Egypt Independent: Business-Main news en Mitsubishi Motors has cash to weather mileage scandal, but brand battered, again <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p>Mitsubishi Motors&#39; (MMC) (<a href="" target="_blank">7211.T</a>) market value and Japanese orders have halved since it admitted last week to rigging fuel economy tests, but with more than US$4 billion in cash and low debt, the automaker should contain the potential damages.<br /><br />The scope of its cheating also now seems more limited than at first feared, improving the prospects that one of Japan&#39;s smaller automakers can survive a third scandal in recent years.<br /><br />That history of scandals though, could put its longer term survival at risk given the latest battering to its branding. In 2004, it was saved from collapse by other Mitsubishi companies.<br /><br />&quot;The firm has repeated the same kind of wrongdoing, so the situation is not good,&quot; said a government source who didn&#39;t want to be named due to the sensitivity of the issue.<br /><br />The survival of companies like MMC highlights the difficulty of shaking out weak players in a cut-throat industry if management avoids tough decisions to downsize, merge or liquidate, industry observers say.<br /><br />&quot;This creates an environment where inertia is the norm, which allows automakers which may otherwise disappear to continue to survive for decades,&quot; said James Chao, Asia-Pacific managing director of research at IHS Automotive in Shanghai.<br /><br /><strong>Weak demand</strong><br /><br />Demand for Mitsubishi cars has weakened, particularly at home, where the maker of the Outlander SUV and Delica mini-van sold just 102,000 vehicles in the year through March, half the number it sold less than a decade ago. With annual sales of around 1 million vehicles, MMC is a minnow in the global market, and has surrendered market share to rivals including Honda, Mazda and Hyundai.<br /><br />Shares in MMC rose more than 6 percent on Thursday ahead of a market holiday, but are down 48 percent since the company said it manipulated mileage test data on four mini-vehicle models, wiping $3.7 billion off its market value.<br /><br />A nagging concern for investors had been whether MMC also rigged data for cars sold in the United States. While MMC sold fewer than 100,000 cars there last year, it&#39;s a more litigious marketplace and could have meant significantly higher damages. MMC says mileage ratings on its U.S. vehicles were correct.<br /><br />Mitsubishi&#39;s balance sheet shows it has cash &mdash; 453.4 billion yen ($4.23 billion) &mdash; to cover potential costs, and with debts of just 27 billion yen and no outstanding term loans, it has room to borrow if necessary. Its shareholder equity to assets ratio, at 48 percent, has grown steadily.<br /><br />&quot;We&#39;ve been building up our finances over the past 2-3 years,&quot; Managing Director Yutaka Tabata said this week. &quot;Our financial structure is strong.&quot;<br /><br />MMC has prioritized bolstering its finances since previous scandals involving hiding customer complaints and secret recalls led to the arrest of former executives, and its bail-out. That may have seen governance and compliance take a back seat.<br /><br />S&amp;P analysts, who placed MMC&#39;s credit rating on negative watch, said they had thought the company&#39;s restructuring and improved governance following previous scandals had helped its performance. &quot;However, we recognize that the fraudulent testing is evidence of a significant problem in the company&#39;s management and governance,&quot; they said.<br /><br /><strong>Totting up the damage</strong><br /><br />Analysts estimate MMC could have to pay close to $1 billion to compensate Japanese mini-vehicle customers for &#39;eco-car&#39; taxes and extra fuel costs.<br /><br />And, Nomura Securities analysts say, costs associated with the non-compliant Japanese testing system may add an additional 24 billion yen ($224 million) to the bill, resulting in a possible 150 billion yen in extraordinary losses in the year to next March.<br /><br />A slump in new car orders will be an additional hit, and halting production of the eK Wagon and eK Space mini-vehicles, along with the Nissan Dayz and Dayz Roox will also bite. Making cars for Nissan has been a driver for domestic sales as MMC&#39;s branded vehicles have lost market share.<br /><br />Mitsubishi Motors produced 202,000 mini-vehicles in the year to end-March, of which around 144,000 were for Nissan. MMC has said it has stopped making the four models affected by its test rigging. A year&#39;s production halt could cost it up to 250 billion yen, analysts estimate, in addition to any compensation payments to Nissan for lost sales.<br /><br />The next question MMC needs to answer is whether its fuel economy claims for cars sold elsewhere in Asia - accounting for a third of its total - were legitimate. Asia, ex-Japan, sales have risen from around a fifth four years ago as MMC focused on selling SUVs and trucks in emerging markets.<br /><br />The company has said it is checking to see if its vehicles sold in Asia and in Europe were compliant.</p> Fri, 29 Apr 2016 13:17:00 +0000 Reuters 2469194 at sites/default/files/photo/2016/04/29/504802/mitsubishi_2.jpg Amazon profit crushes estimates as cloud-service revenue soars <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p> Inc (<a href="" target="_blank">AMZN.O</a>) on Thursday reported profit and revenue that blew past analysts&#39; expectations, sending its shares soaring in after-hours trading and demonstrating the growing market power of its core retail business and new cloud services division.<br /><br />The results draw a sharp contrast to the disappointing fourth quarter Amazon reported in January, which renewed worries among some shareholders about the company&#39;s comparatively thin profit margins. Shares of the world&#39;s biggest online retailer jumped nearly 13 percent to $679 in extended trading on Thursday.<br /><br />Amazon&#39;s performance also assuaged concerns about a broader slowdown among tech and internet companies after Apple, Microsoft and Intel all reported disappointing earnings.<br /><br />&quot;It did restore my faith,&quot; said Dan Conde, an analyst at the Enterprise Strategy Group, who keeps a close eye on Amazon&#39;s cloud business.<br /><br />The company also offered a bright outlook, with revenue guidance for the current quarter of $28 billion to $30.5 billion, compared to the $28.33 billion analysts had expected.<br /><br />While Amazon displayed impressive growth for a company its size &mdash; revenues last quarter rose 28.2 percent to $29.13 billion, the biggest revenue growth since 2012 &mdash; its Amazon Web Services (AWS) cloud computing division was the highlight. Revenues at the division climbed 64 percent to $2.56 billion while operating income more than tripled to $604 million.<br /><br />Even though operating margins fell at the unit compared to last quarter, as Amazon spends heavily to compete with rivals like Microsoft and Google, they remain a healthy 27.9 percent. That compares to 28.5 percent last quarter, and 16.9 percent a year earlier.<br /><br />AWS, launched 10 years ago, delivered more profit in the quarter than Amazon&#39;s retail business. Research firms say AWS has more than 30 percent of the fast-growing cloud-computing market and it remains far ahead of rivals including Microsoft and Google.<br /><br />Amazon said it also has seen strong growth in subscribers to its Prime loyalty program, which offers one-hour delivery, original TV programming and access to its digital entertainment products such as Prime Music and Prime Video for an annual fee of $99.<br /><br />The company said it would ramp up spending to entice Prime customers through video content, particularly its &quot;Prime Originals&quot; - shows Amazon develops itself. That strategy builds on the success of programs including &quot;Mozart in the Jungle&quot; and &quot;Transparent,&quot; which each have won Golden Globe awards.<br /><br />&quot;We feel that program is working,&quot; Chief Financial Officer Brian Olsavsky said in a conference call with analysts. &quot;We&#39;re going to significantly increase our spend in that area.&quot;<br /><br />The company recently launched a monthly subscription to the program for $10.99. Amazon has also said it plans to offer its video streaming service as a standalone service for a monthly fee of $8.99.<br /><br />Amazon does not break out the numbers of Prime subscribers, but Consumer Intelligence Research Partners says the program has 54 million U.S. members. Amazon&#39;s growth on the revenue side suggests that the relationship model around Amazon Prime is working, said Frank Gillett, a senior analyst at Forrester Research.<br /><br />Amazon on Thursday also said it would continue to build its logistics operations, where it has started using its own trucks and planes to supplement carriers such as UPS and Fedex and offer-same day service.<br /><br />&quot;They&#39;re still great partners, have been, and will continue to be for the future,&quot; Olsavsky said in response to an analyst who asked if Amazon would ever entertain delivering items for those companies. &quot;But we see opportunities where we need to add additional capacity and we&#39;re filling those voids.&quot;<br /><br />Amazon founder Jeff Bezos also touted the success of new hardware products. &quot;Amazon devices are the top selling products on Amazon,&quot; he said in a press release, citing the Echo voice-response system and the Fire TV Stick.<br /><br />The Echo has been a surprise hit and Bezos said in the statement that the company could not keep it in stock, but he declined to provide sales figures.<br /><br />Amazon&#39;s net sales in North America, its biggest market by revenue, increased 26.8 percent to $17 billion in the first quarter.<br /><br />Amazon reported net income of $513 million, or $1.07 per share, for the quarter ended March 31, marking a fourth straight quarter of profits for the once perennially money-losing company. A year earlier, Amazon reported a loss of $57 million, or 12 cents per share.<br /><br />Analysts on average had expected a profit of 58 cents per share and revenue of $27.98 billion, according to Thomson Reuters I/B/E/S.</p> Fri, 29 Apr 2016 12:33:00 +0000 Reuters 2469190 at sites/default/files/photo/2016/04/29/504802/amazon.jpg Egyptian central bank keeps key interest rates unchanged <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p>Egypt&#39;s central bank kept its key interest rates unchanged on Thursday in its first decision since it raised rates by 150 basis points last month.<br /><br />The bank&#39;s Monetary Policy Committee (MPC) kept the overnight deposit rate at 10.75 percent and the overnight lending rate at 11.75 percent, it said in a statement.<br /><br />Egypt has been struggling to restore economic growth since a mass uprising in 2011 against veteran leader Hosni Mubarak ushered in a period of political uncertainty that has scared away tourists and foreign investors, the major sources of hard currency. Reserves have more than halved since 2011 to stand at $16.56 billion in March.<br /><br />The central bank had been taking measures to support the pound but on March 14 it devalued the currency to 8.85 per dollar from 7.73. Two days later it strengthened it slightly to 8.78 per dollar as it adopted a more flexible exchange rate policy.<br /><br />In an attempt to curb inflationary pressures after the devaluation, the central bank exceeded expectations and raised its overnight deposit rate to 10.75 percent from 9.25 percent and the overnight lending rate to 11.75 percent from 10.25 percent at its last meeting on March 17.<br /><br />Eight out of 10 contributors to a Reuters poll had said they expected the committee to keep rates unchanged on Thursday, while two contributors expected a hike.<br /><br />Annual urban consumer inflation eased for the third consecutive month in March to 9 percent from 9.1 percent in February.</p> Fri, 29 Apr 2016 12:00:00 +0000 Reuters 2469187 at sites/default/files/photo/2015/06/30/484151/central_bank_of_egypt_0.jpg Crude oil prices steady after hitting new 2016 highs <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p>Oil futures steadied after setting new 2016 highs on Thursday as traders locked in profits, though analysts said supply disruptions, strong investor appetite and a weakening dollar could push prices higher soon.<br /><br />Brent crude futures (LCOc1) were trading at $47.21 per barrel at 1329 GMT, up 3 cents from their last settlement and off an earlier high of $47.59.<br /><br />U.S. West Texas Intermediate (WTI) futures (CLc1) were up 4 cents at $45.37 a barrel after reaching a new 2016 high of $45.71.<br /><br />Brent and WTI have rallied more than 70 percent since hitting their respective 2016 lows in January and February.<br /><br />Record crude storage figures may have spurred some investors to take profits by closing positions betting on a rise in prices, traders said.<br /><br />Government data on Wednesday showed that U.S. crude stocks climbed 2 million barrels last week to an all-time peak of 540.6 million barrels. [EIA/S]<br /><br />Despite slipping from the highs, analysts said oil market sentiment had clearly turned bullish and further price rises were likely.<br /><br />&quot;Nothing appears capable of stopping the surge in oil prices at the moment,&quot; Commerzbank said.<br /><br />Analysts cited a need to factor in supply risks from Venezuela, which faces a severe electricity crisis.<br /><br />&quot;Venezuela is an immediate supply risk. In the next two weeks there is potential to have some serious disruption,&quot; Olivier Jakob at consultancy Petromatrix said.<br /><br />Falling U.S. output has also been a supporting factor in oil&#39;s recovery.<br /><br />U.S. Energy Information Administration data showed that crude production fell to 8.94 million barrels per day (bpd) last week, down almost half a million bpd from last year.<br /><br />But Commerzbank warned that oil prices at $50 a barrel should make drilling attractive again for some shale producers.<br /><br />&quot;Some producers are also likely to use the higher price level for hedging transactions, which would likewise prevent any future fall in production,&quot; the bank said.<br /><br />Analysts said further bullish momentum could emerge due to a weak dollar, which is down almost 6 percent this year against a basket of leading currencies (.DXY).<br /><br />A weaker greenback makes dollar-traded crude cheaper for countries using other currencies.<br /><br />The Federal Reserve said on Wednesday it would leave U.S. interest rates unchanged while the Bank of Japan said on Thursday it would hold back from expanding monetary stimulus, pushing the yen higher against the dollar.</p> Thu, 28 Apr 2016 15:05:00 +0000 Reuters 2469161 at sites/default/files/photo/2016/04/16/505021/oil_feild_.jpg