
which slipped 0.1 per cent to $1,237.36 an ounce. But
the precious metal remains poised for a 0.3 per cent
rise for the week.
Oil prices built on Thursday’s gains, driven by a
report that the Organization of Petroleum Exporting
Countries may consider extending its oil supplyreduction
pact with non-members and may even
apply deeper cuts if inventories don’t fall to a targeted
level.
For now, that optimism appears to be winning the
tug of war with concerns over a rise in US production,
but the worry is set to leave oil prices with a weekly
loss.
US crude added 0.2 per cent to $53.42 a barrel, but
is headed for a decline of 0.8 per cent for the week.
Global benchmark Brent crude advanced 0.1 per
cent to $55.74, narrowing the week’s loss to 1.7 per
cent. — Reuters
German minister backs Peugeot
and Opel deal after GM assurances
LONDON/FRANKFURT: Germany expects PSA
Group’s proposed acquisition of General Motors’
Opel business to go ahead, a minister said, after the
US carmaker sought to allay fears of large-scale plant
closures.
“I expect it to take place,” Economy Minister
Brigitte Zypries told reporters after discussions with
senior executives from General Motors and PSA,
maker of Peugeot and Citroen cars.
The German government is “doing everything we
can” to preserve Opel’s domestic plants, Zypries said.
Talks on a sale of GM’s European arm to PSA
were confirmed by both companies on February 14,
causing alarm in London and Berlin over possible
job cuts. Germany accounts for half of GM Europe’s
38,000 staff, with 4,500 in Britain where the company
operates under the Vauxhall brand.
Two sources close to PSA said on Thursday that
job and plant cuts were part of the tie-up talks, with
the two Vauxhall sites in Britain in the front line.
However British Business Minister Greg Clark
said he had been told by GM President Dan Ammann
that there was no plan to scrap the Vauxhall plants in
the UK.
“I was reassured by GM’s intention, communicated
to me, to build on the success of these operations
rather than rationalise them,” Clark said in a
statement, vowing to maintain “close contact” with
both carmakers as talks progress.
Little is known about the terms of the proposed
PSA-Opel deal, or whether GM would even keep
a stake in the combined entity. PSA declined to
comment on the talks or the prospect of restructuring.
‘NO ASSURANCES’: However, Britain’s Unite
trade union, which met with Ammann and Clark,
said it had not received the guarantees it sought.
“There’s no assurances at the moment,” Unite
leader Len McCluskey told Sky News. “My immediate
priority now is to understand where Peugeot is now
in this process.”
Unite is seeking urgent discussions with PSA
A pedestrian stands in front of an electronic quotation board flashing the Nikkei key index of the Tokyo Stock
Exchange (L) and the current exchange rate of the Japanese yen against the US dollar (R) in Tokyo on Friday. — AFP
“Apart from a reflection
of the slight easing in US
market momentum after
several strong days, investors
are making some greater
allowance for rising risk”
The logo of German car manufacturer Opel is pictured at the company headquarters in Ruesselsheim. — Reuters
Both carmakers are privately
making the case that Opel
would face sharper cutbacks
under GM’s continued
ownership than under PSA’s
Chief Executive Carlos Tavares, McCluskey said.
Both carmakers are privately making the case
that Opel would face sharper cutbacks under GM’s
continued ownership than under PSA’s, sources
close to the matter have said. GM had pledged
“renewed actions” to restore its European business to
profitability before news of the talks broke.
PSA is also pledging to “maintain Opel as a
German company in full compliance with German
labour law”, according to a person briefed on its
contacts with political and union leaders.
UK JOBS: Another source with knowledge of the
PSA-Opel talks said on Thursday that Britain’s June
referendum vote to leave the European Union was a
factor weighing against UK plants.
“It’s much easier to cut jobs in Britain than
Germany,” the person said. “Restructuring is very
likely to happen at the Vauxhall plants.”
The German minister’s latest comments contrasted
sharply with her initial reaction two days earlier,
when she said the companies’ failure to involve labour
or local government representatives in the deal talks
was “totally unacceptable”. — Reuters