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')