European Stocks Climb for an Eighth Week; Santander Jumps - Bloomberg European Stocks Climb for an Eighth Week; Santander Jumps - Bloomberg

Saturday, July 28, 2012

European Stocks Climb for an Eighth Week; Santander Jumps - Bloomberg

European Stocks Climb for an Eighth Week; Santander Jumps - Bloomberg

European stocks rose for an eighth week as German Chancellor Angela Merkel and French President Francois Hollande joined European Central Bank President Mario Draghi in promising to do everything to protect the euro.

Banco Santander SA (SAN) jumped 14 percent as Spanish lenders led gains on the benchmark Stoxx Europe 600 Index. (SXXP) Barclays Plc (BARC), the British lender fined for rigging Libor, climbed 4.9 percent as it posted first-half profit that beat analysts’ estimates. MAN SE slumped 7.4 percent as the German truckmaker controlled by Volkswagen AG cut its earnings forecast for 2012.

The Stoxx 600 added 0.6 percent to 259.81 this past week, its eighth consecutive advance for the longest stretch of weekly gains since January 2006. The gauge has rebounded 11 percent from this year’s low on June 4 as central banks from Europe to China eased monetary policy to help spur economic growth. The Stoxx 600 has risen 3.4 percent so far this month.

“The real focus for everyone is Europe and the comments made by Draghi and Merkel,” said Chris Beauchamp, a market analyst at IG Index in London. “They make a strong defense of the euro. But if you do not see these words backed up with real action, disappointment could quickly set in.”

The ECB may begin a new round of joint-bond purchases to ease borrowing costs in Spain and Italy, as Merkel and Hollande pledged to do everything to protect the euro.

“France and Germany are fundamentally attached to the integrity of the euro zone,” the two leaders said in a joint statement on July 27. “They are determined to do everything to protect it.”

Draghi’s Speech

The leaders of the euro area’s two biggest economies issued their statement a day after ECB President Draghi said that the central bank will act to preserve the euro.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said in a speech in London. “And believe me, it will be enough.”

In the U.S., a Commerce Department report on July 27 showed that the world’s largest economy expanded at a faster pace in the second quarter than economists had predicted. Gross domestic product, the value of all goods and services produced, rose at a 1.5 percent annual rate after a revised 2 percent gain in the first quarter. The median forecast of economists surveyed by Bloomberg News had called for a 1.4 percent increase.

U.K. Growth

In Europe, a report showed that the U.K. economy shrank the most since 2009 in the second quarter, pushing the country into a deeper recession than economists had predicted. Gross domestic product fell 0.7 percent from the first quarter, the Office for National Statistics said on July 25. Economists had forecast a 0.2 percent decline, according to the median of 36 estimates in a Bloomberg News survey.

Banco Santander surged 14 percent even as Spain’s biggest bank reported second-quarter profit on July 26 that dropped 93 percent because of costs for purging bad loans.

Bilbao Vizcaya Argentaria SA soared 12 percent, while UniCredit SpA, Italy’s biggest lender, rallied 11 percent.

Barclays climbed 4.9 percent. The lender, which is looking for a new management team following the Libor scandal, posted pretax profit excluding one-off items for the six months to the end of June that rose 13 percent to 4.23 billion pounds ($6.7 billion). That beat the 3.9 billion-pound median prediction of eight analysts surveyed by Bloomberg.

Carmakers Rally

Daimler advanced 4.8 percent after saying second-quarter sales increased 10 percent to 28.9 billion euros ($36 billion). The world’s third-largest maker of luxury cars also posted earnings before interest and taxes of 2.24 billion euros, in line with the 2.2 billion-euro average of analyst estimates compiled by Bloomberg. An index of auto shares in the Stoxx 600 gained 2 percent this past week.

Rolls-Royce Holdings Plc (RR/) added 1.9 percent after reporting first-half profit that beat projections. Underlying pretax profit increased to 637 million pounds. That exceeded the average analyst prediction of 617 million pounds.

MAN plunged 7.4 percent after lowering its projected return on sales to about 6 percent. The Munich-based truckmaker also posted second-quarter operating profit that slumped 50 percent to 218 million euros. That fell short of the average analyst estimate for earnings of 311 million euros.

BT Group Plc, the U.K.’s largest fixed-line phone company, slid 2.8 percent, its biggest retreat since November, after reporting fiscal first-quarter sales of 4.48 billion pounds. That missed the average analyst estimate of 4.58 billion pounds in a Bloomberg survey.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at

To contact the editor responsible for this story: Andrew Rummer at

Samsung replicates mobile business model for consumer durables - Times of India
KOLKATA: Samsung has restructured its electronics and appliances business to create two sales verticals in a bid to replicate its mobile phone success in the Indian consumer durables market where it trails LG Electronics.

Samsung Electronics India now has two sales verticals - one selling products to distributors, stand-alone multi-brand outlets and Samsung brand stores, and other focussing only on national and regional retail chains.

The restructuring is the brainchild of BD Park, who took charge as MD of Samsung India in January after successfully building the South Korean firm's mobile phone business as the second largest brand in the country and overtaking market leader Nokia in the smartphone market.

HK Seo, head of Samsung's consumer electronics business, said, "This will be a win-win situation for both the company and channel partners by re-organising our business around the sales channel with dedicated team for channel management and products."

The move is a first of its kind in the Rs 37,000-crore Indian durable industry, where companies organise their business on product segments. Samsung Electronics, for example, earlier had two verticals - one for audio-visual products like television and music players and the other for home appliances such as refrigerators, washing machines and air-conditioner.

Mahesh Krishnan, who was the head of home appliances business, has been re-designated as the head of distributor channel while the erstwhile head of audio-visual business, Raj Kumar Rishi, now heads the retail chain channel.

They will report to Seo and Park.

Each of these two verticals will have separate heads for audio-visual products, home appliances and air-conditioners and separate teams for product management, supply channel management and sales planning.

Seo says the change in sales approach will help the firm meet the needs of the large, widespread and growing multi-brand outlet world as well the specialised needs of the large format retail channel.

Analysts say Samsung's move is a testament of the growing importance of key accounts like big retailers and regional stores.

"This will help Samsung interact closely with the customer, understand their needs and provide customer intimacy," Debashish Mukherjee, partner, consumer goods and retail, at AT Kearney, said. "However, execution and processes become important otherwise some product categories may suffer," he added.

The company tried out this channel-led strategy in the mobile phone business two years back, which led to rapid expansion of market share. The move allowed the company to have better relationship with the key sales partners, dealers and retailers, understand their need and build customised sales promotion strategy around them, company officials said.

Having replaced Nokia as the largest smartphone player in the country following the success of the Galaxy range, Samsung now hopes the new strategy will help it better LG in the Indian durables market.

Samsung has already overtaken LG in overall revenues for two consecutive years, thanks to its rapid growth in the mobile phone market. The company says it is the market leader in flat panel television segment and the second largest brand in home appliances.

Under the new structure, Samsung has given higher responsibility to a lot of executives for leadership roles and it plans to expand the sales team.

At the regional level, there will now be two branch heads for audio-visual products and home appliances to grow the business in multi-brand outlets under the regional manager who will report to Mahesh Krishnan. There will also be key account managers at the region and branch level who will push sales to the national and regional retail chains under the leadership of Rishi.

Samsung India last year clocked Rs 20,000 crore revenue across both mobile phone and consumer electronic business and is targeting 25-30% growth this year.

Miami imposes 'financial urgency' in union bargaining - Reuters

July 28 | Sat Jul 28, 2012 2:40pm EDT

July 28 (Reuters) - Miami officials declared "financial urgency" in a bid to get $40 million in labor concessions from police, firefighters and other union workers, using a Florida law that allows the city to unilaterally alter union contracts, according to media reports.

The declaration in a letter by City Manager Johnny Martinez on Friday was the fourth in four years by the administration of Mayor Tomas Regalado, who has said staff costs had to be cut again because they account for nearly 80 percent of the city's $485 million operating budget for the next fiscal year.

Regalado also has recommended $20 million of other spending reductions. On Thursday, city commissioners voted to keep local property taxes unchanged.

Miami officials were not immediately available on Saturday but published news reports quoted Martinez as saying city officials expected to resume negotiations with unions for police, firefighters, sanitation crews and administrative workers within two weeks.

Regalado resists calls for increases in local property taxes and argues that austerity would encourage outside investment and migration, and leave the city of 410,000 well placed.

"We want to be partners and not adversaries; we want to be a family that works for the city of Miami," Regalado said on Thursday.

Miami officials are pushing for the concessions from the city's four government workers' unions as part of a plan to plug a $60 million gap. Pension contributions, overtime limits for firefighters and higher health insurance contributions are among the city's proposals.

Part of the budget shortfall is caused by the scheduled expiration of temporary concessions made last year by police and other unions.

Labor leaders told city commissioners on Thursday that Miami's unions had made substantial give-backs to help ease financial pressure on the city. Firefighters have said their pay has been reduced by 35 percent in recent years.

Stung especially hard by the U.S. housing collapse, Miami used Florida's financial urgency law in May 2010 to change labor terms that saved the city $80 million. Other Florida cities, like nearby Hollywood, also have used the law to force pay cuts on government workers.

On Wednesday, Moody's Investors Service put $669 million of Miami's debt on review for possible ratings cuts after federal regulators determined that city officials had misled bond investors about its finances.

Other leading ratings groups, Standard & Poor's and Fitch, said their analysts were closely watching the inquiry by the U.S. Securities and Exchange Commission but would take no immediate ratings actions on Miami's debt.

"While Fitch is concerned about the costs and potential operational disruptions associated with the ongoing investigation, recent financial results indicate some modest improvement in the city's overall financial position," Fitch said in written statement.

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