News Archive


China commerce ministry declines to comment on whether Qualcomm deal approved

BEIJING (Reuters) – China’s commerce ministry declined on Thursday to comment on whether or not Qualcomm Inc’s (QCOM.O) deal to buy NXP Semiconductors (NXPI.O) had been approved, after a deadline for approving the deal passed without an announcement, and with Qualcomm having said it would drop its bid for the Dutch firm.

The ministry also said during a press briefing that the matter was an anti-monopoly issue and not related to U.S.-China trade frictions.

Reporting by Elias Glenn; Editing by Shri Navaratnam

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German industry group: Deeds must follow words on U.S.-EU trade

BERLIN (Reuters) – Germany’s BDI industry association welcomed the outcome of talks between U.S. President Donald Trump and European Commission President Jean-Claude Juncker on trade as a sign of de-escalation but added that action must follow the words.

“The willingness of the EU and U.S. to talk about reducing transatlantic trade barriers is an important signal to ease tense relations. The duties spiral seems to have been stopped for the time being. Now words must follow deeds,” said the BDI.

Reporting by Madeline Chambers; Editing by Michelle Martin

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Germany hails U.S.-EU trade reprieve

BERLIN (Reuters) – German ministers welcomed an initiative agreed between U.S. President Donald Trump and European Commission President Jean-Claude Juncker to ease the threat of a trade war, with one describing it as a breakthrough and another saying it had won the EU time.

After a meeting with Juncker at the White House on Wednesday, Trump agreed to refrain from imposing car tariffs while they start talks on cutting other trade barriers.

The two also said talks would seek to “resolve” U.S. tariffs on steel and aluminum and Europe’s retaliatory duties, a step back from Trump’s import protections for U.S. metal producers.

“This is not yet the result we are aiming for but it has made a positive result in the whole discussion…on free trade or protectionism more likely than before,” Maas told a news conference in Seoul, extracts of which were broadcast on German radio.

“America and Europe are not opponents…We are partners and allies with common values and interests,” Maas said, adding it was good that the two would also work on unfair trade practices and on a reform of the World Trade Organization.

“The answer to America First can only be: Europe United,” he said.

German Economy Minister Peter Altmaier was even more enthusiastic, hailing the talks as a “breakthrough” that could avoid a trade war and save millions of jobs. “Great for global economy,” he tweeted late on Wednesday.

U.S. import tariffs of 25 percent on steel and 10 percent on aluminum imposed in March will stay in place during the talks and Trump said Europe had agreed to raise purchases of liquefied natural gas and lower trade barriers to American soybeans.

The DIHK chambers of Commerce gave a cautious welcome to what was agreed, saying however, that U.S. auto tariffs were not totally off the table.

Germany’s car industry, including BMW (BMWG.DE), Daimler (DAIGn.DE) and Volkswagen (VOWG_p.DE), accounts for some 800,000 jobs.

“The proposed solutions move in the right direction but a significant proportion of scepticism remains,” the DIHK said.

Reporting by Madeline Chambers; editing by Emelia Sithole-Matarise and Angus MacSwan

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Asian shares edge higher, but weak growth outlook weighs

SHANGHAI (Reuters) – Asian shares inched up n Thursday as the United States and Europe agreed to negotiations to ease barriers on trade, but weakness in China markets underscored persistent worries about the outlook for global growth.

European markets looked set to open higher after U.S. President Donald Trump and European Commission President Jean-Claude Juncker had agreed to work to lower industrial tariffs on both sides.

Financial spreadbetters expect Britain’s FTSE to open 0.1 percent higher, Germany’s DAX to climb 0.7 percent and France’s CAC to gain 0.4 percent.

Juncker also called Trump’s agreement to hold off on car tariffs as the two sides launch negotiations to cut other trade barriers a “major concession.”

At the same time, Trump said Europe has agreed to increase purchases of U.S. liquefied natural gas and lower trade barriers to American soybeans.

But a warning of slowing growth from Facebook Inc, which saw the company’s stock fall as much as 24 percent in after-hours trading on Wednesday, highlighted risks for investors and businesses in the current earnings season.

Detroit automakers General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV (FCA) also lowered their full-year profit forecasts on Wednesday, in an indication that trade war worries are far from over.

Furthermore, nearly three-quarters of economists polled by Reuters said trade protectionism would have a significant downward impact on global growth next year.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.

After months of see-sawing prompted by uncertainty over trade, some markets were enjoying a relief rally, said Matt Simpson, senior market analyst at Faraday Research in Singapore.

“Possibly we’ve got a bit of Trump fatigue,” he said, referring to Trump’s turnabout on trade threats. “You know, nobody cares if it’s going to happen or not at this stage. They just want a slight change of tone.”

He added that ahead of U.S. second-quarter GDP data on Friday and a likely shift in the Bank of Japan’s stimulus policy next week, investors were “in a bit of a holding pattern.”

The BOJ is said to be considering changing the composition of exchange-traded funds it buys as part of its stimulus program. It holds a two-day policy review on July 30-31.

Concerns that the bank could begin unwinding its stimulus pushed the yield on benchmark 10-year Japanese government bonds to its highest level in a year. The yield was 2.5 basis points higher at 0.090 percent.

U.S. Treasury yields also remained elevated, pushed higher by the outcome of the Juncker-Trump meeting. The yield on 10-year notes was at 2.9690 percent, compared with its U.S. close of 2.936 percent on Wednesday.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, was at 2.6694 percent compared with a U.S. close of 2.657 percent.

ECONOMIC UNCERTAINTIES

In China, the Shanghai Composite index fell 0.7 percent and blue-chip shares lost 1.1 percent. A senior official at the country’s state planner told journalists that “escalating Sino-U.S. trade frictions have brought uncertainties to our country’s economic development.”

The prospect of weaker growth has prompted a loosening of fiscal policy in China as authorities seek to head off a slowdown. Most recently, China’s central bank gave notice to some domestic banks that it would ease a capital requirement to support lending.

Shares in Taiwan gained 0.4 percent and Seoul’s KOSPI added 0.6 percent, with Korean investors taking heart from a respite in trade tensions.

But data on Thursday showed South Korea’s gross domestic product grew at a slower pace in the second quarter, and export growth weakened.

Australian shares were flat and Japan’s Nikkei stock index was down 0.1 percent.

After gains on Wall Street on Wednesday sparked by signs of sunnier days for U.S.-Europe trade, SP 500 E-mini futures turned lower Thursday in Asia, falling 0.3 percent to 2834.25.

In commodities, the prospect of a deal between the U.S. and Europe lifted the most active soybean futures up 2.2 percent at $8.94-3/4 a bushel, after touching their strongest level since July 9 at $8.95-1/4.

U.S. soybeans are among the goods China included in retaliatory tariffs after Washington slapped additional levies on $34 billion worth of Chinese goods on July 6.

But while the transatlantic mood was improving, “this deal, along with the breakdown of a large MA deal, leave investors fearing that the trade war has just turned even more so on China,” Citi analysts wrote in a note Thursday, referring to Qualcomm Inc dropping its $44 billion bid for NXP Semiconductors after failing to secure Chinese regulatory approval.

The dollar dropped 0.2 percent against the yen to 110.73

The euro was up less than 0.1 percent on the day at $1.1734, while the dollar index, which tracks the greenback against a basket of six major rivals, fell 0.2 percent to 94.140.

U.S. crude was flat at $69.29 a barrel. Brent crude was 0.5 percent higher at $74.30 per barrel.

After moving slightly higher as the dollar eased, spot gold fell 0.1 percent to $1,229.20 per ounce. [GOL/]

Reporting by Andrew Galbraith; Editing by Jacqueline Wong and Richard Borsuk

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Retailers set sights on Facebook, Google ad revenue

BERLIN/CHICAGO (Reuters) – People with hay fever hate dust. That was the premise of a marketing drive launched by British vacuum cleaner maker Dyson with U.S. retailer Target Corp.

Using data about its customers’ shopping habits, Target homed in on shoppers who likely had allergies and showed them ads for Dyson’s cordless V6 vacuum on social media and Target’s website. The result: sales for the vacuums doubled among shoppers who regularly purchase anti-allergy treatments and products such as Claritin or humidifiers on Target.com and in stores.

Data about real people and real behaviors “actually get a much stronger result because the fidelity of that data is so much richer,” said Kristi Argyilan, Target’s senior vice president of media and guest engagement.

Retailers ranging from Target and Walmart Inc to grocers such as Tesco Plc are working aggressively to attract big advertisers to their websites in a bid to drive sales, according to interviews with retailers, packaged goods makers, consumer data firms and marketing consultants.

Specifically, they are selling more ad space, pop-up banners and search-bar keywords to consumer goods companies such as Kraft Heinz Co and Procter Gamble Co. These makers of everything from soup to shampoo are investing more to advertise on retailers’ websites where people who already have an intent to buy are guided to specific products using their individual shopping habits.

This online ad revenue offers significantly higher margins for retailers than selling goods in stores.

By carving out a space for themselves in the booming digital ad market, they are taking on Alphabet Inc’s Google and Facebook Inc and the $114 billion they received last year in global online ad revenue. According to research company eMarketer, Google and Facebook’s revenue accounted for nearly half of the global market in 2017.

For a Graphic, click tmsnrt.rs/2K04vpc

Supermarkets have long charged brands to place products in the busiest parts of their stores, such as near the checkout counter.

As more shopping shifts online, e-commerce giants Amazon.com Inc and Alibaba Group Holding Ltd pioneered replicating that strategy on their websites by mining data to target advertising at selected customers or groups. Amazon ad revenue alone could jump to $6.6 billion by 2019 from $2.8 billion last year, according to JPMorgan.

While retailers have a long way to go before they come close to Google and Facebook digital advertising prowess, their instant access to data on what is selling puts stores in a strong position, said Joe Zawadzki, chief executive of MediaMath, which helps brands manage ad campaigns.

“To the extent that the retailer can help the manufacturer, it becomes a new revenue opportunity and a way forward for them,” he said. “We’re very much at the start of this.”

Alphabet and Facebook declined to comment. To be sure, retailers and brands for the foreseeable future will still be drawn to advertise with Facebook and Google given the internet giants’ massive customer base in order to drive traffic to their websites. And the Silicon Valley companies likely will make overtures to long-time clients of theirs to avoid losing business.

BANNERS, POP-UPS AND MONEY BACK

Retailers are offering a range of marketing options online, including banner ads, pop-ups and money-off deals. As with Google, suppliers can pay for keywords to get their products listed at the top of any search.

Some industry observers expect voice aides like Amazon’s Alexa may one day let brands pay to be the first product recommended when a shopper asks to purchase an item such as ketchup, a feature known as “Amazon’s Choice.” Amazon told Reuters it has no plans to let companies pay for the distinction, “nor do we have plans to advertise on Alexa broadly.”  

“We’re making sure that when consumers are typing in ‘ketchup’, our product is really above, that it comes up into that first screen,” Nina Barton, Kraft Heinz president of global online and digital growth, told Reuters in an interview.

Barton said Kraft Heinz, the owner of the Philadelphia cream cheese and Planters peanuts brands, was on track to spend four times more on e-commerce marketing in 2018 than it did last year, including advertising on social media, search engines and retailer’s websites.

Consumer companies bid against one another for thousands of keywords such as “ketchup” or “chocolate,” often even snatching up keywords that are important to rival brands to undercut them, said Nii Ahene, co-founder CPC Strategy, a digital marketing agency that advises several major consumer packaged goods companies, including Unilever.

Retailers are paid anything from 25 cents to $2 each time a shopper clicks on a sponsored search item, depending on the product being sold,  he said. Ads for supplements, for instance, cost a premium as people are more likely to buy the same vitamins repeatedly and that means more sales for the consumer company, according to Ahene.

“Companies like Kraft Heinz and Nestle have always paid for a premium placement, whether it’s at the front of the store, in an end-cap or premium placement on a shelf. This is simply the evolution of existing processes to a digital storefront,” he said.

SALES IMPACT

The push by retailers comes as some major brands question the value of some online ads.

Procter Gamble, the world’s biggest advertiser, pressured Facebook and Alphabet’s YouTube and other media companies to reveal how many people see their ads and how ad agencies spend advertising dollars.

The average view time for an ad on a mobile news feed is just 1.7 seconds, Marc Pritchard, PG’s chief brand officer, told the Association of National Advertisers’ media conference in March.

“Even Facebook and Google can’t tell PG properly whether their ads have worked, whereas if you’re buying retail media we can measure whether there has been a statistically significant uplift from running that media campaign,” said Guillaume Bacuvier, a former Google advertising executive who is now chief executive of customer data company Dunnhumby, which is owned by British supermarket Tesco.

The average time that an ad is viewable on retailer sites is about 16 seconds, according to Dunnhumby, which defines “viewable” as when at least half of the ad is on the screen.

In one case, Tesco ran banner adverts on its website for a leading brand of dishwasher tablets. Dunnhumby said almost 100,000 pounds ($132,000) of sales came from customers exposed to the ad, with 6 percent of the sales happening in a store.

That translated into a return on advertising spending of $11.34 for every $1 invested, according to Dunnhumby, noting that more than 2,200 new customers had added the brand to their online favorites list as a result of the campaign. That is far more than an average return on ad spend of $2.62 for every $1 invested across all media types, according to a 2016 Nielsen report.

It is those kinds of numbers that are helping win over marketing experts including Andrew Clarke at Mars Inc, another major advertiser and the maker of MM’s candy and Wrigley’s gum.

“The advantage potentially of these players is they can help really demonstrate the impact of our marketing dollars on a transaction, both online and potentially offline as well,” Clarke told Reuters. ($1 = 0.7577 pounds)

Additional reporting by Kate Holton, Dominique Vidalon, Lisa Baertlein, Martinne Geller and Jeffrey Dastin; editing by Vanessa O’Connell and Edward Tobin

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German industry warns U.S. auto tariffs not completely off table yet

BERLIN (Reuters) – A top German industry group gave a cautious welcome to solutions proposed by U.S. President Donald Trump and European Commission President Jean-Claude Juncker to avert a trade war, but warned that U.S. auto tariffs were not completely off the table yet.

After a White House meeting on Wednesday, Trump and Juncker said they agreed to hold sweeping trade talks on reducing tariff, subsidy and non-tariff barrier reductions, with Trump appearing to give ground on his threat to impose a 25 percent tariff on imported cars and auto parts.

Germany, home to big carmakers such as Volkswagen AG (VOWG_p.DE) and Daimler AG (DAIGn.DE), would be hard hit by car tariffs, and the automotive industry has warned such measures could hike vehicle costs by $83 billion and result in the loss of hundreds of thousands of jobs.

German Economy Minister Peter Altmaier hailed the deal as a breakthrough, saying the measures agreed by Trump and Juncker could help avoid a trade war and save millions of jobs.

Eric Schweitzer, president of the German Chambers of Industry and Commerce (DIHK), said it was up to the United States now to rebuild a basis of trust with Europe, and remove the tariffs.

“The proposed solutions move in the right direction, but a significant portion of scepticism remains,” he said in a statement issued shortly after the two men spoke to reporters.

He said the meeting had at least shown that the European Union would not let itself be divided. “Only united as Europeans do we have sufficient economic and political weight to effectively represent our interests,” he said.

“Without strong European answers, there is a danger that only we will make concessions and in response face new unreasonable demands from the USA,” he said, calling for a comprehensive agreement that followed the guidelines of the World Trade Organisation (WTO).

Schweitzer said European companies also faced other non-tariff barriers to doing business in the United States, for instance in winning government contracts, or due to the different regulations in various U.S. states.

Reporting by Andrea Shalal; Editing by James Dalgleish

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China’s Pinduoduo prices U.S. IPO at top of range, raises $1.6 billion: sources

HONG KONG (Reuters/IFR) – Chinese online group discounter Pinduoduo Inc (PDD.O) priced its U.S. initial public offering (IPO) at $19 per American depositary share (ADS), raising $1.63 billion in the second-biggest U.S. float by a Chinese firm this year, according to three people familiar with the situation.

The pricing values money-losing Pinduoduo – which counts Chinese internet giant Tencent Holdings Ltd (0700.HK) as a main backer – at $23.8 billion including all outstanding share options, compared with a valuation of $15 billion following a funding round in April.

The fast-growing company allows consumers to group together to get better discounts from merchants selling goods as varied as clothes, kitchenware and gadgets. It offered about 85.6 million ADS or about 6.8 percent of its enlarged share capital, at $16 to $19 each.

Pinduoduo declined to comment on the pricing. The people declined to be named because they were not authorised to speak to the media.

Pinduoduo is the latest Chinese tech firm tapping international capital markets to bolster coffers amid ever-intensifying competition with domestic rivals, notably e-commerce heavyweights Alibaba Group Holding Ltd (BABA.N) and JD.com Inc (JD.O).

It is also joining several sizable Chinese listings in New York this year even as Sino-U.S. trade tensions involving tit-for-tat tariffs rattle global markets.

Chinese video streaming service provider iQiyi Inc (IQ.O) raised $2.42 billion from a Nasdaq IPO in March, and Tencent Music Entertainment, China’s largest music-streaming firm, aims to raise up to 4 billion in a U.S. IPO planned for October.

Set up by former Google engineer Colin Huang in 2015, Pinduoduo will begin trading on Nasdaq under the symbol PDD on Thursday.

It said in U.S. regulatory filings that it had attracted over 300 million active buyers and more than 1 million merchants to its platform.

Due to low-priced products and a large user base in China’s smaller cities, the firm’s gross merchandise volume exceeded 100 billion yuan ($14.98 billion) last year. Alibaba’s Taobao marketplace took five years to reach that milestone, while JD.com took 10 years.

Investors and analysts also attribute its rapid growth to the online traffic derived from Tencent’s messaging-to-shopping app WeChat, which helps direct many of its more than 1 billion users to Pinduoduo.

“We believe WeChat accounts for the majority of buyer traffic, and Pinduoduo could not have built up its large user base cost-effectively and rapidly without WeChat,” wrote Arun George, a technology analyst who publishes on independent research platform Smartkarma.

Pinduoduo’s revenue has grown sharply, reaching 1.38 billion yuan in January-March from 37 million yuan in the same period a year prior. Its net loss, however, remained broadly steady at 201 million yuan.

China Renaissance, CICC, Credit Suisse and Goldman Sachs are advising Pinduoduo.

Reporting by Julie Zhu and Fiona Lau of IFR in Hong Kong;Editing by Christopher Cushing and Stephen Coates

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Factbox: Tributes paid to former Fiat Chrysler CEO Marchionne

(Reuters) – Former Fiat Chrysler Chief Executive Sergio Marchionne, one of the auto industry’s most tenacious and respected auto chiefs, has died, succumbing to complications from surgery.

The carmaker’s controlling family shareholder confirmed news reports of his death on Wednesday, without giving the cause of death or saying when he had died.

Following are some of tributes paid to Marchionne.

Apple CEO Tim Cook:

“Sad to hear of the unexpected passing of Sergio Marchionne, an auto industry visionary and a remarkable leader. Our thoughts are with his family, friends and everyone at Fiat Chrysler.”

U.S. President Donald Trump:

“Sergio Marchionne, who passed away today, was one of the most brilliant successful car executives since the days of the legendary Henry Ford. It was a great honor for me to get to know Sergio as POTUS, he loved the car industry, and fought hard for it. He will be truly missed!”

Canadian Prime Minister Justin Trudeau:

“He was a giant in the auto industry, a friend of the Italian-Canadian community, and a visionary in the corporate world. Sergio Marchionne’s death is a huge loss, and Sophie and I send our condolences to his family and friends.”

PSA Group CEO Carlos Tavares:

“I am extremely sorry to hear this very sad news and I extend my sincere condolences to the family of Sergio Marchionne. Marchionne’s leadership will remain our benchmark in the automotive industry.”

Aston Martin CEO Andy Palmer:

“We are deeply saddened to learn of the passing of Sergio Marchionne. On behalf of all of us at Aston Martin Lagonda, I would like to extend our sincere sympathies and condolences to his family, friends and colleagues at Fiat Chrysler Automobiles.”

Daimler Chief Executive Dieter Zetsche:

“The auto industry has lost a real giant. And many of us have lost a very dear friend: Sergio Marchionne.”

Gary Jones, United Auto Workers President:

“During the industry’s dark days of the recession, Chrysler, Dodge, Jeep and RAM were at a perilous point. Working with the UAW members, the FCA rebirth was born when many doubted it would come. As in all labor-management relationships, there were clashes and disagreements.”

“And when history looks back at his legacy, despite bumps and bruises along the way, in the end, the sun wasn’t setting when he left the company, the sun was rising. That will long be remembered.”

Chase Carey, Chairman and CEO of Formula 1 motor racing:

“He led with great passion, energy and insight, and inspired all around him. His contributions to Formula 1 are immeasurable. He was also a true friend to all of us and he will be deeply missed.”

Italian President Sergio Mattarella:

“Marchionne wrote an important page in the history of Italian industry. As leader of Fiat he went through years of very deep and radical transformation of markets, production systems, financial strategies, and trade union relations. He has ensured the continuity and the re-launch of the group by building a new combination able to keep up with the competition.”

Bill Ford, executive chairman of Ford Motor Co:

“Sergio Marchionne was one of the most respected leaders in the industry whose creativity and bold determination helped to restore Chrysler to financial health and grow Fiat Chrysler into a profitable global automaker. His extraordinary leadership, candor and passion for the industry will be missed by everyone who knew him. Our thoughts and prayers go out to his family at this difficult time.”

Silvio Berlusconi, former Italian prime minister and media tycoon:

“With Sergio Marchionne Italy loses not only the most brilliant of its managers, but one of the symbolic figures of our country. He represented the best of Italy.”

“An Italy that is not afraid of competition, knows how to face it and win thanks to the quality of Italian products and the creative capacity of people and businesses.”

Volkswagen Chief Executive Herbert Diess:

“With Sergio Marchionne the auto industry has lost a great thinker and shaper.” 

General Motors CEO Mary Barra:

“Sergio created a remarkable legacy in the automotive industry. Our thoughts are also with our industry colleagues at Fiat Chrysler as they deal with this sudden loss.”

Domenico Siniscalco, former Italian finance minister, now Italy country head at Morgan Stanley:

“Sergio was a unique blend of a visionary and an executor. He combined a grand vision and the ability of getting things done. This is a real tragedy.”

Carlos Ghosn, Chairman and CEO Renault-Nissan-Mitsubishi:

“Our entire team at Renault-Nissan-Mitsubishi were saddened to learn of the death of Sergio Marchionne. At this difficult time, we would like to express our sympathies to the Marchionne family, to our colleagues at Fiat Chrysler, Ferrari and CNH International.”

Hyundai Motor vice chairman Chung Eui-sun:

“All of us at Hyundai Motor Group are deeply saddened to hear of Sergio Marchionne’s passing. We offer our deepest condolences to his family, friends, and colleagues for their loss.”

“He was an incredible leader who made a major impact on the Fiat Chrysler business and the wider automotive industry. He will undoubtedly be missed by everyone who knew him.”

Reporting by Pamela Barbaglia, Giselda Vagnoni, Laurence Frost, Edward Taylor, Joe White, Bernie Woodall, David Shepardson and Hyunjoo Jin; Editing by Keith Weir, Kirsten Donovan and Peter Cooney

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Former Fiat Chrysler CEO Marchionne dies

MILAN (Reuters) – Former Fiat Chrysler CEO Sergio Marchionne, who rescued the Italian and U.S. companies and built them into the world’s seventh-largest carmaker, has died, the news breaking moments before the group reported a heavy fall in profit on Wednesday.

The announcement of the death of Marchionne, 66, one of the auto industry’s most tenacious and respected CEOs, drew tributes from rivals and tears from his closest colleagues, a collective grief that overshadowed a big sell-off in Fiat Chrysler shares.

Marchionne had fallen gravely ill after what the company had described as shoulder surgery at a Zurich hospital. He was replaced as chief executive last weekend after Fiat Chrysler (FCA) said his condition had worsened.

FCA’s scheduled second-quarter earnings presentation, led by Marchionne’s successor and former lieutenant Mike Manley, began on Wednesday afternoon with a minute’s silence. At FCA’s Italian base in Turin, “executives are all in tears. I spoke to a few of them,” said a source close to the company.

As eulogies flooded in, FCA shares fell more than 16 percent as investors digested an unexpected 11 percent fall in adjusted operating profit, well below market forecasts.

“Unfortunately, what we feared has come to pass. Sergio Marchionne, man and friend, is gone,” FCA Chairman John Elkann, scion of the controlling Agnelli family, said in a statement.

Marchionne rescued Fiat and Chrysler from bankruptcy after taking the wheel of the Italian carmaker in 2004 and he multiplied Fiat’s value 11 times through 14 years of canny dealmaking. He was due to step down at FCA in April next year.

“The best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion,” Elkann added.

NEW BOSS, SAME STRATEGY

On Saturday, FCA named Jeep division head Manley, 54, as head of the world’s seventh-largest carmaker, saying the Briton would execute a strategy that Marchionne had outlined in June.

Marchionne was also replaced on Saturday as chairman and CEO of Ferrari and chairman of tractor maker CNH Industrial, both spun off from FCA.

Underlining the task facing Manley, FCA cut its full-year profit outlook after the weaker-than-expected quarter. It blamed the result on a weaker performance in China, a market that represents one of the new CEO’s immediate headaches.

“The biggest challenges we face and frankly we’re going to continue to face … are all focused in China,” Manley said.

FCA has yet to make any significant inroads in China.

In Marchionne’s June plan, FCA pledged to boost production of sport utility vehicles and invest in electric and hybrid cars as part of a plan to double operating profit by 2022. It also unveiled fresh bold targets for Jeep, FCA’s profit engine.

The auto industry has lost one of its strongest protagonists for mergers and acquisitions at a time when strategic alliances with technology companies are increasingly supplanting transformational mergers between traditional carmakers.

Apple CEO Tim Cook described Marchionne as “an auto industry visionary”.

Marchionne had advocated industry mergers to share the cost of building electric and self-driving cars.

He gave up the quest when his preferred target, General Motors Co, rejected his advances and focused on fixing FCA’s finances first, notably erasing all net debt, which he achieved in the quarter to June.

Manley said on Wednesday that his mandate was to deliver the 2022 strategy as “a strong and independent FCA” but added the group would remain “flexible” about any deal opportunities.

In the absence of a partner, Manley needs to show FCA can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries over potential U.S. emissions fines abound. FCA is also heavily reliant on North America just as that market is expected to come off its peaks.

The future appears less clear at Ferrari, which Marchionne had been due to lead until 2021 and where a new mid-term strategy was supposed to be unveiled in September.

TRIBUTES PAID

Tributes arrived from industry figures and politicians worldwide, praising his perseverance, hard negotiating skills and candor.

Marchionne resurrected one of Italy’s biggest corporate names and revitalized Chrysler, succeeding where the U.S. company’s two previous owners – Mercedes parent Daimler and private equity group Carberus – failed.

“Sergio Marchionne was one of the most respected leaders in the industry whose creativity and bold determination helped to restore Chrysler to financial health and grow Fiat Chrysler into a profitable global automaker,” said Ford Motor Co Executive Chairman Bill Ford Jr.

Daimler Chief Executive Dieter Zetsche said in a post on Linkedin: “The auto industry has lost a real giant. And many of us have lost a very dear friend: Sergio Marchionne.”

At FCA, Marchionne flattened an inflexible hierarchy, replacing layers of middle management with a meritocratic leadership style. He slashed costs by reducing the number of vehicle architectures and creating joint ventures to pool development and plant costs.

“Marchionne’s leadership will remain our benchmark in the automotive industry,” said Carlos Tavares, CEO of PSA Group.

A tough negotiator known for getting his way, in 2005 Marchionne forced GM to pay Fiat $2 billion not to exercise an option to sell its auto division to the U.S. carmaker – a move that may not have helped his later merger overtures.

Marchionne’s track record with operational turnarounds was a little more patchy than his dealmaking. Profitability in Europe is only now gradually recovering, and Alfa Romeo has yet to turn a profit despite multi-billion-euro investments.

In North America, however, Marchionne was quick to end production of unprofitable sedans and retool plants to build pricier SUVs and trucks, a move since emulated by Ford and GM.

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Marchionne had “created a remarkable legacy”, said Mary Barra, the GM boss that rejected Marchionne’s tie-up advances.

Additional reporting by Ed Taylor, Laurence Frost, Bernie Woodall, Simon Jessop and Pamela Barbaglia, Editing by Mark Bendeich/Keith Weir/Adrian Croft

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZFlng920kEk/former-fiat-chrysler-ceo-marchionne-dies-idUSKBN1KF182