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.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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