Monday 04/02/19

  1. In CARS NEWS, Nissan makes a shock decision and Ford outlines its January performance
  2. In RETAIL NEWS, Ikea tries furniture leasing and HMV gets another bidder
  3. In INDIVIDUAL COMPANY NEWS, we take a closer look at Nintendo and a changing Maersk
  4. In OTHER NEWS, I bring you the Peppa Pig effect and a dog dryer. For more details, read on…



So Nissan goes for Japan with the X-Trail and Ford looks forward…

In Nissan blames diesel tax for U-turn (Daily Telegraph, Alan Tovey) we see that the Japanese car manufacturer is using new diesel regulation and weakening sales as an excuse for deciding to make its X-Trail car in Japan rather than in the Sunderland factory which makes the Qashqai, Juke and Leaf. This came as a shock given that the company had pledged to make the X-Trail in the UK back in 2016 having apparently been reassured by the government over Brexit. * SO WHAT? * Bad news for Sunderland, but you can’t really blame Nissan given all of the uncertainty and weaker car sales generally. Unfortunately, this could be a precedent that other manufacturers in this country decide to follow.

Ford starts key year with strong January (Wall Street Journal, Mike Colias) looks at the positives for Ford as it announced a 7% increase in January US sales as chief exec Jim Hackett outlined his turnaround plan. He is having to address concerns over the company’s credit rating and its ability to pay the current dividend by cutting costs in the ailing overseas business and boosting domestic operations by churning out more high-margin trucks and SUVs. * SO WHAT? * The measures have yet to have the desired effect as operating profit for 2018 fell by 27% and if they don’t work soon, there is a danger that the company’s credit rating will fall to junk status with Moody’s saying that it is “critical that Ford’s fitness program show evidence of progress in 2019”. If things continue to drag, a rating downgrade will increase Ford’s cost of borrowing (because it is perceived as being “riskier”) at a time where the company is trying to keep a lid on expenses. Hackett sent an e-mail to employees last week describing the results as mediocre and that they should put 2018 behind them to focus on 2019 goals.



Ikea looks at trying something new and HMV gets another bidder…

Ikea to trial furniture leasing in business overhaul (Financial Times, Richard Milne) heralds a rather radical departure for the flat-pack king as it is about to trial furniture leasing in Switzerland later this month. The company is experimenting with new ways for customers to own its wares, according to Inter Ikea chief exec Torbjorn Loof, who explained in an interview with the Financial Times that “We will work together with partners so you can actually lease your furniture. When that leasing period is over, you hand it back and you might lease something else”. He added that “…instead of throwing those away, we refurbish them a little and we could sell them, prolonging the lifecycle of the products”. * SO WHAT? * What an interesting company! The fact that an industry leader really is doing something substantial to ensure its longevity is to be applauded. These tests are moving towards”scalable subscription services” for different types of furniture where you could effectively rent your kitchen or office furniture as part of a circular business model where it not only sells 

products but subsequently reuses them to make new items. The company is also trying to reduce its climate footprint by 15% in absolute terms and is designing products that are more easily recyclable as well as looking at launching a spare parts business for customers to buy replacement components for furniture that they no longer stock. The company really is experimenting with a lot of new initiatives at the same time so I am sure that they will come up with a very exciting permanent and widespread offering.

Canadian may join Ashley in bidding to buy troubled HMV (The Guardian, Rupert Jones) signals an interesting development as Doug Putman, who runs fast-growing Canadian record retailer Sunrise Records and who was the one who bought about 70 HMV sites in Canada after the chain went bust there in 2017, has thrown his hat in the ring along with Mike Ashley to buy HMV. * SO WHAT? * Putman’s previous form with HMV could make his bid an interesting alternative to Sports Direct’s Ashley as he has shown success in growing Sunrise Records from only five stores in 2014 to 80 currently, benefiting from a resurgence in the popularity of vinyl. There’s no word on how many of HMV’s current 125 outlets (including nine Fopp stores) will be saved, but clearly talks aren’t quite at that stage yet. This looks like it could get interesting.



Nintendo gets a buffeting and shipping giant Maersk gets closer to a break-up…

Does Nintendo deserve a higher valuation? (Financial Times, Leo Lewis) takes a look at the Japanese gaming giant after its share price suffered a 9.2% one-day kicking when it announced that it would cut console sales forecasts. This happened despite a strong performance in the 2018 holiday season, three massive hit titles and third quarter results that showed a 36% uplift in operating profits. * SO WHAT? * Naysayers will cite historic wisdom that console makers’ profits are highly volatile and are dependent on hardware sales (i.e. the more consoles that are sold, the more games will be sold – meaning that if console sales are weak, software sales will also be weak). Others say that this traditional boom-bust cycle is becoming less volatile as online gaming extends console lifespans (look at the continued success of Sony’s PS4 which is now in the seventh year of its cycle and still sold 5.6m units in the 2018 holiday season alone) and supplies alternative revenue streams to each software title. It seems that the naysayers are holding sway for now as Nintendo’s 

share price has fallen by 30% since February 2018, but Nintendo supporters believe its fortunes could turn up if it brings out a no-frills version of the Switch that lowers the effective entry price, if investors start to value the Switch as a handheld device – like its very popular 3DS machine – rather than a fixed console, or if it cut the price of a Switch to increase volumes.

Shipping giant Maersk steams ahead with break-up plans (Financial Times, Richard Milne) looks at the current state of affairs at the world’s biggest container shipping line which has been shedding businesses left, right and centre in a bid to address its massive debts and focus on more profitable businesses. It has, so far, cut its oil and gas tankers business and plans to spin off its drilling rig unit this year as part of plans to concentrate on shipping, port terminals and logistics (the latter with a view to becoming the UPS or FedEx of containers). * SO WHAT? * Although it’s doing all the right things in slimming itself down from a conglomerate with eight divisions down to one, the company is also fighting against a weakening credit rating that could make future acquisitions more difficult while other deals are going on among its competitors. The container shipping business, which is still central to Maersk, continues to face an uncertain outlook against a backdrop of US-China trade tensions choking world trade.



And finally, in other news…

I thought I’d leave you today with ‘Peppa Pig effect’ which has hit toddlers leaves mums mortified (The Mirror, Robyn Darbyshire which tells us that kids around the world are picking up “posh” accents and snorting at the end of sentences as a result of watching too much of the TV show. Presumably they’re also starting to think that daddies are a bit thick and useless (not that I’m bitter or anything ????).

AND FINALLY, I thought I’d sign off with news of a gadget I could have done with yesterday when I shampooed the dog in the bath (something that she really hates and that can often become a rather messy affair!): Bizarre device claims to dry your dog in minutes – here’s where you can buy it (The Mirror, Courtney Pochin It looks like some kind of canine sumo-wrestler costume!

Some of today’s market, commodity & currency moves (as at 0812hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq *DAX *CAC-40 *Nikkei **Shanghai **
7,020 (+0.74%)25,064 (+0.26%)2,707 (+0.09%)7,26411,181 (+0.07%)5,019 (+0.53%)20,859 (+0.37%)2,618 (-0.01%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)