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Cevian is a company that offers IT consulting services, identity and relationship management services.

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German factory output falls as supply chain problems deepen – business live

Jun 8, 2021

Rolling coverage of the latest economic and financial news Japan’s Q1 slump revised up LIVE Updated An A-class model of German car manufacturer Mercedes Benz at the production line of the Daimler factory in Rastatt, Germany. Photograph: Kai Pfaffenbach/Reuters First published on Tue 8 Jun 2021 02.55 EDT BAT now expects revenue growth guidance of above 5% for 2021, as it pushes these ‘new category’ products such as Vuse, Velo and Glo. Jack Bowles, chief executive, said: “We added +1.4 million non-combustible product consumers in Q1, to reach a total of 14.9 million. “We are growing New Categories at pace, encouraging more smokers to switch to scientifically substantiated reduced-risk alternatives.” Back in February, my colleagues Rob Davies and Matthew Chapman reported how BAT had launched a £1bn campaign using social media and popular influencers to promote its e-cigarettes , vapes and pouches. They explained: Critics say that such viral videos, even if they aren’t paid-for adverts, are the consequence of a global marketing push designed to offset dwindling cigarette consumption by recruiting the nicotine consumers of the future. BAT has embarked on a £1bn campaign that harnesses the popular appeal of social media influencers, pop stars and sporting events. According to a wide-ranging report by The Bureau of Investigative Journalism , it has also attracted younger adults, non-smokers and even reached the eyes of children. Tobacco giant bets £1bn on influencers to boost 'more lung-friendly' sales Read more British insurance giant Aviva’s headquarters are pictured in London. Photograph: Ben Stansall/AFP/Getty Images Shares in UK insurance firm Aviva have jumped 3.6%, after activist investor Cevian took a 5% stake - and started pressing for change. Cevian, Europe’s biggest activist investor, is pushing for Aviva to make deeper cost cuts, and return £5bn to investors following recent asset sales. Christer Gardell, Cevian’s co-founder, says: “Aviva has been poorly managed for many years, and its high-quality core businesses have been held back by high costs and a series of bad strategic decisions.” Shares in Aviva have gained 14.7p to 425p this morning, their highest since January 2020, just before the pandemic. But Cevian argues that Aviva’s share price could climb to more than £8 within three years, if it returned excess capital to shareholders through dividends or buybacks. Aviva has promised substantial returns and cost reductions as central planks of its strategy shift under Blanc, who has told investors that her mantra is to move quickly. However, Cevian wants a specific return of £5bn in dividends or buybacks of capital that the insurer has in excess of regulatory requirements The activist fund also believes that the cost-cutting can go further, calling for reductions of more than £500m from Aviva’s annual cost base by 2023, compared with the management’s target of £300m. It is also pushing for a leaner management structure, according to a person familiar with the matter. Updated FTSE opens a little higher In London, stocks have opened a little higher, with the FTSE 100 up 15 points or 0.2% to 7092 points. Asset manager Intermediate Capital Group are the top riser, surging 6.7%, after reporting record profits , and a 19% jump in third-party assets under management amid the recovery in markets over the last year. But oil producer Royal Dutch Shell are down 1.3%, following a drop in the oil price this morning, while steelmaker Evraz is down 1.5%. Brent crude has dipped 0.5% to $71 per barrel, after China’s crude oil imports dropped by almost 15% in May - suggesting weaker demand . Bob Yawger, director of energy futures at Mizhuo Securities, said: “Chinese oil imports at a five-month low ... would tend to confirm weakness in the Asia market.” On a brighter note, Japan’s economy shrank by less than first feared in the January-March quarter. Q1 GDP was revised up today, to show an annualised contraction of 3.9% (so almost 1% smaller on a quarterly basis). That’s up from a preliminary reading of a 5.1% contraction (or -1.3% q/q). Government spending and corporate investment fell less than first estimated, although household spending fell slightly more. Although the upgrade is welcome, it still leaves Japan half-way into recession, and breaks its recovery in the second half of 2020. Robert Ward (@RobertAlanWard) Slight upgrade to Japan’s Q1 GDP print. Partly higher medical costs plus some (probably involuntary) stockbuilding. So, not a structural upgrade, Q2 contraction still on cards. Japan's 1st qtr GDP fall upgraded to 3.9% on more public demand - The Mainichi The German industrial output was down 1% mom in April and March was revised slightly downwards from 2.5% to 2.2%.The fall was mainly due to consumer goods and construction, while energy was strong (+6%) due to bad weather conditions. A lack of semiconductors, timber and other intermediate goods weighed on German industrial output, says Reuters: The weaker than expected industrial figures suggest that the German economy will have to rely on household spending to support a still-fragile recovery from the coronavirus crisis. “Such a combination is unparalleled: Order books in industry are well filled and production is falling,” VP Bank economist Thomas Gitzel said, adding that the supply problems with semiconductors were pushing down output in the car industry. So despite well-filled order books, manufacturing will only make a limited contribution to overall economic growth in the second quarter, Gitzel said. Updated ING: Suez Canal blockage and chip shortages hit German firms He writes that April’s disappointing drop in industrial production suggests the rebound of the German economy in Q2 has ‘started with shaky knees’: The disappointing start to the second quarter suggests that supply chain disruptions, like the blockage of the Suez Canal in April or the ongoing semiconductor delivery problems, have not left German industry unscathed. However despite today’s disappointment, the industrial outlook remains bright. Brzeski adds that capacity issues and the lack of qualified workers could soon return as the most pressing hurdles to growth, as lack of demand isn’t a problem. Carsten Brzeski (@carstenbrzeski) Germany: First disappointments | Snap | ING Think - Disappointing industrial production data in April suggests a delayed rebound of the German economy Energy production jumped by 6.0%. Introduction: Supply shortage problems hit German factories Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. Output at German factories has fallen unexpectedly, as supply chain bottlenecks and shortages of key parts and materials such as computer chips threaten to undermine the recovery. German industrial production fell by 1.0% in April, the Federal Statistics Office reports this morning. That’s shy of forecasts of a 0.5% rise, as Europe’s largest economy looked to recover from its contraction earlier this year. Production of consumer goods slumped by 3.3% - even though some households are expected to be spending heavily this summer as lockdowns restriction are lifted. Production of intermediate goods (items used in final products) fell 0.2%, while production of heavy duty capital goods decreased by 0.1%. German industrial output to April 2021 Photograph: Destatis March’s growth was revised down too, from +2.5% to +2.2%. It means production at German factories is still 5.6% below its pre-pandemic levels, despite the pick-up in the global economy this year. Daniel Lacalle (@dlacalle_IA) Disappointing German industrial production. Down 1.0% in April after an increase of 2.2% in March. Significantly below consensus. Factory bosses have been warning of shortages of semiconductors, plastics, rubber and metals, with suppliers hiking prices in response. These shortfalls are threatening to undermine the recovery from last year’s economic slump, and are also pushing prices higher as firms try to recoup their costs. Holger Zschaepitz (@Schuldensuehner) OOPS! In April, German Industrial Production drops by 1.0% MoM, misses estimates of +0.4%, due to chip crisis and construction timber shortages. Yesterday we learned that German factory orders fell in April, indicating that the problems may last for some time. Semiconductor shortages are a particular problem, which has already hit car production this year. Those shortages are expected to run into next year, as ramping up chip fabrication plants takes time. Tesla is reportedly considering buying its own chip plant, to guarantee supplies . Bosch, Europe’s largest auto supplier, says car manufacturers must put “money on the table” and make a “rock solid” commitment to orders, Bosch board member Harald Krüger told the Financial Times. “The only way to get out of [the recent crisis] is to have a different level of commitment” Bosch opened a €1bn semiconductor plant in Dresden yesterday, to produce chips for its power tools in July, before beginning production on automotive chips in September. That might help to ease the chip shortage, though as Krüger says.... “Money needs to be put on the table and actually parts have to be bought. “The commitment needs to be rock solid that those parts will be bought. It can’t be: ‘Maybe I [will] buy them, prepare for it, and maybe not.’ This doesn’t work.”

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