Company news in brief

14 May 2020 | Business

Nissan plans massive cuts

Nissan Motor Co plans to cut US$2.8 billion in annual fixed costs as part of its restructuring plan, Bloomberg News reported yesterday, as it braces for a drop in sales that could complicate its recovery from years of poor profitability.

Following a three-year spell of tumbling profits, Nissan will announce its restructuring plan on May 28, its latest attempt to slash costs after a strategy of aggressive selling to chase market share has pummelled its bottom line.

The Japanese automaker plans to slash fixed costs in areas that include marketing and research, Bloomberg reported, citing unnamed sources. It added that the company's board has not yet reviewed the plans.

Most automakers are preparing for a big financial hit from the coronavirus, but Nissan's sales and profits were falling even before the outbreak, forcing it to roll back the aggressive expansion plan pursued by ousted leader Carlos Ghosn.

Phasing out Nissan's lower-cost Datsun brand, which has been struggling in Asian and Russian markets, and closing down an additional vehicle production line are also among measures being considered, the report said. – Nampa/Reuters

Maersk warns of shrinking demand

Shipping giant A.P. Moller-Maersk yesterday warned of a sharp drop in global container volumes due to the coronavirus pandemic after posting flat first-quarter revenues in line with expectations.

"As global demand continues to be significantly affected, we expect volumes in the second quarter to decrease across all businesses, possibly by as much as 20%-25%," chief executive Soren Skou said in a statement.

The company now expects global container demand to contract this year, after previously forecasting growth of 1%-3%.

To deal with the slowdown in trade and keep freight rates from falling, Maersk said it had cancelled more than 90 sailings, or 3.5% of total shipping capacity, in the first quarter. It expects to cancel some 140 sailings in the April to June period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 23% to US$1.52 billion, slightly above company guidance provided in March when it suspended full-year guidance due to uncertainty caused by the coronavirus pandemic. – Nampa/Reuters

Group Five to delist from JSE

Group Five Ltd said on Monday the Johannesburg Stock Exchange has approved the South African builder's application to delist its shares from trading, following a bankruptcy protection filing last year.

The company's listing will be removed from the exchange on June 15, it said in a statement. The application was approved by JSE on May 6.

The construction company, which traces its roots back to the 1970s, filed for bankruptcy protection in March last year after struggling to make money in an industry squeezed by stagnant economic growth. – Nampa/Reuters

BHP sticks with spending strategy

BHP Group will stick with its capital allocation framework despite the impact of the coronavirus pandemic while Rio Tinto is eyeing M&A, the chief executives of the miners said on Tuesday.

Speaking at a virtual presentation at Bank of America, BHP CEO Mike Henry said the capital allocation framework, which was introduced in 2016 and assesses the best way to deploy spending across the group, had "been a game-changer" for the company.

"It's helped us to drive high quality returns and growth, so it's not going anywhere," he said.

BHP, the world's largest listed miner, said in April that spending in the 2021 financial year would be lower than its original guidance of US$8 billion due to the coronavirus outbreak.

Henry also said BHP could act on the right M&A opportunity but focus is on organic growth. He said the company is on track to cut spending on overheads by more than US$500 million by 2021, relative to last financial year. – Nampa/Reuters

Vale to cut carbon emissions 33%

Brazilian miner Vale SA plans to spend at least US$2 billion to cut both its direct and indirect carbon emissions by 33% by 2030, chief executive Eduardo Bartolomeo told Reuters on Tuesday.

Direct emissions refer to those from the company's own operations, while indirect come from external sources, like electricity generated by a utility company and then used by Vale.

The miner's plan includes using biofuels to pelletise iron ore instead of coal, electrifying its mines and railroads, increasing energy efficiency and using more renewable energy, Bartolomeo said in an interview.

The spending is already factored in the company's investment plans for coming years. Vale's goal is to reduce emissions to 9.5 million tonnes of carbon dioxide equivalent by 2030 from 14.1 million tonnes as of 2017.

A ruptured mining waste dam at a Vale facility in the town of Brumadinho in January last year led to the deaths of at least 270 people. Bartolomeo said the incident "woke us up to a need to relate differently to society." – Nampa/Reuters