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The Morning Ledger: U.S. Manufacturers Grapple With New Risks |
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Caterpillar said tariffs on aluminum and foreign steel made parts for the machinery it manufactures in the U.S. more expensive. PHOTO: CALLAGHAN O'HARE/BLOOMBERG NEWS
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Good day. Rising costs, a stronger dollar and concerns over slowing growth in China are posing new risks to U.S. manufacturers. Such concerns sparked a selloff Tuesday that affected shares in Caterpillar Inc., 3M Co. and other industrial bellwethers, reports The Wall Street Journal.
Cost of doing business: Caterpillar said tariffs on aluminum and foreign steel has made parts for the machinery it manufactures in the U.S. more expensive. Tariff-related costs are likely come in at the low end of the forecast range of $100 million to $200 million this year, the company said. 3M said it expects the tariffs to push up costs by about $20 million this year and $100 million next year.
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Slowing giant: 3M also said sales of its face masks and other products in China are dropping as economic growth there cools. Paint-and-coatings maker PPG Industries Inc. said last week that demand in China was falling due to lower spending on cars.
Raising prices: Caterpillar said it would raise prices on most machines and engines by as much as 4% next year. PPG and consumer goods giant Procter & Gamble Co. said they were increasing prices to reflect higher commodity costs. United Technologies Corp., which makes Pratt & Whitney jet engines and Otis elevators, said on Tuesday it would continue to raise prices across its portfolio next year if tariffs were still in place.
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AT&T Inc., Boeing Co., Ford Motor Co., Tesla Inc., Visa Inc. and United Parcel Service Inc. are among the companies slated to report earnings today.
The WSJ's Jay Greene writes of three things to watch in Microsoft Corp.'s results.
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Rising U.S. Oil Output Led Brazilian Airline to Change How It Hedges |
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A GOL jet lands in Guarulhos, Brazil. PHOTO: PAULO LOPES/ZUMA PRESS
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A surge in U.S. crude oil production has created an accounting headache for the finance chief of Brazil’s largest airline, GOL Linhas Aereas Inteligentes SA, reports CFO Journal's Tatyana Shumsky.
The São Paulo-based airline uses options on oil futures to protect itself from unexpected spikes in jet-fuel prices. That is because crude oil is refined into jet fuel, and the prices of the two commodities tend to move in tandem.
But earlier in the year, a surge of U.S. shale-oil output weighed on the U.S. oil price benchmark, known as West Texas Intermediate, even as the international oil benchmark, Brent, soared.
This divergence forced GOL to migrate its hedges from WTI oil to Brent oil contracts to maintain hedge accounting treatment, which requires companies to ensure the derivatives they are using offer adequate protection against the risks they seek to hedge.
“You want your hedge to be effective,” said Richard Lark, finance chief at GOL. “Because of things going on in West Texas, the correlation with WTI and international jet fuel prices dropped substantially.”
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Target says it now fulfills about 50% of its digital orders at its stores and plans to fulfill over 90% of two-day orders from the stores. PHOTO: ANTONIO PEREZ/CHICAGO TRIBUNE
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Target Corp. said it plans to offer free two-day shipping on online orders this holiday season, undercutting competitors such as Amazon.com Inc. and Walmart Inc.
Union Pacific Corp. plans to lay off about 500 employees before the end of the year, the first of several rounds of job cuts as the railroad implements a new operating plan to turn around its performance.
McDonald’s Corp. is still struggling to attract more U.S. customers but it eked out sales gains in the latest quarter by charging more for its food.
Dunkin’ Brands Group Inc. is trying to undercut what rival Starbucks Corp. charges for a signature product: quality espresso.
Ford Motor Co. has hired a new chief for its China operations, ending a nine-month search. He will look to fix a deep sales slump in the world's biggest car market, reports Reuters.
Harley-Davidson Inc. said U.S. motorcycle sales would remain weak through 2019, as company executives wait for the results of a new growth strategy focused on younger riders.
Deutsche Bank AG on Wednesday said a continued slump in trading revenue took another bite out of its quarterly profit, as the struggling German lender faces growing pressure to cut costs and stabilize its earnings.
Barclays PLC Chief Executive Jes Staley said the bank’s trans-Atlantic diversification strategy is paying off, as it reported improved third-quarter investment-banking profit and group return that were above targets.
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President Trump speaking with reporters during an interview with The Wall Street Journal in the Oval Office. PHOTO: THE WALL STREET JOURNAL
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President Trump escalated his attacks on U.S. Federal Reserve Chairman Jerome Powell, saying the head of the nation’s central bank threatened U.S. economic growth and appeared to enjoy raising interest rates.
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The European Union took the unprecedented step Tuesday of rejecting Italy’s draft budget as incompatible with the bloc’s rules on fiscal discipline, escalating a battle between Europe’s establishment and populists in Rome.
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American Express Co. has received subpoenas from the U.S. Department of Justice and inquiries from other federal agencies related to its foreign exchange international payments business, Reuters reports.
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U.K. public companies need to improve their corporate reporting and eliminate basic errors, according to a review of 220 annual and interim reports for the 2017-2018 financial year conducted by the Financial Reporting Council.
The U.K. regulator for corporate reporting, accounting and audit on Wednesday said judgements, estimate disclosures and cash-flow statements are the biggest source of concern, followed by the use of Alternative Performance Measures, reports CFO Journal's Nina Trentmann.
Over 95% of FTSE 350 companies report they comply with all but a couple of the 55 provisions of the U.K. Corporate Governance Code. However, reporting on how companies apply the code is often inadequately covered, the regulator said. "Companies are reluctant to explain clearly why they don't comply," the regulator said in a statement.
"A lack of transparency in financial and governance reporting undermines trust in business," Paul George, executive director of corporate governance and reporting at the council, said in a statement. "More accurate reporting and better governance practices are needed to reverse this trend."
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Traders working on the floor of the New York Stock Exchange on Tuesday. PHOTO: BRENDAN MCDERMID/REUTERS
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Volatility returned in force to the stock markets Tuesday, sending the Dow Jones Industrial Average tumbling almost 550 points before it erased nearly all of those losses in the final hours of the trading day.
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Oil prices tumbled to a two-month low on signs of rising supply and as fears about slowing global growth prompted investors to abandon risky assets.
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Overseas investors, traders and central bankers are buying fewer Treasurys, a potential turning point for a $15 trillion market at the center of global finance and economics.
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BorgWarner Inc., the Auburn Hills, Michigan automotive powertrain supplier, named Thomas McGill as interim chief financial officer, effective Jan. 1, 2019. He will succeed Ronald T. Hundzinski, who plans to retire effective Dec. 31, 2018.
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The company has hired an executive search firm to look for a permanent successor. Mr. McGill has been with the company for more than 17 years and is currently vice president and treasurer.
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