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The Morning Ledger: Profits Under Scrutiny as Corporates Slash Outlook
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FedEx Corp. is among the corporations that have recently cut their full-year profit forecasts as a result of challenging market conditions. PHOTO: CHRISTOPHER LEE/BLOOMBERG NEWS
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Hello. The stock market’s strongest run in more than two decades will be tested beginning this week, as a looming pullback in corporate profit growth sets up major indexes for a fresh bout of volatility, The Wall Street Journal reports.
Downbeat expectations. Dozens of companies have slashed their profit forecasts for the first quarter. Walgreens Boots Alliance Inc. last week became the latest big company to cut its full-year profit forecast as a result of challenging market conditions, joining corporate powers such as Apple Inc., FedEx Corp. and 3M Co.
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Just a blip? With earnings season kicking off in earnest this week and valuations creeping up to their highest levels in more than half a year, investors say they plan to scrutinize corporate executives’ comments to gauge whether the contraction in corporate profit growth is a momentary blip or further evidence of a late-cycle economic slowdown.
The bar is high: Part of the profit pain for companies is due to the high bar many set during last year’s tax-cut-fueled earnings boom, making year-over-year growth comparisons hard to meet without another economic stimulus. S&P 500 companies grew profits 20% in 2018, one of the best growth rates since the financial crisis, according to FactSet. Analysts see profits growing just 3.7% this year.
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Car-Parts Maker Forecasts Higher Tax Burden After Wabco Takeover
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Wolf-Henning Scheider, the CEO of ZF Friedrichshafen, is seen during the company's annual press conference in Germany. PHOTO: ZUMA PRESS
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German car-parts maker ZF Friedrichshafen AG expects to pay higher taxes for Wabco, once the transaction to purchase the U.S.-listed company closes, said Chief Financial Officer Konstantin Sauer.
Wabco Holdings Inc., a maker of brakes and truck-safety systems, moved its headquarters to Bern, Switzerland, at the beginning of the year. As a result, Wabco has forecast an average tax rate of 18% for this year, according to the company’s financial filings.
That rate is substantially lower than the average tax rate at ZF which was 21% in 2018 and around 25% in previous years, ZF’s Mr. Sauer told CFO Journal.
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Pinterest Inc. plans to set a price range for its initial public offering that is below where the online image-search company last raised money privately when it begins a roadshow to pitch the shares to investors Monday.
Kenon Holdings Ltd. and Legacy Housing Corp. are among the companies scheduled to report earnings today.
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On Wednesday, the U.S. Labor Department publishes March consumer prices data. Economists surveyed by The Wall Street Journal forecast consumer prices rose 0.3% on the month in March. Also on Wednesday, the U.S. Federal Reserve releases minutes of its policy meeting in March.
On Thursday, the Labor Department publishes March producer prices data. Economists polled by the WSJ expect producer prices rose 0.3% in March from a month earlier.
On Friday, the University of Michigan releases its preliminary April estimate for U.S. consumer sentiment. Economists surveyed by the WSJ forecast the index logged in at 98.0 in early April.
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Former Nissan Chairman Carlos Ghosn leaving his lawyer's office in Tokyo in March. PHOTO: KAZUHIRO NOGI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Nissan Motor Co. shareholders voted to remove former Chairman Carlos Ghosn from the board at a three-hour extraordinary shareholders’ meeting, severing his final link to the company.
Arconic Inc.’s fourth chief executive in two years is trying to execute a much-delayed turnaround by focusing on operations. The board, though, remains mired in a long-running feud that threatens to cause yet another disappointment in the company’s short life.
Amazon.com Inc. is positioning Alexa, its artificial-intelligence assistant, to track consumers’ prescriptions and relay personal health information, in a bid to insert the technology into everyday health care.
Some U.S. startups are looking for a windfall in tax savings by adopting a corporate structure that until recently made little sense for any but the largest, publicly traded companies.
The fight for new listings is set to be epic this year: Five of the 10 highest-valued private U.S. companies have made or are considering a debut, alongside scores of smaller firms.
As dealers’ profit margins on new-car sales shrink, they are relying more on selling extended warranties, paint-protection plans and other optional services pushed by salespeople in the finance office.
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€1 billion
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BMW AG will take a $1.1 billion charge against first-quarter earnings in the wake of European Union allegations it colluded with other car makers to restrict emissions technology, the German auto maker said.
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A Facebook billboard ad at an underground station in London last year. PHOTO: HENRY NICHOLLS/REUTERS
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Fiat Chrysler Automobiles NV plans to pool its fleet with Tesla Inc. to avoid significant fines for violating stricter European Union emissions rules, the Financial Times reports.
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A federal judge on Friday said he wants to hear in court from witnesses who object to the U.S. Justice Department’s decision last year to approve CVS Health Corp.’s nearly $70 billion acquisition of Aetna Inc.—a highly unusual move that threatens to shake up the already-consummated deal.
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The path of federal spending in the U.S. has had an important impact on growth in this expansion. PHOTO: AL DRAGO/BLOOMBERG NEWS
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One of the big unknowns for U.S. economic growth heading into the presidential election year needs to be sorted out by lawmakers in the coming months: the path for government spending.
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Low natural-gas prices suggest high faith in U.S. energy producers’ ability to tap massive reserves and meet growing demand while finding enough to survive next winter comfortably. It isn’t enough to make much money, though.
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China’s foreign-exchange reserves grew for the fifth straight month in March to a seven-month high of $3.099 trillion, according to central bank data Sunday.
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Red Robin Gourmet Burgers Inc., a Greenwood Village, Colo., operator of casual dining restaurants, said Chief Financial Officer Lynn Schweinfurth will assume the designation of principal accounting officer.
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Ms. Schweinfurth has served, and will continue to serve, as the company's executive vice president and CFO since Jan. 2019. There is no change in compensation for Ms. Schweinfurth at this time, Red Robin said in a filing with U.S. securities regulators.
Red Robin's current Chief Accounting Officer Dave Hansen will resign from his employment with the company, effective May 21. Mr. Hansen has served as the firm's chief accounting officer since October 2018.
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