RTC Director

Apple profits fall for first time in a decade

Computer and smartphone maker Apple has reported its first quarterly drop in profits in a decade, but said it will raise dividends for shareholders.

 

It made a net profit of $9.5bn (£6.2bn) in the January to March quarter, down from $11.6bn last year.

 

But the results were better than many had expected, as strong iPhone and iPad sales boosted revenues to $43.6bn.

 

Concerns over slowing demand for its products amid increased competition have hurt Apple's share price recently.

 

"Though we've achieved a credible scale and financial success, we acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012," Tim Cook, chief executive of Apple said.

 

The company said it sold 37.4 million iPhones and 19.5 million iPads worldwide in the three-month period.

 

'Very frustrating'

Although Apple continues to remain a dominant player in the tablet computer and smartphone markets, investors have been worried that its market share was being eroded by increasingly popular offerings from rivals such as Samsung.

 

There have also been concerns over the lack of new product launches.

Analysts have suggested the company needs to innovate and develop new products to stay ahead of the competition, rather than relying on updates to existing products.

"The market is tired of the same old thing at Apple,'' said Lauren Balter, an analyst at Oracle Investment Research.

"Investors are looking for innovation. The reality is that people are looking at other products now and they are looking at other cool features from competitors.''

These concerns have seen investors ditch Apple shares over the past few months. It has lost around 40% of its stock market value since hitting an all-time high in September last year.

However, Apple's chief executive tried to assure investors and shareholders that the firm was continuing to take measures to ensure that it maintained its dominance in the market.

"The decline in Apple's stock price over the last couple of quarters has been very frustrating for all of us... but we'll continue to do what we do best,'' he said.

"The most important objective for Apple will always be creating innovative products.

"Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline," he added.

Some analysts said that the lack of a new product did not mean that the firm was not developing one

 

 

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by RTC Director

US manufacturing growth worst in six months

 

The US manufacturing sector grew at its slowest pace in six months during April, a survey has suggested.

 

Research firm Markit said the domestic market was the main source of weakness, offset by a rise in export production.

 

Markit's purchasing managers' index (PMI) fell to 52 from 54.6, remaining above the 50 level that marks the line between growth and contraction.

 

Similar surveys released on Tuesday covering China and the eurozone also showed economic activity weakening.

 

Gloomy outlook

Markit's "flash" PMI survey - which is based on replies from about 85% of those firms surveyed - found that US manufacturing employment increased in April, although the rate of increase was weaker than of late.

 

Demand from US buyers rose at its slowest pace in six months, with the new order component of the index falling to 51.8 from 55.4 last month.

 

Chris Williamson, chief economist at Markit, said the findings suggested output growth was slowing sharply in the second quarter.

 

"While this week's first quarter GDP numbers may... bring some brighter news on the economy, the picture looks to have already begun to darken again, with GDP growth set to weaken in the second quarter."

 

Figures due out on Friday are expected to show the US economy grew at an annualised pace of 3% in the first three months of the year.

 

Germany weakens

Earlier on Tuesday, a preliminary manufacturing PMI survey for China showed growth in the sector slowed in April, adding to concerns about the country's economic recovery.

 

A drop in new export orders was blamed for the decline, a sign of weak global demand.

 

Meanwhile in the eurozone, activity in the services and manufacturing sectors continued to decline in April, with German output falling for the first time since November last year.

 

Markit's PMI for the eurozone remained at 46.5 in April, unchanged from the month before.

 

 

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by RTC Director

IFC’s financing for Indomina supports economic growth & employment in the Dominican Republic

IFC, a member of the World Bank Group, is investing $20 million in the Dominican Republic’s first full-service film and television studio facility to help diversify the country’s economy and generate high-skilled jobs, growth, and tax revenues in the fast-growing media sector. In addition to its direct investment, IFC is also helping to mobilize a US$10 million syndicated loan, for a total transaction value of $30 million.

 

Pinewood Indomina Studios will offer integrated production and post-production services for regional and international film and television productions. The facility is expected to significantly contribute to the local film industry, creating more than 1,000 direct jobs and 600 indirect jobs among small and mid-sized suppliers over the next five years. Indomina has also established a film training program in the Dominican Republic, in collaboration with international academic organizations, to help build the technical and creative skills necessary to support this growing industry. It is offering specialized training in a wide range of technical areas, including production, film accounting, set design, and post-production.

 

“Indomina's partnership with IFC is a key milestone in the company’s evolution,” said Indomina’s Chief Financial Officer Antonio Gennari. “IFC’s financing enables us to invest in Pinewood Indomina Studios, the media park, and Indomina's film production, as well as execute top quality training initiatives for small and medium businesses that will provide services to the film and television industry.”

 

Located approximately 40 miles east of the capital of Santo Domingo, Pinewood Indomina Studios is expected to start its operations in 2013 and will attract foreign and domestic film projects. In its initial phase, expected to be inaugurated in June, the studios will include three state-of-the-art soundproof sound stages, a world class 60,000 sq ft ocean-front water filming facility, and a wide range of supporting facilities, including offices and workshops. These facilities will consolidate industry service providers, creating a competitive cluster.

 

“The film industry is a powerful driver of economic growth for many countries and, increasingly, for emerging markets,” said Ary Naim, IFC’s Country Head for the Dominican Republic. “With its diverse landscapes, good infrastructure and proximity to the United States, the Dominican Republic is well positioned to compete in this dynamic sector and capitalize on its benefits – from job creation to innovation and development.”

 

Despite the recent global recession, the film industry continues to report increasing revenues and, in some countries, has grown faster than the overall economy. Recognizing the potential for economic growth and employment opportunities, some governments, including Brazil, Colombia, the Dominican Republic, Mexico and Argentina, have created specific incentives and policies to promote this sector.

 

The Dominican Republic has recently enacted a comprehensive cinema law that introduces film incentives to position the country as a competitive film production destination in the global marketplace.

 

IFC supports companies across the telecommunications, media and technology value chains in emerging markets and currently has a US$1.5 billion portfolio in this sector. This is IFC’s first investment in a media park.

 

Since the Dominican Republic became a member of IFC in 1961, IFC has invested US$937.9 million in the country’s private sector, including US$292.6 million in mobilization. IFC also implements advisory programs to improve the business climate, build skills of local entrepreneurs, and promote access to finance and markets for small businesses.

 

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by RTC Director

Eurozone output still falling, PMI survey indicates

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Activity in the eurozone's services and manufacturing sectors continued to fall in April, a survey has indicated, with even German output declining.

 

Markit's composite purchasing managers' index (PMI) for the eurozone remained at 46.5 in April, unchanged from the month before.

 

A reading below 50 indicates shrinking activity.

 

The survey suggested that German private sector output fell for the first time since November last year.

 

Chris Williamson, chief economist at Markit, said: "Previously, we've seen Germany expand while other countries have contracted - notably Spain, Italy and France.

 

"Now it seems those contractions are being accompanied by a downturn in the largest economy, Germany, and that will no doubt act as a drag on growth."

 

There was slightly better news from France, where the PMI survey indicated that the private sector contracted at a slower rate in April than before.

 

Policy change?

The European Central Bank (ECB) is meeting next week for its regular monthly monetary policy meeting, with eurozone interest rates currently at 0.75%.

 

Mr Williamson warned that while the eurozone PMI figure had not worsened in April, there were signs that things could get worse in the future.

 

"The forward-looking indicators suggest there's risks to the downside for the contraction to gather pace," he said.

 

The eurozone's economy is contracting, and shrank by 0.6% in the last quarter of 2012.

 

Ben May, European economist at Capital Economics, said the survey could act as a nudge to the ECB to provide some further stimulus measures.

 

"[There are] further signs that the improvement in market sentiment alone will not be enough to drag the eurozone out of recession," he said.

 

"Given this, and the fact that inflation looks set to remain subdued, pressure on the ECB to provide additional policy support looks set to increase."

 

Earlier on Tuesday, a survey by HSBC indicated that growth in China's manufacturing sector slowed in April.

 

The preliminary reading from HSBC's PMI survey fell to 50.5, from 51.6 in March, with a drop in new export orders blamed for the decline.

 

The findings add to concerns about the country's economic recovery. China's growth rate slowed to an annual pace of 7.7% in the first three months of the year, down from 7.9% in the previous quarter.

 

 

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by RTC Director

Tighter rules for mortgage lending agreed by EU

New rules will mean that borrowers across the European Union (EU) will be refused a mortgage if they fail a standard affordability assessment.

 The European Commission said its new mortgages directive would prevent any repeat of reckless home loan lending of the past.

 The agreement also includes plans to make it easier for consumers to shop around for their loan.

 A lenders' group said the changes would have little impact on the UK system.

 The Council of Mortgage Lenders (CML) said that UK rules, which were bolstered recently, already had the greater consumer protection and information in place.

 The directive, driven by the Irish Republic's presidency of the EU, aims to halt cases of mortgages being handed out without any background checks on borrowers.

The key feature is that any borrower across the 27 EU member states would be refused a home loan if they failed a standard credit worthiness assessment.

Other features of the agreement include:

A standard information sheet given to borrowers to explain how to find the mortgage that suits their needs

Detailed information on the specifics of a loan, including warnings about future changes to interest rates and costs of borrowing in a foreign currency

A crackdown on misleading advertising

A cooling-off period for anyone signing up to a mortgage

A general right to repay a mortgage early, although this may include a fee

Lenders being required to show some forbearance to borrowers who get into difficulty with repayments, rather than repossessing a home immediately

"The financial crisis started with the subprime debacle in the United States where mortgages were being handed out with no background checks carried out on whether consumers could afford them, and ill-informed and often vulnerable consumers were encouraged to take excessive risk," said EU Internal Market Commissioner Michel Barnier.

"We have seen similar excesses in Europe, for example with the housing booms and the inevitable busts which followed in Spain and Ireland."

He said the consequences had been enormous, with many people losing their homes to repossession.

"This directive will help put an end to these excesses and foster responsible lending practices," he added.

"Consumers will finally get the protection they deserve. They will be better informed so they can choose the mortgage product which best meets their needs, at the best price, and fully aware of the risks they are taking."

In the UK, lenders have recently gone through a mortgage market review that tightened rules on applications. This has led to new rules, including affordability checks, which will come into force in April 2014.

Paul Smee, director general of the CML, said that the changes would create more paperwork for lenders and regulators in the UK.

But he said that little would change for mortgage applicants above the April rules.

"For consumers, the requirements of the directive add little to the consumer protection and information that UK customers already receive, since our regulatory regime is already the most advanced among European member states," he said.

"For customers in some other member states, the changes will result in increased protection and greater consistency."

The European rules must be approved by the EU Parliament as a whole and endorsed by member states. A vote will be held in the EU Parliament on 11 June.

 

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by RTC Director