Industrials

Daimler could spin its trucks into Ferraris

4 Feb 2016

Margins and market share are improving, but the German carmaker’s valuation gives little credit for its big truck business. Boss Dieter Zetsche might unlock value by listing that separately, as Fiat did with prize brand Ferrari. Truckmakers like Volvo fetch far higher valuations.

ThyssenKrupp salvation is right on its doorstep

29 Jan 2016

The German steel-making group’s turnaround has sputtered: shares are down 35 pct in a year and the outlook is tepid. A better corporate structure could create new oomph. A full-blown breakup may be tricky, but fellow Essen resident RWE’s spinoff plans may work for Thyssen too. 

Reformed robot maker tripped up by tech slowdown

29 Jan 2016

Japan’s Fanuc smartened up after activist Dan Loeb took a stake: hiking dividends, cancelling stock, and actually talking to investors. But dismal results reflect the challenges posed by a slowing China and weaker smartphone demand. That’s not something financial policy can fix.

Ford investors are driving at big drop in profit

28 Jan 2016

The humble six times earnings at which the automaker trades implies a 40 pct fall in the bottom line. GM and Fiat Chrysler look worse. China’s wobbles, a peaking U.S. market and autonomous cars warrant caution. At least Ford is better prepared for a downturn than a decade ago.

United’s pesky investors chart risky flight path

27 Jan 2016

Altimeter Capital and another fund are pressuring the No. 2 U.S. airline, whose stock has sagged amid the CEO’s health problems and lower traffic at its Houston hub. Cheap oil creates room for share-lifting payouts, but United could use the cushion when future turbulence strikes.

Time for BASF to press the self-help button

27 Jan 2016

The low oil price is hitting the German chemicals giant harder than previously expected, with writedowns denting 2015 operating profit by 18 pct. Investors won’t be best pleased. But BASF has a big oil and gas investment budget it can hack back before considering deeper cuts.

Siemens’ strong earnings have many moving parts

26 Jan 2016

The German engineer raised its expected earnings per share for 2016 by 2.5 percent. Cost-cutting seems to be taking effect. But earnings per share, which hinge on many inputs, make for a slippery target, especially as Siemens is sticking to its former revenue and margin guidance. 

Johnson-Tyco inversion is insured against politics

25 Jan 2016

U.S. building-controls maker Johnson Controls’ $16 bln purchase of Ireland-domiciled Tyco risks becoming a target for critics of tax-reducing deals. But with an expected $500 mln of yearly savings and a low 11 pct premium for Tyco’s owners, tax savings are gravy, not meat.

Obama’s driverless car idea needs turbo boost

15 Jan 2016

The president wants to invest $4 bln over 10 years to encourage more drivers to use accident-preventing technology. The shift to connected and automated cars could save lives and almost $1 trln a year. Tax breaks and tighter safety standards would speed up the process.

GE making wicked smaht HQ move to Boston

13 Jan 2016

Despite being the capital of a state once derided as Taxachusetts, Beantown ticks boxes for a hulking global company. Relocating from a sleepy part of Connecticut to a university town with a startup and engineering culture, and solid infrastructure, should advance GE’s makeover.

Epic IPO suggests Saudis feel heat of fading oil

7 Jan 2016

The kingdom may sell a stake in state-owned Aramco, the world’s largest crude producer – by far. The firm’s value could be in the trillions of dollars, dwarfing the likes of Exxon. With oil prices falling and other energy sources on the rise, there’s growing pressure to cash in.

Dow-DuPont tax acrobatics more clever than cagey

15 Dec 2015

The chemical giants’ $130 bln merger and split should avoid any tax on capital gains. One needed contortion is to show that the shareholder rosters overlap. Dodges like so-called inversions have caught flak lately, but this looks more like a convenient fit with byzantine rules.

BAE deal beats Rolls-Royce nationalisation

14 Dec 2015

The British government has concerns about the aero-engine maker that also handles some nuclear submarine work for the UK. In extremis, nationalisation is a possibility. A better scenario is that defence contractor BAE steps in. It might dust off deal ideas in any event. 

From Caterpillar an activist butterfly may hatch

10 Dec 2015

The $39 bln earth-moving machinery conglomerate is in a pickle. Deals struck at the peak of the commodities and Chinese investment booms trashed the stock and hurt management’s credibility. An investor seeking changes, even a breakup, could play well in Peoria and on Wall Street.

Dow-DuPont reaction could produce $20 bln in value

9 Dec 2015

Combining the chemical giants, each worth nearly $60 bln on Tuesday, would be complicated. A three-way split thereafter might not unlock much value, but would bring focus. Asset rejiggering could allow cost cuts worth almost twice as much as Wednesday’s 10 pct share-price gains.

How to beat the FTSE 18-fold: keep spending

9 Dec 2015

Shares of UK construction-hire group Ashtead have outpaced the FTSE average at an extraordinary rate. It has won admiration because it spends every penny it has on new kit. Negative cashflow results, but earnings grow. Ashtead’s task is to know when to stop investing.

Late cycle M&A runs afoul of U.S. trustbusters

7 Dec 2015

Enforcers stopped GE’s sale of its ovens business to Electrolux, put the lid on a canned tuna union and may yet erase Office Depot’s sale to Staples. Some health insurance mergers may be at risk, too. In a record year for acquisitions, it’s becoming hard to find clean ones.

Electrolux’s GE failure leaves only faint stains

7 Dec 2015

The Swedish group will be deprived of extra growth after a U.S. acquisition was scotched by trustbusters, who felt that owning GE’s appliance unit would give Electrolux overmighty pricing power. The $1 bln fall in Electrolux’s value suggests investors never held such hopes. 

Rail deal’s logic loses steam under legal scrutiny

4 Dec 2015

Norfolk Southern rejected a $28 bln bid from Canadian Pacific, which could probably afford up to $33 bln. Regulatory approval is a bigger issue, though. The bar is high for railroad mergers, and this one likely falls short. It may be one deal that shouldn’t have left the station.

Spinoff may recharge drained RWE

1 Dec 2015

The German power group may soon list renewable, grid and retail units separately, leaving behind a dirty old coal and nuclear business laden with debt. It looks like an attractive way to boost the 6.3 billion euro valuation. The downside is a potentially huge stock overhang.