February 28, 2021

Danish Wind Turbine Maker Appoints New Leader

LONDON — Vestas, the Danish wind turbine maker, appointed a new chief executive, Anders Runevad, on Wednesday amid signs that the company is continuing to struggle.

Mr. Runevad replaces Ditlev Engel, who been chief executive since 2005.

The company reported a net loss of 62 million euros, or $83 million, for the second quarter, compared with a loss of $10.7 million in the similar quarter a year earlier. Revenue declined to $1.6 billion, compared with $2.1 billion the previous year.

The company’s share price, which has fallen about 85 percent since 2009, was up 5 percent Wednesday in Copenhagen trading.

Vestas, once a star of the wind power industry, has been under pressure in recent years from the recession in Europe, lower government subsidies for alternative energy and competition from China. These trends have put pressure on most of the renewables industry.

The company’s chairman, Bert Norberg, a former executive at Ericsson, the Swedish telecommunications company, has been leading a restructuring of the company since 2012. Several top executives have been replaced. The company also says it is cutting its work force to no more than 16,000 at the end of this year, from 22,700 employees at the end of 2011.

Like Mr. Norberg, Mr. Runevad, the new chief executive, comes from Ericsson, where he was president for Western and Central Europe.

“The company is now entering a new phase, where we want to realize our growth potential, and I am confident that Mr. Runevald has the right experience to lead the company, ” Mr. Norberg said in a statement.

There were some bright spots in the results announced Wednesday. Orders booked in the quarter nearly doubled, to $2.3 billion. Free cash flow, or money available for investment or redistribution to shareholders, was positive, at $264 million, compared to a negative $453 million a year ago.

But there were also signs of lingering problems. For instance, Vestas cut its estimate of its order book by $536 million, to $95 billion, “due to uncertainty surrounding a few customers’ ability to comply with the contractual obligations.” The company said that about half of the amount “relates” to a Central European customer that it did not name.

Article source: http://www.nytimes.com/2013/08/22/business/global/danish-wind-turbine-maker-appoints-new-leader.html?partner=rss&emc=rss

Daimler Abandons Forecast Amid Dismal Market

PARIS — Daimler, the maker of Mercedes-Benz cars, said Wednesday that it was abandoning its 2013 profit forecast in the face of a dismal European market.

The company, which is based in Stuttgart and also makes buses and trucks, said it expected demand in Western Europe to continue hovering “around a 20-year low” this year. “The German market,” it added, “cannot detach itself from this development and is expected to fall significantly short of the previous year’s level.”

The carmaker said it still expected group revenue to rise this year. But even operating from the assumption that the second half of the year would be better than the first, it said it no longer believed it would be able to match its 2012 operating profit of about €8.1 billion, or $10.5 billion.

Despite poor sales in Europe, Ford Motor said Wednesday that its net profit climbed 15 percent in the first quarter, to $1.6 billion, as record results in North America compensated for losses in Europe and South America.

The company reported a pretax loss of $462 million in Europe, about triple the $149 million it lost in the region in the first quarter of 2012.

Ford has said it expected a loss of up to $2 billion this year in Europe, where weak economic conditions have driven new vehicle sales to their lowest level in decades.

The company is closing a major assembly plant in Belgium and accelerating other cost cuts in Europe. It said the “outlook for the business environment in Europe remains uncertain.”

Results in Asia, where Ford is investing heavily in new factories and products, improved slightly. The company said it had a pretax profit of $6 million in the region compared with a $95 million loss a year earlier.

Car sales in the European Union totaled just under three million units in the January-March period, down 9.8 percent from the period a year earlier. Last week, the European Automobile Manufacturers’ Association described that as the worst start to a year since it began collecting the data in 1990.

In Germany, sales fell 17.1 percent last month, and the luxury segment, which long escaped the worst of the downturn, is now shrinking as well. In another worrying sign, recent data have shown the German economy, the largest in Europe, losing steam, meaning things may get worse.

European automakers may also find themselves competing at a disadvantage against Toyota, Nissan and Honda, after the Bank of Japan began a campaign to end deflation that has driven down the yen and made vehicles built in Japan relatively less expensive in other markets.

Daimler said its quarterly net profit slid 60 percent from a year earlier, to €564 million. Its earnings before interest and taxes, a measure favored by analysts, fell 56 percent, to €917 million, lower than the most pessimistic forecast in a Reuters survey of analysts. Revenue fell 3 percent, to €26.1 billion.

Daimler had warned this month that it was reassessing its forecasts, raising expectations that its rivals might follow suit. But that caution was not mirrored at Volkswagen, the largest European automaker, which said Wednesday that it planned to meet expectations, holding operating profit steady in 2013.

Despite the difficult market, “we remain confident overall that we can pick up speed over the rest of the year,” Martin Winterkorn, the VW chairman, said in a statement. Volkswagen, based in Wolfsburg, Germany, reports its first-quarter results on Monday.

In Paris, PSA Peugeot Citroën said its first-quarter auto sales fell 10.3 percent, outpacing the European market decline. The French company does not report profit or loss on a quarterly basis.

Peugeot, the second-largest European automaker, relies heavily on the Continent for its sales. It said Wednesday that its efforts to expand in China had paid off well in the first quarter, as its unit sales there increased 31 percent.

Bill Vlasic contributed reporting from Detroit.

Article source: http://www.nytimes.com/2013/04/25/business/global/daimler-abandons-forecast-amid-dismal-market.html?partner=rss&emc=rss

Off the Charts: Globalization, as Measured by Investment, Takes a Step Backward

Then came the financial crisis, which, the McKinsey Global Institute noted in a report issued this week, “upended many of the world’s assumptions about the inevitability of growth and globalization.”

Last year, the report estimated, world capital flows were 13 percent below the levels of the previous year. And while they were higher than during the depths of the credit crisis, they are still 61 percent below the peak levels of 2007.

“Some of the shifts under way represent a healthy correction of the excesses of the bubble years,” the report stated, but there is a risk the reversal of globalization will be overdone.

“If we move to a system where the global financial system is more balkanized, that will raise the cost of capital for more borrowers and perhaps slow economic growth,” said Susan Lund, a principal of McKinsey Global Institute and the primary author of the report.

The accompanying charts show the institute’s estimates of global capital flows, which totaled $4.6 trillion in 2012, down from $11.8 trillion in 2007. Of the 2007 total, $10.2 trillion went to developed countries, and $1.6 trillion went to developing countries. Last year, capital flows were $3.1 trillion, a decline of 69 percent, for the developed countries, and $1.5 trillion, a decline of 10 percent, for the others.

The charts break out the flows into four types. The most stable is foreign direct investment, in which a company either builds a business or acquires at least 10 percent of an existing business. By far the least stable is loans, which are often short term and can be withdrawn on short notice, creating havoc. The others are bonds and equity, meaning stock market investments.

The Asian currency crisis of the late 1990s taught developing countries the potential hazards of loans that can be here today and gone tomorrow — a lesson that some European countries ignored to their regret. The institute calculated that in 2006 and 2007, the amount of capital flowing into Ireland was more than twice as large as the country’s gross domestic product. Moreover, most of that was in loans and bonds, debt instruments that in many cases could not be repaid.

International loans and bond issuances have particularly declined in Western Europe, where the euro crisis led many to withdraw funds and caused banks to concentrate on local markets. During four years in the middle of the last decade, more than $1 trillion in Western European bonds were purchased by foreigners each year. In each of the last two years, more bonds were sold back to the issuing country than were newly sold internationally.

For a number of years, China was the largest recipient of foreign direct investment, and that continues, with as estimated $260 billion flowing in last year. But it also sent $120 billion in such investment to other countries, about the same as Japan and more than was sent by any other country except the United States, according to the estimates.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/03/02/business/economy/globalization-as-measured-by-investment-takes-a-step-backward.html?partner=rss&emc=rss

DealBook: Citigroup Awards $6.65 Million to Pandit

Vikram Pandit, the former chief of Citigroup.Mark Lennihan/Associated PressVikram Pandit, the former chief of Citigroup.

The board of Citigroup has awarded $6.65 million to Vikram S. Pandit after unexpectedly ousting the chief executive last month.

Mr. Pandit will receive the money as part of an “incentive” package for his work during 2012. He will also continue to collect his deferred cash and stock awards from the previous year, compensation that the bank currently valued at more than $8.8 million.

In a surprise move, Mr. Pandit resigned in October, a departure that was orchestrated for months by the bank’s board. Its powerful chairman, Michael E. O’Neill, maneuvered behind the scenes to curry support with other directors and replace Mr. Pandit. Michael L. Corbat was named the new chief executive.

As part of the shake-up, the board also forced out John Havens, the chief operating officer. Mr. Havens will receive $6.8 million in incentive pay for 2012, with previous deferred stock and cash awards valued at $8.725 million.

Since Mr. Pandit and Mr. Havens abruptly left the company, they will both forfeit the remainder of their retention packages, which were outlined last year. For Mr. Pandit, the lost compensation amounts to roughly $24 million, according to a person with knowledge of the matter who could not speak publicly.

Mr. Pandit led the bank during a turbulent chapter in its history. After taking over in 2007, he navigated the bank through the financial crisis, securing a $45 billion lifeline from the federal government. The bank’s health was so dire that Mr. Pandit opted to take a token $1 annual salary.

While the bank has returned to profitability, Citigroup has struggled with a stagnant stock price and lackluster earnings. It suffered an especially tough blow in March when the Federal Reserve rejected the bank’s plans to raise its dividend.

Since Mr. Pandit resigned, the mood among some senior executives has been grim, according to several people close to the bank. The executives felt that the board’s actions last month were particularly brutal and humiliating to Mr. Pandit, considering his role in reviving the bank.

A version of this article appeared in print on 11/10/2012, on page B3 of the NewYork edition with the headline: Ousted Citi Chief to Receive $6 Million in ‘Incentive’ Pay.

Article source: http://dealbook.nytimes.com/2012/11/09/citigroup-awards-6-65-million-to-pandit/?partner=rss&emc=rss

U.S. Housing Prices Remain Weak

The private Standard Poor’s/Case-Shiller index, a closely watched measure of home prices, was up 1 percent compared with April, according to the broadest measure of data tracking 20 cities. Prices rose in 16 of the cities; they fell in Detroit, Las Vegas and Tampa and were unchanged in Phoenix.

The rise in May comes after the index edged up a fractional 0.6 percent in April, which marked the first time prices were higher in eight months.

But the trend in the 20-city composite index, while positive, was attributed to seasonal factors, and analysts were hesitant to read too much into one or two months of data. Demand is typically stronger in the spring, and continued weakness was evident in other barometers of housing health, such as contract cancellations, tightened lending standards and sales of new homes in June.

“We have now seen two consecutive months of generally improving prices; however, we might have a long way to go before we see a real recovery,” said David M. Blitzer, the chairman of the index committee at SP Indices. “Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery,” he said in a statement released with the survey.

The data compared to the past several years showed that prices in Detroit, Las Vegas and Tampa reached new lows, down nearly 50 percent or more since the peaks of 2005-2006, the survey shows.

The overall index in May was down compared to May 2010, by 4.5 percent. That reflected a decline in prices in 19 of the 20 metropolitan areas when compared with the previous year.

Washington, D.C., was the area with the only annual price increase, while Minneapolis, where home prices were up 2.6 percent in May and 0.1 percent in April, had the biggest fall in prices from May last year, with an 11.7 percent drop.

Barbara T. Jandric, the president of Edina Realty in Minneapolis, said that the drop from last year reflected prices of many foreclosed homes. But in recent months the profile of houses being sold was starting to grow sounder, with fewer foreclosure sales as a percentage of the whole.

“We still have quite a few of those sales in our market, but we see that we maybe hit our peak,” she said.

In addition, the firm has noticed more buyers on the higher end of the market, she said.

“So for the first time in many, many years, in that segment of the market we are seeing shortages of listings,” she said. “For us, it is another glimmer of hope that the market is really slowly, slowly trying to come back.”

Analysts said that the spring uptick started in April and was likely to dwindle by October, when weak demand typically drags down home prices.

In addition, other variables in the economy are deflating hopes for a housing rebound, including a struggling jobs market in which the unemployment rate is at 9.2 percent and consumer confidence is at depressed levels, said Chris G. Christopher Jr., senior principal economist for IHS Global Insight.

“Things do not look very favorable on the housing front since the employment situation has taken a turn for the worse in May and June,” he said in a research note. “Going forward, the Case-Shiller indexes are likely to post increases during the home-buying season, and then turn down again.”

In another report, new-home sales were virtually unchanged in June, slipping 1 percent to an annual rate of 312,000, according the Department of Commerce. Analysts had predicted a 320,000 annualized level.

The number of new homes for sale declined nearly 2 percent to 164,000, and was 22 percent down compared with a year ago, the department said.

Article source: http://feeds.nytimes.com/click.phdo?i=24e1a83fc84d01631d9f54bcab19a173

India Raises Interest Rates to Battle Inflation

MUMBAI — In a bid to rein in persistently high inflation, India’s central bank raised interest rates Tuesday more than analysts had expected and signaled that it would be willing to raise borrowing costs even further.

The action, which caused the country’s stock market to close 2.4 percent lower, will make it harder for India to achieve the 9 percent growth target set by the government for the current financial year, which ends in March 2012.

The central bank, the Reserve Bank of India, acknowledged that concern but said it had to act to make sure the economy did not suffer long-term damage from rising prices; the central bank said it expected the economy to grow 8 percent, down from 8.6 percent in the previous year.

That slower growth will make it harder for India, the second fastest growing major economy in the world, behind China, to pull hundreds of millions of people out of poverty. And it will most likely exacerbate the Indian government’s already large fiscal deficit.

India has been struggling to control rising prices over the past year, especially for food and energy. But in recent months the cost of other goods has also jumped, raising concern that the Indian economy is overheating. In March, the country’s benchmark wholesale price index jumped 9 percent and a consumer price index for industrial workers was up 8.8 percent.

On Tuesday, the bank raised its repo rate at which it lends money to banks one-half percentage point, to 7.25 percent. Most analysts had expected an increase of 0.25 point, which would have been in keeping the modest increases the central bank has been making in the past year. The central bank also raised rates on bank savings accounts by one-half point, to 4 percent.

Including the most recent increase, the central bank has raised the repo rate 4 percentage points in the past year. The governor of the central bank, Duvvuri Subbarao, said the bank was willing to risk slowing the economy in the short run to prevent inflation from damaging the longer-term prospects for growth.

“Current elevated rates of inflation pose significant risks to future growth,” Mr. Subbarao said in a statement. “Bringing them down, therefore, even at the cost of some growth in the short-run, should take precedence.”

Even before this most recent interest rate increase, India’s economy had been slowing down in recent months because of a drop in private investment by domestic and foreign companies. Now, analysts say they expect growth to slow faster, even as inflation remains high.“In the near term, it’s going to be a difficult adjustment for the economy,” said Sonal Varma, an economist at Nomura Securities in Mumbai. “That is the sacrifice that the R.B.I. is making.”

The central bank’s more aggressive stance on inflation will most likely increase pressure on the government to implement structural policy changes and increase investment in infrastructure.

For instance, Indian officials have long discussed changes to improve productivity and reduce waste in its agricultural sector, where more than half of its people work. But the government has been reluctant to implement many of those changes because they are politically unpalatable.

“There are a whole gamut of administrative measures that are needed to bring down structural inefficiencies in the system to bring down inflation,” said Samiran Chakraborty, head of research at Standard Chartered Bank in Mumbai. “As long as those measures are not taken, monetary policy has to do double duty.”

Separately, the central bank announced new rules for the country’s troubled microfinance companies, which saw a sharp drop in loan repayment rates in a large south Indian state last year after politicians accused lenders of driving some borrowers to suicide. The central bank imposed an interest rate cap of 26 percent on new micro loans and limited loans to no more than 50,000 rupees ($1,125) per family. The rules also allow borrowers to choose how they want to repay loans – weekly, every two weeks or monthly.

Article source: http://www.nytimes.com/2011/05/04/business/global/04rupee.html?partner=rss&emc=rss