Brexit: More time for negotiations – vote option by Feb 27th

The UK Prime Minister Theresa May will be offering a second vote for the Parliament Members regarding the Brexit-deal. The idea of this is that next week the Parliament will have the voting on Thursday, the 14th of February and a second time by the 27th Feb, if needed.

The idea is to give more time for the UK Goverment to have negotiations with the EU about the Irish border issue. If the UK-EU negotiations will not have any new outcome, the MPs will have the second vote by the end of February.

The possibility of no-Brexit deal has increased  the unease and uncertainty in corporate side and raised concerns over the economic growth in the UK. This is also the situation in the US, while some of the US listed companies have filed notices to the markets of the possible uncertainty and future risks.

According to Financial Times, for example defence company Lockheed Martin, food company McCormick and travel company Expedia have expressed their increased risks concerns to investors over longer-term business operations related to no-deal Brexit.

Lockheed Martin, which filed the annual 10K document to the SEC, said that the company´s business is highly sensitive to changes in regulations, political environments and security risks that could affect the company ability to conduct business outside the US.

– We continue to evaluate the potential effect of the United Kingdom’s (UK) planned departure from the European Union (EU) on our business operations and financial results.  We anticipate that the most probable near-term effects are likely to reflect the pressure Brexit is placing on the UK government, which may influence the government’s ability to make decisions on large complex programs of the type we perform. Brexit may also have adverse tax effects on movement of products or sustainment activities between the UK and EU. Additionally, Brexit may impact the value of the pound sterling. If the pound sterling were to remain depressed against the U.S. dollar, this could negatively impact the ability of the UK government to afford our products, the company said.

– Currently, we do not anticipate that Brexit will have a material impact on our operations or our financial results, Lockheed Martin stated in the document, which was filed on the 8th February.

Business Finance

Euronext increasing its offer for Oslo Bors?

The European Euronext is considering increasing its offer for Oslo Bors. According to Bloomberg News, the updated offer could be published during this week and one option is still, that no increase is made.

The parties have declined to comment the matter, but the Nasdaq Stock Exchnage made an offer in January to buy the Oslo Bors for 152 kroner per share, while the earlier offer by Euronext was 145 kroner per share.

Oslo Bors is one of the last independent stock exchanges in Europe with the average daily trading of 5,4 billion kroner. The number of trades increase over 25 % last year and the energy sector was the biggest industry sector in Olso. Oil companies represent about 35 % of the combined market capitalisation.

 

 

Business Finance

Sustainable growth in the aviation in 2019

The aviation industry is expected to explore a substantial growth in renewable energies during this year. The industry is committed to achieve a carbon-neutral growth by 2020 and one major strategy goal is to the use of renewables.

Aviation will be swifting to use more biofuels which are from organic sources (like waste, algae and oil) and thus use less of fossil-fuels. Airplanes will be using Renewable Jet Fuel (RJF) or Sustainable Aviation Fuel (SAF). This change will also mean the overall efficiency in the operations, while the new fuels also perform well in the cold weather (up to -47 C).

These new biofuels have significantly lower carbon emissions over their lifecycle and according to some studies, the fuels can be up to 80 % less carbon-intensive over their lifecycle. It is also notable that the fuels minimize their impact on biodiversity and have lower impact on food crops or drinking water. A sustainable biofuel releases only the carbon absorbed by the feedstock plants.

According to IATA (International Aviation organization) the industry has agreed on these steps to mitigate the Climate Change:

– An average improvement in fuel efficiency of 1.5% per year from 2009 to 2020
– A cap on net aviation CO2 emissions from 2020 (carbon-neutral growth)
– A reduction in net aviation CO2 emissions of 50% by 2050, relative to 2005 levels

Air transport accounts for 2% of global man-made CO2 emissions. In 2017, civil aviation, as a whole, emitted around 859 million tonnes of CO2 according to IATA.

Some of the renewables producers like Neste Group (Neste) is also expecting a major increase in the aviation, while the company has announced its plans to produce more renewable jet fuels this year. In fact, they have said  that they “plan to produce sustainable jet fuels more than all other providers combined”.

The growth is remarkable while Neste estimates the renewables jet fuels to exceed 400K in production in 2022. In 2017 the company produced renewables all together 2567K and has published its new investments in its Singapore site, which will focus on renewables.

The company is expected to publish the year 2018 figures on the 6th 2019 and will have a Capital Markets Day in London on the 27th February 2019.

 

 

 

 

 

 

Business Finance

Wall Street slightly mixed – trade talks to continue

The financial markets were slightly mixed in Wall Street on Friday. The US-China trade talks made  progress and president Donald Trump made a statement that the deal might be done by March 1st. Also the macrodata from US jobs lifted the markets.

Dow Jones -index ended up  0,26 % to 25063  points, the S&P 500 -index ended up 0,09 % to 2706 points and the Nasdaq-tech index ended down by 0,25 % to 7263 points for the week.

According to Xinhua News Agency, China agreed to buy more US goods, including agriculture products, but also the talks included some agreements about IP rights. The talks will continue in China for the next round in mid-February and the US-China Presidents´summit might take place before the March time according to Bloomberg. The Chinese markets will be closed during next week due to the New Year´s holidays.

In the UK, the Brexit situation with extending time period got new supporters. The UK Chancellor of the Exchequer Philip Hammond said that he excepts the delay of the exit-day if needed.

– If we do get the deal and we need a little bit more time to put all the legislation and so on in place then I’m sure everybody on both sides will take a reasonable approach to that,” Hammond said in an interview with ITV News according to Bloomberg.

The stocks in London ended up and FTSE 100 -index gained 0,69% to 3851 points. Also the markets in Germany and in France were positive and the CAC 40-index  ended up 0,51 % to 3911 points and the DAX-index 0,13 % to 11 180 points.

Oil gained nearly 3 % and a barrel was traded at 55,37 dollars. Energy sector was one of the leaders for the Friday trading.

Euro was trading quite firmly against dollar at 1,1456, up 0,07 %, but the UK sterling was down 0,23 % to 1,30 dollars.

Business Finance

Tesla: Q4 operating income stable – positive cash flow beyond Q1 2019

According to the Tesla (TSLA) CEO Elon Musk last year was the most pivotal year in Tesla’s history. Mr Musk commented the year in the shareholder letter conserning 2018 and Q4 figures.

– During our Model 3 production ramp, we went through significant challenges with the battery module line at Gigafactory 1 in Nevada, and later with our general
assembly line in Fremont. Thanks to the hard work and ingenuity of our
manufacturing teams, by mid-2018 we successfully overcame these
challenges and stabilized Model 3 production at high volumes, he said on Wednesday.

Tesla´s  Q4 figures:

– Q4 operating income stable compared to Q3 at $414M, operating margin of 5.7%
– Operating cash flow less capex improved from Q3 to $910M in Q4
– Cash and cash equivalents of $3.7B at Q4-end, increased by $718M in Q4
– Q4 GAAP net income of $139M impacted by $54M non-cash charge
– Model 3 GAAP and non-GAAP gross margin remained stable at >20% in Q4

Elon made his estimates of the Model 3 production this year and commented the production shift.

– Model 3’s production rate progressively improved through Q4, with December 2018 being our highest volume month ever. In our Fremont facility, we are now past the steep portion of the production S-curve, and we expect our production rate to continue to
gradually improve. Every part of the Model 3 production process has demonstrated over a 24-hour period the ability to produce at an extrapolated rate of 7,000 vehicles per week. By the end of this year, we expect to be able to produce Model 3 at this rate on a
sustained basis, he stated.

– In Q4, we delivered 27,607 Model S and Model X vehicles to customers. For the full year, we delivered 99,475 Model S and Model X vehicles, which was in line with our guidance. We recently stopped taking orders for the 75 kWh versions of Model S and Model X and
will focus on the longer-range versions of these flagship products instead, with the recent introduction of a 310 mile range base Model S and 270 mile range base Model X, he reminded.

– In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019, representing a growth of approximately 45% to 65% compared to 2018. In this range, we are expecting to have positive GAAP net income and to generate positive free cash flow
(operating cash flow less capex) in every quarter beyond Q1 2019. We believe these results will be substantially driven by our restructuring action and the ongoing financial discipline with which we are managing the business, Elon said.

– Our 2019 capex, the vast majority of which will be to grow our capacity and develop new vehicles, is expected to be about $2.5 billion. We believe this amount should be sufficient to continue to develop our main projects, such as Gigafactory Shanghai, Model Y and Tesla Semi, as well as for the further expansion of our Supercharger, service and retail networks. We expect to arrange financing through local banks in China to fund most of the capex for Gigafactory Shanghai, he said.

Tesla published its figures after the Wall Street trading, but the company shares closed higher to 302 dollars, up 3,80 %.

 

Business Tech

Brexit: No more time – new backstop?

After UK Brexit votes  this week, the situation with the UK- EU is still the same. No new news  – this means that solution is not ready yet. The UK Parliament agreed that the deal could be done if the Irish border issue, the backstop, would have a new approach. What that would be, is still unclear and the EU has said  on Wednesday that there would be no new agreements.

The UK Parliament voted that no new timeline was given, which means that the March 29th exit-day is still valid. Prime Minister Theresa May was granted a mandate to negotiate with the EU collaques about the Irish border issue. According to news agencies, she is not travelling to Brussels this week any more.

The UK Parliament is having the Brexit-vote on Valentine´s Day, the February 14th and according to Bloomberg, some EU diplomats are expecting to have the EU summit about the Brexit on the March 21-22.

The financial markets have seen increasing prices in spite of the turbulence in this Brexit-matter. For example in London the FTSE 100 -index ended up 1,58 % to 6941 points, but also the Wall Street increased to new level due to the news that the Federal Reserve will be “patient” with the future interest-rates moves. The Feds Funds Rate is now at 2,25 – 2,50 percent and the Fed is still having the 2 percent inflation target.

Dow Jones was up 1,61 % to 24976 points, the S&P 500-index was up 1,51 % to 2679 points and technology-index Nasdaq was up 2,01 % to 7169 points.

The US-China tradetalks are having a new chapter when the Chinese economic advisor, Vice Premier Liu He is meeting with the US Treasury Secretary Steven Mnuchin today and tomorrow.

In Asia, the stockmarkets were mixed while the HangSeng increased by 0,40 % to 27642 points and the Nikkei-index in Tokio decreased by 0,52 % to 20 556 points.

 

 

 

Business Finance