Industrials

Gases suppliers caught by two deflating bubbles

1 Dec 2015

Linde cut its medium-term EBITDA forecasts by 5 percent, knocking its shares hard. The German industrial gas company is exposed to emerging markets and oil prices. Its dour outlook will blow cold air on the sector, including rival Air Liquide’s $13 bln bid for Airgas.

Bombardier subsidies offer crucial but costly lift

19 Nov 2015

The Canadian aerospace firm’s rail unit agreed to a $1.5 bln infusion from Quebec, days after the province struck a deal to invest in its wobbly jet project. Public cash buys time but comes with pricey terms and governance risks. Potential mergers may be harder to pull off, too.

Chancellor: The illusion of debt-fuelled earnings

18 Nov 2015

Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.

Rail deal needs more than $28 bln to stay on track

18 Nov 2015

Canadian Pacific justifies its hostile bid for Norfolk Southern by touting cost savings worth over $12 billion. But CP shareholders will keep $5 billion of that amount for themselves. Given antitrust risks, a higher offer will be necessary to bring this merger into the station.

Dialog shareholders should short-circuit Atmel bid

17 Nov 2015

The Anglo-German chipmaker’s $4 billion-plus bid for its U.S. peer has been opposed by activist Elliott Management. Both sides have put forward doubtful theories to make their case. But Elliott is right on one thing: the integration risks look too big.

Rolls-Royce can emerge from turbulence intact

12 Nov 2015

Cutting next year’s pre-tax profit estimates by a third will intensify calls for a break-up of the UK engine maker. But that would neither solve Rolls’ problems, which mostly stem from past strategic errors and cheap oil– nor would it make much sense at the current share price.

BASF can withstand pain from cheap oil and China

27 Oct 2015

The German chemical giant has been hit by deteriorating emerging markets. Low oil prices also hurt BASF’s exploration business. A slightly poorer 2015 guidance sent shares down more than 3 pct. But a solid balance sheet and strong cashflow justify the group’s $77 bln valuation. 

Maersk adrift in oversupplied shipping sector

23 Oct 2015

Freight rates are collapsing faster than the Danish container shipping company can cut costs. The $34 bln group has lowered its earnings guidance for 2015 by 15 pct. Amid weak trade and overcapacity in the sector, even efficient operators like Maersk can’t fight the tide. 

GM’s bumper Q3 exposes broader carmaker concerns

21 Oct 2015

The Motown giant earned $1.4 billion and posted a record pre-tax margin. Fears about U.S. and China profit and rising competition from Silicon Valley persist, though, hobbling stocks across the industry. But GM’s discount to rivals is looking increasingly unwarranted.

Harley-Davidson needs to find a fountain of youth

20 Oct 2015

The iconic motorcycle maker’s brand has morphed from Hells Angel outlaw to retired Michigan dentist. Like the broadcast news, it’s struggling to generate new, younger customers. The shift requires a major overhaul that dents profit – a task that may best be performed in private.

United board flies into risk-management failure

19 Oct 2015

The U.S. airline’s directors have been buffeted by the turbulence caused by new CEO Oscar Munoz’s illness. Apple’s handling of Steve Jobs’ terminal cancer remains a far worse example. But Goldman Sachs and JPMorgan show it’s possible to both inform investors and respect privacy.

GE is overdue Nelson Peltz’s kid-glove activism

5 Oct 2015

His investment firm now owns 1 pct of the slimmed-down $266 bln U.S. conglomerate. But the usually forceful activist is playing nice. That’s because CEO Jeff Immelt’s plan to ditch most of GE’s finance unit should work. Any fumbling, though, will create an easy target for Peltz.

Poland’s coal mine meddling saps its credibility

5 Oct 2015

Premier Ewa Kopacz’s Brazilian-style intervention in the country’s energy sector has seen one state-controlled company replace defiant executives. It may soothe irate unions with elections imminent. But it’s far from what Poland’s capital markets and vibrant economy need.

Schaeffler gets second time unlucky with markets

2 Oct 2015

The German car-parts maker delayed its IPO amid a scandal at customer VW. It’s not Schaeffler’s first unhappy brush with markets. In 2009, the financial crisis foiled a hostile takeover of rival Continental, leaving the group almost bankrupt. Management again face a tough choice.

Bayer weakens itself via mistimed plastics IPO

1 Oct 2015

The German drug giant has slashed the size of its plastics arm’s listing by 40 pct and cut the price by a quarter, blaming China and VW woes. As the proceeds will be used to lower its own debt, its balance sheet will be weaker than it could have been. Bayer should have waited.

Alcoa split is canny move – not least for its CEO

28 Sep 2015

The $12 bln aluminum producer is cleaving sluggish smelting from healthier aerospace. Based on rival valuations, Alcoa shareholders can expect a modest uplift. Boss Klaus Kleinfeld, however, gets a new gig atop a more promising business, one he has been building by acquisition.

One easy cost cut for Caterpillar is executive pay

24 Sep 2015

CEO Doug Oberhelman bet big on mining in 2011, just as commodity prices peaked. Now the $42 bln equipment maker plans to slash up to 10,000 jobs. Investors aren’t impressed. Maybe with his chairman’s hat on, Oberhelman could ensure he and his team share the pain.

IPO adds unusual twist to Schaeffler family saga

21 Sep 2015

The closely held car-parts maker, which once sprang a surprise raid on rival Continental, is opening itself to outside shareholders. Schaeffler has strong growth and high margins. But the family, which recklessly loaded the group with debt, isn’t giving up an inch of control.

Rob Cox: Immelt pins GE colors to Alstom’s mast

10 Sep 2015

If the revised math actually works, buying the French energy provider is a steal of a deal. GE’s big acquisition also serves as a symbol of its shrewd refocus on industry over finance. On this 14th anniversary of being at the helm, Jeff Immelt is staking his legacy on Alstom.

Volkswagen gets new chairman decision half-right

3 Sep 2015

Naming CFO Hans Dieter Poetsch as its new chair should give the German carmaker a better balance between cost discipline and engineering perfection. But a strong external candidate would have made more sense. As it is, Poetsch will start off needing to prove his independence.