Company news in brief
Renault clinches 5-billion-euro state loan
Renault finalised on Wednesday, 3 June 2020, a five-billion-euro (US$5,6 billion) loan from with the French government, strengthening the carmaker's finances in the wake of the coronavirus pandemic which has ravaged the auto industry. Renault said that the credit facility carried a guarantee from the French state - which owns a 15% stake in Renault – of up to 90% of the total amount borrowed.
Banks BNP Paribas, Credit Agricole, HSBC France, Natixis and SocGen were involved in the credit deal. Renault also said in a statement that the loan would help finance the company's liquidity requirements. The carmaker last week announced plans to cut about 15 000 jobs worldwide, including 4 600 in France, where the company will seek voluntary departures and use retirement schemes. The announcement sparked weekend protests at some factories, including at Maubeuge in northern France, although Renault's chairman Jean-Dominique Senard has pledged the site will not be closed.
- NAMPA / REUTERS
Lufthansa to revamp as losses balloon
Lufthansa vowed to step up up restructuring measures after posting a first-quarter net loss of 2,1 billion euros (US$2,35 billion), days after agreeing a state bail-out amid the fallout from the coronavirus pandemic. The German carrier's pledge to slash costs comes as it braces for a significant decline in 2020 earnings. "In view of the very slow recovery in demand, we must now take far-reaching restructuring measures," said Chief Executive Carsten Spohr, adding the group was in talks with labour representatives over cutbacks. The first quarter loss, which compares to a net loss of 342 million euros in the year-earlier period, was driven by write-downs of 266 million euros on its fleet, as well as write-downs on the book value of catering business LSG North America by 100 million and on budget unit Eurowings by 57 million, the carrier said on Wednesday. A slump in fuel hedging contracts was another 950-million-euro burden on the bottom line. Lufthansa, which had grounded almost all its aircraft at the height of the pandemic, confirmed a loss before interest and tax of 1.2 billion euros during the first three months of the year, first reported in April. The group's non-executive board on Monday approved a 9-billion-euro (US$10 billion) government bailout that will force it to cede some of its prized landing slots to rivals. Lufthansa Group, which includes Swiss, Austrian Airlines and Brussels Airlines, suffered a 98% slump in April passenger numbers from the year-earlier month to 241 000. But it laid out plans on Wednesday to increase the offered capacity in September to reach 40% of what it had scheduled before the crisis. Analysts expect the national carrier to be removed from Germany's benchmark blue-chip index DAX of which Lufthansa has been a constituent since the gauge's inception in 1988.
NAMPA / REUTERS
2019/20 net loss for steelmaker Voestalpine
Austrian steelmaker Voestalpine reported a net loss for the business year that ended in March, as demand from the car industry and other sectors dried up due to the coronavirus crisis and the group was hit by internal operational problems. The company said its current first quarter results will be further hit by the global economic downturn, but it sounded a cautiously optimistic note for the rest of the year.
"From today's vantage point, a scenario that posits an improvement in the economy on the whole after the summer of 2020 is likely," said Chief Executive Herbert Eibensteiner in a statement. Voestalpine's nine production sites in China are almost back to producing at the capacity prevailing prior to the coronavirus outbreak, the group said. But Voestalpine has faced ramp-up problems at a plant that supplies carmakers in the United States.
Voestalpine booked a loss of 216 million euros (US$242 million) for the 2019/20 business year after posting a profit of 459 million the previous year. Earnings before interest, tax, depreciation and amortisation (EBITDA) reached 1.2 billion, but are expected to drop to between 600 million and 1 billion euros in the current business year, the group said. It plans to cut the dividend to 0.20 euros per share for 2019/20 from 1.10 euros per share last year.
NAMPA / REUTERS
US probes India's digital tax
The US government's move to launch a trade investigation into a digital services tax adopted by several countries including India should not be construed as a move of aggression against New Delhi, a senior Indian government source said on Wednesday. The US Trade Representative's Office is investigating digital services taxes being adopted or considered by India and other countries such as Italy and Brazil, it said on Tuesday, a move that could lead to new punitive tariffs and heighten trade tensions. "A number of US allies such as the EU and the UK are mentioned in this list ... this USTR action is meant to address the issue of digital taxation and should not be treated as a move of aggression against India," said the government source, declining to be identified due to the sensitivity of the matter. India's federal trade ministry did not immediately respond to an emailed request from Reuters for a comment. The Indian government has so far not commented officially on the USTR investigation. From April 1, India imposed a new 2% tax on foreign billings, or transactions where companies take payment abroad for digital services provided in India. The tax also applies to foreign e-commerce transactions on sites such as Amazon.com. The tax is also levied on advertising revenue earned by companies overseas if those ads eventually target customers in India. Alphabet Inc's Google was particularly concerned that it would not be able to swiftly identify countries where such advertising arrangements were in place.
NAMPA / REUTERS
Facebook signs original Indian music label
Facebook Inc has signed a global licensing deal with one of India's largest music labels, allowing users to choose from a large catalogue of Bollywood music for their Facebook and Instagram posts, the music company said on Wednesday. Shares of Saregama India Ltd shot up 20% on the deal. The music company, which did not disclose the financial details of the deal, said Facebook and Instagram users can now add music from Saregama's catalogue of more than 100 000 songs spanning 25 languages to their posts and "stories". The Kolkata-based company, which sold vinyls and cassettes under household name HMV for decades, is India's oldest music label and released the country's first ever studio-recorded song in 1902. Its catalogues include popular albums and singles from some of the country's most successful artists, including Bollywood singing legends Lata Mangeshkar and Kishore Kumar. The deal will "allow people on our platforms, globally, to use their favourite retro Indian music to further enrich their content," said Facebook India's director and head of partnerships, Manish Chopra, in a statement. Saregama's deal with Facebook follows its licensing deal with Swedish music streaming service Spotify, announced earlier this month. Shares in Saregama surged to 334.65 rupees in Mumbai before hitting a so-called "upper limit" in morning trading.
NAMPA / REUTERS
Banks BNP Paribas, Credit Agricole, HSBC France, Natixis and SocGen were involved in the credit deal. Renault also said in a statement that the loan would help finance the company's liquidity requirements. The carmaker last week announced plans to cut about 15 000 jobs worldwide, including 4 600 in France, where the company will seek voluntary departures and use retirement schemes. The announcement sparked weekend protests at some factories, including at Maubeuge in northern France, although Renault's chairman Jean-Dominique Senard has pledged the site will not be closed.
- NAMPA / REUTERS
Lufthansa to revamp as losses balloon
Lufthansa vowed to step up up restructuring measures after posting a first-quarter net loss of 2,1 billion euros (US$2,35 billion), days after agreeing a state bail-out amid the fallout from the coronavirus pandemic. The German carrier's pledge to slash costs comes as it braces for a significant decline in 2020 earnings. "In view of the very slow recovery in demand, we must now take far-reaching restructuring measures," said Chief Executive Carsten Spohr, adding the group was in talks with labour representatives over cutbacks. The first quarter loss, which compares to a net loss of 342 million euros in the year-earlier period, was driven by write-downs of 266 million euros on its fleet, as well as write-downs on the book value of catering business LSG North America by 100 million and on budget unit Eurowings by 57 million, the carrier said on Wednesday. A slump in fuel hedging contracts was another 950-million-euro burden on the bottom line. Lufthansa, which had grounded almost all its aircraft at the height of the pandemic, confirmed a loss before interest and tax of 1.2 billion euros during the first three months of the year, first reported in April. The group's non-executive board on Monday approved a 9-billion-euro (US$10 billion) government bailout that will force it to cede some of its prized landing slots to rivals. Lufthansa Group, which includes Swiss, Austrian Airlines and Brussels Airlines, suffered a 98% slump in April passenger numbers from the year-earlier month to 241 000. But it laid out plans on Wednesday to increase the offered capacity in September to reach 40% of what it had scheduled before the crisis. Analysts expect the national carrier to be removed from Germany's benchmark blue-chip index DAX of which Lufthansa has been a constituent since the gauge's inception in 1988.
NAMPA / REUTERS
2019/20 net loss for steelmaker Voestalpine
Austrian steelmaker Voestalpine reported a net loss for the business year that ended in March, as demand from the car industry and other sectors dried up due to the coronavirus crisis and the group was hit by internal operational problems. The company said its current first quarter results will be further hit by the global economic downturn, but it sounded a cautiously optimistic note for the rest of the year.
"From today's vantage point, a scenario that posits an improvement in the economy on the whole after the summer of 2020 is likely," said Chief Executive Herbert Eibensteiner in a statement. Voestalpine's nine production sites in China are almost back to producing at the capacity prevailing prior to the coronavirus outbreak, the group said. But Voestalpine has faced ramp-up problems at a plant that supplies carmakers in the United States.
Voestalpine booked a loss of 216 million euros (US$242 million) for the 2019/20 business year after posting a profit of 459 million the previous year. Earnings before interest, tax, depreciation and amortisation (EBITDA) reached 1.2 billion, but are expected to drop to between 600 million and 1 billion euros in the current business year, the group said. It plans to cut the dividend to 0.20 euros per share for 2019/20 from 1.10 euros per share last year.
NAMPA / REUTERS
US probes India's digital tax
The US government's move to launch a trade investigation into a digital services tax adopted by several countries including India should not be construed as a move of aggression against New Delhi, a senior Indian government source said on Wednesday. The US Trade Representative's Office is investigating digital services taxes being adopted or considered by India and other countries such as Italy and Brazil, it said on Tuesday, a move that could lead to new punitive tariffs and heighten trade tensions. "A number of US allies such as the EU and the UK are mentioned in this list ... this USTR action is meant to address the issue of digital taxation and should not be treated as a move of aggression against India," said the government source, declining to be identified due to the sensitivity of the matter. India's federal trade ministry did not immediately respond to an emailed request from Reuters for a comment. The Indian government has so far not commented officially on the USTR investigation. From April 1, India imposed a new 2% tax on foreign billings, or transactions where companies take payment abroad for digital services provided in India. The tax also applies to foreign e-commerce transactions on sites such as Amazon.com. The tax is also levied on advertising revenue earned by companies overseas if those ads eventually target customers in India. Alphabet Inc's Google was particularly concerned that it would not be able to swiftly identify countries where such advertising arrangements were in place.
NAMPA / REUTERS
Facebook signs original Indian music label
Facebook Inc has signed a global licensing deal with one of India's largest music labels, allowing users to choose from a large catalogue of Bollywood music for their Facebook and Instagram posts, the music company said on Wednesday. Shares of Saregama India Ltd shot up 20% on the deal. The music company, which did not disclose the financial details of the deal, said Facebook and Instagram users can now add music from Saregama's catalogue of more than 100 000 songs spanning 25 languages to their posts and "stories". The Kolkata-based company, which sold vinyls and cassettes under household name HMV for decades, is India's oldest music label and released the country's first ever studio-recorded song in 1902. Its catalogues include popular albums and singles from some of the country's most successful artists, including Bollywood singing legends Lata Mangeshkar and Kishore Kumar. The deal will "allow people on our platforms, globally, to use their favourite retro Indian music to further enrich their content," said Facebook India's director and head of partnerships, Manish Chopra, in a statement. Saregama's deal with Facebook follows its licensing deal with Swedish music streaming service Spotify, announced earlier this month. Shares in Saregama surged to 334.65 rupees in Mumbai before hitting a so-called "upper limit" in morning trading.
NAMPA / REUTERS
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