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Samsung records 30% slump in Q4 profit

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Samsung Electronics on Tuesday flagged its first quarterly profit drop in two years and painted a grim outlook owing to mounting competition from Chinese smartphone makers and declining chip prices.

The shock warning added to concerns about the broader tech sector after Apple sent shudders through world markets last week by slashing its revenue forecast blaming weak sales in China and citing the trade war.

Samsung — the world’s top maker of smartphones and memory chips — has enjoyed record profits in recent years despite a series of setbacks, including a humiliating recall and the jailing of its de facto chief.

But operating profit during the October to December period was expected to be around 10.8 trillion won ($9.8 billion), down 28.7 percent from a year earlier, Samsung said in an earnings estimate.

The figure was below market consensus of about 13.5 trillion won, according to market researcher FnGuide.

Sales dropped more than 10 percent to 59 trillion won in the period, Samsung said.

It cited “lacklustre demand in the memory business and intensifying competition in the smartphone business” for the dismal outlook.

“Memory earnings fell significantly… due to weaker-than-expected demand amid inventory adjustments at data-centre customers,” which led to a “greater-than-expected” drop in chip prices, it said.

“We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business but strengthen in the second half.”

But analyst Kim Sun-woo of Meritz Securities said worsening supply and demand for semiconductors and the structural challenges facing Samsung’s smartphone business will hit profits throughout 2019.

Demand for DRAM memory chips “will hit a low in the fourth quarter of 2019”, he added.

Samsung withholds net profit and sector-by-sector business performance data until it releases its final earnings report, which is expected later this month.

For 2018, the firm expects operating profit of 58.9 trillion won, up nearly 10 percent on-year, and sales to inch up 1.6 percent to 243.5 trillion won.

Shares in Samsung Electronics, the flagship subsidiary of the Samsung Group that dominates South Korea’s economy, were down 1.68 percent at the close.

Last week Apple said it expected to earn $84 billion in October-December, well down from the $89-$93 billion previously forecast as it blamed a steeper-than-expected “economic deceleration” in China and emerging markets.

(NAN)

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Governance

Euro zone bond yields slide as Brexit, U.S. shutdown sap risk appetite

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Britain’s Prime Minister Theresa May speaks in the House of Commons in London on Jan 15, 2019 ahead of the meaningful vote on the Government’s Brexit deal. (Photo: AFP/Mark Duffy/UK Parliament)

 

LONDON – 17 January 2019: Euro zone bond yields edged lower on Thursday after rising the day before, as markets continued to assess the outlook for the UK, and the U.S. shutdown failed to provide much direction to markets.

Eurozone bond markets have taken their cue this week from Britain, where Gilt yields rose on Wednesday after the UK parliament rejected a Brexit agreement.

Britain remained in focus after UK Prime Minister Theresa May survived a no-confidence vote on Wednesday night, though uncertainty over the passage of Britain’s exit from the European Union rumbled on.

Germany’s 10-year government bond yield, the benchmark for the region, opened 1.6 basis points lower to 0.207 percent while other 10-year bond yields in the euro zone slid around two basis points.

Euro area inflation figures, released at 1000 GMT, are expected to confirm flash estimates and drop to 1.6 percent year-on-year from 1.9 percent, brought down by lower gas prices.

The data “won’t give the markets any hint because of the storm in British Parliament and the prospect of delay in their departure from the euro zone,” said Commerzbank’s rate strategist, Rene Albrecht.

However, euro zone data are likely to surprise to the upside, Albrecht said. “We expect better data than sentiment indicators are. We think yields should bottom out at the long end.”

New supply is due from Spain, which will tap its 2021s, 2023s, 2024s and 2027s to raise 4 billion to 5 billion euros.

Elsewhere, Italian five-year government bonds continued to perform following Italy’s successful 15-year bond sale, which prompted a follow-on rally in Italian government bonds.

Italy’s five year government bond fell 13.5 basis points on Wednesday, its biggest one-day fall in over a month.

GOOD FOR GREECE Greek bond yields fell on Thursday after Prime Minister Alexis Tsipras won a confidence vote in parliament, triggered by Greece’s approval of an accord to end a dispute over Macedonia’s name, which averted the prospect of a snap election.

Greece is widely expected to return to the debt markets in the coming weeks, with Italy’s deal likely to provide confidence to the southern European nation.

EU Economics Commissioner Pierre Moscovici said on Wednesday that Greece should regain full access to the debt markets and all efforts should be made to that end.

Greece’s 10-year government bond yield slipped in early trade to its lowest level since December 13 at 4.22 percent .

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Company News

Diet Coke Unveils New Flavors and Marketing as Brand Refresh Enters Second Year

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Diet Coke entered a new era in 2018 by debuting a modern new look, sleek new packaging, four bold new flavors and new marketing – with the goal of reenergizing and contemporizing the beloved brand for new drinkers and loyal fans alike.

And in 2019, America’s top-selling zero-calorie sparkling beverage is picking up where it left off with the introduction of two more flavors – Blueberry Acai and Strawberry Guava – and releasing new content as part of the “Because I Can” campaign.

The restage helped spark a 2018 turnaround for the brand, which posted retail dollar sales growth in Nielsen measured channels for four consecutive quarters after at least five years of decline.

Diet Coke

“We focused on modernizing Diet Coke to appeal to a new consumer base while at the same time connecting with our core drinkers by preserving the essence of what makes this brand so special,” said Rafael Acevedo, group director, Diet Coke. “We took smart risks in our approach to this holistic brand restage, and everything worked together to generate excitement and draw new fans to the brand.”

Diet Coke Blueberry Acai and Diet Coke Strawberry Guava were selected from a shortlist of 20 options and tested with more than 2,000 Americans. The new flavors will offer even more variety to the existing Diet Coke lineup, which also includes Ginger Lime, Feisty Cherry, Zesty Blood Orange and Twisted Mango. They aim to satisfy adventurous fans’ thirst for bolder tastes and more dynamic experiences.

“These new flavors are highly incremental to our current flavors and will continue to drive excitement for the brand,” Acevedo said. “Flavor variety is key because it provides more points of entry into the brand. Different consumers have different favorites, so it’s important to offer a range. And we’re finding that when new drinkers try a flavor, they’re also more likely to reach for (original) Diet Coke.”

Both flavors, which hit stores nationwide in mid-January, are available in sleek 12-oz. cans and sold as on-the-go singles and in eight packs. A nationwide sampling activation will give people the chance to experience the new flavors through August. The six-month tour will hit 15 cities and more than 100 college campuses runs through August and. Learn more at DietCoke.com.

Fresh new marketing will launch in the coming weeks across all channels – from TV, to social, to experiential – and will extend the “Because I Can” invitation for fans to live life confidently and on their own terms.

“Last year’s campaign introduced Diet Coke’s new personality and philosophy,” said Tara Mathew Sahu, integrated marketing communications (IMC) director, Diet Coke. “As we enter year two, we aim to show how the brand delivers a refreshing boost to everyday moments.

Blueberry Acai

She added, “Many of our newer fans were not even born when Diet Coke first launched in 1982, so they may see the brand as a choice of generations before them. We’re reframing the brand in a youthful, energetic and aspirational tone and showing how Diet Coke can fit into their lives.”

Acevedo said that while he’s encouraged by the brand’s rebound over the last year, the team has its eye on the long term.

“You don’t restage a brand the size of Diet Coke in one quarter or one year,” he added. “This is a multi-year plan, so it’s important to stay focused on our core strategy.”

Source: Nielsen AMC, Full-Year 2018

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Governance

Jim Yong Kim announces resignation as World Bank President

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Former World Bank President Jim Yong Kim delivers a speech during the “reinvented toilet expo” in Beijing. AFP PHOTO 

World Bank President Jim Yong Kim announced Monday he would step down next month, more than three years before his current term was due to expire.

The decision ends Kim’s six-year tenure and may give US President Donald Trump decisive influence over the future leadership of the global development lender.

“It has been a great honour to serve as president of this remarkable institution, full of passionate individuals dedicated to the mission of ending extreme poverty in our lifetime,” Kim said in a statement.

Kim, who became president in 2012, is to join an as-yet unnamed firm focusing on investments in developing countries, the bank said in a statement, and will return to the board of Partners-in-Health, which he co-founded.

Under Kim’s leadership, the bank set the goal of eliminating extreme poverty by 2030 and ramped up financing.

Last year, it also won approval for a sharp $13 billion capital increase after acceding to requests from the Trump administration to curb loans to high-income countries like China.

Kim’s tenure was also marked by high levels of disaffection among World Bank staff, who chafed at a widespread internal restructuring that Kim began.

World Bank CEO Kristalina Georgieva will serve as interim president upon Kim’s February 1 departure, the bank said in a statement.

– BusinessDaily
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