1 Apple profit ‘biggest in history’ (Richard Taylor on BBC) US technology giant Apple has reported the biggest quarterly profit ever made by a public company. Apple reported a net profit of $18bn in its fiscal first quarter, which tops the $15.9bn made by ExxonMobil in the second quarter of 2012, according to Standard and Poor’s. Record sales of iPhones were behind the surge in profits.
Apple sold 74.5 million iPhones in the three months to 27 December – well ahead of most analyst’s expectations. However, sales of the iPad continued to disappoint, falling by 18% in 2014 from a year earlier.
Apple’s impressive results represent a significant shift towards the massive untapped potential of China. With a strong line-up of devices entering the final quarter, it was able to reap the fruits of its deal with the world’s biggest mobile network, China Mobile.
All eyes now are on the Apple Watch – but with a relatively high base price it is not clear whether it will be able to woo more than the Apple faithful. Apple’s revenue grew to $74.6bn in 2014 – a 30% increase from a year earlier. Sales in greater China hit $16bn in 2014 – a 70% increase from a year earlier, and almost equalling the $17bn in sales the company recorded in Europe last year.
2 What ‘junk’ credit status means to Russia (San Francisco Chronicle) Russia has seen its credit grade cut to “junk” status for the first time in over a decade, a big blow for a country that wants to be a world economic power. The downgrade by Standard & Poor’s reflects the country’s growing economic problems, such as the collapse in the value of its oil exports and the impact of Western sanctions. But it is also rare for a country with such low debt levels.
Standard & Poor’s cut Russia’s rating to BB+, a non-investment grade the country last held in 2004, when it was still recovering from a painful financial collapse in the 1990s. The downgrade puts it at the same level as Turkey, Indonesia and Barbados. Russia’s economy is expected to contract by 4 to 5 percent this year for the first time since 2009, when the economy was hit by a global crisis.
Investors pulled $152 billion out of the country last year, compared with an average of $57 billion annually during 2009 to 2013. Foreign currency reserves have dropped below $400 billion for the first time since August 2009.
A country’s credit rating determines how expensive it will be for the government to borrow on international markets. That cost eventually affects how expensive loans are in the broader economy, for companies and consumers. As Russia does not borrow much on international bond markets, the impact on its public financing costs is likely to be limited.
Finance Minister Anton Siluanov has unveiled an anti-crisis plan that will freeze the level of government spending and reform the economy. The plan aims to get a budget surplus as soon as 2017 and “so that we do not burn recklessly through Russia’s sovereign reserves.”
3 Scotch whisky industry ‘bigger than UK iron & steel or computers’ (Rebecca Smithers in The Guardian) Scotch whisky is worth more than £5bn to the UK economy, according to a report that highlights its contribution to the country’s exports and job creation. Distillers directly employ 10,900 people, but they also support a further 30,000 jobs through the supply chain, the research group 4-consulting found.
The figures make whisky the third biggest industry in Scotland, behind energy and financial services, comprising about 70% of the entire Scottish food and drink sector. The industry dwarfs tourism and the creative sector and is nearly three times the size of Scotland’s digital or life science industries.
Despite a slowdown in exports, more than 1.26bn bottles of whisky are shipped each year. Exports to the US alone were worth almost £820m in 2013, a record high. Using a “value-added” measure to gauge the contribution to the economy, the research found the industry is bigger than the UK’s iron and steel, textiles, shipbuilding or computer industries.
The sector is expanding at unprecedented rates, with around 30 new distilleries being planned or built across Scotland, the report said. Capital investment reached £142m in 2013, up 31% since 2008. At its peak during the 1970s, the industry accounted for just over 20,000 jobs across the whole of Scotland. But the 1980s marked the start of an extended downturn, triggering significant structural change.
A Treasury spokeswoman said: “Scotch whisky is a huge British success story – to support the industry we ended the spirits duty escalator and froze the duty on whisky and other spirits at last year’s budget. The government has also introduced the spirits verification scheme. This will help protect the integrity and high reputation of Scotch whisky by helping consumers in the UK and abroad to identify genuine products and avoid fakes.”