Daimler sees currency effects tempering Mercedes revenue growth

The profitability of its luxury cars division was dented by higher expenses for revaluing the leasing portfolio in Germany, Daimler said. (Reuters)
Updated 27 April 2018
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Daimler sees currency effects tempering Mercedes revenue growth

FRANKFURT: Daimler said currency headwinds will dampen revenue growth at its Mercedes-Benz luxury vehicles division this year, after foreign exchange effects and the absence of one-off gains pushed the group’s first-quarter operating profit 12 percent lower.
Daimler’s Chief Financial Officer Bodo Uebber said the company now expected a burden on earnings this year in excess of 1 billion euros tied to currency effects and the strong euro.
Group earnings before interest and taxes (EBIT) dropped to €3.34 billion in the three months through March, below analyst expectations.
Results in the year-earlier quarter were boosted by the reversal of an impairment of Daimler’s equity investment in BAIC Motor Corp. and the valuation of a stake in map maker HERE.
The return on sales at its Mercedes-Benz Cars division inched up to 9 percent in the first quarter, from 8.9 percent a year earlier, thanks to a 5 percent rise in car sales to 594,299 vehicles, the company’s best ever quarter for luxury sales.
The profitability of its luxury cars division was dented by higher expenses for revaluing the leasing portfolio in Germany, Daimler said.
Although Mercedes-Benz expects to continue posting new sales records, revenue growth will be impacted going forward, the Stuttgart-based carmaker said.
“At Mercedes-Benz Cars, the expected exchange rate developments and lifecycle effects will dampen the development of revenue, so the division is expected to post full-year revenue at the high level of 2017,” Daimler said.


World’s biggest sovereign fund worried about trade wars

Updated 21 August 2018
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World’s biggest sovereign fund worried about trade wars

  • The fund posted a positive return of 1.8 percent, or 167 billion kroner ($19.8 billion), in the second quarter
  • Markets are worried about a trade dispute between the United States and China

OSLO: The managers of Norway’s sovereign wealth fund, the world’s biggest, expressed concern Tuesday about global trade tensions, which could heavily impact its value.
The fund posted a positive return of 1.8 percent, or 167 billion kroner ($19.8 billion), in the second quarter, helping erase a loss of 171 billion kroner in January-March that was attributed to a volatile stock market.
The Government Pension Fund Global, which saw its total value swell to 8.33 trillion kroner by the end of June, manages the country’s oil revenues in order to finance Norway’s generous welfare state when its oil and gas wells run dry.
But Norway’s central bank, which runs the fund, said geopolitical and trade tensions presented a risk.
“It’s fair to say that increased trade barriers or even trade wars will not be beneficial for the fund as a long-term global investor,” Trond Grande, the deputy chief of Norges Bank Investment Management, told reporters.
Markets are worried about a trade dispute between the United States and China. Accusing Beijing of unfair competition, the US administration is considering slapping a new round of levies worth $200 billion on Chinese goods.
Talks between the two slated for Wednesday and Thursday aimed at resolving the dispute have however eased concerns somewhat.
Following US-Turkey tensions that sent the Turkish lira and the Istanbul stock market tumbling, the Norwegian fund said its assets there were worth less than the 23 billion kroner they were at the beginning of the year.
“We’ve seen the market rise for a long time, that there are different political and geopolitical events in the world that can affect the market, and we have to be prepared for the fact that (the value of) the fund can go down a lot,” Grande concluded.
The fund’s strong second quarter was attributed primarily to its share portfolio, which accounts for 66.8 percent of its investments and which rose by 2.7 percent.
Real estate holdings, which account for 2.6 percent of its holdings, rose by 1.9 percent, while bond investments, which represent 30.6 percent, remained flat.
Faced with falling oil revenues in recent years, the Norwegian government has been tapping the fund to finance public spending since 2015. But with oil prices recovering, the fund registered its first inflow in three years in June.