Walmart profit warning hits shares; Easy Jet records profit for fifth year; Bahrain plans more subsidy cuts, new charges

1 Walmart profit warning hits shares (BBC) Shares in the world’s biggest retailer, Wal-Mart, have plunged after it cut its profit forecast. The company said it expected earnings per share to drop by between 6% and 12% in the next financial year. The announcement sent shares of the company tumbling by 8%, their biggest fall in six years.

Wal-Mart said the lower profit forecast was because it was investing in e-commerce as well as increasing employee wages. The retailer’s spending efforts are in part a reaction to slowing sales, and competition from online retailers like Amazon.

It is also spending more to train and retain employees. In April, the company raised its base salary to $9 per hour and will increase it to $10 next year. The company revised down earnings figures for this year as well, predicting growth would be flat, rather than the previously forecast growth of 1%-2%.

Wal-Mart has blamed the fall in part on the strong dollar affecting overseas sales, something that has also affected other US retailers. Profits for the company dipped over the summer as sales in its UK supermarket chain, Asda, declined. The retailer also announced it would repurchase $20bn in shares from investors.

2 Easy Jet records profit for fifth year (Sean Farrell in The Guardian) Air passengers have failed to show up for flights to and from France after the Paris attacks, but people’s desire to travel will override fears, Carolyn McCall, easyJet’s chief executive said, as the budget airline announced record annual profits.

Pre-tax profit for the year to the end of September increased by 18% to £686m – easyJet’s fifth straight year of record profits – as passenger numbers rose 6% to 68.6 million. The company filled record numbers of seats on planes in July and August as holidaymakers headed for the sun.

McCall said said easyJet was allowing passengers to defer or reroute flights to and from France, and that this had happened “a bit – it’s not one thing that is overwhelming”. McCall added that travel was now a part of everyday life and demand would resume as it did after the 2007 bombings in London and the Germanwings plane crash in March.

The easyJet chief executive said she was confident in the longer term outlook for the business and announced the order of 36 Airbus A320 planes. The airline increased its annual dividend by 22% to 55.2p a share.

EasyJet’s rival no-frills carrier Ryanair has predicted intensifying price competition between airlines, but McCall said such battles would be isolated and that her main competition was large national airlines, because there was little overlap between easyJet and Ryanair.

“This isn’t like a supermarket price war. What is a price war? We are watching prices all the time, but because we are 30% cheaper than the largest carriers at [main] airports, our prices have held up really well,” she said.

3 Bahrain plans more subsidy cuts, new charges (Khaleej Times) Bahrain is planning more subsidy cuts and intends to impose charges for government services next year in order to boost revenues hit by slumping oil prices, the kingdom’s minister for industry and commerce has said.

Like other Gulf oil-exporting states, Bahrain has for many years subsidised goods and services such as food, fuel, electricity and water, keeping prices ultra-low in an effort to maintain social peace.

But since its oil income began to plunge last year, the government’s budget deficit has widened and the subsidies have become much harder for Bahrain to afford. “We have already started cutting subsidies and we are now looking at others – electricity, fuel, those are next year,” Zayed bin Rashed Al Zayani said.

Governments around the Gulf have begun restraining expenditure and studying whether to cut subsidies, but most do not face as much pressure as Bahrain, which lacks the huge financial reserves of its neighbours.

Bahrain’s revenues have dropped 60-70 percent because of low oil prices, Zayani said. Last month, Bahrain more than doubled prices of beef and chicken as it removed meat subsidies; local citizens but not foreigners will receive some compensation in the form of cash handouts.

In April, the government raised the price of natural gas sold to industry. The kingdom is also looking at boosting revenues by imposing charges on government services that are currently free or carry minimal fees. As part of efforts to diversify its economy beyond oil, Bahrain will in the first quarter of 2016 unveil a new short- and medium-term industrial strategy, now in the final stages of planning.



About joesnewspicks

This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off — normally on Sundays — and does not appear when I am on vacation or busy.) I am a journalist for nearly three decades.
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