Volvo taken over by Geely

The die is cast, Volvo Cars is now in the hands of the Chinese company Geely. Earlier, Flemish prime minister Peeters had an appointment with the Swedish company’s CEO Stephen Odell to discuss the approaching contract of sale. Minister Peeters had to make sure the Flemish plants would sustain the overtake.

Previously, Volvo was in possession of the American company Ford. Due to the economic crisis Ford felt the pressure to sell a couple of luxury car makes such as Jaguar and Aston Martin in 2007.

The acquisition of Volvo has never occurred in China, it is the most elaborate overtake ever for a Chinese car constructor. China has one of the most extensive markets all over the world, their voluminous population provides a stable turnover. This gives them the opportunity to address to foreign, western markets as well.

The Belgian plants in Ghent and in Göteborg were pleased to perceive the news. Although Geely is planning on establishing a new plant in China, the ones in Belgium and Sweden will be preserved. Guarantees concerning continuity, productivity and the certainty of employment.

In my prospective this is a good evolvement for Volvo in its entirety but more specific for Ghent and Göteborg as well. If another company took over Volvo, both of the plants in Ghent and Göteborg could be closed. There are already many problems in Belgium concerning unemployment and in plants such as these, a big working environment could be brought to a close.

The Chinese company Geely could breathe life into western markets when it comes to technology. We all know the majority of new technologies are set in motion in Japan and China.

http://www.standaard.be/artikel/detail.aspx?artikelid=DMF20100328_063&subsection=215

A message for my fellow students, I know my blog describes the same object as annelies' but I will change it when I have the time to.

Volvo is turning into Chinese property

Because of its quality and its safe car image, a lot of Belgian families make use of a Volvo as their family car. In a little while, Volvo will be undergoing a change of ownership. The question in this occasion is whether the brand will stay unaffected.

After almost a year of discussion the present-day owner, the American car manufacturer Ford Motor, and the future proprietor, Geely Holding Group, will round off the sale contract at the end of this week. The long term of consultation with the Chinese concern is due to the complex situation of Volvo. The activities of the former owner Ford and Volvo are namely strong intertwined with each other. For instance, both companies make use of the same parts for the production of their vehicles. The split up of these industrial processes isn’t that easy. Another important item within the sale contract is the independence of Volvo. The Geely Group guarantees that they will respect the image of Volvo and their obtained market position.

Furthermore was announced that Geely counted down 1.8 billion dollar for the former Swedish car constructor. Half of this enormous amount would be financed by European banks. More specifically, the European Investment bank have put between 500 and 800 million US Dollars at their proposal. Given the fact that the Volvo-factories are located in Belgium and Sweden, these countries are responsible for the state warranty of these debts. Next to that, also Swedish banks would pay up about 500 million dollar. The rest of the amount will be assisted by the Chinese banks. It’s striking that Ford Motors sells its luxury brand for only one third of the price they paid ten years ago.

The sale of Volvo to a Chinese concern has really been the ABC of quite some thinking minds. This reaction is completely comprehensible as Volvo is the first luxury brand that becomes property of an Asian company. So far, only cheaper and less luxurious cars were produced in the Far East such as Toyota, Nissan, Honda, Hyundai and Mitsubishi. I think that – with the arrival of Volvo – a change is at hand. I’m sure that the Chinese and Japanese will use the acquired know how of Volvo to bring on an evolution in their own car-industry and a better adaption to our markets. This was also the reason for the long lasting talks about the Volvo takeover. Probably Ford Motor realized that splitting the intellectual rights would involve a lot of trouble. On the other hand the takeover of Volvo opens a lot of perspectives for the car company. China and its adjacent States have a lot of potential for the former American car brand, this will probably have been the decisive element in taking over Volvo.

Sources: De Tijd: 'Ford verkoopt zondag Volvo aan Geely'

Duvel continues to grow

The beer market goes to a difficult period, but in spite of that, Beer-maker Duvel Moortgat had made an excellent growth in 2009. The year results were approximately similar like the expectations. The company wants to increase further in 2010. Nowadays the share price rises of 1 up to 1.12 euro by share.

Duvel Moortgat’s figures were very good, certainly when you compare with the Belgium and the West-European beer market, they have to struggle to difficult times. Look at the largest brewer over the whole world ‘AB InBev’, they had some serious problems with restructuring in Belgium.
Duvel Moortgat’s success is due to different reasons. First of all they succeed to gain ground in foreign countries. In 2009, 45 per cent of the turnover was already obtained outside Belgium. The foreign turnover was for the first time more then 50 millions euro. Today, the group’s beers are exported to over 40 countries.

Secondly Duvel Moortgat had organized its cost very well, especially in terms of marketing. Because of the crises, Duvel Moortgat has decided to use only poster campaigns and no television campaigns. With the money, that they had saved because of this strategy, could they invest in different sections of the company.

A third reason why Duvel Moortgat has done such a good job is, in my opinion, the growing popularity of Duvel trough the youth. Duvel is the strongest brand within Duvel Moortgat and more and more youngsters like the beer. The youth nowadays like to drink such a special beer because of the good taste, but also because of the high percentage of alcohol. Nowadays, there are more and more ‘Duvel parties’ born.

The next few years Duvel Moortgat’s growth will increase further, I think. The company has a unique concept and the beer (especially the Belgium’s beer) becomes a more and more popular drink in foreign countries. The company also expect a price cut of the malt. Because of this reduction, the company will be able to increase their profit.

http://www.tijd.be/nieuws/ondernemingen_consumptie/Duvel_blijft_groeien.8894197-430.art

Pinguin Lutosa has to continue with saving on its costs

In the year 2009 Pinguin Lutosa, a company known for its frozen vegetables, has well fought against the crisis. Unfortunately the year 2010 didn’t start as well as 2009. The reason is a general price-cut. The company wants to compensate this by spending less money on the purchases of vegetables.

Consequently cost savings will be accentuated again in 2010. The price-cut which is already transited, will also partially relate on contract farmers. Most of the contracts for the harvest of 2010 for potatoes, peas and for other vegetables have already been compromised. The farmers realized that the price-cut was inevitable. I’m wondering which product will be the next victim of all these price-cuts. In the past pigs, the milk and potatoes have already been faced with enormously price-cuts. Farmers are always the biggest victims of all this.

Pinguin Lutosa is successful in potatoes and in frozen vegetables. Especially the division of potatoes, good for 48 percent of the sales, is running at full capacity since the spring of 2009. The company is expecting a bigger increase of the demands. Last year this company produced 700 000 ton potatoes. This is at least 70 kilos potatoes per Belgian.

The frozen vegetables, especially the peas, are good for 52 percent of the sales. The sold volumes have increased but lower prices and the weaker British Pound above all, have caused a sales decline of 3.1 percent. The company wants to realize more harmonizing between the stock and the production. In that way the work capital can be kept down.

I think Pinguin Lutosa has not to react by panicking on this. Because this company is certainly not the only one who has to cut its prices. All the companies active in this sector will be confronted with those price-cuts. So Pinguin Lutosa has not to be afraid of its competitive position. Besides this company can compensate this price-cut with the price of onions, which is increasing at a rapid rate.

I regret the enormously weak position of the British Pound. Without taking the currency effect in account, the company would realize a growth of at least 4.9 percent instead of a descent of 1.85 percent, which is now realized. I hope a rising of the British Pound as soon as possible will make an end to this regrettable situation.

‘PinguinLutosa snoeit verder’ (de tijd)
‘Zwakke pond speelt PinguinLutosa parten’ (de tijd)

CEO Deutsche Bank: wage multiplied by six

Despite the ongoing criticism concerning the barely credible incomes in the banking sector, Deutsche Bank decided to multiply the wage of its CEO by six. This brings it to 9.55 million Euros on an annual basis. Because of this measure he has become the best paid Chief Executive Officer in Germany.

First of all, Deutsche Bank is clearly not having any problems with the media storm regarding the immoral remuneration in the financial sector. Because of renewed profitability in 2009, the company is renewing its mistakes of the past. Josef Ackermann, CEO of Deutsche Bank, is not the only one within the company who benefits from the profitability I mentioned earlier. Altogether the board of directors, which consists of eight members, received a sum of 38.98 million Euros. In comparison to 2008, this year the total earnings were multiplied by eight.

On the other hand, I must say that 70 percent of the actual wage is linked to the results of the bank and will therefore be rewarded later on. There are even worse cases of immoral earnings, namely Anshu Jain, head of the business bank. In a period of 9 months he earned a total of 7.8 million Euros. On a yearly basis we can conclude that this person, who joined the same Deutsche Bank management team in April 2009, earned even more than Josef Ackermann, who is retiring in May. He has no problem with that remuneration whatsoever. I cite: “Who wants to be part of the best, needs to hire the very best. That’s why you need to pay what the market demands.”

I think it’s quite far-fetched to read this kind of stories. It’s funny how people live the moment and easily forget the bigger story. There is so much poverty and misery in the world, yet still some people on this planet find it necessary to receive such amounts of money. It’s hard to understand that people who haven’t even founded the company, taken the risks or invested in it, dig up these kind of wages.

On the other hand, I really consider it as courageous of Josef Ackermann to impose such measures. In my opinion it's a very nice gesture of a man in his position. But don't lose your eye on the ball there, it's also a nice deceiving method to justify his extremely outrageous pay check.

VRT has to save extra money

The Flemish public broadcaster has to save 65 million euro before the year 2011. That’s why as many as 300 people, employed by the Flemish public broadcaster, could lose their jobs. The management of the VRT is due to present its spending plans to the board of directors on 15 March.

Already 90 employees have signed to leave the Flemish public broadcaster voluntarily. The director hopes to obtain the number of 279 before the end of the year. I think that is very bad, but the thing that is really outrageous is the fact that they will cut into the budgets of the shows they are offering to their viewers. Some shows will even be cancelled altogether.

The production costs of all shows have to be cut with 10% with the exception of news and culture. These shows only have to cut 5% of all costs. Concretely, this means less sport will be broadcasted; there will be less entertainment on Fridays and less Flemish fiction productions. Off course, I personally couldn’t care less about the loss of sports on tv…but what about all those thousands of football lovers?

On the other hand, the savings will also have consequences for the external production houses. The exclusivity- contract between the Flemish public broadcaster and production house ‘Woenstijnvis’ will come to an end in the middle of this year. The public broadcaster pays almost 30 billion euro in a year to Woestijnvis. This sum of money contains an exclusivity remuneration for the cooperation with Woestijnvis, success premiums,… I know, this is a lot of money. But will this saving plan causes enough inputs to keep offering this successful formula?

Above all, the programs with the highest viewing figures (“man bijt hond”, “van vlees en bloed”,…) are coming from Woestijnvis. So if this exclusivity contract would disappear, the Flemish public broadcaster will fall behind its competitors, won’t it?

http://www.tv-visie.be/nieuws/belgie/contract-vrt-en-productiehuis-woestijnvis-onder-vuur_18368/
http://knack.rnews.be/nieuws/belgie/bijna-300-banen-op-de-tocht-bij-de-vrt/site72-section24-article47910.html#
http://www.nieuwsblad.be/article/detail.aspx?articleid=DMF20100316_101

Technology keeps Fnac Going

Fnac remains a profitable company in Belgium despite of the economical crisis and upcoming competition such as MediaMarkt and Saturn. The Belgian departments produced a turnover of 200 million euro, that’s 4.4 percent of the groups turnover.

We can itemize all the elements that brought out the turnover. The turnover of audio, video and games, the “content”, is the prominent element. It still represents 30 % of the total turnover , despite of the decrease of 2.7 % this year. The reason that this segment of the market decreased is mainly due to the fact that producers did not carry-in a new video console. Because of that the games’ profit decreased quite a bit. The shortcoming of the previous segment gets equalised by the increasing sale of books. They represent a quarter of the total profit made by the Belgian department of Fnac.

When it comes to consumer electronics, they sell more, but the prices decline very fast. Therefore the turnover remains the same.

In the near future, they expect loads of new technology to display in their shops such as the iPad and e-books.

Fnac Belgium still has some work to do. They have to improve on their online-sales, and fast. More and more people buy online and this might add a big share to the turnover.

The things written in the article, I agree with them completely. There is nothing to disagree with anyhow. When it comes to economics, technology is a very sensitive component.

Technology renews itself all the time. 2010 or 2011 might become the year of the iPad, who knows? But in two to five years the iPad might be in the possession of everyone.

Things become cheaper the longer they exist. And everything that has something to do with technology is expensive in the beginning. There is nothing to agree or disagree, it’s a fact.

http://www.standaard.be/artikel/detail.aspx?artikelid=642NPM2F&subsection=215

BP to Pay Devon $7 Billion for Fuel Assets

BP, the British oil giant that operates at the energy industry, had decided to increase production by getting an asset of oil and gas in Brazil. Therefore BP had paid $7 billion to Devon Energy. Because of this transaction BP gets access to the sought-after area off the coast of Brazil. Analysts expect that this area will have a great potential for oil discoveries. BP isn’t the first one that penetrates this area; other rivals like Exxon Mobil already have accessed the area because of partnerships.

It is a good deal for both sides. Because of the sell of its offshore and international oil and gas assets, Devon can focus on its less expensive businesses in the United States and in Canada. BP gets the chance to increase production and profitability. Last year, BP already produced more oil and gas than Exxon for the first time.

BP is very impassioned about the deal. They see different benefits. First of all it offers a long term growth based on high-margin oil. Secondly it will give them a broad portfolio of assets in the deepwater of Brazil. And it also will intensify their position in the Gulf of Mexico.

Brazil became more important concerning oil and gas. Some industry experts see Brazil as the new battleground for big oil companies. Brazil knows a great economical growth the last few years. Brazil isn’t a poor country, but the prosperity is very disproportionate. There are a lot of social problems in the countries. But I think this deal is really good for Brazil. BP has more than enough resources to invest large sums of capital in development of the oil blocks. They are able to withstand years of investment in technology and exploration.

http://www.nytimes.com/2010/03/12/business/global/12bp.html?ref=energy-environment

Nespresso is experiencing fenomenal growth

As the title of the article already mentions, the Swiss brand Nespresso is going through a great period of sales. In 2009 it has established a turnover of 1.9 billion Euros and a total growth of 22 %, which is very remarkable because the coffee machine market has experienced a decreased sales percentage of 8 % over the same period.

In the article, Daniel Blarer, Director of Nespresso Benelux, states that the coffee filter market has experienced some serious collateral damage because of the changing market conditions. In contrast to this decrease, this has brought several benefits for Nespresso. The sales of espresso machines have gone up by 57 % last year. Nowadays, 1/6th of all coffee machines is an espresso machine. Nespresso, a Nestlé Group brand, has an espresso machine market share of 45 percent at the moment, which makes it the uncontested market leader in this segment.

When it's being asked why Nespresso is experiencing such phenomenal growth, it is mentioned that Belgium is a country which has a large number of repetitive coffee consumers. Another key factor that is mentioned, is the unique trilogy that leads to an unseen confidence in the brand. This so-called unique trilogy consists of top quality, the ease of using their innovative system and their exclusive service that is right sized on the specific needs of the customer. These factors lead to a customer that is very confident and loyal to the brand. This is one of the reasons why Nespresso is one of the fastest growing brands in the world, with an average growth of 30 % since 2000. The company is determined to close off the decennium with that same average.

The company is looking to succeed in the proposed growth by launching some exclusive series of coffee flavours as well as fashionably designed coffee machines. The company has also set high hopes on the new so-called flagship boutiques. Some 30 of these boutiques will be opened all over the world in the near future. On of these boutiques will be opened in Brussels on the 6th of May. Nespresso is also making efforts to  create a new e-commerce platform to make sure that on-line orders go even more smoothly en efficiently, nowadays 1 out of 2 orders already go over the internet. The new platform is necessary in order to improve their customer service and guarantee with a maximum delivery period of 48 hours.

I am well aware of the market situation of Nespresso because I have already written an article on the Nespresso subject earlier. Even though it was about a totally different topic, it helped me understand the background situation and the threats it is experiencing. For me it was a good experience to get to know more about the company's financial situation and to get a deeper insight in the circumstances.

I believe Nespresso is a very strong brand with an even stronger business culture. The most important thing about this article is the positive trend the company is experiencing. For investors, this is the key issue in the whole story. In my opinion, as a part of the Nestlé Group, Nespresso has a lot of expansion possibilities towards the future. If we see that the brand has come up with new possibilities the expand its activities, (such as the boutiques and the new flavours) then I can say I'm very positive towards the mid-term expansion.

On the other hand, I think the company really needs to take possible competitors and threats into account and manage to overcome them by staying innovative and going in on the beat of the emerging markets in order to stay successfull and sustain expansion.

"Deceuninck is back"

Deceuninck is determined to make profit during the running year. According to the chairman, the company which produces window profiles in synthetic materials, will make a turn for the better in the coming year.

A year ago, in the lowest-point of the crisis Tom Debusschere took over as CEO. He immediately realized that drastic measures had to be taken to find a way out of the depression.

First of all the new chief executive officer decided to close 4 factories, consequences of this decision were that 630 employees became unemployed. This is about 17% of the total staff. Moreover all the other sites were right sized. By this intervention they reached a reduction of costs for 38.3 million Euros. Debusschere is convinced that because of the lowered basis of costs, the company will make profit at the end of 2010. All of this in spite of rising costs of raw materials and the awaiting restoration of the building market. The CEO believes that also in 2011 the profit will keep on growing. This because their products offer the best possibilities to isolate houses. The rising isolation standards imposed by the government will fundamentally contribute to the sales of Deceuninck.

The reorganization within the company was insufficient to come to a change in their financial situation. In addition, they have made an appeal to a capital increase of 85 million Euros. This capital has been placed at their disposal by several banks. On the other hand we see that the company is subject to strict rules due to this measure. The banks will evaluate the financial position of the stock-listed company on a quarterly basis. The CEO underlines that they are ahead of their scheme so they are prepared for some unexpected circumstances.

Finally, another item in our story is that a dividend does not belong to the possibilities, simply because the banks don’t allow it at the moment. The credit givers expect that the available capital will be used to pay back creditors. This phenomenon will be sustained over the following years.

At first sight it’s a pity that some 600 employees have lost their jobs because of the difficulties of the company. In contrast to the latter, we must not forget that this is why the company has become healthy again and in the long term they will create new employment if they keep doing well.

As for the situation of the shareholders, we should use a long term vision. Every investor who’s familiar with the stock exchange and has a good view on the main activities and expectancies of Deceuninck knows this company is worth the investment. In the past they have already proven that they are able to gain profit in a liable way. Maybe in the future they should think about taking bigger innovative measures. I’m sure there are other products they can manufacture with the knowhow they’ve built up through the years. Maybe the stronger isolating standards set by the government will involve opportunities.

Sources: Deceuninck is back (Article 'De Tijd')