business
Samsung's profit plummets amid global economic woes
Samsung Electronics said Tuesday its profit for the last quarter plummeted nearly 70% as a weak global economy depressed demands for its consumer electronics products and computer memory chips.
The company’s operating profit of 4.3 trillion won ($3.5 billion) for the three months through December was a 69% decline from the same period a year earlier, representing its lowest quarterly profit since the third quarter of 2014. Revenue fell 8% to 70.46 trillion won ($57.2 billion).
The South Korean tech giant had thrived through the first two years of the pandemic thanks to its dual strengths in parts and finished products, benefiting from robust demands for PCs, TVs and chips powering computer servers as the virus forced millions to work at home.
Read more: Samsung launches month-long smartphone campaign for September
But it has been harder for the company to weather the economic shock unleashed by Russia’s war on Ukraine, which disrupted industrial supply chains and left major economies grappling with higher inflation and slower growth.
“The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” Samsung said in a statement.
The company’s profit from its bread-and-butter semiconductor business came to 270 billion won ($219 million) for the last quarter, down significantly from the 8.83 trillion won ($7.1 billion) it got a year earlier.
Samsung said chip prices fell sharply amid weakened demand as clients adjusted their inventories in face of “deepening uncertainties” in the global economy, a problem the company says will likely extend into the first quarter of 2023.
Read more: Samsung tops 'World's Best Employers 2022'
Samsung also expects the demand for its smartphones and TVs to further decline in the first quarter amid the global economic downturn.
Turaag Active teams up with Daraz, Foodpanda to promote 'active lifestyle'
Turaag Active, a brand of Wave Riders, has partnered with online marketplaces Daraz and Foodpanda to promote an "active lifestyle."
The brand recently signed two separate memorandums of understanding (MoUs) with Daraz and Foodpanda.
These partnerships will allow Turaag Active to bring athleisure right to everyone's doorstep, according to a media statement.
Turaag Active is offering performance-enhancing fashionable activewear – casual clothing that is suitable for exercise or sport, for both men and women.
The brand's activewear, including polo shirts, sportswear, leggings, sweatshirts, jackets, and joggers, will now be available on Daraz and Foodpanda.
Faiaz Rahman, founder and director of Turaag Active, said: "We are changing the athleisure business by producing trendy gear for men and women that improves performance."
"We focus on fashion, functionality, and versatility while designing sportswear to create a line that you can wear daily," he added.
Read more: Daraz organises roadshow to celebrate 50 years of Bangladesh's Independence
EDF alternative: Tk10,000 crore fund to be operated through 49 banks
Bangladesh Bank (BB) on Monday signed a Participation Agreement with 49 banks to ensure adequate liquidity for the export-oriented sector.
Earlier the central bank formed ‘The Export Facilitation Pre-financing Fund (EFPFA)’ of Tk10,000 crore to assist the export sector amid the slowdown of global economic growth. The entrepreneurs can borrow from this fund for an interim period before getting foreign buyers' payment against the order.
From the newly constituted fund of Tk10,000 crore, exporters will be given loans in local currency. After taking loans in taka, they (exporters) can convert them into foreign currency and open an LC. As a result, it will act as an alternative fund to the export development fund (EDF), where exporters get loans in foreign currency, acting as a drag on the country's forex reserves.
It drew attention after the IMF insisted the EDF of USD $7 billion be counted as encumbered reserves - not as part of the country's liquid foreign exchange reserve.
The executive director and spokesperson of BB Mesbaul Haque told UNB that Governor Abdur Rauf Talukdar had a meeting with the MDs of the banks on Monday. Separate deals were signed with 49 banks in the meeting.
Read more: BB set to announce new monetary policy
As per the deal, banks will be able to borrow from this fund at 4 percent interest rate, he said.
After the meeting, Chairman of Association of Bankers, Bangladesh (ABB) and Managing Director of BRAC Bank Salim RF Hossain said that the banks will benefit through the formation of the fund in local currency.
“We applaud this initiative. We have entered into an agreement with the central bank to avail loans from the Export Facilitation Pre-financing Fund,” he said.
After receiving the export work order from the buyer, entrepreneurs will be given loans from this fund to import the required raw materials for the exporting sector. Loans will be given from this fund at a maximum interest of 4 percent.
In respect of this loan, no fee or commission can be collected in excess of the charge or commission fixed by the central bank.
Dutch electronics giant Philips to cut 6,000 jobs worldwide
Dutch consumer electronics and medical equipment maker Philips said Monday it is cutting 6,000 jobs worldwide over the next two years as it revealed a net loss of 1.6 billion euros ($1.7 billion) in 2022, down from a net profit of 3.3 billion euros last year.
The job losses come on top of a reduction of 4,000 staff the company announced in October.
The company, which has its headquarters in Amsterdam, is reeling from a worldwide recall of sleep apnea machines and economic headwinds including COVID-related issues in China and the war in Ukraine.
Read more: Google axes 12000 jobs, layoffs spread across tech sector
CEO Roy Jakobs said 2022 was “a very difficult year for Philips and our stakeholders, and we are taking firm actions to improve our execution and step up performance with urgency.”
He said the job cuts will significantly reduce costs and make Philips a “leaner and more focused organization.”
Read more: Job cuts in tech sector spread, Microsoft lays off 10000
Will Europe's ban on Russian diesel hike global fuel prices?
Europe is taking another big step toward cutting its energy ties with Russia, banning imports of diesel fuel and other products made from crude oil in Russian refineries.
The European Union ban takes effect Feb. 5 following its embargo on coal and most oil from Russia. The 27-nation bloc is trying to sever its last uses of Russian energy and stop feeding the Kremlin's war chest as the anniversary of the invasion of Ukraine nears.
The newest ban has risks: Diesel prices have already jumped since the war started on Feb. 24, and they could rise again for the fuel that is key to the global economy.
“We’re leaving money in the road to provide our services,” said Hans-Dieter Sedelmeier of the family-run German bus and travel company Rast Reisen.
Most things people buy or eat is transported at some point by trucks, which mostly run on diesel. It also powers farm equipment, city buses and industrial equipment. The higher cost of diesel is built into the price of almost everything, helping push up inflation that has made life harder for people worldwide.
Here are key facts about the upcoming European embargo:
WILL THE EMBARGO PUSH UP DIESEL PRICES?
That depends. Diesel, like crude oil, is sold globally, and Europe could look for new sources, such as the U.S., India or countries in the Middle East. If that goes smoothly, the impact on prices might be temporary and modest.
Europe has already cut Russian diesel imports almost in half, from 50% of total imports before the war to 27%. U.S. suppliers have stepped up supplies to record levels, from 34,000 barrels a day at the start of 2022 to 237,000 barrels per day so far in January, according to S&P Global.
Read more: What's the effect of Russian oil price cap, ban?
The EU’s top energy official, Kadri Simson, says markets have had time to adjust after the ban was announced in June. Europeans also appear to have stocked up on Russian diesel before the deadline, with imports rising last month.
There is a complicating factor: The Group of Seven major democracies are talking about imposing a price cap on Russian diesel heading to other countries, just as they did on Russian crude. As with oil, the idea is to keep Russian diesel flowing to world markets but reduce Moscow’s revenue.
If the cap works as advertised, global diesel flows should reshuffle, with Europe finding new suppliers and Russian diesel finding new customers, without a major loss of supply.
But it's hard to say how the cap will work without knowing where the price will be set and whether Russia will retaliate by withholding shipments.
“When Russian exports are constrained, for whatever reason, that would of course cause some trouble in this whole reshuffle process," said Hedi Grati, head of fuels and refining research for Europe at S&P Global Commodity Insights. “Europe would be competing with other big importers, and that would cause upward pressure on pricing.”
If the cap doesn't block large amounts of Russian diesel, there might be “a short-lived price spike” as the market adjusts. For one, tankers would have a longer journey to Europe from the U.S., Middle East or India than from Russia's Baltic Sea ports, stressing shipping capacity.
But massive new refining capacity is launching in Kuwait and Saudi Arabia later this year and in Oman in 2024. That “could further alleviate any pressure points from this divorce from Russia,” Grati said.
WHAT COULD A DIESEL PRICE CAP ACCOMPLISH?
The hope is to reproduce the effect of the oil price cap, which barred Western companies that largely control shipping services from handling Russian crude priced above $60 a barrel.
Read more: Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
Russia says it won't sell oil to countries observing the price ceiling, but the cap and falling demand from a slowing global economy has meant customers in China, India and elsewhere can buy Russian oil at steep discounts, cutting into the Kremlin's revenue.
Boosted by more expensive crude, diesel prices rose to over $1,000 a ton last week from $800 a ton in early December. Diesel costs more than $40 per barrel above the crude used to make it.
One reason for the price hike was a late December storm in the U.S. that disrupted refineries, said Barbara Lambrecht, an analyst at Commerzbank.
WHAT HAPPENS IF DIESEL GETS MORE EXPENSIVE?
Fuel prices have been a major factor behind painful inflation in Europe that has robbed consumers of purchasing power and slowed the economy.
Diesel prices at the pump have swung from 1.66 euros per liter ($6.43 a gallon) to 2.14 euros per liter ($8.29 a gallon) in the course of a year.
“That is a gigantic increase,” said Christopher Schuldes, the third generation of his family to run German trucking company Schuldes Spedition.
The company has 27 diesel trucks and 50 employees in the small town of Alsbach-Haehnlein between Frankfurt and Heidelberg in southwest Germany. It already has cut fuel costs by equipping trucks with efficient engines, ensuring trucks leave fully loaded and training employees in fuel-efficient driving.
“We did all that a long time ago, long before Russia invaded Ukraine," Schuldes said. “There's no more room for optimization.”
To ease the extra diesel costs, the company tried negotiating higher prices with customers who have long-term contracts. Some agreed, some didn’t. Even if a contract allows prices to rise with diesel costs, there’s a two-month lag.
Regarding the embargo, “I am of two minds about it,” Schuldes said. “I have to see that the company is in good shape, and that our purchasing is as economical as possible. On the other hand — on the personal level — I say Russia must not be supported.”
Meanwhile, Rast Reisen, the bus and travel company near Freiburg im Breisgau in southwestern Germany, has seen diesel fuel rise from 12%-15% of costs to 20%-25%. Because 15 of its 25 buses are part of the regional public transport network, the company can't automatically raise fares, and government increases so far are “a droplet on a hot stone,” said Sedelmeier, managing director for public transport.
Read more: Russian oil cap begins, trying to pressure Putin on Ukraine
Rast Reisen had to add a 10- to 15-euro diesel surcharge to trips to popular destinations like northern Germany's island of Sylt or Croatia's coast because prices spiked after catalogues were printed. Next year, prices for trips will simply be higher.
WHAT COULD GO WRONG?
Energy markets are looking to China and wondering when the world's second-largest economy will recover after the end of drastic COVID-19 restrictions. With low demand for fuel at home, the Chinese government let refineries ramp up their exports.
But if travel picks up in China, that diesel may disappear from the world market, raising prices as competition for fuel increases.
Adani accuses short-seller Hindenburg of attacking India
India’s Adani Group, run by Asia’s richest man, has hit back at a report from U.S.-based short-seller Hindenburg Research, calling it “malicious”, “baseless” and full of “selective misinformation.”
Shares in the conglomerate have suffered massive losses since Hindenburg issued its report alleging fraud and other malfeasance. On Monday, shares in some Adani companies recovered some lost ground. The flagship company, Adani Enterprises, gained 3.2% and Adani Ports & Special Economic Zone Ltd. added 3.3%. But shares in other Adani listed companies fell between 5% to 20%.
Adani’s 400-page rebuttal issued late Sunday accused Hindenburg of attacking India and its institutions and of breaking securities and foreign exchange laws. Adani has also accused Hindenburg, which said it was betting against the group’s companies, of trying to derail a share sale originally expected to bring in about $2.5 billion.
Read more:
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani's statement said.
In response, the Hindenburg firm denied the accusations and said Adani's response largely confirmed its findings and failed to address key questions. It said the group was trying to conflate its rise with the success of India itself.
“We believe India is a vibrant democracy and emerging superpower with an exciting future. We also believe India's future is being held back by the Adani Group," Hindenburg said in a statement. “We also believe that fraud is fraud, even when it's perpetrated by one of the wealthiest individuals in the world," it said.
Read more: Adani’s 750 MW power to come to national grid in March: Nasrul Hamid
Gautam Adani and his family have built a vast fortune mining coal to fuel energy-hungry India’s fast-growing economy. Businesses in the conglomerate span industries including infrastructure, ports, data transmission, media, renewable energy, defense manufacturing and agriculture. Adani's own net worth has skyrocketed nearly 2,000% in recent years.
With a net worth of nearly $125 billion late last year, Adani surpassed Amazon boss Jeff Bezos to briefly become the world's second-richest man, according to Bloomberg's Billionaire Index. After last week's losses, Bloomberg's index ranked him seventh richest in the world with a fortune worth $92.7 billion.
The report from Hindenburg said it judged the seven key Adani listed companies to have an “85% downside, purely on a fundamental basis owing to sky-high valuations.”
Hindenburg said its report, “Adani Group: How the World’s 3rd Richest Man is Pulling the Largest Con in Corporate History,” followed a two-year investigation. It listed 88 questions it invited the company to answer. Most of the allegations involved concerns about the group’s debt levels, activities of its top executives, use of offshore shell companies and past investigations into fraud.
Investors began dumping Adani-linked shares on Wednesday, wiping out some $48 billion in market value.
Over the weekend, Adani said it would carry on with its share sale in Adani Enterprises as scheduled, despite the value of its shares falling well below the price range of the offering. On Monday, Adani Enterprises was trading at 2,850 rupees ($35), up 3.2% but well below the band of 3,112 to 3,276 rupees initially set for the offering which closes Tuesday.
In its response to Hindenburg, the Adani Group said none of the 88 questions in its report was “based on independent or journalistic fact finding.” It rejected numerous questions as baseless, misleading or biased. In response to other questions, the group attached documents and tables of data and said it had followed local laws.
Read more: Adani Group mulls suing US short-seller for fraud claims
Adani also dismissed concerns over its debt-fueled growth, saying the “leverage ratios of Adani portfolio companies continue to be healthy and are in line with the industry benchmarks of the respective sectors.”
In an interview with CNBC TV-18 on Monday, Adani's chief financial officer Jugeshinder Singh said the group's gross debt was $30 billion, out of which $9 billion was from Indian banks.
Hindenburg said only 30 pages in Adani's response focused on issues it raised and the rest consisted of court records, general information, company financials and “irrelevant corporate initiatives.” Adani failed to specifically answer 62 of the 88 questions it had posed, it said.
Late Thursday, Jatin Jalundhwala, head of the Adani group’s legal department, said the group was considering legal action against Hindenburg. Hindenburg said it stood by its report and would welcome legal action by the Adani group.
Automakers Renault, Nissan make cross-shareholdings equal
Nissan and Renault have changed their mutual cross-shareholdings equal at 15%, ironing out a source of conflict in the Japan-French auto alliance.
Renault Group will transfer 28.4% of the Nissan shares it owns into a French trust, so its stake will be the same 15% that Nissan Motor Co. has in the French automaker.
Read more: Nissan plans to halt production in Russia
Voting rights would be “neutralized” for most decisions, the two companies said in a statement Monday.
The move had been anticipated because of leaks to various media outlets.
Read more: Nissan has launched all-new Nissan Magnite in Bangladesh
The Nissan-Renault alliance began in 1999, at a time when the Japanese automaker was in tough financial straits. The disparity was a cause of friction, especially after Nissan became far more profitable than Renault.
Taxes slow India's solar power rollout but boost manufacture
In May last year Fortum India, a subsidiary of a Finnish solar developer, won the bid for a solar power project in the state of Gujarat. The project was due to be completed three months ago and would have generated enough electricity for 200,000 homes.
But like many other solar power projects in the country, it's been delayed as Fortum India struggles to source and pay for necessary components.
“For the last six months, we have not been able to finish developing any new projects,” said Manoj Gupta, who oversees Fortum India's solar projects in India.
Gupta said solar panels and cells have become obstructively expensive because of protective taxes the Indian federal government implemented in April last year. The basic customs duty imposes a levy of 40% on imported solar modules and 25% on solar cells.
The government says it wants to encourage the domestic manufacture of components required to produce solar power and reduce the country's reliance on imports.
Read more: Bangladesh, India don’t compete with each other in garment sector, says BGMEA President
But solar developers say homegrown producers, while rapidly growing and being pushed along by policy initiatives, are still too fledgling to meet demand. Current cell and module manufacturing capacity in India is around 44 gigawatts per year, just a fraction of what's needed to meet India's renewable aims.
In 2022, India had a target to install 100 gigawatts of solar energy as part of goal to add 175 gigawatts of clean electricity to its grid. But only 63 gigawatts of solar power were ultimately installed last year, according to Indian federal government data. India missed its 2022 renewable energy target by just nine gigawatts.
“Without these duties we would have easily achieved our targets for larger solar projects, at least,” said Jyoti Gulia of the renewable energy research and advisory firm JMK Research.
Most solar developers in India and around the world rely on China, with the nation producing more than 80% of the world's solar components, according to the International Energy Agency. Many countries have tried to encourage domestic production to limit dependence on the country. The United States' recent climate law, for example, also incentivizes homemade renewable energy manufacturing.
“China controls the market and we saw during both the pandemic and the geopolitical conflict between our countries that they just stopped the supply chain completely,” said Chiranjeev Saluja from the Indian solar manufacturer Premier Energies. “I think the government wants to develop the whole solar ecosystem, that is the intent behind such policies.”
Saluja added that a bustling solar manufacturing industry also had wider economic benefits.
“The jobs in manufacturing are well-paying, secure jobs. And while developers employ only a handful of people, to manufacture cells required to produce one gigawatt of solar energy, you will need at least 500 people,” he said.
A 2022 report found that India’s renewable energy sector could employ more than one million people by 2030, but only if domestic manufacturing continued to scale up considerably.
Another Indian government policy that mandates that solar components can only be bought from government-approved manufacturers to ensure that the modules and cells are of good quality is also stalling projects, according to analysts.
Read more: Indian investors can set up industries in Bangladesh through buy-back arrangement: PM
Developers are unable to purchase from southeast Asian countries as manufacturers there have yet to be approved or have not applied. Many of those countries have free trade agreements with India which would make them exempt from import taxes.
“The situation is quite grim today,” said Vinay Rustagi, managing director at the renewable energy consultancy Bridge to India. “Global supply chain issues, material shortages and, of course, the duty on solar components has led to a lot of projects being postponed.”
Rustagi said the growth in domestic manufacturing as a result of the tax is “encouraging, but I do not think it is sustainable.” He added that the government “should be aiming to create strong domestic capabilities that can be a preferred choice without any taxes or duties.”
Solar manufacturers do not agree.
“We have allowed for dumping from other countries for too long. Otherwise domestic manufacturing would have taken a strong root already,” said Gyanesh Chaudhary, vice chairman at Vikram Solar, an Indian solar manufacturer.
“These taxes and policies were announced well in advance and there was enough time to factor them into costs,” Chaudhary said. “Mandates such as the approved list of manufacturers are to make sure the quality of products coming into India are of a certain minimum quality.”
But Srivatsan Iyer of solar developer Hero Future Energies said the unpredictability of the sector made it hard to factor in the extra costs.
“Land, connectivity to the project site, supply chain issues are just some dynamic factors and, of course, the pandemic,” said Iyer of the difficult landscape for solar projects. “With these duties, clean power is just more expensive for India now.”
Iyer is worried that the extra costs could also thwart India's next renewable energy target in 2030. But he's hopeful the government might defer some duties in the upcoming federal budget announcement scheduled for Feb. 1.
The government hasn't yet given any indication that it will make amendments to its tax policy.
Top 10 Export-Earning Products of Bangladesh
Bangladesh’s export earnings hit a record high of $52.08 billion in FY22. However, inflation and economic slowdown across the world impacted the country's export earnings. Though clothing is the main export product of Bangladesh, the export basket includes many other products that contribute significantly to the economy. Let’s take a look at Bangladesh’s top export products.
10 Major Exportable Products of Bangladesh Bringing Highest Earning
Besides the apparel industry, small factories of various export products have been developed in all corners of the country by private initiatives. Here are the product categories that bring the highest foreign exchanges for Bangladesh.
1. Readymade Garments
In Fiscal Year (FY) 2021-2022, the export value of Bangladesh’s Ready-Made Garment (RMG) sector reached an estimated $31.46 billion or approximately Tk. 3,33,639 crore (the exchange rate is equivalent to Tk. 106.05), which was a growth compared to the previous year’s figure of $27.95 billion or approximately Tk. 2,96,415 crore (the exchange rate is equivalent to Tk. 106.05).
Read More: BGMEA, SOWTEX to help connect more Bangladeshi RMG exporters with Indian textile suppliers
The RMG exports of Bangladesh comprise a wide range of knitwear and woven garments, including shirts, pants, T-shirts, jeans, jackets, and sweaters.
Notably, the Export Promotion Bureau (EPB) statistics indicate that knitwear products saw a remarkable rise of 36.88% to $23.2 billion, or approximately Tk. 2,46,040 crore, outstripping woven garments, which increased by 33.82% to $19.4 billion or Tk. 2,05,741 crore approximately.
This surge in the apparel industry has had a great impact on Bangladesh’s economic development. The major foreign markets for Bangladesh’s RMG exports in FY22 were the United States, the United Kingdom, Germany, Italy, France, Spain, the Netherlands, Canada, and Belgium.
2. Jute and Jute Products
Bangladesh is one of the leading exporters of jute and jute products in the world. The country has a long history of jute cultivation and manufacture, dating back to the colonial era. Bangladesh’s jute industry is in the middle of a period of immense success.
Read More: Export of jute products a boon for Satkhira women.
IMF expected to approve Bangladesh’s $4.5 billion loan package on Monday
Bangladeshi officials have received indications from the International Monetary Fund (IMF) that the multilateral lender's board has agreed in principle to approve the country's loan request.
Several officials of the Ministry of Finance said that the IMF will approve the loan for Bangladesh on Monday (Jan 30).
An IMF team led by Rahul Anand visited Dhaka from October 26 to November 9, 2022, to thrash out the details of the program.
Read: IMF to support Bangladesh’s aspirations of becoming a higher-income country by 2041: DMD
After that the IMF's deputy managing director, Antoinette Monsio Sayeh, visited Bangladesh from January 14-18 and praised the economic development and social progress she witnessed during her visit, saying it has left an impression on the whole world. Sayeh also congratulated Prime Minister Sheikh Hasina on that.
Former IMF economist Dr Ahsan H. Mansur told UNB that is known of the visits and discussions held with the Ministry of Finance, Bangladesh Bank, National Board of Revenue, Ministry of Planning, Bangladesh Bureau of Statistics (BBS), and others indicates the global lender has reached an agreement to provide $4.5 billion loan to the country.
The first instalment of the IMF loan is just awaiting formalities, he said.
"We are getting the loan just the way we wanted. A total of $4.5 billion will be leant to Bangladesh," Finance Minister AHM Mustafa Kamal told the media earlier.
The amount will be disbursed in seven installments till December 2026. The first installment of $447.78 million will be cleared in February. The remaining amount will be in six equal instalments of $659.18 million each.
Read: Bangladesh Bank expects first instalment of $4.5 b IMF loan to arrive by next month: Spokesman
The interest rate of the loan will depend on the market rate at the time of maturity. The Finance Ministry has calculated that the rate would be around 2.2 percent, sources said.
The IMF earlier stated that its delegation led by Rahul Anand and the Bangladesh authorities had agreed on a program to support Bangladesh's economic policies with a 42-month arrangement of about $3.2 billion under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) as well as of about $1.3 billion under the Resilience and Sustainability Facility (RSF).