BusinessDay 09 Apr 2018
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A12 BUSINESS DAY<br />
C002D5556 Monday <strong>09</strong> <strong>Apr</strong>il <strong>2018</strong><br />
FT<br />
NATIONAL<br />
Citic Resources plans stake sale to Kazakhstan<br />
Central Asian country prepares to play bigger role in China’s ‘Belt and Road’ trade<br />
HENNY SENDER<br />
Hong Kong listed Citic Resources<br />
Holdings is negotiating<br />
with Kazakhstan to sell<br />
a significant minority stake to the<br />
country, which is preparing to play<br />
a bigger role in Beijing’s “Belt and<br />
Road” trade and development initiative,<br />
according to two people with<br />
direct knowledge of the matter.<br />
The complicated plan, which still<br />
has not been finalised, involves Citic<br />
Resources itself selling off a series of<br />
assets starting with an under-performing<br />
oilfield in northeastern China. It<br />
hopes eventually to sell other oilfields<br />
in China and various mining and coal<br />
assets, these people added.<br />
Meanwhile a Kazakh government<br />
entity will inject energy assets<br />
into Citic Resources in return for a<br />
stake in the company, while powerful<br />
Citic Group itself will remain its largest<br />
shareholder.<br />
Among the most important assets<br />
involved will probably be JSC Karazhanbasmunai,<br />
which has the right to<br />
explore, develop, produce and sell oil<br />
from the Karazhanbas oilfield. Today<br />
Kazakhstan and Citic Resources each<br />
own 50 per cent of that entity.<br />
The deal has been in the works for<br />
many months and has the blessing of<br />
Chang Zhenming, chairman of Citic<br />
Group who is expected to retire next<br />
year and wants Citic Resources to<br />
become an important participant in<br />
China’s principal international initiative,<br />
these people added.<br />
Citic Group has long had a close<br />
relationship with Kazakhstan: for example,<br />
local Halyk Bank agreed to sell a<br />
60 per cent stake in its subsidiary Altyn<br />
Bank to Citic Bank Corp in a transaction<br />
meant to promote the Belt and Road<br />
initiative, while Citic Kazyna Investment<br />
Fund I is sponsored by Citic and is<br />
a subsidiary of Kazakhstan’s sovereign<br />
wealth fund. That fund focuses on<br />
infrastructure projects in Kazakhstan,<br />
Central Asia and China.<br />
The first step in the transformation<br />
of the company is the sale of the<br />
Hainan-Yuedong Block in the Bohai<br />
Bay Basin in Liaoning Province to<br />
Geo-Jade Petroleum Corp, a Shanghailisted<br />
independent oil exploration and<br />
production company for a price that is<br />
yet to be determined.<br />
Adidas looks to score online<br />
as it drives harder...<br />
Continued from page A11<br />
of shoes; but when you sell to the<br />
end customer, you ship maybe one<br />
pair of shoes, some socks and maybe<br />
some shorts.”<br />
The group is hiring 200 staff with a<br />
digital focus and wants to more than<br />
double its ecommerce revenues to<br />
€4bn by 2020. Last year, the group’s<br />
online sales rose 57 per cent to almost<br />
€1.6bn.<br />
“That growth rate is impressive,”<br />
says Piral Dadhania, an analyst with<br />
Royal Bank of Canada, adding that<br />
the “relatively ambitious” 2020 target<br />
for online sales shows Adidas has<br />
“a high level of confidence for the<br />
midterm prospects” online.<br />
As part of its efforts to boost digital<br />
sales, Adidas introduced a smartphone<br />
app that allows customers<br />
a high degree of personalisation. It<br />
has been launched in the US, the UK<br />
and Germany, and is set to go live<br />
in France, Spain and Canada in the<br />
coming months.<br />
Another driver of growth are tieups<br />
with online retailers such as fellow<br />
German group Zalando — both<br />
warehouses are connected, and Adidas<br />
fulfils some of its partner’s orders.<br />
Adidas, which last month announced<br />
a €3bn share buyback and<br />
a 30 per cent increase to its dividend,<br />
is one of Germany’s best-performing<br />
blue-chips. Its shares have risen 21<br />
per cent this year, compared with<br />
a 5 per cent drop for the blue-chip<br />
Dax index.<br />
In the first full year under Mr<br />
Rorsted’s leadership, Adidas in<br />
2017 reported a 16 per cent increase<br />
in revenue to €21.2bn, while the<br />
operating profit margin increased<br />
120 basis points to 9.8 per cent. Mr<br />
Rorsted aims to lift sales 10-12 per<br />
cent a year by 2020, and to boost<br />
the operating profit margin from<br />
almost 10 per cent to 11.5 per cent.<br />
The company says net profit is forecast<br />
to rise 22-24 per cent annually<br />
until 2020.<br />
“Adidas has been one of the most<br />
successful turnround stories in the<br />
sporting goods universe,” write<br />
Berenberg analysts.<br />
Mr Rorsted insists increasing<br />
sales and margins at the same time<br />
is not a trade-off. “In most industries,<br />
the larger companies are also<br />
the most profitable,” he says, adding<br />
that in the past regional operations<br />
were too fractured. “Every country<br />
was running their own warehouses<br />
and systems. We became 20 Adidas<br />
companies instead of one.”<br />
Pruning its store network is also<br />
intended to increase profitability, as<br />
margins in ecommerce are higher<br />
than for traditional retail.<br />
Christian Sewing has been at Deutsche Bank since 1989 © Reuters<br />
Co-deputy chief in line to replace Cryan at Deutsche Bank<br />
Chairman favours Christian Sewing as board prepares to meet on Sunday evening<br />
OLAF STORBECK<br />
John Cryan is set to be replaced<br />
by one of his deputies as chief<br />
executive of Deutsche Bank two<br />
years earlier than planned after a spat<br />
with chairman Paul Achleitner that<br />
has thrown Germany’s largest lender<br />
into turmoil, according to two people<br />
involved in the discussions.<br />
Deutsche Bank’s supervisory board<br />
will make a final decision on whether<br />
to appoint Christian Sewing, who also<br />
runs the bank’s retail operations and is<br />
Mr Achleitner’s preferred candidate,<br />
in a meeting on Sunday evening, according<br />
to several people familiar with<br />
the matter.<br />
The board is also poised to appoint<br />
Garth Ritchie as the sole head of the<br />
lender’s ailing corporate and investment<br />
bank, a person familiar with the<br />
internal discussions said.<br />
Mr Ritchie’s current co-head Marcus<br />
Schenck informed Mr Achleitner<br />
over the Easter break that he was leaving<br />
Deutsche Bank after May’s annual<br />
meeting as the bank was not commit-<br />
HENRY FOY AND<br />
DAVID SHEPPARD<br />
The latest round of US sanctions<br />
against Russian oligarchs and<br />
political officials have been designed<br />
to wound parts of the country’s<br />
economy. But the pain is also likely to<br />
be felt far away from Moscow.<br />
Blanket sanctions against billionaire<br />
Oleg Deripaska’s aluminium empire look<br />
set to have an impact across the global<br />
commodity market, while restrictions on<br />
major figures in Russia’s energy and industrial<br />
sectors could also create widespread<br />
complications for western partners.<br />
Friday’s salvo against 24 Russians<br />
ting enough resources to secure the<br />
investment bank’s global position,<br />
according to a person who knows Mr<br />
Schenck.<br />
Mr Sewing, 47, has been with<br />
Deutsche Bank since he was a teenager.<br />
His previous roles included<br />
head of group audit, deputy chief<br />
risk officer and chief credit officer.<br />
German news magazine Der<br />
Spiegel on Sunday reported that Mr<br />
Achleitner had chosen Mr Sewing.<br />
Two people close to the supervisory<br />
board stressed that the final decision<br />
had yet to be made.<br />
Three top-10 shareholders on Sunday<br />
voiced their deep frustration with<br />
Mr Achleitner’s handling of the situation.<br />
“His days as chairman should<br />
be numbered,” one of the lender’s<br />
biggest investors told the FT, adding<br />
that he was “just the lesser of<br />
two evils”.<br />
A person at another leading investor<br />
in Deutsche Bank said it was<br />
“beyond doubt that Mr Achleitner<br />
botched his job”. A third key shareholder<br />
said his record at the lender<br />
was “devastating” but pointed<br />
US sanctions on oligarchs set to resonate globally<br />
Broad-based salvo of restrictions will ripple across wider commodity secto<br />
and 14 companies bans US citizens from<br />
doing business with them.<br />
But it also for the first time extends<br />
that restriction to non-Americans who<br />
“knowingly facilitate significant transactions…<br />
for or on behalf of [them]”, a proviso<br />
that means the sanctions’ impact on<br />
global trade will likely be deeper than<br />
previous curbs. It could make banks and<br />
commodity houses wary of conducting<br />
any US dollar denominated transactions<br />
with those linked to sanctioned entities,<br />
lawyers said, creating ripples across the<br />
wider commodity industry in which<br />
Russia plays an oversized role<br />
“These sanctions are going to make<br />
it very difficult for any western bank<br />
out that his position nonetheless<br />
seemed secure. Shareholders extended<br />
Mr Achleitner’s term by five<br />
years at last year’s annual shareholder<br />
meeting.<br />
Mr Achleitner’s frustration over<br />
Mr Cryan’s lack of leadership, and<br />
the incomplete implementation of<br />
the bank’s cost-cutting strategy, are<br />
the main reason for the rift between<br />
the chairman and CEO, two people<br />
familiar with Mr Achleitner’s thinking<br />
told the FT.<br />
“This is not about strategy, but<br />
about the failure to execute it,” one<br />
of them said.<br />
Investors have a different view.<br />
“The strategy and its implementation<br />
is ultimately the chairman’s<br />
responsibility,” said Hans-Christoph<br />
Hirt, executive director at Hermes<br />
EOS, which advises and represents<br />
around 0.5 per cent of the voting rights.<br />
He added that Mr Sewing would be<br />
the third CEO during the six years of<br />
Mr Achleitner’s tenure. “Mr Achleitner<br />
will have to answer some serious<br />
questions in the run-up to and at the<br />
shareholder meeting.”<br />
to deal with these companies or individuals,”<br />
said Michael O’Kane, partner at<br />
Peters & Peters in London. “The breadth<br />
of the sanctions also suggest they may<br />
restrict non-US citizens from facilitating<br />
significant transactions with these companies,<br />
which may complicate trade.”<br />
It will certainly complicate the aluminium<br />
market. Mr Deripaska’s Rusal<br />
accounts for just under 6 per cent of the<br />
metal’s global supply and is the largest<br />
producer of the metal outside of China.<br />
Rusal is the second biggest supplier of<br />
aluminium to the US after Canada, and<br />
more than 10 per cent of his output is<br />
sent to America, roughly $1bn worth of<br />
metal that it now needs to sell elsewhere.<br />
Trump leads condemnation<br />
of Syria gas attack<br />
US president says there will be ‘big price to<br />
pay’ for alleged eastern Ghouta attack<br />
REBECCA COLLARD AND<br />
COURTNEY WEAVER<br />
Donald Trump has led international<br />
condemnation of<br />
an alleged chemical weapons<br />
attack by the Syrian government,<br />
raising prospects of an American<br />
response to the assault that<br />
has killed at least 48 people in the<br />
rebel-held town of Douma.<br />
The US president singled out<br />
Russian president Vladimir Putin in<br />
a tweet on Sunday, saying he held<br />
Russia and Iran, Syrian president<br />
Bashar al-Assad’s backers, responsible<br />
for the atrocity. He slammed<br />
the “Animal Assad” and warned<br />
there would be a “big price to pay”<br />
for the attack.<br />
Republican lawmakers urged<br />
Mr Trump to turn his words into<br />
action. Senator Lindsey Graham,<br />
a Republican foreign policy hawk,<br />
said a soft response from Mr Trump<br />
would damage his credibility. “If<br />
he doesn’t follow through and live<br />
up to that tweet, he’s going to look<br />
weak in the eyes of Russia and Iran,”<br />
he warned.<br />
Relations between Washington<br />
and Moscow are fraught after the<br />
Trump administration on Friday<br />
imposed sanctions against 24<br />
prominent Russians and more than<br />
a dozen Russian companies.<br />
The EU said on Sunday that it<br />
“condemns in the strongest terms<br />
the use of chemical weapons”<br />
and urged for an “immediate response<br />
by the international community<br />
. . . to make sure that those<br />
responsible are held accountable.”<br />
Brussels also pressed Russia<br />
and Iran “to use their influence to<br />
prevent any further attack and ensure<br />
the cessation of hostilities and<br />
de-escalation of violence”.<br />
The Syrian American Medical<br />
Society, a medical relief organisation,<br />
said that at least 48 people<br />
had been killed and hundreds more<br />
injured in a chemical attack inside<br />
the rebel-held enclave of eastern<br />
Ghouta on Saturday evening.<br />
If confirmed the attack would<br />
be the most serious since sarin gas<br />
was dropped on the Syrian town of<br />
Khan Sheikhoun a year ago, killing<br />
more than 80 people and provoking<br />
retaliatory air strikes on the Assad<br />
regime by the US military. The UN<br />
said last year that the Syrian government<br />
had carried out dozens of<br />
chemical attacks since the start of<br />
the Syrian civil war seven years ago.<br />
Video footage and images posted<br />
by activists showed rescue workers<br />
treating dozens of people, some<br />
foaming at the mouth, as well as<br />
children and babies being given<br />
oxygen and being doused in water.<br />
It was not possible to confirm the<br />
authenticity of the videos or images.