RETAIL
Debenhams cuts forecast
British department-store owner Debenhams PLC yesterday cut its full-year profit forecast as sales worsened last month and this month amid discounting from competitors in a tough UK retail climate. The company now expects pretax profit of ￡35 million to ￡40 million (US$46.11 million to US$52.7 million), compared with a market consensus of ￡50.3 million, Debenhams said in a statement. The move follows a series of retail insolvencies and store-closings on the UK’s shopping streets. “It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that,” chief executive officer Sergio Bucher said. “We don’t see these conditions changing in the near future.” To strengthen its balance sheet, the company said it plans a material reduction in capital expenditure in the next fiscal year.
FOOD MAKERS
Kraft Heinz mulls brand sale
Kraft Heinz Co is considering a sale of children’s milk drink brand Complan in India, which could fetch about US$1 billion, people familiar with the matter said. Kraft Heinz is working with an adviser to gauge interest in the business, said the people, who asked not to be identified. The brand could attract local companies and private equity firms, the people said. Consumer acquisitions in India have more than doubled this year to US$7.7 billion, up from US$3.4 billion during the same period last year, data compiled by Bloomberg show. Kraft Heinz is bringing Complan to market as UK pharmaceutical firm GlaxoSmithKline PLC weighs selling its stake in its Indian consumer health subsidiary, which owns malted milk drinks brand Horlicks. Foreign companies selling health drinks are facing more intense competition as new local rivals enter the market, said Arun Kejriwal, founder of Kejriwal Research & Investment Services Pvt in Mumbai.
UTILITIES
Moody’s glum on US utilities
Moody’s Investors Service has cut its outlook for US utilities to negative, saying that the sector’s debt levels have reached their highest since the financial crisis and might remain there for months. The sector’s consolidated debt-to-equity ratio has hit the highest level since 2008 as companies finance mergers, acquisitions and other investments in renewable energy and pipelines, Moody’s analysts led by Ryan Wobbrock said on Monday. The federal tax overhaul signed by US President Donald Trump stands to make matters worse, since utilities that depend on regulated returns are collecting less cash from customers to cover their tax expenses, the ratings firm said. The downgrade underscores how a massive buying spree and rising dividends have affected the industry’s debt levels. Power companies have been turning to mergers and acquisitions to fuel growth as demand for electricity weakens, and the costs of maintaining their infrastructure rise.
COMMUNICATION
EchoStar might sweeten bid
EchoStar Corp is considering raising its offer for rival Inmarsat PLC after its initial approach for the British satellite company was rejected as being too low, people familiar with the matter said. EchoStar, founded by billionaire Charlie Ergen, is discussing financing for an improved offer in the coming days, said the people. Inmarsat has a market value of about US$3.3 billion, while EchoStar is worth about US$4.4 billion.
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Rick Cassidy, the chairman of Taiwan Semiconductor Manufacturing Co's (TSMC, 台積電) US subsidiary, TSMC Arizona Corp, plans to retire, but the company has yet to name a successor. After Cassidy made his intention to retire known, TSMC Arizona held a special general meeting and approved a resolution that Cassidy would not continue as chairman and would not remain as a director, TSMC said in a statement filed with the Taiwan Stock Exchange last night. The meeting also approved a plan to appoint TSMC Arizona president Rose Castanares as a director, the company said, adding that Cassidy has been named as an advisor
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The
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