Business

LONDON — Ryanair saw first-quarter net profits sink by more than a fifth, as it faced headwinds from rising costs, intense competition and Brexit turmoil, the Irish no-frills airline said on Monday.

Earnings after taxation slumped 21 per cent to 243 million euros ($270 million) in the three months to the end of June compared with the same portion of the previous financial year, Ryanair said in a results statement.

That was in line with company guidance given in May.

Ryanair also reported a 6 per cent drop in average air fares as the low-cost short-haul sector faced intense competition, particularly in Germany.

At the same time, the British market has also been plagued by anxiety over Brexit, with the UK set to leave the European Union at the end of October.

"The two weakest markets were Germany, where Lufthansa was allowed to buy Air Berlin and is selling this excess capacity at below cost prices, and the UK where Brexit concerns weigh negatively on consumer confidence and spending," said chief executive Michael O'Leary.

The Dublin-based carrier's recent performance has been hit also by pan-European strikes last year that forced it to cancel flights, affecting thousands of passengers, and offer improved pay to staff via landmark deals with unions.

"As previously guided, first-quarter profits fell 21 per cent ... due to lower fares, higher fuel and staff costs," added O'Leary.

The Dublin-based carrier said however that passenger traffic rose 11 per cent to 42 million in the reporting period, while revenue also grew 11 per cent to 2.31 billion euros.

Monday's results were published one week after Ryanair slashed its growth outlook and said it would temporarily shut bases as crisis-hit Boeing pushes back plane deliveries owing to fatal crashes that grounded its 737 MAX jets.

It hopes to take delivery of its first MAX 200 jet between January and February 2020.

The airline did not indicate any job cuts but trimmed its full-year 2020/2021 passenger traffic forecast to 157 million from 162 million.

LIBRAMONT, Belgium — The Libramont agricultural show is the highlight of the year for Belgium's proud beef industry, but this year even the sunny skies of western Europe's record heatwave couldn't chase one looming shadow away. 

The breeders parading their famous Belgian Blue beef cattle will soon face competition from the vast ranches of the South American pampas. 

Resistance is building among some European farmers against a draft trade deal reached by EU officials with the Mercosur group — Argentina, Brazil, Paraguay and Uruguay. 

After 20 years of negotiations, officials in Brussels — 140 kilometres northwest of the pastures of Ardennes — are very pleased with the accord that could save European exporters four billion euros ($4.5 billion) in duties per year.

But, as member states decide whether to ratify and implement the deal, EU farmers and environmentalists are less excited.

Beef breeders, in particular, say that EU quality standards are higher than those in Latin America, and fear a flood of cheap meat will drive them to the wall.

"We are already close to over-production in all of Europe and in Wallonia as well... The last thing we need is Brazilian meat, especially when we see the conditions in which it is produced", warns Hughes Falys, beef producer and farmers' union spokesman. 

'Bad deal' 

"Mercosur isn't a case of 'Yes, maybe' or 'Yes, if'. Mercosur is 'No!'," declares the Wallonia regional farming minister, Rene Collin, to loud applause.

Collin might not be a regular on the G-20 summit circuit or at WTO get-togethers. But the world's trade negotiators may find they have to listen to the French-speaking Belgian region of Wallonia, home to only 3.6 million people. 

In 2016, the region held up Belgium's signature of the CETA trade deal between the entire EU and Canada, and it could make life complicated for Brussels once again.

"We made them evolve CETA. We made them put important safeguard clauses in there. We'll be just as vigilant when it comes to Mercosur," Collin told AFP at the four-day fair and trade show.

He warns that the regional parliament and Belgium's members of the European Parliament could vote against ratification.

The European Commission has tried to reassure farmers, so far to no avail. 

The deal contains two big promises to the sector: Increased beef imports will be limited to 99,000 tonnes a year, and one billion euros will be set aside for European farmers.

Farmers at Libramont are unconvinced and pessimistic for the future despite the impressive size and quality of their livestock, proudly on display.

"Lots of older farmers find it difficult to sell up, especially livestock farmers," says Beatrice Ghyselen, a 61-year-old farmer from Vedrin, outside the Wallon capital Namur.

"My children and their spouses are interested in growing crops, but pretty sceptical about betting on beef," she says. 

Ghyselen's family pioneered the introduction of Limousin cattle in Belgium, and she still has 300 head of cattle. 

Beef prices may be high in European shops right now, she admits, but production costs are relatively higher still and farmers' margins are tight. Ghyselen would like to see a more detailed labelling system to educate consumers. 

For his part, 49-year-old Falys keeps 50 Charolais cattle. 

A small herd, but he concentrates on directly serving local retail with high quality product, cutting out the supermarket chains.

Jean-Luc Pierret, 64, and his son Xavier, have been growing their cattle with organic feed in Orgeo, outside Libramont since 1999.

Their blonde Aquitaine cattle look fine on the diet, and a magnificent bull wins third place at the fair, but they are not confident of continued commercial success. 

"I've haven't got a good feeling about it," Xavier says of a future dominated by huge world trading blocs. 

"From what I can see, the farmer is no longer number one. I wish the young ones courage, they'll need it."

The EU-Mercosur pact will not enter into effect until the parliaments of all 28 — or 27 after Brexit — member states give the go ahead. The ratification process is expected to take at least two years.

AMMAN — The Arab Bank Group announced its results for the first half of 2019, reporting a growth of 4 per cent with its net profit after tax reaching $453 million compared with $436 million in 2018, according to  an Arab Bank Group statement. 

Deposits increased by 3 per cent and reached $34.1 billion while the group’s equity stood at $8.7 billion, said the statement.

In the statement, Sabih Masri, chairman of the board of directors commented, saying despite the continued slowdown of economic growth in the region, the group continues to deliver strong financial performance.

This affirms the bank’s effective management of risks and its ability to deal with the challenging environment, he added.

Nemeh Sabbagh, chief executive officer, stated that “the underlying performance of the group continues on its growth path with first half results recording a sound increase of 5 per cent in net operating income”, according to the statement. 

He noted that Arab Bank Group enjoys high liquidity and strong and robust capitalisation. 

The Arab Bank was recently named “The Middle East’s Best Bank 2019”, by Euromoney — London in addition to “Best Bank in the Middle East” for the 4th consecutive year by Global Finance, New York.

YOKOHAMA, Japan — Crisis-hit Japanese automaker Nissan said on Thursday it would cut 12,500 jobs and announced a plunge in quarterly net profit, as it struggles with weak sales and the arrest of its former chief.

The embattled firm has been buffeted by poor performance in the United States and Europe as well as the scandal of financial misconduct charges against former boss Carlos Ghosn.

"We acknowledge the first-quarter results were very tough," Chief Executive Hiroto Saikawa said.

"We knew the pace of sales would be tough, but I think we have to admit that it was slightly below our expectations," he added.

"But I believe we can fully recover to our expectation levels in the second and third quarter."

Nissan said net profit slumped nearly 95 per cent in the April-June quarter due to falling sales and growing costs.

The automaker's bottom line profit dropped to 6.4 billion yen for the three months to June, from 115.8 billion yen last year, on sales down 12.7 per cent at 2.37 trillion yen.

"Profitability was negatively impacted by the decrease in revenues and external factors such as raw material costs, exchange rate fluctuations and investments to meet regulatory standards," Nissan said.

Operating profit fell 98.5 per cent, to just 1.6 billion yen, but the firm left its full-year earnings forecast in place, predicting net profit of 170 billion yen on sales of 11.3 trillion yen for the fiscal year to March 2020.

 'No magic formula' 

The automaker said it was laying off thousands of employees as it works to cut costs and streamline production.

"Nissan will reduce its global production capacity by 10 per cent by the end of fiscal year 2022. In line with production optimisations, the company will reduce headcount by roughly 12,500," it said in a statement.

Saikawa said 6,400 job cuts had already been carried out in the 2018 and 2019 fiscal years at eight locations.

He declined to identify the six locations at which the firm plans to make another 6,100 cuts between fiscal 2020-2022, saying some factories would close while others would operate with fewer production lines.

"Broadly speaking, unprofitable lines, and relatively speaking, more overseas-based lines will be affected," he told reporters at the firm's headquarters in Yokohama outside Tokyo.

Analysts say the cuts are necessary as Nissan tackles excess capacity.

"Nissan decided not to pursue the volume for volume's sake," said Tatsuo Yoshida, an analyst at Sawakami Asset Management.

"The company has no other choice than reducing capacity or trimming the number of people employed in order to survive the difficult period," he told AFP.

But he warned there was "no magic formula to revive Nissan immediately".

 'Tough for Nissan' 

On top of stagnant sales, the company has also faced tensions with its French partner Renault, which owns 43 per cent of the Japanese manufacturer.

The two companies, which with Mitsubishi Motors form a top-selling auto alliance, have seen relations falter in the wake of the Ghosn scandal and over persistent differences in how closely integrated they should be.

"Business circumstances remain quite tough for Nissan," Satoru Takada, an auto analyst at Tokyo-based research and consulting firm TIW, told AFP before the widely expected figures were announced.

"The outlook for Nissan is still unclear, as the company is facing a number of obstacles, including ties with Renault," Takata said.

Nissan is currently undergoing an overhaul intended to strengthen governance after the Ghosn scandal.

Last month, Nissan shareholders voted in favour of various measures including the establishment of three new oversight committees responsible for the appointment of senior officials, pay issues and auditing.

They also approved the election of 11 directors as the firm restructures, among them two Renault executives as well as Saikawa.

The reforms are designed to put Nissan on a more stable footing after the shock caused by the arrest of Ghosn, considered one of the auto industry's most powerful executives.

Ghosn, who has been sacked from auto industry leadership roles, is awaiting trial in Japan on charges of under-reporting millions of dollars in salary and of using company funds for personal expenses. 

NEW DELHI — Switzerland is the world’s most innovative country for a second consecutive year, while Asian giant India made the biggest strides among major economies, a global indicator showed on Wednesday.

The annual Global Innovation Index — compiled by World Intellectual Property Organisation (WIPO), Cornell University and INSEAD — ranks 129 world economies on 80 parameters including research, technology and creativity.

Switzerland was closely followed by Sweden and the United States.

India, where the announcement was made, was ranked 52nd but has leaped up the rankings in recent years, WIPO Assistant Director General Naresh Prasad said.

The report came as the International Monetary Fund downgraded global growth and warned of a “precarious” 2020 amid trade tensions, continued uncertainty and rising prospects for a no-deal Brexit.

The report’s authors said spending on innovation was still growing and appeared resilient despite the slowdown.

But they also warned of signs of waning public support for research and development in high-income economies usually responsible for pushing the innovation envelope, and increased protectionism.

“In particular, protectionism that impacts technology-intensive sectors and knowledge flows poses risks to global innovation networks and innovation diffusion,” the report said.

“If left uncontained, these new obstacles to international trade, investment, and workforce mobility will lead to a slowdown of growth in innovation productivity and diffusion across the globe.”

DUBAI — The International Monetary Fund (IMF) on Tuesday slashed its economic growth forecast for the Middle East and North Africa to the worst level in more than a decade over Iran sanctions and regional unrest.

In its World Economic Outlook update, the global lender projected economic growth for the Middle East, North Africa, Afghanistan and Pakistan this year would be 1 per cent, its worst since the IMF put them in one group in 2009.

The downgrade, the fifth in a year, is a half percentage point lower than its April projection.

The reduction is in large part due to a change in the IMF's forecast for Iran's growth "owing to the crippling effect of tighter US sanctions", the lender said. 

"Civil strife across other economies, including Syria and Yemen, add to the difficult outlook for the region."

The price of oil, the main driver for revenues in the region, will also impact growth, the IMF added.

In 2018, the region saw 1.6 per cent growth, down from 2.1 per cent in the previous year.

The IMF in April projected Iran's economy will shrink by a steep 6 per cent this year, its worst performance since it contracted by 7.7 per cent in 2012.

The new report provided no updated figures on the Iranian economy, the second largest in the region behind Saudi Arabia, but other reports predicted a deeper recession in the Islamic republic.

One report jointly prepared by the London-based Institute of Chartered Accountants in England and Wales and Oxford Economics, released early this week, said Iran's economy is expected to shrink by 7 per cent this year.

The report also predicted regional growth to be just 0.6 per cent due to Iran sanctions and instability in the region.

US sanctions on Iranian oil exports were renewed in May and aim to halt Tehran's overseas crude sales, which provide key revenues to the Islamic republic.

The IMF also attributed the lower growth projections to rising US-Iran tensions centred on recent incidents in the Gulf and unrest in several Arab nations.

"Civil strife in many countries raises the risks of horrific humanitarian costs, migration strains in neighbouring countries, and, together with geopolitical tensions, higher volatility in commodity markets," the IMF said.

The IMF raised its forecasts for Saudi economic growth this year by 0.1 percentage points, to 1.9 per cent, and to 3 per cent in 2020.

It attributed the boost to the development of the kingdom's non-oil-related sectors.

The world's largest oil exporter has substantially cut power and fuel subsidies as well as imposed fees on expatriates and a 5-per cent value added tax as part of a reform programme to decrease dependence on oil. 

WASHINGTON — US credit monitoring agency Equifax agreed to pay up to $700 million in a settlement stemming from a data breach that affected nearly 150 million customers, regulators said on Monday.

The biggest-ever penalty in a data breach case was announced by the Federal Trade Commission (FTC) and state regulators after revelations that hackers had stolen the personal details, including names, dates of birth and social security numbers, of millions of people.

“Companies that profit from personal information have an extra responsibility to protect and secure that data,” FTC Chairman Joe Simons said in a statement announcing the settlement.

“Equifax failed to take basic steps that may have prevented the breach that affected approximately 147 million consumers,” he added.

The settlement, subject to court approval, calls for at least $300 million of the penalty to go to affected consumers, and to provide extra credit monitoring beyond what the company has already offered. Additional money will be added to this consumer fund based on the number of claims filed, officials said.

“As part of our settlement, Equifax will provide every American who had their highly sensitive information accessed with the tools they need to battle identity theft in the future,” said New York state Attorney General Letitia James, one of the state regulators in the case.

“Equifax put profits over privacy and greed over people, and must be held accountable to the millions of people they put at risk.”

Some $175 million will be paid to states joining the litigation and $100 million in civil penalties to the federal government.

While Equifax does not deal directly with consumers, it handles sensitive information on them to help lenders determine borrowers’ creditworthiness in the United States and some other countries including Britain. It is one of three large credit-reporting agencies in the United States.

The FTC said that Equifax learned of a vulnerability in its network in March 2017 but failed to patch its network or notify consumers until later in the year.

Origin remains unclear 

While not the largest breach — attacks on Yahoo leaked data on as many as one billion accounts — the Equifax incident could be the most damaging because of the nature of data collected: bank and social security numbers and personal information of value to hackers and others.

It remains unclear who was behind the Equifax hack, but some experts said it appeared to be the work of a state-sponsored actor.

Equifax chief executive Mark Begor said in a statement: “This comprehensive settlement is a positive step for US consumers and Equifax as we move forward from the 2017 cybersecurity incident and focus on our transformation investments in technology and security as a leading data, analytics, and technology company.”

NEW YORK — With its free coffee, couches and glass partitions, shared workspace startup WeWork has shaken up both office culture and commercial real estate.

Brushing aside questions about its business model, the New York outfit shows no signs of slowing down and is now preparing for its Wall Street debut to raise fresh capital.

As recently as this month WeWork was seeking to tap credit markets for $4 billion to expand its footprint in the market for co-working, according to The Wall Street Journal.

When the French startup CybelAngel wanted to open a New York office, WeWork was an obvious choice.

With only basic furniture, their current space overlooks Manhattan's tony 5th Avenue, with a corner office next to a small conference room.

"It's not cheaper" than a traditional office rental, said Jocelyne Attal, CybelAngel's head of operations in New York.

"But we don't have to make a three-year commitment."

She added: "There's security, a reception desk, the building codes are met, there's housekeeping. We don't have to take care of anything."

The free Monday breakfasts and Thursday drinks do not hurt, either.

When the company first appeared on the scene in 2010, the co-working concept was only starting to gain traction thanks to new technologies allowing professionals to work remotely.

The global financial crisis helped business, as it drove financial and creative professionals to launch their own startups.

"WeWork was the first to really gravitate towards all the demand from first time entrepreneurs and small business," said Alex Cohen, vice president at the Compass real estate firm in New York.

At WeWork spaces, all office supplies and utilities are provided, right down to Internet connections and printers. And the decor, a blend of bright colours and industrial themes, appeals to millennials.

But the company also has attracted interest from major companies like Microsoft, HSBC and Facebook. 

Companies with more than 500 employees now represent 40 per cent of WeWork's clientele.

Officially renamed the We Company in January, the firm now manages 485 locations in 28 countries — often entire floors split into separate offices, common spaces and individual work spaces that WeWork furnishes and sublets.

Losses or Investments? 

"Per square foot, it is much more expensive than a typical workplace," said Cohen of Compass.

But for a small business, the benefits per person add up.

"You are sitting in a room with four or five other people, and included in the desk space is the ability to use conference rooms, to enjoy the lounge, the pantry."

But not everyone welcomes the company's rise.

"There's been a certain amount of reluctance among owners about renting space, in light of the fact that WeWork's tenants are relatively short term," he said.

In a recession, the tenants will tend to clear out.

Real estate market players recall the misadventures of a company called Regus — now an office space and co-working giant known as IWG — which nearly went bust following the tech crash of 2001.

Questions linger about whether WeWork's business model is sustainable.

The latest estimates value the company at $47 billion although it continues to burn cash: $1.9 billion in losses last year with revenues of $1.8 billion.

IWG's revenues were almost twice as much last year, and it is also profitable and has $4 billion market capitalisation.

Meanwhile, WeWork has ventured into new areas like residential apartments and education, and tells investors they should see its quarterly losses as investments.

"We really want to emphasise the difference between losing money and investing money," Chief Financial Officer Artie Minson told CNBC.

"At the end of this quarter, we have these cash flow-generating assets."

Certain moves by co-founder Adam Neumann, such as personally investing in real estate before renting it back to WeWork, have also caused some to grit their teeth.

Nevertheless, Cohen says co-working has driven demand for commercial real estate in major urban markets over the last five years.

"Many landlords, despite a certain amount of reluctance, or reluctance among their lenders, have had to accept WeWork as a good opportunity for them," he said.

SAN FRANCISCO — Microsoft on Thursday posted quarterly earnings that trounced expectations, citing growth in partnerships with companies on technology and cloud computing services.

The US technology titan, shifting in recent years to business services from consumer tech, reported its net income rose 49 per cent to $13.2 billion on revenue that was up 12 per cent to $33.7 billion.

Microsoft’s profit in the fiscal fourth quarter that ended June 30 was helped by at $2.6 billion tax benefit, according to the company.

The results showed the “strongest commercial quarter ever”, for Microsoft, said chief financial officer Amy Hood.

Chief Executive Satya Nadella said the results closed out a record fiscal year for the tech giant, which has the largest market value of any company at more than $1 trillion.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said Nadella.

“Every day, we work alongside our customers to help them build their own digital capability...This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”

Net income for the fiscal year more than doubled to $39.2 billion on revenue that was up 14 per cent to $125.8 billion, according to the earnings report.

Microsoft shares rose 1.4 per cent to $138.35 in after-market trading that followed release of the earnings figures.

“Microsoft is firing on all cylinders now, growing big in growing markets and even managing growth in mature markets like PCs (personal computers),” said technology analyst Patrick Moorhead of Moor Insights and Strategy.

The Redmond-based company is “cementing its spot” as a provider of software, infrastructure and platforms hosted as services in the internet cloud, according to Moorhead.

Microsoft reported growth across all it businesses except Xbox gaming unit where revenue declined 10 per cent.

A reason is likely that the latest generation Xbox console that debuted nearly six years ago is getting “long in the tooth”, with a successor on the horizon, Moorhead said.

Microsoft in June gave the world a first glimpse of a powerful next-generation Xbox that it aims to release late next year.

Xbox head Phil Spencer pulled back the curtain on “Project Scarlett”, a successor to the Xbox One that will give game makers “the power they need to bring their creative visions to life”.

The new Xbox was promised to be released in time for the Christmas holiday shopping season in 2020.

Xbox battles in the console gaming arena with Sony, which is working on a new generation PlayStation.

The commitment to consoles by longtime contenders in the market comes with the rise of video games hosted as subscription services streamed Netflix-style from data centres in the Internet cloud, which plays to Microsoft’s cloud and Xbox strengths.

Revenue from productivity and business processes division that includes business and consumer cloud services as well as career-focused social network LinkedIn was up 14 per cent to $11 billion, according to the earnings report.

Money taken in at LinkedIn jumped 25 per cent with the service seeing record levels of engagement, Microsoft said.

The company also saw revenue rise from server products; Windows operating software; online search advertising, and its Surface table computers.

Surface revenue growth was “surprising” considering the overall personal computer market was flat, according to Moorhead.

“This quarter was an absolute ‘blow out quarter’ across the board with no blemishes and in our opinion speaks to an inflection point in deal flow as more enterprises pick Redmond for the cloud,” Wedbush analyst Daniel Ives said in a note to investors, referring to Microsoft’s headquarters in Washington State.

“While the stock has been very strong and a trillion dollar market cap is now reached, we believe the cloud party is just getting started in Redmond.”

CHANTILLY, France — Ministers from G-7 top economies on Thursday reached consensus on steps towards an accord on taxing digital giants, an issue that has divided the United States and its allies Britain and France.

French Finance Minister Bruno Le Maire, who hosted the two-day meeting in Chantilly outside Paris, hailed the consensus as unprecedented, although US Treasury Secretary Steven Mnuchin insisted there was more work to be done.

The French parliament this month passed a law that would tax digital giants for income amassed inside a country even if their headquarters are elsewhere, a move the United States complained discriminated against US firms like Google, Apple, Facebook and Amazon.

Britain has announced plans for a similar tax and the G-7 meeting in the tranquil French town — usually famed for its horses rather than horsetrading — was dominated by tough talks to find some common ground.

Le Maire said finance ministers and central bankers had reached an agreement "to tax activities without physical presence, in particular digital activities".

"This is the first time that G-7 members agree in principle on this," he told reporters.

 'Minimum tax' 

France issued a statement saying the G-7 had agreed a two-pronged solution — confirming the principle of companies being able to accrue revenues outside their legal base but also on a minimum tax to be agreed internationally for their activities.

Ministers "fully supported a two-pillar solution to be adopted by 2020", the statement said.

"Ministers agreed that a minimum level of effective taxation... would contribute to ensuring that companies pay their fair share of tax," it said.

A French official, who asked not to be named, said the tax rate would have to be agreed in the future.

German Finance Minister Olaf Scholz said he was happy with the "progress" achieved and in particular with the reference to the minimum tax level in the final statement.

Further talks would now be needed in the wider context of the G-20 group of top economies for an international agreement which would be overseen by the Organisation for Economic Cooperation and Development (OECD).

Scholz expressed hope that a full international consensus could be reached next year under the OECD.

 'Step forward' 

The French parliament's move infuriated President Donald Trump and the US had announced an unprecedented probe against France which could trigger the imposition of tariffs.

Mnuchin struck a slightly more cautious tone than his French counterpart Le Maire while making clear he was well satisfied with the talks.

"We made some significant progress at this meeting, there is more work to be done," Mnuchin told reporters, adding that ministers had made a "big step in the right direction".

He said the United States has "significant concerns" with the French law and planned British legislation and was pleased that both Paris and London would dump the domestic laws if an international agreement was forged.

"Everyone here wants to reach an acceptable international solution," said Mnuchin. "Creating certainty for global multinationals is very important," he added.

 'Warning on Libra' 

The G-7 ministers had far less trouble agreeing a position on new cryptocurrencies such as Facebook's Libra, saying such new and untested digital money risked destabilising the international monetary system and were not ready to be implemented.

"They agreed that projects such as Libra may affect monetary sovereignty and the functioning of the international monetary system," the French statement said.

The other key issue at the meeting was finding a replacement for Christine Lagarde, who has led the International Monetary Fund since 2011 but has resigned to become head of the European Central Bank.