Bombardier hit by 300% hike in duties after Boeing complaint
Bombardier hit by 300% hike in duties after Boeing complaint
The decision underscored the defensive trade policy of US President Donald Trump, and could effectively halt sales of Bombardier’s innovative new plane to US airlines by quadrupling the cost of the jets imported to the US.
The Commerce Department proposed a 79.82 percent antidumping duty on Friday, on top of a 219.63 percent duty for subsidies announced last week.
The new duty follows a preliminary finding that Bombardier sold 75 CSeries jets below cost to Delta Air Lines in 2016. The total was well above the 80 percent Boeing sought in its complaint.
The proposed duties would not take effect unless affirmed by the US International Trade Commission (ITC) early next year.
The duties are expected to heighten trade tensions between the US, Canada and Britain, where CSeries wings are made. The US, Canada and Mexico also are negotiating to modernize the North American Free Trade Agreement.
After the first duty was announced on Sept. 26, Canada and Britain threatened to avoid buying Boeing military equipment, saying duties on the CSeries would reduce US sales and put thousands of Bombardier jobs in their countries at risk.
“This is a disappointing statement but hardly surprising given last week’s preliminary ruling sided with Boeing,” a British government spokesman said on Saturday.
“We continue to make all efforts alongside the Canadian government to get Boeing to the table to resolve the case.”
Boeing, the world’s largest plane maker, hailed the decision and hinted at an alternative for Bombardier.
“These duties are the consequence of a conscious decision by Bombardier to violate trade law and dump their CSeries aircraft to secure a sale,” Chicago-based Boeing said in a statement.
“Bombardier always has the option of coming into full compliance with trade laws,” Boeing added.
Canada’s foreign ministry said Boeing was “manipulating the US trade remedy system” to keep the CSeries out of the country.
Canada is in “complete disagreement” with the decision and would keep raising concerns with the US and Boeing, Foreign Minister Chrystia Freeland said in a statement.
To win its case before the ITC, Boeing must prove it was harmed by Bombardier’s sales, despite not using one of its own jets to compete for the Delta order.
Bombardier said it was confident that the ITC would find Boeing was not harmed, calling the Commerce Department decision a case of “egregious overreach.”
Delta said the decision was preliminary and it was confident the ITC “will conclude that no US manufacturer is at risk” from Bombardier’s plane.
Boeing has said the dispute was about “maintaining a level playing field” and was not an attack on Canada or Britain.
US Commerce Secretary Wilbur Ross said the decision affirmed Trump’s “America First” policy.
“We will do everything in our power to stand up for American companies and their workers,” Ross said in a statement.
But the industry is not so simple. More than half of the purchased content of each CSeries aircraft comes from US suppliers, Bombardier has said.
The plane supports an estimated 22,700 jobs and Bombardier’s aerospace division spent $2.14 billion in the US last year, according to the company and documents seen by Reuters.
Boeing has said the CSeries would not exist without hundreds of millions of dollars in launch aid from the governments of Canada and Britain and a $2.5 billion equity infusion from the province of Quebec and its largest pension fund in 2015.
Online fashion retailer Boohoo’s sales almost double
LONDON: British online fast-fashion retailer Boohoo beat forecasts with a 40 percent jump in annual profit and an almost doubling of revenue as its mainly younger customers snapped up its budget-friendly designs.
The company, which imitates the latest fashions and sells them at “pocket money” prices to mainly twentysomethings, said it had made a strong start to this year, sending its shares as much as 18 percent higher.
Its robust performance and that of bigger online peer ASOS highlights how the Internet is reshaping the British retail landscape and the clothing sector in particular.
“Against a backdrop of difficult trading in the UK clothing sector, the group continued to perform well, gaining market share in the expanding online sector,” said joint chief executives Mahmud Kamani and Carol Kane.
Founded in Manchester, northern England, in 2006, Boohoo has expanded rapidly, purchasing the PrettyLittleThing and Nasty Gal brands at the beginning of last year.
The pure Internet players are bucking a challenging backdrop for UK consumers, outflanking and taking market share from traditional rivals burdened with big store estates.
Last week the 240-year old Debenhams department store chain reported a 52 percent slump in first-half profit and warned on the full-year outlook for the second time in four months.
In stark contrast, Boohoo raised sales and profit guidance four times in 2017-18.
The company made a pretax profit of £43.3 million pounds in the year to February 28, up from £30.9 million a year earlier and topping the £39.4 million expected by analysts, according to Reuters data. Revenue soared 97 percent to £579.8 million, ahead of company guidance.
The stock has come off from 273 pence in June last year, on concerns profit growth will be held back by a step-up in investment.
However, Boohoo said on Wednesday it could invest more in systems, technology, warehouses, distribution and marketing, while still delivering substantial sales and profit growth.
Capital expenditure in 2018-19 would be £50 million- £60 million. Revenue growth was forecast at 35-40 percent, with a profit (EBITDA) margin of 9-10 percent.
Looking beyond 2018-19 it forecast sales growth of “at least” 25 percent, whilst maintaining a 10 percent EBITDA margin.
“Critically, fears of a ‘margin reset’ have not been realized,” said analysts at Peel Hunt, reiterating their “buy” recommendation.
“Changes to distribution plans means the next move is likely to be overseas,” they said.