EU prepares to send petrol cars to the scrap heap

EU prepares to send petrol cars to the scrap heap
The the body of a car is seen at the assembly line for the VW ID 3 electric car of German carmaker Volkswagen in Dresden. (AFP)
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Updated 08 July 2021

EU prepares to send petrol cars to the scrap heap

EU prepares to send petrol cars to the scrap heap
  • Sources in Brussels expect the commission’s plan, part of a climate climate strategy, to foresee an end to new registrations of petrol engines from 2035

BRUSSELS: Europe’s prestigious carmakers lead the world in perfecting the internal combustion engine — but the days of the petrol motor are numbered, and the continent is changing gear.
On Wednesday next week, the European Commission will unveil its plan to reduce carbon emissions from new vehicles to zero within the next decade, to fight climate change.
The EU plans to be carbon neutral by 2050, but petrol and diesel cars remains the continent’s main mode of transport and the pride of its globally admired marques.
Sources in Brussels expect the commission’s plan, part of a climate climate strategy, to foresee an end to new registrations of gas guzzlers from 2035.
Europe’s existing emissions limit of less than 95 grams of CO2 per kilometer was to have been reduced by 37.5 percent in 2030.
Exact figures are still under discussion, but Brussels is now expected to seek a 60 percent reduction by 2030 and a 100 percent reduction just five years later in 2035.
The economic damage the coronavirus pandemic has damaged the road vehicle market as a whole, but electric cars have been an exception, with growth accelerating.
Battery-powered cars represented eight percent of new registrations in western Europe in the first five months of this year, with 356,000 new vehicles.
This, noted analyst Matthias Schmidt, represents more than in the whole of 2019.
The impending new regulations will increase this trend, as they will not only spell doom for classic petrol and diesel motors but effectively force out hybrid and hybrid-rechargeable models.
These had once been seen as a transitional technology, a key product for an industry that boasts of employing 14.6 million workers in Europe.
The car lobby is resigned to going along with the changeover, but wants help from Europe, in particular in terms of developing a network of recharging points for battery cars.
“Under the right conditions, we are open to even higher CO2 reduction targets in 2030,” said Oliver Zipse, president of the carmakers’ association ACEA and chief executive of BMW.
The industry is divided about the best way forward, with some executives warning too quick a transition will drive up prices and favor Chinese competitors, which have an advance in battery technology.
But Europe’s giant, Volkswagen, which represents one sale in four on the continent, has followed US champion Tesla in backing an all-electric future.
In 2015, the firm was at the heart of a scandal over faked emissions tests on diesel motors, and is keen to restore its image with the public and regulators.
“There is a huge conflict going on at ACEA level,” market analyst Schmidt explained.
“Volkswagen was forced to go early into electric vehicles because of Dieselgate, to improve their image. they have made huge investments and now they have got the products ready to meet CO2 legislation.
“They are in a perfect position to gain market share, and they will be happy to see others go to the wall.”
Volkswagen already plans to stop selling vehicle with internal combustion engines between 2033 and 2035.
“In general a car remains on the road for 15 years. If we want transport to be carbon free by 2050, we need the last combustion-driven car to be sold by 2035 at the latest,” said Diane Strauss, of pressure group Transport and Environment.
The NGO’s latest report, published in June, gives Volkswagen and Volvo good marks for their preparations, with Renault and Hyundai a little behind them.
But BMW, Daimler (which owns the Mercedes brand), Stellantis (Peugeot, Citrion and Fiat) and Toyota are seen as lacking ambition and remaining too wed to hybrids.
MEP Pascal Canfin, chair of the environment committee in the European Parliament, said the 2035 target date is a good compromise.
He said 2030 would be too soon for industry and workers to adapt, while 2040 would be too late for Europe’s climate goals.
But Canfin is holding out for a fund of “several billion” euros to help fund the transition.


Data-led innovation needed to help Saudi firms process information, says Dell ahead of LEAP

Data-led innovation needed to help Saudi firms process information, says Dell ahead of LEAP
Updated 14 sec ago

Data-led innovation needed to help Saudi firms process information, says Dell ahead of LEAP

Data-led innovation needed to help Saudi firms process information, says Dell ahead of LEAP

RIYADH: The majority of Saudi businesses gather data faster than it can be analyzed and used, Dell Technologies has warned ahead of the LEAP tech event being held in Riyadh from Feb. 1-3.

The US firm is set to take part in the forum, which is focused on future and disruptive technologies.

Ahead of the event, Mohamed Talaat, vice president in Saudi Arabia, Egypt and Levant at Dell Technologies, pointed to research by his company in 2021 that showed 70 percent of Saudi respondents have data-driven business and consider data as the lifeblood of their organisation.

However, 59 percent said they were gathering data faster than they could analyze and use.

Talaat said: “Saudi Arabia today stands at the threshold of change, underpinned by the nation’s ambitious vision and drive to transform, innovate and build a legacy for generations to come.

“Dell Technologies remains committed to advancing the country’s transformation agenda. We're empowering local organizations with end-to-end infrastructure and client solutions. They not only support a data-driven work culture, but are also capable of predicting the future and achieving better business results.”


Pandemic fast food orders see Saudi chain Herfy triple profits in 2021

Pandemic fast food orders see Saudi chain Herfy triple profits in 2021
Updated 9 min 33 sec ago

Pandemic fast food orders see Saudi chain Herfy triple profits in 2021

Pandemic fast food orders see Saudi chain Herfy triple profits in 2021

RIYADH: Saudi Arabia’s largest food chain, Herfy Food Service Co. has seen over a threefold rise in its estimated annual profit for 2021, after a surge in its sales during the pandemic.

The estimated net profit amounted to SR162 million ($43.2 million), compared to SR52.8 million a year earlier, according to a bourse filing.

The hike was propelled by a jump in sales of 22 percent, reaching more than SR1.3 billion, as well as a fall in general and administrative expenses.

This came despite a decrease in other income and higher selling and marketing expenses, the Riyadh-based food chain owner said in a bourse statement.

Herfy Food Services was established in 1981, and the first Herfy restaurant opened in Riyadh that same year.


Shares in SoftBank trading at their lowest level since May 2020

Shares in SoftBank trading at their lowest level since May 2020
Updated 27 min 16 sec ago

Shares in SoftBank trading at their lowest level since May 2020

Shares in SoftBank trading at their lowest level since May 2020

RIYADH: Japan's SoftBank, backed by the Saudi Public Investment Fund was among the most significant victims of the tech stock sell-off across Asia on Thursday, Bloomberg reported.

Investors turned on billionaire Masayoshi Son's company as the tightening phase of central bank policies unfolded.

The stock dropped as much as 9.8 percent in Tokyo, the most since March 2020, as Nasdaq futures tumbled and shares of the firm’s biggest investment, Alibaba Group, dropped in Hong Kong.

Hawkish signals from Federal Reserve Chair Jerome Powell led investors to bet against technology companies, which have powered much of the recent growth in global markets: something SoftBank has been gambling on with its Vision Funds of speculative tech bets.

“SoftBank is a poster child of a firm highly leveraged to the current asset bubbles,” wrote Amir Anvarzadeh, senior strategist at Asymmetric Advisors Pte, who recommends shorting the stock.

“This latest lurch down in its value could add further pressure on its financing structure.”

Shares in SoftBank traded at their lowest level since May 2020, with reports that a planned sale of its Arm chip unit to Nvidia was likely to fall through also weighing on the stock.

Analysts pointed out that the failure of the deal may lead to a credit downgrade.


Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks

Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks
Updated 34 min 36 sec ago

Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks

Gulf countries to mitigate US Hawkish monetary policies, with strong liquidity and profitable banks

US Federal Reserve officials signaled on Wednesday an interest rates raise starting March, with the decision driven by high inflation, a tightening labor market and the fast rebound of the economy as pandemic restrictions are eased.

Although international investors are nervously watching the Fed’s next move, Gulf financial researchers remain positive on the region’s prospects.

Soaring oil prices are shielding Gulf economies from the US’s tightening of monetary policies, as they provide them with high liquidities. 

A strong banking sector and commodities market are to also profit positively from the Fed’s next moves, according to Jaap Meijer, head of research at Arqaam Capital.

“While we are cautious about the US equity market, as high valuations for technology shares unwind, we remain constructive on GCC (Gulf Cooperation Council) equity markets,” he said, adding: “We expect GCC monetary policymakers to reflect US Fed rate hikes entirely (such as in Saudi or the UAE which currencies are pegged to the dollar) or at least partially (in other GCC countries).”

“However, GCC banks, which comprise 40 percent of the region’s indexes, will enormously benefit from higher net interest margins, particularly Saudi banks.” he underlines, as banks' profitability tends to increase with high interest rates, boosting their net margins.

Meijer warns nonetheless that he is cautious about Egypt’s equity markets. 

“Egypt runs at a low single-digit current account deficit and has a high USD dependency, despite strong foreign exchange reserves. We expect fiscal and monetary policy to be managed very tightly and could see a rate hike by the end of the year, which will likely weigh on equity valuations, as T-bills remain an attractive alternative for local investors,” adds Meijer.

Regarding regional commodities, higher commodity prices, particularly Aluminum and Urea, will remain supportive for the Gulf commodity sector, explains Meijer. Urea has important uses as a fertilizer and feed supplement. It is also a starting material for the manufacture of plastics and drugs as well as batteries.

This would result in higher index weights that should continue to support Qatar and Saudi Arabia valuations. 

“We see M&A arbitrage and further economic reforms being a tailwind,” he added.

While international bond markets will be negatively affected by the interest hike, the GCC will be able to mitigate the impact. 

Bonds markets are fixed income instruments used by corporations and governments as a borrowing tool. 

“Liquidity will most likely become less abundant as the asset purchases will end in early March, while the balance sheet run-off will begin after rates have started to rise. Nonetheless credit spreads in the GCC should remain tight on strong liquidity, with almost all governments running large fiscal surpluses as oil prices remain high,” emphasizes Meijer.

The region’s local sovereign wealth funds will continue internationalizing and diversifying their holdings. 

“They can afford a risk-on approach, reaping benefits from potential market locations as the US. Fed tightens its monetary policy,” he concludes.


Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn

Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn
Updated 27 January 2022

Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn

Profits of SABIC Agri-Nutrients jump over 300% to $1.2bn

RIYADH: Saudi Arabian petrochemical firm SABIC Agri-Nutrients Co. has seen a nearly fourfold jump in its profits in 2021, buoyed by an increase in selling prices.

Amid global economic recovery in 2021, net profit soared to SR5.23 billion ($1.2 billion), compared to SR1.29 billion a year earlier, according to a bourse filing.

Revenues almost tripled, reaching SR9.59 billion, and the profit per share was up from SR3 to SR11.

The company, half-owned by SABIC, attributed the profit hike to higher selling prices of products.

However, profits were capped by an increase in inventory as well as general and administrative expenses, the firm said in a statement to the Saudi exchange, Tadawul.

The homegrown fertilizer producer earlier said it plans to take over 49 percent of Dubai-based ETG Inputs Holdco’s share capital amid a SR1.2 billion deal.