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Volkswagen profit fell 20% in Q1 of 2016 as the auto maker continues to grapple with fallout from the diesel emissions scandal.
Pre-tax profit fell to €3.2 billion in Q1 of 2016, down from €3.97 billion in the same period a year ago.
VW CEO Matthias Muller said he was “satisfied” with the start of “what will undoubtedly be a demanding” 2016.
The German giant admitted last year that it installed software to cheat US emissions tests.
VW has already set aside more than €16 billion to pay for costs arising from the scandal.
The company has agreed a deal with the DoJ in which it will buy back and “substantially” compensate more than 500,000 American owners of its diesel cars affected by the emissions cheating. Final details are expected in June.
“In the first quarter, we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions,” Matthias Muller added.
VW Group sales revenue fell 3.4% to €51 billion in the period.
Sales of VW-branded cars were particularly hard hit, with profit from that part of the business falling 83% to €73 million from €514in 2015.
VW maintained its forecast of a 5% fall in 2016 sales revenue compared with last year, “depending on economic conditions – particularly in South America and Russia – and exchange rate developments as well as against the backdrop of the diesel issue”.
However, the company predicted “a marked decrease in sales revenue” in 2016 for its passenger car brands, which include Audi, Seat and Skoda.
Matthias Muller said: “2016 will be a transitional year for Volkswagen… we remain confident that our operating business will again record solid growth this year.”
After publishing the profit report, VW shares fell 3% in Frankfurt to €133.57 and are down 40% over the past 12 months.
Lufthansa has announced that it will suspend flights to Venezuela from June 18 due to economic difficulties in the country.
The German airline also said currency controls in Venezuela made it impossible for airlines to convert their earnings into dollars and send the money abroad.
Venezuela’s economy has been hit hard by a sharp drop in the price of oil – the country’s main source of income.
The country has high inflation and severe shortages of basic goods.
In a statement, Lufthansa said that it “will be forced to suspend our service between Caracas and Frankfurt as of June 18”.
The company noted that the demand for international flights to Venezuela had dropped in 2015 and in the first quarter of the current year.
However, it said it hoped to restore services in the near future.
Strict currency controls were first imposed in Venezuela in 2003 by late President Hugo Chavez.
The restrictions were further tightened two years ago, forcing several airlines to reduce their operations in the country as they struggled to repatriate billions of dollars in revenue held in the local currency – the bolivar.
Some airlines are now requiring passengers to pay their fares in dollars.
Venezuela’s government has defended its policies, saying it must prioritize.
Caracas says it is using its foreign reserves – which are now scarce – to pay for essential items such as medicines and industrial machinery.
Your business is growing at a steady rate and bringing in solid revenue month after month. Still, you don’t have a huge profit margin yet and need cash flow to cover business expenses. Perhaps you need to expand your space to keep up with business growth, or maybe you need to invest in a new piece of equipment to make sure your company doesn’t fall behind the competition. Either way, you are in need of some business financing and are probably wondering how to get the money you need.
Two of the options you might consider are merchant cash advances and traditional bank loans. Both options are ways to go through lenders to get the cash you need. Beyond that obvious similarity, there are major differences between merchant cash advances and traditional bank loans that you should know about before you decide what to do for business funding.
What Is a Merchant Cash Advance?
You already know how bank loans work: you go to the bank, request financing, and go through a long application and vetting process to get approved. If the bank thinks your business will be able to repay their loan, they will approve your application and give you some money. Over time, you will have to repay the bank loan with interest, but the money will hopefully give you the freedom you need to grow your business and bring it to a more prosperous and profitable level.
A merchant cash advance is a more niche-based type of small business funding that will only be a possibility if your business has frequent receipts from credit or debit card sales. To accept credit or debit cards, your business needs to work with a company that can process credit card payments. These processors are also known as merchant account providers. In a merchant cash advance, instead of getting a loan from the bank, you are getting a lump sum monetary loan from your merchant account provider. Your merchant account provider will then take a percentage of your credit card sales each day until your business has paid off the original amount plus interest.
The Differences Between Traditional Bank Loans and Merchant Cash Advances (and Determining Which Business Funding Option Is Right for You)
As you can see, there are a few major differences between traditional bank loans and merchant cash advances. The financier is one big difference: with a bank loan, you are working with… well, the bank. With a merchant cash advance, you are working with your credit card processor. The terms of repayment are also very evidently different. With a bank loan, you will have to remember to make payments on the loan every month (or more frequently, depending on your terms). With a merchant cash advance, the entire process is automated, with your credit card processor just taking a set amount of your credit or debit card sales—usually on a daily basis.
Based on these two key differences, a merchant cash advance may well be the preferable option for your business funding needs. After all, plenty of people would tell you that banks are difficult to deal with, and the day-to-day automated setup of merchant cash advances makes them easy and largely not intrusive.
There are also other features of merchant cash advances that make them more attractive than traditional bank loans, from faster approval times to a lack of collateral. Merchant cash advances aren’t technically loans, so there’s no real reason to put up collateral. The “collateral” is your future credit card sales. You are essentially “selling” a portion of these sales to get an upfront cash payment.
The bottom line is that, if your business is in retail or some other industry where credit card sales are a substantial percentage of your revenues, it’s worth looking into a merchant cash advance for your business funding. You won’t have to jump through the hoops that come with applying for a loan and you will only have to give up a set percentage of your daily card sales. In other words, if you have a big sales day, you will make a bigger payment; if you have a smaller day, you won’t pay off as much. Either way, you won’t have to worry about a payment that you can’t cover. Get in touch with a reputable business funding company to talk about your possibilities.
Coca-Cola has been forced to stop producing soft drinks in Venezuela amid an escalating food and energy shortage.
The company said that sugar suppliers in Venezuela will “temporarily cease operations due to a lack of raw materials”.
The announcement comes after Venezuela’s biggest brewer, Empresas Polar, closed plants due to a barley shortage.
Venezuela’s economy has contracted sharply as oil prices plunge.
A Coca-Cola spokeswoman said the company would continue producing sugarless drinks such as Coca-Cola Light (Diet Coke).
She said: “We are engaging with suppliers, government authorities and our associates to take the necessary actions for a prompt solution.”
Sugarcane production has been falling due to price controls and rising production costs, as well as problems in obtaining fertilizer.
As a result, many smaller farmers have turned to other crops that are not price controlled and thus generate higher income.
Venezuela is expected to produce 430,000 tonnes of sugarcane in 2016/17, down from 450,000 tonnes for the previous 12 months, and import 850,000 tonnes of raw and refined sugar, according to USDA figures.
The country’s economic problems have forced many consumers to queue for hours to buy basic foodstuffs.
Venezuela’s economy is expected to shrink by 8% in 2016 after it contracted by 5.8% in 2015.
Its reliance on oil to generate foreign currency and investment has made it a victim of regular recessions.
President Nicolas Maduro has declared a state of emergency in an effort to combat the economic crisis. Critics argue it is an attempt to strengthen his grip on power.
Meanwhile, Bridgestone said on May 23 it was selling its Venezuelan business after six decades in the country.
Bridgestone’s Venezuelan assets will be sold to Grupo Corimon.
Other multinational companies such as Procter & Gamble, Ford and Halliburton have either slowed or abandoned their investments in Venezuela.
German chemicals giant Bayer has made a $62 billion offer for American multinational agrochemical and agricultural biotechnology corporation Monsanto, in a deal that would create the world’s biggest agricultural supplier.
Both companies confirmed last week that Bayer had launched an offer for the US seeds giant.
Monsanto is primarily known for genetically modified crops, often leading to vocal activist criticism.
The offer comes amid a wave of mergers in the industry.
Rivals DuPont, Dow Chemical, and Syngenta have all announced tie-ups recently, although they have yet to be cleared by regulators.
Bayer said the offer of $122 per share represented a 37% premium on the price of Monsanto shares before rumors about the takeover bid emerged in the media.
When news about the takeover offer broke last week, Bayer shares took an 8% hit and a number of large Bayer investors voiced their criticism of the prospective deal.
Bayer has a market value of about $90 billion, making it the second-largest producer of crop chemicals after Syngenta.
Monsanto, which has a market capitalization of $42 billion, attempted to buy Swiss rival Syngenta in 2015.
However, Syngenta ended up accepting a $43 billion offer from ChemChina in February, although that deal is still being reviewed by regulators in the US.
Bayer’s acquisition of Monsanto is expected to be bigger in value than the ChemChina-Syngenta deal.
The biggest merger in the chemicals industry took place late last year when Dow Chemical teamed up with Du Pont to form a new $130 billion company.
Pfizer will acquire California-based Anacor Pharmaceuticals – the maker of a new eczema treatment – in a deal worth $5.2 billion.
The pharmaceutical giant announced it had agreed a deal with the board of Anacor.
Anacor’s flagship product is crisaborole, a cream for eczema which is awaiting approval by US regulators.
The deal comes just weeks after Pfizer scrapped a planned $160 billion merger with Irish drugmaker Allergan for tax reasons.
Albert Bourla, head of Pfizer’s global innovative pharma unit, said: “We believe the acquisition of Anacor represents an attractive opportunity to address a significant unmet medical need for a large patient population.”
Crisaborole can achieve $2 billion in annual sales if approved by the Food and Drug Administration, according to Pfizer.
Some 18 million to 25 million people suffer from eczema in the US, but currently there are few safe appropriate treatments, Pfizer said.
Anacor shares jumped 57%, rising above the $99.25 a share agreed with Pfizer.
Warren Buffett has revealed that his investment company, Berkshire Hathaway, has bought a $1 billion stake in Apple.
In a regulatory filing, Berkshire Hathaway disclosed a holding of 9.81 million shares in Apple.
Warren Buffett, who has traditionally shied away from tech stocks, is known for buying “value stocks”, so it is being seen as significant for Apple.
Apple’s shares have fallen almost 30% over the past year but rose on May 16 and closed the trading session 3.7% higher at $93.88.
Slowing iPhone sales have led investors to question whether the company can maintain Apple’s huge profit levels.
Last week Apple temporarily lost its place as the world’s most valuable company after a fall in shares pushed its total market value below that of Google parent Alphabet.
Warren Buffett did not make the actual investment himself, meaning the order would have been placed by his stock-picking team Todd Combs and Ted Weschler, the Wall Street Journal reports. The paper says they are willing to invest in areas that Warren Buffett himself wouldn’t.
They are each thought to manage a $9 billion portfolio and usually make the smaller investments, while Warren Buffett makes the big bets.
The Apple holding makes Berkshire Hathaway the 56th largest shareholder.
Apple is not Berkshire Hathaway’s only technology investment. It is also the biggest shareholder in IBM and increased its holding in the first quarter.
However, Warren Buffett admitted at Berkshire’s annual meeting last month that his investment firm had been slow to get involved the new tech industry. He has always said he would not invest in companies he doesn’t understand.
On May 16, Warren Buffett also told CNBC that he would consider helping Dan Gilbert, chairman of Quicken Loans, finance a bid for Yahoo.
Volkswagen is being sued by a Norwegian sovereign wealth fund over the car giant’s emissions scandal.
Norges Bank Investment Management, the world’s largest fund, said it had been advised by lawyers that VW’s conduct “gives rise to legal claims under German law”.
VW admitted last year that it had installed secret software to cheat US emissions tests.
The move, from one of VW’s biggest investors, is the latest in a flood of legal actions over the scandal.
VW faces action from US Department of Justice, the Federal Trade Commission and its own dealers.
Norges Bank Investment Management is worth $850 billion (€751 billion) and has stakes in more than 9,000 companies.
According to the Financial Times, which first reported the story, the lawsuit is expected in the coming weeks. It will be filed in Germany, joining class-action cases which are being prepared there.
“Norges Bank Investment Management intends to join a legal action against Volkswagen arising out of [the fact that] the company provided incorrect emissions data,” the statement said.
“As an investor, it is our responsibility to safeguard the fund’s holding in Volkswagen.”
In April, VW reached a deal with US authorities in which it agreed to offered to buy-back almost half a million vehicles and provide money for a fund to help develop cleaner car technology.
Norges Bank Investment Management recently announced action to clamp down on excessive executive pay at the companies it invests in, as well as encouraging oil companies to report more on the risks of climate change.
Fatma Samba Diouf Samoura has become FIFA’s first female secretary general as she was appointed to succeed former secretary general Jerome Valcke, who was banned from soccer-related activity for 12 years.
The 54-year-old Senegalese spent 21 years working for the United Nations and will start at soccer’s governing body in June.
FIFA President Gianni Infantino said: “It is essential FIFA incorporates fresh perspectives as we continue to restore and rebuild our organization.
“She has a proven ability to build and lead teams, and improve the way organizations perform. Importantly for FIFA, she also understands that transparency and accountability are at the heart of any well-run and responsible organization.”
Fatma Samba Diouf Samoura’s appointment, announced at FIFA’s congress in Mexico City, completes a new-look to an organization which has been dogged by corruption allegations under Jerome Valcke and previous president Sepp Blatter.
Sepp Blatter, who had led FIFA since 1998, stood down in 2015 and was later suspended from soccer for six years for breaching ethics guidelines.
Fatma Samba Diouf Samoura, who will undergo an eligibility check before her role is ratified, currently works for the UN in Nigeria, and speaks four languages.
She started her UN career as a senior logistics officer with the World Food Program in Rome in 1995 and has since served as country representative or director in six African countries, including Nigeria.
At her appointment, Fatma Samba Diouf Samoura said: “Today is a wonderful day for me, and I am honored to take on this role.
“This role is a perfect fit for my skills and experience – strategic, high-impact team building in international settings – which I will use to help grow the game of football all over the world.
“I also look forward to bringing my experience in governance and compliance to bear on the important reform work that is already underway at FIFA.
“FIFA is taking a fresh approach to its work – and I am eager to play a role in making that approach as effective and lasting as possible.”
Nissan has announced it will acquire a 34% stake in rival Mitsubishi Motors, in the wake of the latter’s recent scandal over fuel efficiency.
According to the Japanese auto giant, the all-share deal is valued at 237 billion yen ($2.2 billion).
Nissan CEO Carlos Ghosn has called the deal “a breakthrough transaction and a win-win” for both companies.
The tie-up is subject to regulatory approval as well as the backing of Mitsubishi shareholders.
If it is approved, the deal is expected to close by the end of 2016 and make Nissan the largest shareholder in Mitsubishi Motors.
The strategic alliance will extend an existing partnership between Nissan and Mitsubishi Motors forged over the past five years.
Both will co-operate in areas including purchasing, technology and sharing platforms.
Carlos Ghosn said: “We will support Mitsubishi Motors as they address their challenges and welcome them as the newest member of our enlarged alliance family.”
Nissan’s Alliance family is built around a 17-year cross shareholding agreement with French auto maker Renault. Nissan has also previously acquired stakes or signed partnerships with other carmakers including Daimler.
Mitsubishi Motors CEO Osamu Masuko said he hoped the deal with Nissan would restore confidence in the company: “It is not an easy task to regain trust, so through the alliance with Nissan, we will be starting a path towards tackling this difficult task.”
The tie-up was announced as Nissan reported a 14.5% rise in net profit to 523.8 billion yen ($4.4 billion) for the 12 months to March.
Nissan said rising demand in North America and China helped to offset unfavorable currency movements and weakness in emerging markets.
For the financial year to March 2017, Nissan is estimating flat profit growth and an 11% fall in operating profit due to the strengthening yen.
Carlos Ghosn said: “Encouraging demand for new models, combined with continued cost efficiency, helped us withstand currency headwinds and volatile trading conditions in several emerging markets.”
Nissan’s recently launched models including the Maxima, Altima and Titan pick-up trucks were expected to contribute to global sales growth in the coming year.
The Panama Papers relating to more than 200,000 offshore accounts have been posted online.
The huge database belonging to Mossack Fonseca law firm became accessible on the International Consortium of Investigative Journalists (ICIJ) website offshoreleaks.icij.org.
The documents have shown how some wealthy people use offshore companies to evade tax and avoid sanctions.
The papers were leaked by a source simply known as “John Doe”. The company denies any wrongdoing.
Last week Mossack Fonseca issued a “cease and desist ” order to prevent the database being made public but the organization that has the documents, the ICIJ, appears to be going ahead.
The papers have revealed the hidden assets of hundreds of politicians, officials, current and former national leaders, celebrities and sports stars.
They list more than 200,000 shell companies, foundations and trusts set up in more than 20 tax havens around the world.
Among those whose affairs have come under scrutiny include, Presidents Vladimir Putin of Russia, Petro Poroshenko of Ukraine and Mauricio Macri of Argentina, UK PM David Cameron along with Argentinean soccer star Lionel Messi, actor Jackie Chan and Spanish movie director Pedro Almodovar.
Iceland’s PM Sigmundur Gunnlaugsson resigned after the matter came to light.
Mossack Fonseca says it has never been accused or charged with criminal wrongdoing. It says it is the victim of a hack.
Offshore companies are not illegal but their function is often to conceal both the origin and the owners of money, and to avoid tax payments.
Some 2.6 terabytes of information – 11.5 million documents – was originally given to the German newspaper, Sueddeutsche Zeitung, by “John Doe” more than a year ago.
The ICIJ insists that today’s online database is not be a data dump of the kind used by the WikiLeaks organization.
The ICIJ said: “The database will not include records of bank accounts and financial transactions, emails and other correspondence, passports and telephone numbers. The selected and limited information is being published in the public interest.”
On May 9, 300 economists signed a letter urging world leaders to end tax havens, saying they only benefited rich individuals and multinational corporations, while boosting inequality.
Although the name John Doe is used, the gender of the source has not been revealed.
Saudi Arabia’s veteran oil minister Ali al-Naimi has been removed by King Salman as part of a broad government overhaul.
Ali al-Naimi has been replaced after more than 20 years in the role by former health minister Khaled al-Falih.
Saudi Arabia – the world’s largest crude exporter – unveiled major economic reforms in April, aimed at ending the country’s dependence on oil.
In 2015, about 70% of Saudi Arabia’s revenues came from oil, but it has been hit hard by falling prices.
The Saudi government shake-up, announced in a royal decree, sees a number of ministries merged and others, such as the ministry of electricity and water, scrapped altogether.
A public body for entertainment is being created, and another for culture.
King Salman’s son Prince Mohammad directs Saudi Arabia’s economic policy, and Ali al-Naimi’s removal is an indication that he wants tighter control over the commodity.
Khaled al-Falih has spent more than 30 years working at state oil giant Aramco, most recently serving as chairman.
He will take charge of a new department managing energy, industry and mineral resources.
Years of oil profits have allowed the Saudi government to offer generous benefits and subsidies to its citizens.
However, with another huge budget deficit forecast in 2016, last month saw the approval of wide reforms including plans to create the world’s biggest sovereign wealth fund and widen the participation of women in the workforce.
Many of the changes announced by King Salman in this overhaul focus on areas where reforms have been promised.
Fiat Chrysler and Google have signed a deal to double the size of the tech giant’s fleet of self-driving cars.
The auto maker will supply 100 Chrysler Pacifica vans and provide engineers to help integrate the technology.
Fiat and Google described the deal as the most advanced partnership to date between Silicon Valley and a traditional auto maker.
Google wants to add more vehicles to its fleet to increase the amount of road testing it does.
Fiat CEO Srgio Marchionne has in the past raised also concerns about the tech industry’s impact on the auto makers.
Sergio Marchionne called tech companies moving into the sector “disruptive interlopers” and questioned the caliber of the vehicles they could produce.
John Krafcik, Google’s head of self-driving cars, said: “The opportunity to work closely with [Fiat] engineers will accelerate our efforts to develop a fully self-driving car that will make our roads safer.”
Google has said it believes driverless cars could be ready to goes on sale by 2020.
The announcement of the partnership came a week after Astro Teller, the head of “Moon Shots” at Google said the driverless cars project may soon move from under the umbrella of the Google X division that focuses on futuristic innovations and projects.
Google will own the Fiat cars, and both companies will be free to work with other companies to develop driverless technology.
The deal could propel Fiat to the head of the self-driving pack and position it to become a major manufacture for Google.
HSBC has posted a 14% drop in profits for Q1 of 2016 following “extreme levels of volatility” in financial markets at the start of the year.
The banking giant’s profit before tax came in at $6.1 billion for Q1, down from $7.1 billion a year ago.
However, analysts had expected a far steeper fall in profits.
HSBC CEO Stuart Gulliver said the bank had been “resilient in tough market conditions”.
Adjusted pre-tax profits, including currency effects and one-off items, fell 18% to $5.4 billion.
HSBC cut almost a thousand jobs worldwide in Q1, leaving it with 254,212 full-time staff across 71 countries and territories.
Stuart Gulliver said HSBC was confident of hitting its $5 billion cost-cutting target by the end of 2017.
HSBC’s adjusted revenue for Q1 amounted to $13.9 billion, a 4% drop from the same time last year.
The bank also said the development of its Asian business was gaining momentum, “despite a challenging environment with key increases in market share in debt capital markets, China M&A and syndicated lending”.
Ahead of the results, analysts had warned HSBC might signal an end to its highly-valued progressive dividend, which delivers ever-increasing payouts.
However, HSBC maintained the progressive target and left its dividend unchanged from the same period last year at $0.10.
HSBC also announced that the $5.2 billion sale of its Brazil unit to banking giant Banco Bradesco received preliminary approval from competition regulators.
The head of South Korea’s 2018 Winter Olympics organizing committee, Cho Yang-ho, has resigned.
Cho Yang-ho said he wanted to focus on “urgent matters” with his business group, which includes the struggling Hanjin Shipping carrier, the Yonhap news agency reports.
Hanjin Shipping, South Korea’s largest shipper by assets, is facing severe financial difficulties and Cho Yang-ho needed to focus his efforts on restructuring and stabilizing the company.
Photo LA Times
Cho Yang-ho is the chairman of the Hanjin conglomerate, which also controls the nation’s flag carrier Korean Air, a corporate sponsor of the 2018 Games.
According to reports, Cho Yang-ho, who took on the role in 2014, was nearing the end of his two-year term.
The Winter Games are due to take place in Pyeongchang in February 2018.
In March, the International Olympic Committee (IOC) said it was confident South Korea’s preparations were “moving in the right direction”.
Cho Yang-ho said he had “truly put forward my very best efforts to work with every member of the organizing committee to prepare a successful Olympic and Paralympic Winter Games in 2018.”
He said he would “continue to support Pyeongchang through to the Games in 2018”.
In April, Hanjin Shipping said it would ask creditor banks to restructure its debt. It had debt of 5.6 trillion won ($4.92 billion) and a debt-to-equity ratio of nearly 850 percent as at the end of 2015, according to the company.