Financial Communique

Panasonic predicted worst annual loss in its history

Viliyana Filipova — Wed, 08 Feb 2012 04:22:34 +0000

Panasonic Corp revised its forecast for net losses in fiscal year ending in late March to a record 780 billion yen (10.2 billion dollars) – another Japanese company, which lowered their expectations after the floods in Thailand. In October Panasonic predicted that losses for the period will reach 420 billion yen. The projected result will probably be the worst in history, founded in Osaka in 1918 company. Worst loss of the Panasonic until amounted to 427.8 billion yen reported for the period March 2001 – March 2002. The largest manufacturer of plasma televisions in the world follow Sony Corp. and Sharp Corp. and also lowered its forecast for the period, citing slowing global economic growth and the damage inflicted by the Japanese manufacturers and suppliers from flooding in Thailand and the earthquake in Japan on March 11. Panasonic wrote off 290 billion yen from its commercial reputation and acquired Sanyo Electric Co. 250 billion yen.
“The business of consumer electronics brings in less revenue than planned due to weak fundamentals and a strong yen”, said Jeff Lof, chief analyst at Macquarie Capital Securities in Tokyo. For the 12 months ending in March Panasonic’s operating profit will likely reach 30 billion yen compared with the previous forecast of the company for 130 billion yen, said in a statement. Panasonic lowered its forecast for revenue in the 12 months to the end of March to 8 trillion. from 8.3 trillion yen. For the last quarter of 2011 the company announced a net loss of 197.6 billion yen. (2.6 billion dollars). In October Panasonic stopped production at three factories in Thailand, because the worst flooding last 70 years there.

Expectations of Johnson & Johnson for 2012 are pessimistic

Viliyana Filipova — Tue, 07 Feb 2012 23:13:46 +0000

In 2012 Johnson & Johnson, the largest company in the world of cosmetics, medicines and healthcare products, forecast profit weaker than expected, after announcing a 89% drop in net profit for the fourth quarter a year earlier. The deterioration of the results is due to exceptional costs of settlement of disputes. In the fourth quarter 2011 net profit fell to 218 million dollars, or 8 cents a share, from 1.94 billion, or 70 cents per share for the same period last year, said in a statement New Jersey based corporation. Company profit without one-off effects reached 1.13 dollars per share, which exceeded the median forecast of economists surveyed by Bloomberg, to 1.09 dollars per share. For 2012, the company forecast earnings of 5.05 dollars to 5.15 dollars per share – less than analysts estimated 5.20 per share. The effect of movements in exchange rates will reduce the company’s results by about 13%, the statement said. Executive Director of J & J William Weldon states that growth in sales suffered from the redemption of medicines, including Tylenol and implants.
“Everybody noticed the volatility of currency markets, so I do not think J & J exaggerate” the effect on sales, says Les Funtlindar, manager of Miller Tabak & Co. in New York. “There’s nothing scary, although I wish revenues are a little more exciting”.
The sales of J & J for the fourth quarter rose 3.9 percent to 16.3 billion dollars after the proceeds of pharmaceutical products for the period rose 6.7 percent to 6.09 billion dollars. Last year J & J won certificates for many drugs, including Zytiga to treat prostate cancer, Edurant against HIV, Xarelto for preventing heart attack and Incivo to treat hepatitis C.

EU could ease the capital requirements for the banks

Viliyana Filipova — Mon, 06 Feb 2012 21:18:55 +0000

The European banking regulator may consider easing its capital requirements for banks. Later this week in London, the European banking regulator (EBA) will hold a meeting that will review in December announced new capital requirements. The requesting anonymity because of confidentiality of the talks, the meeting will be reviewed in the new higher capital buffers that banks must have on their bond holdings of certain eurozone countries. As part of measures to tackle the debt crisis, EBA asked European banks by the end of June to raise 114.7 billion additional capital. The regulator wants banks to increase their capital adequacy ratio to 9%, and to accumulate additional capital buffers, according to market value of bonds having difficulties in the euro area they have.
“To calculate the need for additional capital based on returns so volatile it was the right decision”, said Nicolas Veron, strategist at Bruegel, a Brussels-based economic research agency. “This decision is the result of political negotiations, so it is not right to blame the EBA”. Any decision to change the government buffers will be considered only after consulting the European Systemic Risk Board (ESRB) – organization of central bankers in Europe, indicate the sources compiled by Bloomberg. “The need for these buffers and their size will be reviewed, where measures to tackle the debt crisis have an impact on bond markets”, said Andrea Henri in January, President of the EBA.

Berkshire Hathaway doubled its stake in Tesco

Viliyana Filipova — Sun, 05 Feb 2012 21:11:22 +0000

The investment company of U.S. billionaire Warren Buffett’s Berkshire Hathaway has benefited from the quake in the shares of British supermarket chain Tesco and significantly increased its share capital in her. On January 12 by Tesco announced that they expect small growth in operating profit in fiscal 2013, far below market expectations for an increase of 10 percent. As a result of new market capitalization of the company fell sharply as shares fell from 3.85 to 3.23 liras per share. At this point, Berkshire Hathaway began purchasing by January 13 to share the fund Tesco’s capital was increased from 3.21 to 5.08 per cent. Tesco is the third largest retail chain of retail sales in the world after Carrefour and Wal-Mart.
The strategy of Warren Buffett is known that focuses on long-term performance of companies they invest. The strong increase in the share capital of Berkshire in Tesco’s can be regarded as a signal of confidence in company management. The Tesco’s intentions are in this year’s pursuit of profit will remain in the background, and priority to investments in businesses in Britain and reversing the loss of market share.

Financial Loans: The risks involved

Viliyana Filipova — Sun, 05 Feb 2012 18:32:33 +0000

While you are off to get a loan from the market, you need to consider all the benefits and risks involved in the deal. For most of the best loan options, once a borrower always remain the borrower, repaying the amount in installments throughout his life. Hence, it must be considered that what you are getting out of the deal is fair enough for you to hold on to it. Major risks involved for a borrower in the deals usually are loss of asset if he is getting a secured loan, and the issue of rising of interest rates. For these issues a borrower needs to accept only the deals in which he thinks he is getting enough time and flexibility of return of loan that his own asset, he is pledging as the collateral will not be subjected to auction instantaneously at the declaration of his bankruptcy. A borrower needs to realize that he is not getting a victim of predatory lending, which is a lending abuse through which a lender tries to put the borrower in the position from which personal gains could be taken. Loan sharks are there in the market wandering for their next prey. Charging of excessive interest called usury is also another risk faced by the borrowers from which they need to beware of.

Germany was complicit in irrational credit practices of Greece

Viliyana Filipova — Sun, 05 Feb 2012 16:19:41 +0000

A little more than a week the German government proposed “Budget Commissioner” of the euro area to exercise direct control over the budget of Greece. With this proposal, Berlin, Athens asked to give up its sovereignty in the name of financial assistance, to prevent the bankruptcy of our southern neighbor. Although the European Commission (EC) rejected the proposal, it is not sunk into oblivion. Greece can not settle with its creditors, which leads to two outcomes for the country: either declare bankruptcy or to continue negotiations with the private sector, the European Union (EU) and International Monetary Fund (IMF), says the CEO of American company Stratfor Strategic Analysis and reputed political scientist George Friedman. In his agreement with its creditors Greece will consist of three parts: the forgiveness of the debt, additional financial assistance from the EU and IMF agreement to limit government spending and raise taxes so as to avoid future sovereign crises or at least to be paid to the Greek debt. The Germans certainly do not believe the Greeks, as the latter have not met already made commitments to creditors. That lack of confidence led to the proposal for budget control, but it would be okay, if it is a corporation or a private person, says Friedman. Such a request from a nation state, however, is unacceptable according to the analyst. State is based on two premises. The first is that the nation state is unique legitimate community whose members share a common range of values and interests. The second condition is related to the occurrence of the state. Friedman points out that this happens in people’s will and only has the right to determine state action.
“There is no doubt that Greece is a nation and the government in Athens in accordance with the principles of the state is responsible to the Greek people,” wrote Friedman in his analysis. Germany claims that Greece has failed as a country, for which creditors have a moral right and power to suspend the principle of national self-determination. This is a very radical concept and it is important to understand how it came to her, wrote in the analysis of the expert. The reasons he says are two. First Greek democracy, and many other democracies, requires the state to the benefit of people. Politicians in Greece who want to be selected to provide guarantees for those benefits. Hence the pressure for excessive costs. The second reason, according to George Friedman is associated with the status of Germany as the second largest exporter in the world. About 40% of German gross domestic product (GDP) is formed by exports of the country, most of it is for the EU. Therefore Berlin’s interest to increase demand and consumption, otherwise the country would be depressed.

Households Savings in Europe decreased in Q3 2011

Viliyana Filipova — Sun, 05 Feb 2012 10:31:09 +0000

The level of household savings in the euro area has fallen by 13.3% and the European Union (EU) – by 10.9% in the third quarter of last year compared to the second, according to the European statistics office Eurostat. Disposable income of households in the euro area has picked up its fall to 0.4% after the second quarter recorded a 0.1% decrease, indicated by Eurostat. It is the decline in disposable income due to the reduction of savings in the euro zone by Eurostat explain. Real consumption expenditure of households in the euro area but rose by 0.1 percent in the third quarter of 2011, figures show. The gross investment by households in the EU from July to September 2011 increased slightly to 8.5% from 8.4% in the previous three months. In the euro area gross investments of households remained unchanged at 9.1%. For the same period, gross business investment in non-financial corporations rose in the euro area and in all member states to respectively 21.1% and 20.5%.

Irish Central Bank lowered its economic forecast

Viliyana Filipova — Fri, 03 Feb 2012 11:25:13 +0000

The Central Bank in Dublin lowered its forecast for growth in the Irish economy in 2012, questioning the sustainability of the recovery in the country, which last year managed to overcome the recession. This year the bank predicts growth of just 0.5%, citing the deepening debt crisis in the euro area and problems with exports. In October, the bank expected growth this year to accelerate to 1.8%. Gross national product (GNP) of the country, often taken for a better indicator of the Irish economy by gross domestic product (GDP) because it does not include dividends and profits exported from Irish subsidiaries of foreign companies are expected to decrease by 0.7%. Ireland returned to growth in the first half of 2011, after three years of recession. This prompted the European leaders to identify Ireland as an example of a country that has a positive growth despite the measures for budget savings. The Bank states that Dublin is on track to meet the pledged in 2012 to decrease its budget deficit to 8.6 percent of GDP, but that the economic downturn makes the implementation of the fiscal targets set for 2013 more difficult. In 2013, the bank expects growth to accelerate to about 2.1%.
This year, the institution is forecast to slow export growth, and unemployment rising to 14.6% after the marked decline in 2011 to 14.1%.

Starbucks started partnership with Tata

Viliyana Filipova — Mon, 30 Jan 2012 22:27:48 +0000

Shortly after the U.S. coffee chain Starbucks reported record results for the first quarter of the current financial year, it became clear that the company intends to enter India. The chain will open its first facility in India in August. Entering the local market will be in partnership with the manufacturer of tea and soft drinks Tata Global Beverages, part of conglomerate Tata Group. By the end of the year the company expects to have 50 new branches throughout the country. Although Indians are known as a connoisseur of tea, the taste of coffee is more beloved. “We are witnessing an evolution in the style of life in India. More and more Indians try to fit in your standard of living and lifestyle of international standards, “says the opinion of the joint venture. The entry of Starbucks in India will continue expanding the company’s Asian and Pacific markets, which currently generate more revenue for the company compared to U.S. business. For the first decade of the century coffee consumption in India has almost doubled to 108 thousand tons, and last year in India, there were 1,600 coffee shops. President of Starbucks to China, Asia Pacific, John Culver expects growth of 30% for 2012.
Earlier this month the Indian government changed the number of laws that were abolished restrictions on foreign investment to chain retailers. Under the new laws international companies hold over 51% of local companies must obtain at least 30% of raw materials and goods in the local market, recalls Bloomberg. Starbucks already has signed a contract for the supply of coffee with Tata Coffee, a subsidiary of Tata Global Beverages.

France increases the VAT to 21.2%

Viliyana Filipova — Sun, 29 Jan 2012 11:33:15 +0000

In the fight against high unemployment, French President Nicolas Sarkozy announced the lifting of VAT by 1.6 percentage points. The rate will reach 21.2 percent, writes in today’s issue Le Monde. Several months before the presidential elections unemployment is near record twelve. Sakrozi blames it primarily the high cost of labor, which, however, is challenged by strong unions. After France lost the best credit rating, Sarkozy, according to recent opinion polls after a rival Francois Aland is under enormous pressure. According to a survey of Ifop, published today, voters believe Aland for the best candidate to tackle unemployment (46% vs. 22% for Sarkozy). He has already attacked the financial sector and presented a series of tax changes on the rich, which he says it’s time to make a tribute to escape from the crisis. Sarkozy, in turn, has already announced it would reduce the contribution made by employers, which will be offset by slightly higher VAT paid by all users. The President introduced new measures to reduce working hours and wages to save jobs and raising VAT to reduce employers’ contributions of 13 billion per year. In defending their efforts to rescue the euro and the French economy, Sarkozy said: “The financial crisis is back. Europe is no longer on the brink of the abyss … There are elements to stabilize the financial situation worldwide and in Europe. “The president said he would announce the” end “of the 35-hour workweek in France. He also said that the proposals of the Socialists to return the retirement age of ‘60 . are “crazy” and “lie”.
His statement was a one-hour television interview, broadcast simultaneously on nine national channels. The French president also announced that his country will start to gain by 0.1% in financial transactions. The rate will apply to every company that has headquarters in France. Thus, his country would set an example for other euro area countries. For 2011, Sarkozy expects the deficit to be 5.4 or 5.3%. The government forecasts a deficit of 5.7%. In 2013 the new obligations of the country will be 3% of GDP. Currently, despite downgrade, the country had record low duties still believes Sarkozy. He also announced that it plans to establish an industrial bank to promote SMEs. It starts with an initial capital of 1 billion. However, Sarkozy only hinted at his candidacy for a second term, the election will be held on April 22 and May 6. The German Chancellor Angela Merkel has already announced that it will support in the election battle. It is already planned in the spring repeated meetings with Sarkozy as Paris and Berlin and Brussels.