HOUSTON/CARACAS, March 23 (Reuters) – Expanded oil export contract reviews at Venezuela’s state-run PDVSA have nearly halted all commercial crude and fuel releases, as officials seek to match past invoices with payments, according to documents and people familiar with the matter.
An anti-corruption probe has led to the recent arrests of about 20 PDVSA employees, judges and politicians, and prompted the resignation of powerful oil minister Tareck El Aissami. An oil export suspension that first began in January under El Aissami has worsened, internal documents showed.
PDVSA, which accounts for most of the OPEC nation’s export revenue, delivered documents to prosecutors that revealed $21.2 billion in commercial accounts receivable in the last three years, of which $3.6 billion are potentially unrecoverable.
Across Venezuela’s export terminals, only four PDVSA customers were active this week: Iran’s Naftiran Intertrade Company (NICO), U.S.-based Chevron (CVX.N), Cuba’s state-owned Cubametales and Hangzhou Energy, according to PDVSA schedules.
NICO, Chevron and Cubametales are taking cargoes as compensation for pending debt or oil swaps, which reduces PDVSA’s risk of failed payments. Hangzhou Energy’s contract is the only one so far ratified after the audit, according to one of the sources, who spoke on condition of anonymity.
PDVSA, Venezuela’s oil ministry, Cuba’s foreign affairs ministry and a Chevron spokesperson did not immediately reply to requests for comment. Hangzhou Energy could not be reached for comment.
AUDIT EXTENDED
The anti-corruption investigation has focused on determining whether customers with contracts that required prepayments had delivered payments. More recently, officials have expanded the scope of the audit to include price discrepancies, and the performance of PDVSA subsidiaries and joint ventures, company sources said.
A bottleneck of tankers waiting for PDVSA to allocate export cargoes has worsened, according to PDVSA’s schedules and vessel monitoring service TankerTrackers.com.
TankerTrackers.com estimated on Thursday there were 23 supertankers, 16 of them near the Jose Terminal, the country’s main export terminal, waiting to load Venezuelan crude and fuel for export. That was up from 21 at the end of January.
Contributing to the shipping delays: Privately-owned shipping agencies working for PDVSA and its customers were placed on hold to revise their registration documents, the people said. Only two agencies continued to service companies.
The delays are worrying some customers whose cargoes of crude, fuel and byproducts have not been shipped on time, according to other people familiar with the matter.
On Tuesday, PDVSA head Pedro Tellechea, who also was appointed as oil minister after El Aissami’s resignation, named two new top executives at the company: Hector Obregon as executive vice president, and Luis Molina as vice president of exploration and production.
Reporting by Marianna Parraga in Houston, Deisy Buitrago in caracas; Additional reporting by Sudarshan Varadhan in Singapore; Editing by Paul Simao
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WASHINGTON, March 23 (Reuters) – The number of Americans filing new claims for unemployment benefits edged down last week, showing no signs yet that the recent financial market turbulence following the failure of two regional banks was having an impact on the economy.
The unexpected dip in claims reported by the Labor Department on Thursday suggested March could be another month of solid job growth. The weekly unemployment claims report is the most timely data on the economy’s health.
Persistently tight labor market conditions have left some economists expecting the Federal Reserve would raise interest rates two more times this year, despite the U.S. central bank signaling on Wednesday that it was on the verge of pausing its monetary policy tightening campaign.
“A week after the banking panic began, the labor market is steady as a rock with no new layoffs nationwide,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Credit conditions may tighten as banks grow more cautious, but it could be weeks or months before that translates into a material slowdown in real economic activity.”
Initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 191,000 for the week ended March 18.
Economists polled by Reuters had forecast 197,000 claims for the latest week. Claims have bounced around in a tight range this year, remaining very low by historical standards, despite a rush of layoffs by major technology companies.
Economists will be watching to see if this trend persists when the government updates the seasonal adjustment factors, the model it uses to strip out seasonal fluctuations from the data, at the beginning of April.
Unadjusted claims dropped 4,659 to 213,425 last week. A jump in filings in Indiana and an increase in Massachusetts were offset by decreases in California, Illinois and New York.
With 1.9 job openings for every unemployed person in January, employers are generally reluctant to let go of workers.
Stocks on Wall Street were trading higher. The dollar fell versus a basket of currencies. U.S. Treasury yields were mixed.
TIGHTENING CREDIT CONDITIONS
Labor market conditions could loosen, especially in the wake of the collapse of Silicon Valley Bank in California and Signature Bank in New York. Financial conditions have tightened, which could cause banks to become more strict in extending credit, potentially impacting households and small businesses, who have been the main drivers of job growth.
That was acknowledged by the Federal Reserve, which on Wednesday raised its benchmark overnight lending rate by a quarter of a percentage point. The U.S. central bank has hiked its policy rate by 475 basis points since last March from near-zero to the current 4.75%-5.00% range.
Fed Chair Jerome Powell told reporters that “the events of the last two weeks are likely to result in some tightening of credit conditions for households and businesses, and thereby weigh on demand on the labor market and inflation.”
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of March’s employment report.
Claims were little changed between the February and March survey weeks, potentially hinting at another month of strong payrolls gains. The economy created 311,000 jobs in February after adding 504,000 in January.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will shed more light on the health of the labor market in March.
The so-called continuing claims increased 14,000 to 1.694 million during the week ending March 11, the claims report showed. Continuing claims have averaged 1.674 million this year, below their pre-pandemic average, indicating some laid off workers could be readily finding new work.
“Tight labor market conditions are a key reason we expect the Fed to raise rates by 25 basis points at both the May and June meetings,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. “But the Fed will proceed more cautiously given the recent stress in the banking system and its uncertain impact on the economy.”
The housing market, which has borne the brunt of the Fed’s aggressive rate hikes, is showing signs of stabilizing at very low levels. New single-family home sales rose 1.1% to a seasonally adjusted annual rate of 640,000 units in February, the highest level since August, the Commerce Department said in a separate report.
New home sales are, however, very volatile on a month-on-month basis. They have now increased for three straight months.
Economists had forecast new home sales, which account for a small share of U.S. home sales, falling to a rate of 650,000 units. The surprise gain was despite mortgage rates rising from early February through early March after mostly falling since November, according to data from mortgage finance agency Freddie Mac. Monthly sales rose in the South and West. They fell in the Midwest and plunged 40.0% in the Northeast.
Sales were down 19.0% on a year-on-year basis in February. The median new house price in February was $438,200, a 2.5% rise from a year ago.
Data this week showed sales of previously owned homes rebounding for the first time in a year in February. Homebuilder sentiment improved for a third straight month in March, while single-family housing starts and building permits rose in February. Nevertheless, the housing market is not out of the woods yet. Tighter lending standards could make it harder for prospective homebuyers to borrow.
“At a minimum the decline in housing activity has slowed significantly and the inventory situation looks manageable,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
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WASHINGTON, March 21 (Reuters) – A group of seven U.S. senators on Tuesday proposed legislation to raise the mandatory commercial pilot retirement age to 67 from 65, in a bid to address airline industry staffing issues.
The legislation first proposed last year by Senator Lindsey Graham and other Republicans now includes Democrats Joe Manchin and Mark Kelly, a former Navy pilot and astronaut.
The proposal, which would require pilots over age 65 to pass a rigorous medical screening every six months, follows complaints of pilot shortages by many regional airlines.
It comes as Congress is considering various aviation reforms ahead of the Federal Aviation Administration’s (FAA) Sept. 30 expiration of operating authority.
Graham said roughly 5,000 pilots will be forced to retire within the next two years. He noted hundreds of flights are being canceled due to a shortage of available pilots and crews.
The Regional Airline Association (RAA) praised the proposal, saying 324 airports have lost, on average, a third of their air service, including 14 small airports that have lost all service, and more than 400 airplanes are parked because of a lack of pilots.
RAA President Faye Malarkey Black in an email said raising the retirement age is “the one solution that will immediately mitigate the pilot shortage, particularly the captain shortage, which is an even more acute constraint within a constraint.”
She added that it also would reduce “wrongheaded age discrimination against healthy pilots.”
The Air Line Pilots Association (ALPA) opposes proposals to increase the retirement age. Even if the proposal is approved, the union said pilots older than 65 would still not be able to fly in most countries outside the United States because of international rules.
Graham previously noted that in 2007 the United States raised the mandatory retirement age from 60 to 65, and “the sky did not fall.”
Transportation Secretary Pete Buttigieg has previously said he does not support raising the pilot retirement age.
Some have urged the lowering of the number of hours experience needed to be a co-pilot.
The FAA denied a request last year by regional carrier Republic Airways for allowing only 750 hours of flight experience instead of 1,500 hours.
Reporting by David Shepardson
Editing by Bill Berkrot
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STOCKHOLM, March 15 (Reuters) – For years, Sweden has been warned that its dysfunctional housing market, plagued by under-supply and kept aloft by low rates and generous tax benefits, was a risk to the wider economy.
Now those risks are becoming reality. Households with big mortgages are reining in spending as interest rates rise, and house-builders are pulling the plug on investment, tipping Sweden into recession.
The country is set to be the only EU economy experiencing outright recession this year. The crown is trading at around its weakest level against the euro since the global financial crisis, partly due to housing market worries, making the central bank’s job of curbing inflation more difficult.
“It’s not that no one saw this coming,” Riksbank Governor Erik Thedeen said at the end of February. “The Riksbank has warned about this … for a long time. And now it is clear that it is a problem.”
After years of ultra-low borrowing costs, the pandemic and the Ukraine war have served up a toxic cocktail of high inflation and rapidly rising interest rates to many countries.
But in Sweden, the structural problems rooted in its housing market are magnifying the effects.
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House prices in Sweden have almost quadrupled in the last 20 years, easily outstripping wage growth, boosted by generous mortgage tax relief, almost non-existent real estate taxes and a rental market with limited supply because of tight regulations.
Debt levels are among the highest in the European Union at around 200% of disposable incomes, much of which is mortgage debt. And around 60% of Swedes have floating-rate mortgages, meaning rate increases have an immediate impact on the majority of households.
Banking group Nordea (NDAFI.HE) expects household consumption to fall around 2% in 2023, while the National Board of Housing expects housing starts to fall around 50% in the coming year compared with 2021.
Many home-owners are already struggling with higher mortgage repayments alongside surging food and energy prices – even though the full effects of interest rate rises over the last year have yet to be felt.
Philippa Logan, a single mother of two, bought her 89 square meter (958 square feet) apartment in Ostberga in the south of Stockholm in 2017 and paid off some of the mortgage after getting divorced in 2020.
“However, in the last few months, the interest rate has almost tripled making it almost unaffordable to survive,” Logan said.
“The stress has been indescribable,” she said, adding she had been forced to take on extra work to make ends meet.
The central bank expects further rate increases in the coming months. Markets expect borrowing costs to peak at 4%, up from 3% currently.
“Our forecast is for the Riksbank to raise rates to 3.75 as a peak,” Gustav Helgesson, economist at Nordea said. “I think at that level we are very near some kind of pain threshold for households.”
HOME TRUTHS
The European Commission expects Sweden’s gross domestic product to contract by around 1% this year – the only country in the 27-member bloc likely to see negative annual growth.
Nordea expects GDP to contract by around 2%.
House prices are down around 15% since their peak in spring last year, a bigger drop than during the global financial crisis. Some regions have experienced a fall of as much as 40%, the real estate division of insurer Lansforsakringar said.
While Sweden is not alone in seeing big house price falls, its households are almost uniquely sensitive to interest rate hikes because more than half have floating rate mortgages.
In Germany, for example, most borrowers have fixed mortgages and rising rates have largely been shrugged off.
“No, we don’t have any fear with the mortgages,” said Hannah, a teacher in the city of Bochum, in the west of the country, whose joint mortgage with her partner is fixed at 0.9%.
“We have 15 years to pay back and it was all planned in a way that we could pay back even if interest rates rose,” she said.
In Canada, while debt levels are high, variable rate mortgages only account for about one-third of total outstanding mortgage debt, according to the Bank of Canada.
While some economists predict a mild recession in Canada, the OECD think tank expects the Canadian economy will grow around 1.3% in 2023.
A FIXER-UPPER?
Sweden’s housing problems date back decades, but have proven hard to fix.
Plans to ease rent controls have been fiercely opposed by the political left which believes introducing market forces would increase social division by pricing many people out of desirable areas of Sweden’s cities.
All the main political parties agree an overhaul of mortgage tax relief is needed, but none are prepared to give their rivals a stick to beat them with when elections come around.
Reintroducing a property tax, abolished in 2008, is seen as another sure-fire vote-loser.
Financial regulators have introduced tougher lending practices and tightened mortgage repayment rules. Sweden’s banks are among the most strongly capitalised in Europe – partly as a result of worries about the housing market.
These should prevent falling real estate prices from triggering a financial meltdown as happened in Sweden in the early 1990s.
But Sweden’s economy is likely to remain a hostage to imbalances in the housing market while its structural problems go unresolved.
“It’s up to the politicians to decide whether they want to deal with these problems and, more than anything, when,” Nordea’s Helgesson said. “In the current situation, it is very hard to tackle them.”
($1 = 10.6895 Swedish crowns)
Reporting by Simon Johnson, additional reporting by Maiya Keidan and Fergal Smith in Toronto, Anna Koper in Warsaw and Maria Martinez in Berlin. Editing by Jane Merriman
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March 8 (Reuters) – Citigroup Inc’s (C.N) chief financial officer Mark Mason said that the lender would adjust its investment banking headcount as necessary, Bloomberg News reported on Wednesday.
Citigroup, which has been boosting its investment banking division by hiring for sectors including energy and biotechnology over the years, is considering changing the pace of some of its investments following the recent drought in dealmaking, the report added, citing Mason’s interview with Bloomberg Television.
Citigroup, when asked about the bank’s headcount plans, did not give details beyond Mason’s comments in the Bloomberg interview.
The recent announcement follows the bank’s plan to lay off less than 1% of staff, according to a Reuters report from last week, citing people familiar with the matter.
The focus on the strength of investment banking teams follows a similar attitude across other major investment banks including Goldman Sachs (GS.N) and Morgan Stanley (MS.N), which have also cut jobs following a slowdown in dealmaking from the ensuing market rout and recessionary fears.
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Reporting by Anirban Chakroborti in Bengaluru; additional reporting by Juby Babu; Editing by Rashmi Aich and Eileen Soreng
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DUBLIN, March 8 (Reuters) – Ireland’s two dominant banks, AIB Group (AIBG.I) and Bank of Ireland (BIRG.I), expect commercial real estate values to fall this year but said this week conservative underwriting in their lending to the sector will make any revaluation manageable.
A shift to home working has put pressure on the Irish office market, which experienced a boom in recent years thanks largely to high levels of investment from multinational tech firms, some of whom are now cutting back on their hiring sprees, including letting people go.
Ireland’s largest life insurer Irish Life, a unit of Canada’s Great-West Lifeco Inc (GWO.TO), introduced a six-month notice period for withdrawal requests from a 500-million-euro ($526.95-million) property fund on Monday, citing an increase in the level of customer withdrawals.
The commercial property market is facing a challenging period due to the reduction of office demand and consequences of higher interest rates, Colin Hunt, chief executive of AIB, the country’s largest mortgage lender, said on Thursday.
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“From our perspective, we consider what are the qualities of the underwriting and the quality of that underwriting is really, really robust with loan to value (LTV) ratios in the order of 60% at initiation of the facilities,” Hunt told RTE after the bank reported a jump in profits and shareholder returns.
“So certainly I think that a valuation challenge may well be ahead for the sector, but I don’t expect material impairments on foot of it.”
Bank of Ireland, the country’s largest lender by assets, based its updated financial targets published on Tuesday on commercial real estate (CRE) price falls of 6% in 2023 and 2.5% in 2024.
AIB Finance Chief Donal Galvin told Reuters on Wednesday that it estimates prices could fall by up to 10% this year.
Bank of Ireland Chief Executive Myles O’Grady described CRE as “an area of some concern” for the system, but that the average LTV for its office book stood at 55%.
The exits of KBC (KBC.BR) and NatWest Group (NWG.L) from the Irish market has left AIB and Bank of Ireland as the main banks lending to the sector.
However unlike over a decade ago when a huge crash in CRE prices contributed to a banking collapse, funds investing in property are now a key participant in Ireland, holding around 35% of the investible market, according to the country’s central bank.
The regulator last year introduced a new leverage limit for property funds to address risks arising from that rapid expansion.
($1 = 0.9489 euros)
Reporting by Padraic Halpin; Editing by Shounak Dasgupta
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HONG KONG, March 7 (Reuters) – Hong Kong, one of the world’s top luxury shopping destinations, is losing its lustre as high-end retail properties go vacant and famous foreign brands reduce exposure to the city in favour of opening new outlets in mainland China.
Glitzy Hong Kong shopping streets once packed with luxury stores that attracted 56 million visitors in pre-pandemic 2019 now have about half of their shop units sitting vacant, according to property management companies.
Rents in Tsim Sha Tsui are down 41% from pre-pandemic levels, according to property firm Cushman & Wakefield (CWK.N), and last year the retail district was displaced as the world’s most expensive shopping real estate by New York’s Fifth Avenue.
Canton Road, the most famous shopping street in Tsim Sha Tsui, has a vacancy rate of about 53%, according to global property company Savills (SVS.L).
“Most luxury retailers don’t think Hong Kong will return to the dizzy levels of 2014 when the market here peaked,” said Simon Smith, Savills’ senior director of research and consultancy in Hong Kong.
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“If you walk around the major shopping areas you won’t see the queues outside luxury boutiques or if you do they are very short,” Smith said.
In place of stores shut by Tiffany, Valentino, Burberry (BRBY.L) and other big brands over the last three years, including in Tsim Sha Tsui, Central and Causeway Bay shopping districts, pharmacies and sports apparel outlets for brands like Adidas (ADSGn.DE) and Sweaty Betty have moved in.
Luxury and big brand retail companies mentioned in the story did not respond to requests for comment.
The store closures came after pro-democracy protests and the crackdown that followed pushed sales into a slump which worsened under nearly three years of stringent COVID rules.
Over that period, Hong Kong suffered around a 30% plunge in overall retail sales compared to 2018 levels, largely due to a tumble in mainland visitors because of travel restrictions. Tourists from greater China are the main driver of Hong Kong’s branded retail and luxury goods market.
Hong Kong retail data doesn’t break out luxury goods separately but the sector was hit hard as China accounted for almost 80% of inbound tourists in 2019. Jewellery, watches, clocks and valuable gifts sales in 2022 at HK$38.8 billion ($4.9 billion), for instance, were less than half their 2018 value.
And while inbound travellers in January tripled from December as COVID restrictions were lifted and travel resumed, arrivals were still only about 10% of 2019 levels.
Morgan Stanley (MS.N) forecast Hong Kong visitor numbers this year will reach just 70% of 2018 arrivals. It estimates retail sales will grow 15%, holding at around 80% of retail trade from the pre-COVID year.
MANY MORE ALTERNATIVES
Many luxury brands expanded in mainland China during the pandemic, opening stores in far-flung locations to reach consumers unable to travel. Tourist destinations such as resort island Hainan and Macau also have become popular alternatives as China sought to develop multiple duty and tax free destinations.
Visitors to Macau in January more than tripled from December, hitting 40% of the level of January 2019. Hainan, which reported visitor growth even during the pandemic, saw arrivals rise 11% between Jan. 8 and Feb. 15 compared to the same period a year earlier, according to the government.
“(Hong Kong) will never be back to the level it was, like a decade ago, when it was the only, I would say, duty free location where Chinese would go,” L’Oreal (OREP.PA) CEO Nicolas Hieronimus told Reuters.
“Now they have many more options.”
Duty free malls in Hainan, where tourists are the main customers, reported an 84% jump in sales in 2021, the latest data from consultancy Bain & Co showed, outpacing the mainland’s average growth rate of 36% in luxury sales for that year.
Hainan also accounted for 13% of China’s domestic luxury spend in 2021 versus 6% pre-pandemic, and tax regulations are set to ease further, allowing more duty-free stores to open.
That helped China’s domestic luxury sales double to 471 billion yuan ($68.8 billion) in 2021 from 2019, according to Bain. That outstripped total Hong Kong retail sales from a peak hit in 2013 at HK$494.5 billion ($63.0 billion), according to the city’s statistics department.
This imbalance in favour of increasing sales in China had big luxury brands opening stores across the country over the last few years, according to filings and company websites.
Hermes (HRMS.PA), with 27 stores in the mainland, opened a new, enlarged store in Nanjing in January, relocating to upscale mall Deji Plaza. It first opened a store in 2010 in the eastern city.
Gucci owner Kering (PRTP.PA) opened nine boutiques in Greater China in 2021; upscale men’s suit maker Brioni opened stores in Chengdu, Wuhan and Shenzhen; jeweller Boucheron opened two mainland stores.
Saint Laurent, another Kering brand, opened its first flagship stores in Shanghai and Beijing in 2019. The group’s jeweller Qeelin has also been expanding in the mainland and opened its largest flagship store in China in Shanghai in 2021.
Despite the increasing investment in the mainland, some are still hopeful about the long-term outlook for Hong Kong as global economies and holiday travel recover.
“Macau is another tax free destination and Hainan is duty free. Yet, you don’t find the breadth and depth of mono-brand stores in Hainan that you can find in Hong Kong,” Luca Solca, managing director for luxury goods at investment management firm Sanford C. Bernstein, told Reuters.
“Hong Kong remains very attractive for Chinese consumers.”
($1 = 6.8510 yuan)
($1 = 7.8498 Hong Kong dollars)
Reporting by Farah Master, Jessie Pang, Anne Marie Roantree, Angel Woo and Donny Kwok in Hong Kong, Sophie Yu in Beijing, and Mimosa Spencer in Paris; Writing by Miyoung Kim; Editing by Tom Hogue
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DUNTON, England, March 6 (Reuters) – Ford Motor Co’s (F.N) push to use reams of data generated by its vans and trucks – from engines to oil filters or brake pads – to attract more customers in the European and U.S. commercial vehicle market plays out on a 9-metre-long (30 ft) screen at its UK headquarters in Dunton east of London.
During a recent visit by Reuters, that screen showed real-time data from 114,000 vans in Britain so far covered by Ford’s FORDLiive monthly subscription service.
Ford employees were focused on the 98.3% of the vans that were in service – and of those, roughly 8% in need of repairs fairly soon or urgently – but concentrated even more so on the 1.7% vehicles out of action.
The U.S. automaker tracks 4,000 data points via modems it has installed in all commercial vehicles since 2019 – and can warn paying customers of engine problems and basics such as brake pad wear, low oil or diesel additives that are cheap to maintain proactively but expensive to fix if not addressed.
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The automaker has connected all of its UK dealers to its system, so it can arrange repairs and have parts ready for vans before they arrive at a dealership.
Ford, which leads the commercial vehicle market in both Europe and the United States, launched the system in 2021. Hans Schep, European head of Ford Pro, the company’s commercial vehicle business, said it is already close to hitting long-term targets of increasing vehicle “up time” by up to 60%.
Ford estimates that downtime, when a van is out of action, costs an average of 600 pounds ($724) daily per van.
“This has already been a major game-changer,” Schep said.
After a successful test run in Britain, Ford is also rolling out the FORDLiive service in mainland Europe and the United States. The automaker has focused more on its profitable Ford Pro business in Europe than lower-margin mass-market passenger cars.
Ford recently announced engineering job cuts in Europe, but is still hiring software experts for its data services.
Data is a huge battleground for commercial vehicle makers and competition will only intensify with electric models, which are essentially computers on wheels.
Using data to show where vans are, how they consume fuel, how drivers use or misuse them, whether they can skip an oil change, but above all avoiding downtime is becoming as important as the vehicles themselves.
There is also an ongoing fight pitting insurers, leasing companies and car repair shops against carmakers in the European Union over access to connected car data and the vast potential revenue it could generate.
“We plan to grow our leadership position,” said Ted Cannis, chief executive of Ford Pro. “We are going to have many, many more markets that we were not even previously in.”
EASING THE ELECTRIC JOURNEY
Electric vans provide far more data points for Ford and its rivals to work with – including tracking how much range they have left and providing easy, comprehensive charging solutions.
Ford’s Schep said providing that data is crucial for van fleets because according to the automaker’s research, 60% of its corporate customers “are really worried about the journey to electric.”
The UK operations of DHL Express, part of the Deutsche Post DHL Group (DPWGn.DE), has 270 electric Ford E Transit vans with firm orders for 120 more, and is signing up for FORDLiive.
Fleet director Richard Crook said aside from monitoring those vans’ batteries, he wants to tap Ford’s predictive maintenance capabilities.
“We need to get ahead of things and plan maintenance schedules because the vehicle is actually telling you ‘I have a problem,'” Crook said.
Ford rival General Motors Co (GM.N) has also rolled out telematics services including “in-vehicle coaching,” where a voice nicknamed “Karen in the vehicle” coaches drivers against excessive braking, speeding or other bad habits.
Michelle Calloway, director of OnStar Business Solutions at GM, said “Karen” cut fuel use by 30% in 30 days in one customer’s fleet.
“Those are impactful savings scaled across a large fleet,” Calloway said.
Starting with 2024 models, GM will provide a range of OnStar data services free for fleet vehicles. Ed Peper, who heads GM’s fleet sales, said once customers try those services, they are likely to pay for more.
Italian truck, van and bus maker Iveco Group NV (IVG.MI) has around 150,000 connected vehicles using telematics services and has seen a 30% increase in uptime, plus a “single-digit percent” drop in warranty costs so far, said chief technology officer Marco Liccardo.
Liccardo estimates subscription services will generate 40% to 50% of commercial vehicle makers’ profits by 2030 and help franchise dealers survive the shift to electric with fewer parts to service.
“Data will be the oxygen to do that,” Liccardo said.
($1 = 0.8289 pound)
Reporting by Nick Carey in Dunton, England
Additional reporting by Giulio Piovaccari in Milan
Editing by Matthew Lewis
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March 2 (Reuters) – Best Buy Co Inc (BBY.N) on Thursday joined peers with a cautious annual earnings forecast as uncertainty over the U.S. economic outlook tempers expectations for a recovery in demand for TVs, laptops and other electronic products.
U.S. retailers offered bigger discounts than usual during the holiday season to stoke demand as surging costs of rent and food over the last year hammered spending on non-essentials.
Best Buy’s comparable sales decreased 9.3% in the holiday quarter, slightly more than Wall Street expectations.
The company sees no relief this year, forecasting comparable sales to fall 3% to 6%. Analysts on average were expecting a 1.9% decline.
“As we enter fiscal 2024, macroeconomic headwinds will likely result in continued volatility, and we are preparing for another down year for the (consumer electronics) industry,” Chief Executive Officer Corie Barry said in an analyst call.
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Best Buy will also close or remodel some of its larger stores, and open more smaller-sized outlets that sell used and refurbished electronics to pull in more budget-oriented shoppers, she added.
The company expects fiscal 2024 adjusted earnings per share of $5.70 to $6.50, below analysts’ estimates of $6.71.
Walmart (WMT.N), Target Corp (TGT.N) and other retailers have also issued conservative forecasts as still high U.S. consumer prices have raised fears that the Federal Reserve could further lift borrowing costs to cool demand.
However, Best Buy’s forecast was even more conservative than its big-box retail rivals, as it has greater exposure to discretionary categories, M Science Senior Analyst John Tomlinson said.
“Best Buy’s forecast implies things are worse than they were pre-pandemic, while trends, relative to 2019, are generally still much higher for many other companies,” Tomlinson said.
On an adjusted basis, the company earned $2.61 per share in the fourth quarter ended Jan. 28, beating analysts’ estimates of $2.11, according to IBES data from Refinitiv.
Best Buy’s shares were last up about 1% in early trading.
Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva and Sriraj Kalluvila
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HONG KONG/SYDNEY, March 2 (Reuters) – Major property developer China Vanke Ltd said on Thursday it had raised HK$3.92 billion ($499 million) in a share placement in Hong Kong, in the first test of investor appetite for a mainland developer share sale in 2023.
State-backed Vanke said in a filing that it sold 300 million shares at HK$13.05 per share, versus their offer price range of HK$12.93 to HK$13.20 apiece, according to the term sheets of the deal launched on Wednesday and seen by Reuters.
The pricing was at a 6.12% discount to Vanke’s Wednesday close of HK$13.90.
Vanke shares fell 4.9% to $13.22 on Thursday, versus a 0.1% decline in the Hang Seng Mainland Properties Index (.HSMPI).
The Shenzhen-based developer said it intended to use 60% of the proceeds to repay outstanding overseas debt financing, and the rest to replenish working capital.
It would not use proceeds for new domestic residential developments, it said.
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Vanke has $971 million and $650 million dollar notes due in April and May, respectively, according to Refinitiv data.
A person with direct knowledge told Reuters nearly 100 institutional investors participated in the share placement, including from the U.S. and Europe. The person added sizable orders were from sovereign funds and long-only funds, without giving details.
Vanke declined to comment.
China’s property sector has since mid-2021 been grappling with a liquidity crisis, with many developers defaulting on, or delaying, debt payments as they struggle to sell apartments and raise funds.
Vanke, seen by the market as a good quality developer, is among those with the largest onshore credit lines in place.
It received approval to issue about 30 billion yuan ($4.35 billion) notes recently and is planning to sell up to 15 billion yuan new shares in Shenzhen, where it is dual-listed (000002.SZ).
JP Morgan said Vanke’s placement, while not a “total surprise”, came earlier than expected because it is in a blackout period prior to earnings announcement.
“We believe Vanke might have wanted to take advantage of the current window to place H-shares first, especially before a potential wave of placements in 2Q23,” the investment bank said, adding it expected more equity-raising in the sector.
JP Morgan noted Vanke’s placement price was one of the narrowest among recent sales, where the average discount was 12%-13%, and that it did not think the placement hinted Vanke was in distress as its financing activities have been smooth.
Vanke’s share sale represented 13.6% of its enlarged H shares and 2.51% of its enlarged total share capital, including both shares issued in Hong Kong and Shenzhen.
CLSA and Citi are the placing agents of the share sale.
($1 = 7.8490 Hong Kong dollars)
($1 = 6.8942 Chinese yuan)
Reporting by Scott Murdoch and Clare Jim; Editing by Muralikumar Anantharaman and Himani Sarkar
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