Industrials

New GE lacks money-back guarantee for investors

10 Jul 2018

John Flannery’s breakup plan could boost the shares of the conglomerate he runs by one-quarter, a Breakingviews analysis suggests. The unenthused reception from the market may be down to GE’s history of unforeseen charges, and the fact it will retain many old problems.

CATL’s overseas charge has lasting power

10 Jul 2018

The Chinese battery champion will build its first factory abroad in Germany after scoring a $5 bln supply deal with BMW. It establishes a base in a promising market for electric vehicles. The newly listed company is cementing its lead over compatriot Warren Buffett-backed BYD.

UK shareholder battle upsets activist conventions

9 Jul 2018

Unhappy investors typically push for CEOs to step down. At infrastructure firm Stobart, fund manager Neil Woodford tried to get the chairman sacked. Iain Ferguson narrowly survived with help from rival Invesco. But the brawl puts little faith in investors guiding quiet change.

Auto tariff deal hopes are rightly restrained

5 Jul 2018

Carmaker shares rose after a German newspaper reported Europe may be able to avoid higher U.S. levies on exports. But BMW, Daimler and Volkswagen’s valuations are still down a fifth since January. Caution is sensible given the unpredictability of White House thinking on trade.

Vedanta digs just deep enough to leave London

2 Jul 2018

Chairman Anil Agarwal’s offer of a 28 pct premium for the mining group’s 2.3 bln pound UK unit is probably enough for investors spooked by deadly protests. They can invest directly in the Indian operations anyway. And a simpler structure paves the way for more dealmaking.

Cox: If GE can break up, so can the United States

28 Jun 2018

Over a century the industrial conglomerate became too unwieldy to manage, unaccountable to stakeholders and financially undisciplined. Sound familiar? What works for corporate America could be applied to the government of a divided country showing similar symptoms of distress.

GE breakup ushers in brave new era

26 Jun 2018

CEO John Flannery is spinning off the ailing $111 bln conglomerate’s healthcare unit and selling Baker Hughes, ending more than a century of growth. Focusing on aviation and power has risks, but the plan slashes debt and makes GE manageable. It was Flannery’s only logical choice.

Carillion pitchforks are a blunt but merited tool

26 Jun 2018

The UK pension regulator could claw back 17 mln pounds from bosses of the collapsed outsourcer. That’s peanuts compared to Carillion’s pension deficit, and implies a tortuous legal saga. Still, the group’s chaotic failure and reckless management warrant a hefty deterrent.

GE’s small ball merely delays tough decisions

25 Jun 2018

The conglomerate is selling its distributed-power unit to buyout shop Advent for $3.25 bln. It brings CEO John Flannery closer to his divestment target but doesn’t really cut debt or bolster earnings. That will require bigger sales or spinoffs, and probably another dividend cut.

Airbus’ Brexit certainty drive is wishful thinking

22 Jun 2018

The nature of the planemaker’s business means that earmarked transition periods after a UK exit could be too short. But its call for clarity on future arrangements will fall on deaf ears. Even if UK politicians weren’t bungling the process and wanted to help, they can’t.

Trade war tariffs eat Daimler’s homework

21 Jun 2018

The carmaker’s tariff-induced profit warning is odd, since Chinese duties would hit U.S. cars but not imports from elsewhere. Daimler’s statement could cover for poor performance, or make a political point about a trade war’s costs. Expect other companies to try the same.

French cable group suffers earnings power shortage

18 Jun 2018

Nexans lost almost a fifth of its value after saying EBITDA may fall 15 pct. The company’s racy growth plans rest on trends like offshore wind and soaring data use, but investors value it as a sector basket-case. Given the profit warning and a departing CEO, that looks fair.

Rockwell dabbles in financial overengineering

11 Jun 2018

Paying $1 bln for a non-controlling stake in a rival software company seems odd. PTC doesn’t need the cash. Such shareholdings in peers can have logic, as some drugmakers have shown. The bar is high, though, especially after Rockwell last year turned down a takeover at a premium.

M&A pause is promising for Wesfarmers investors

7 Jun 2018

The $39 billion Australian conglomerate is exiting British DIY and spinning off supermarkets. Newish boss Rob Scott is wary about future dealmaking. That is encouraging for shareholders: it makes more sense for now to work existing businesses harder and return more cash.

GE needs to put much more imagination to work

4 Jun 2018

A $135 bln debt load and reduced earnings power are weighing down the $120 bln conglomerate. JPMorgan reckons CEO John Flannery needs to raise $30 bln to cut leverage, and the company’s dividend could be in further danger. GE’s 63 pct Baker Hughes stake is the ripest for a sale.

Greyhound owner’s turnaround faces lengthy delay

31 May 2018

Bus and rail operator FirstGroup’s CEO resigned and its shares fell after it reported a loss, due to competition from low-cost airlines. It can cut costs and sell assets, but tough markets and management upheaval don’t help. A sale looks easier, but may not deliver a good price.

Investors risk whiplash in car parts M&A standoff

31 May 2018

Shares in German headrest maker Grammer are trading 10 pct above an offer from Ningbo Jifeng. That’s optimistic. A big Bosnian investor is unlikely to counter-bid, and the Chinese group just needs another 25 pct to win control. Selling in the market may be the safest option.

China is winner in German-Bosnian governance fight

29 May 2018

Manufacturer Ningbo Jifeng may offer to buy out other shareholders of Bavarian auto supplier Grammer. The Chinese group is offering a tiny premium and should make a healthy return. But a lowball exit may appeal to investors weary of a boardroom spat with Bosnia’s Hastor family.

GE power slump is positive wrapped in negative

23 May 2018

The $130 bln conglomerate warned profit from making turbines won’t grow this year. And demand could remain soft for a while. GE’s sprawl means that as the world goes, so do its businesses. But the irony of slimming down is that fossil fuel dependency just becomes more visible.

GE CEO finally shunts turnaround plan onto tracks

21 May 2018

John Flannery is selling the struggling conglomerate’s sputtering locomotive unit to Wabtec for $2.9 bln and half of the new outfit, most to be spun off to shareholders. It’s not transformational but it removes a big headache and indicates how Flannery might shed other assets.