FT : Why Ocado’s incessant cash burn isn’t such a bad thing

Why Ocado’s incessant cash burn isn’t such a bad thing
The online retailer has been consistent in tapping markets for money

There are two certainties about Ocado. First, it will take longer than investors expect to turn profitable. Second, it will take more money than they think to do it.

Equity capital markets have been basically closed this year, since investors have no appetite for speculative initial public offerings and the season of distressed cash calls hasn’t yet started. It’s fitting that the tech company-cum-grocer has stepped in to fill the gap with a £575mn placing.

Ocado has been remarkably consistent about tapping investors for cash over the past four-and-a-half years. Since it switched from delivering groceries to supplying the infrastructure for other people to do so, it has raised money on the way up — and now the way down. But there’s not much cause to think that’s about to change.

Two years ago it asked for just over £1bn, roughly two-thirds of it straight equity and the rest of it convertible debt. At the time, that seemed opportunistic. The company was three months from its pandemic-era share price peak. The combined package gave it £2.2bn of cash to play with. Now it seems more like a necessity.

While Ocado still had £1.5bn in liquidity at year-end in November, it had capital expenditure of £680mn last year. That figure is set to rise further, to about £800mn. Since the start of 2018 Ocado has raised £143mn from one placing, £183mn via a cash injection from customer Kroger, £563mn from selling half of its old retail business to Marks and Spencer, and £657mn from the 2020 equity raise. A profit warning from the retail joint venture last month may have hastened the cash call along, but the pattern here should be clear. This is a business that eats money.

Ocado says things are now different. This, it says, will be the last time it taps shareholders for funds. The placing and accompanying new revolving credit facility will give it enough headroom to “fund the requirements of its existing and expected customer commitments into the midterm”. After that — supposedly four to six years from now — it’s meant to turn cash flow positive and no new group financing will be needed.

To be fair, the context has shifted since last time round. The markets are much less willing to fund unprofitable growth, of which Ocado has been the UK champion. At £6bn its market capitalisation is less than a third of its peak. If it was a private company, its backers would probably have lost patience by now. Instead, it has the likes of Capital Group, Baillie Gifford and Jörn Rausing to stand behind it, good for around £210mn in the latest raise. But even they may demand greater discipline.

Investors are also less starry-eyed about the prospects for online retail. There hasn’t, as boss Tim Steiner claimed, been a real inflection point. Shoppers have not shifted online en masse. Earnings at the joint venture, Ocado Retail, are under pressure just like everywhere else. In the latest cash call Ocado is no longer talking up the opportunities for further global expansion. It more or less wants money to do what it’s already committed to doing.

But then investors aren’t paying for the pandemic bump any more. Shares are back to roughly where they were at the start of 2019, and its economics will improve as more of its warehouses finally open. It had 10 up and running by the end of last November. By November next year, it should be 30.

Admittedly, Ocado’s business model is still very far from “proven” as the company claims. It projects £6.3bn in revenue and £750mn in earnings before interest, taxes, depreciation and amortisation, but doesn’t say exactly when it will get there. Given past form on earnings misses, don’t bet on it happening sooner rather than later.

But all that said, this is meant to be the type of company London’s equity markets just won’t back. Ocado is proof that they can. It’s an unprofitable, cash hungry company that has been afforded an extraordinary amount of time and capital to prove itself. Expect it to take more time and more money. But at this point — and this price — what’s a little more?

Business of Fashion : Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says

Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says
The global luxury market accelerated sharply in early 2022, the consultancy found, but risks slowing due to macroeconomic pressures and Covid-19 lockdowns in China.
A customer carries shopping bags from Louis Vuitton, Chanel and Christian Dior | Source: Getty Images

The global luxury market is enjoying strong momentum in 2022 so far, Bain & Company said, estimating that first-quarter sales rose 17 to 19 percent year on year.
The market is currently on track to grow by 10 to 15 percent this year, although a slower-growth scenario could see sales rise by just 5 percent, the consultancy said Tuesday in a report issued jointly with Italian trade group Fondazione Altagamma.
While luxury sales have rebounded sharply from the pandemic, macroeconomic pressures including high rates of inflation in the US and Europe, slowing GDP growth, and the war in Ukraine have clouded the outlook for consumer demand. A slower-than-expected recovery from China’s latest round of Covid-19 lockdowns in key population centres like Shanghai and Beijing is another factor that could cause the market to downshift in the months to come, Bain said.
Despite taking a heavy hit in 2020, the luxury market was actually bigger than ever by the end 2021: Last year, the personal luxury goods market grew 7 percent above 2019′s pre-pandemic levels (excluding currency shifts) to total €288 billion ($305 billion), Bain said, revising its previous finding that 2021 sales had been broadly flat compared to 2019.

The new figures mirror the pandemic trajectory of some of luxury’s most powerful players, including Chanel, Hermès and LVMH, which reported record sales in 2021. “The immediate rebound of the market [is] even stronger than what we forecasted,” said Bain partner Federica Levato.
The sector’s resilience stemmed from consumers’ desire to return to their pre-Covid lifestyles, Levato said, as well as the fact that luxury goods were one of the few discretionary spending categories still possible during the crisis (when dining out and travel were paused).
“To spend money on these products and on these brands is really a willingness to go back to normal life to some extent,” she said.
The pandemic also forced brands to think more creatively about how to reach their consumers, leading some to discover untapped opportunities that could benefit growth longer term. In North America, a recent bright spot for luxury, companies have appealed to a more diverse group of consumers across generations, locations and ethnicities, Levato said.
By 2025, Bain expects that non-white consumers will account for 25 to 30 percent of luxury spend in the US, up from about 20 percent in 2019. Geographically, the Mid-West is expected to be a key area of growth over the next few years.
This year, market growth is being driven by booming demand in Europe, where Bain now expects sales to surpass 2019 levels this year, as well as the US, with consumers anxious to return to pre-pandemic lifestyles and refreshing their wardrobes accordingly, according to Bain. Growth in South Korea, too, is accelerating, with the country playing an increasingly prominent role in the global luxury market, Levato said.
Performance in China was strong during the first quarter, but a fresh wave of Covid-19 restrictions in key cities has since hampered luxury spending. According to Bain estimates, the market is unlikely to recover before the end of the year or early 2023.

Business Of Fashion : How a Little Italian Hotel Became a Global Fashion Brand

How a Little Italian Hotel Became a Global Fashion Brand
Pellicano Group CEO Marie-Louise Sciò has turned her family’s hospitality business into a name with fashion cachet. Now, the group is an attractive acquisition target.
Pellicano group CEO and creative director Marie-Louise Sciò has turned her family’s hospitality business into a fashion brand with international cachet. (Getty Images)

KEY INSIGHTS
  • Pellicano Group CEO Marie-Louise Sciò has revamped her family’s hotels business with impeccable style, turning it into a fashion brand.
  • The group has collaborated with the likes of Birkenstock, Aquazzura and Matchesfashion, and launched e-commerce venture Issimo.
  • Though the business remains small — projected to generate about €27 million this year — Sciò’s distinctive point of view has made it an attractive acquisition target.

It started with a bathroom renovation.
In 2005, Marie-Louise Sciò, fresh out of studying architecture at the Rhode Island School of Design, had no ambitions to enter the hospitality business. But when her father, Roberto Sciò, asked her to remodel one of the washrooms at Il Pellicano — the mid-century hotel on the Argentario coast of Tuscany that he had owned since 1979 — she accepted the challenge.
“Then I really started getting into it,” she said. By 2007, Sciò, a tall brunette with a clear sense of fashion and a global sensibility, had begun a revamp of the entire property, where her friends from the art and fashion worlds, inspired by its combination of vintage charm and modern sophistication, were coming to stay with increasing frequency. She recruited Juergen Teller to photograph the scene — populated by the likes of Margherita Missoni, Vladimir Restoin Roitfield and Giovanna Battaglia Engelbert — inspired by images that Slim Aarons and John Swope had taken at the hotel in the 1960s when it opened. In 2011, she published a coffee table book featuring images from all three photographers.
“That [book] was a big game changer in terms of perception,” said Sciò, who was named chief executive in 2012. “It put [Il Pellicano] on the map for a whole new group of people.”

Pellicano Group CEO Marie-Louise Sciò photographed by Juergen Teller in 2009 for a coffee table book on Hotel Il Pellicano. (Juergen Teller)
Over the past decade, Sciò has helped to redefine the top end of the hospitality pyramid as consumer expectations have evolved. Beautiful locations, comfort and unimpeachable service are no longer enough to entice a sophisticated set of high-net worth travellers: they want style, too.
In recent years, luxury brands like Armani and Bulgari have pushed into hotels in an effort to attract high-net-worth consumers interested in spending an increasing amount of their disposable income on experiences. At the same time, hospitality ventures like Soho House and Ace have taken a more design-driven approach, hiring in-demand architects and interior specialists to create distinctive environments, as well as savvy buyers to stock their retail stores with under-the-radar fashion labels rather than typical tourist tchotchkes .
None have managed to do it quite like Sciò, who has extended her hotel brand into fashion, starting with Pellicano Group’s merch — like a dog bed rendered in its signature yellow stripes — and expanding into collaborations. A 2019 partnership with Birkenstock was an instant hit — so successful that the shoemaker, now owned by L Catterton, developed a version of the wildly popular raffia double-strap style designed with Sciò for its main collection.
That same summer, Il Pellicano hosted a pop-up with Matchesfashion, the first place you could buy the collaboration online, on the hotel’s yacht. “We like to find partners who are similarly minded to us,” said Matchesfashion CEO Paolo De Cesare, noting that the group’s hotels are beautiful, sophisticated and lively: an ideal place to host top clients. (This year, the two companies once again partnered, this time on a tour of Rome, Florence, Naples and Ischia, including a four-day event at a Pellicano-managed hotel. The “Grand Tour II” was promoted heavily by both sides, including through Sciò’s own Instagram account, which boasts more than 63,000 followers.)
It didn’t hurt that Pellicano group’s “fashionisation” came just as resortwear was emerging as a significant year-round category for many fashion brands.
Pellicano group has hosted pop-ups at its hotel properties with fashion e-tailer Matchesfashion. (Roberta Krasnig)
Sciò's ambitions to make Il Pellicano and sister property La Posta Vecchia — a villa near Rome previously owned by J. Paul Getty — more than a hotel group proved fortuitous when, at the height of the pandemic in June 2020, she launched Issimo, a full-fledged e-commerce site dedicated to Italian food, design and fashion.
Two years in the making, it gave locked-down consumers an opportunity to buy everything from an €88 Pellicano-branded tote — packed with a moka pot, freshly ground coffee beans and Krumiri Rossi cookies — to a pair of €625 satin flights designed exclusively for the site by Aquazzura.
“It was a sophisticated move,” said Sean O’Neill, senior hospitality editor at Skift, a travel industry intelligence company. “It makes sense because the audiences for the hotel experience and for the fashion experience truly overlap.” The site generated over a half a million euros in revenue in 2020, a significant sum in a year when Italian hotels were hard hit.

But the site was more than a pandemic band-aid, according to Sciò. While Issimo will make up only about 3 percent of the group’s overall revenue in 2022 — a little over €800,000 — it’s helped to raise brand awareness globally, with 88 percent of sales coming from outside Italy. After signing an agreement to manage another Italian seaside hotel, Mezzatorre in Ischia — a picturesque volcanic island near Naples — in 2021, the company is on track to generate nearly €27 million in revenue this year, up from €22 million in 2019.
Part of that growth has to do with a boom in summer travel to Europe, driven largely by affluent Americans, with occupancy rates at luxury hotels nearing 2019 levels, according to STR, an industry data tracker. (In Italy, the average daily rate for a room was more than €630 in May, according to preliminary data, up from €483 in the same month in 2019.)
It’s also down to Sciò's savvy. She understands what makes for a sexy brand, has the right connections and has been able to marry that marketing acumen with an ability to deliver a consistent experience.
“Can you genuinely tell a Ritz Carlton from a St Regis from a Waldorf if you look at a room or lobby picture?” asked Rob Burgess, editor of UK-based frequent-traveller site Headforpoints.com.
Sciò's distinctive point of view could make the Pellicano Group an attractive acquisition target for not only hospitality conglomerates chasing cool, but also the likes of LVMH and other fashion groups, which have invested more in experiential luxury in recent years.
LVMH currently owns less than 1 percent of the overall market for luxury hotels, according to Euromonitor research analysed by Bernstein, but views hospitality as a way to deepen connections with top customers. When it bought the Belmond group in 2018 for $2.6 billion, LVMH CFO Jean-Jacques Guiony said there would be opportunities for Belmond to collaborate with other LVMH brands.
“The high-end luxury hotel market is still fragmented, with the opportunity for large chains and new entrants like LVMH to build up their portfolios through M&A,” said Bernstein analyst Luca Solca, noting that demand at the high end of the hotel market “exploded” this year.
As for whether this family-run business would entertain such a deal: “We are of interest to people,” Sciò said. “But it’s like a marriage. We definitely need to find the right husband.”

WWD : Dior Spa Cheval Blanc Paris Goes Boating

Dior Spa Cheval Blanc Paris Goes Boating
A well-being cruise will run on the River Seine from June 29 to July 13.

A rendering of the Dior Spa Cheval Blanc Paris boat.
COURTESY OF PARFUMS CHRISTIAN DIOR
DREAM BOAT: Dior is taking its Cheval Blanc Paris white-glove spa experience in a new direction — to the River Seine — with a well-being cruise starting June 29.
The boat extravaganza is intended to help kick off couture season, which begins on July 3. It also winks to the Bains de la Samaritaine, a luxurious, high-tech floating bathhouse of the 19th century, which was moored by Pont Neuf, directly in front of the department store. The bathhouse had about 100 treatment rooms that served up cosmetic and medicinal water treatments, steam baths and hydrotherapy options.
Pont Neuf is just a stone’s throw from where the Cheval Blanc Paris hotel is currently located, in the minus-one floor of the Samaritaine building, which reopened about one year ago.


The two-hour cruise, which runs through July 13, is to offer a 60-minute face or body treatment to five passengers at a time in its four suites.


A rendering of a treatment room on the Dior Spa Cheval Blanc Paris boat.
COURTESY OF PARFUMS CHRISTIAN DIOR
The Dior spa boat is to be moored at the Port Debilly, which faces the Eiffel Tower.
The upper deck will be decorated with rattan furniture and parasols in blue toile de Jouy, a pattern of bucolic scenes that is iconic for Dior and that was reinterpreted by the house’s artistic director Maria Grazia Chiuri.
Down the next two levels are a lounge and four treatment rooms, including three singles and one double.
Dior conceived an exclusive treatment menu for this cruise. As the boat glides through the water, people can choose to have a face treatment or a body massage. One face treatment is inspired by the rose from Granville, where Christian Dior’s childhood home stands, and another uses Yquem sap, found in Dior’s L’Or de Vie skin care.
In yin and yang fashion, a body treatment is relaxing, while the other is energizing. Prices for these range from 670 euros for the body massage to 750 euros for the face treatment and 1,500 euros for face or body care treatments for two people simultaneously. Meanwhile, the Pilates cruise is priced at 150 euros.

FT : Anarchy is a likelier future for the west than tyranny

Anarchy is a likelier future for the west than tyranny
The trend of events is not towards strongmen but towards ungovernability

“Little Brother is watching you,” said no novel or movie ever. Almost every fictional dystopia — 1984, The Handmaid’s Tale, Michel Houellebecq’s Submission — involves a vast and oppressive state, not a failed or ineffectual one. Because the most recent threats to civilisation were Hitler and Stalin, we expect the next one to take the same dictatorial form.

We shouldn’t. The story of our species is mostly the story of disorder, not too much order; of anarchy rather than tyranny. Even now, the state, a recent invention, is patchy and provisional in much of the world.

Western liberals should adjust their nightmares accordingly. Worrying about strongmen will continue to make sense as long as Donald Trump ponders a comeback. But the larger trend of events is towards fragmentation and chaos.

The pioneer is, as ever, the US. In a nation that is not just split but checkmated, neither Democrats nor Republicans can build a lasting electoral hegemony of the kind that allowed the New Deal, the Reagan revolution and other necessary reforms in the last century. Inflaming this governance problem is the large minority of the population that does not recognise, say, the legitimacy of President Joe Biden or the wisdom of public health advice. For a sense of how unreachable some voters are, consider that a third or more of Americans are open to the secession of their state from the union. Even if this is so much armchair bluff, states with as much clout as Florida and Texas increasingly define themselves against the federal government.

There is cheering and distressing news here. Even if a tyrant could seize power in a coup, no country so fractious and ornery would remain under his or her thumb for long. The far more plausible future is an ungovernable America.

If the theme here is entropy, Europe shouldn’t feel left out. In France, the political parties that gave some shape to the Fifth Republic have shrunk at dazzling speed and parliament now brims with radicals. A presidency that Charles de Gaulle designed to be quasi-monarchical in its power has in recent decades known two ineffectual one-termers (Nicolas Sarkozy and François Hollande), a man who gave up on economic reform early on (Jacques Chirac) and the very partial success of Emmanuel Macron. Which is likelier: that all these leaders were fools, or that the nation itself is ever harder to lead?

In France, at least, turmoil is a part of folk memory. The British are less prepared for the decay of political order. They have had as many prime ministers since July 13 2016 as between May 2 1979 and June 27 2007. There is a separatist tug from Scotland, a deteriorating crisis in Northern Ireland and what appears to be the beginning of the end of a generation of excruciatingly hard-won industrial peace. Unwritten ethical conventions have turned into dust under a laughing cavalier of a prime minister. That is a measure of his potential as a demagogue, yes, but also of how little structure there now is in public life. As his 80-seat parliamentary majority proves impotent against unions and Nimbys, it is the flight of power from the centre that stands out, not its ruthless concentration there.

It is customary at this point to say that chaos is exactly what creates the public clamour for a Caesar or Napoleon: for a suspension of democratic niceties. But there is nothing to say that one follows the other. Italy has had messy, reform-blocking politics for much of this century without crossing into rule by personal decree. The US has had four presidential assassinations and a civil war in its history, but no dictator. A relapse into that nihilism is more plausible — isn’t it? — than a model of government that has no pedigree in the two and a half centuries of the republic. Perhaps it is because there is no face or voice to put to it that entropy goes under-discussed, under-dramatised and under-feared, even as it accounts for the greater share of human history.

“It could happen here,” say the prophets of a fascist future, as though the rest of us were discounting the possibility. In truth, the failure of imagination is all theirs. The great dictators of the 20th century have such a hold on western thought as to numb it to other kinds of civilisational danger. If minds as fine as Philip Roth’s and Aldous Huxley’s assumed that a bleak future must be a totalitarian one, it is understandable that my lesser profession commits the same error. But not quite forgivable. True vigilance is the fear of under-government as much as of sinister government.

WSJ : Airbus Calls on West to Avoid Sanctions on Russian Titanium

Airbus Calls on West to Avoid Sanctions on Russian Titanium
European plane maker has warned against restrictions on the key material while rival Boeing has stopped purchases

Airbus EADSY 0.69% SE is pushing against sanctions on Russian titanium sales, amid a flurry of restrictions on the export of other Russian goods ranging from vodka to steel.

Airbus, the world’s largest commercial plane maker, is still importing hefty amounts of titanium from one of the country’s biggest exporters. It has publicly called for the European Union to hold off imposing sanctions on the metal, which is used to manufacture critical components of its aircraft, from landing gear and fasteners to the pylons that connect an engine to a wing. About 65% of Airbus’s titanium supply comes from Russia, according to consulting firm Alix Partners.

“We think sanctioning titanium from Russia would be sanctioning ourselves,” Airbus Chief Executive Guillaume Faury said over the weekend. Russian titanium sales are “one of the few areas of business where it is in the interest of no party to disrupt the current situation,” he told reporters at an aviation gathering in Doha, Qatar.

Titanium has so far been kept off the EU and U.S. sanction lists, but many buyers have reduced their exposure to Russian sources and have found alternative suppliers for a number of reasons, including the difficulty of making payments into Russia.

Airbus isn’t the only Western company still buying titanium but is among the biggest Western aerospace firms still doing so, demonstrating the challenges in quickly replacing Russian supply chains. Airbus’s reliance on Russia exposes it to the risk of new sanctions imposed by either Europe or the U.S., or export restrictions from Russia. It is also subject to reputational risk amid rising public pressure on companies to withdraw financial support for the Russian economy.

Airbus gets its Russia-sourced titanium from VSMPO-Avisma PJSC. VSMPO is part-owned by Russian defense firm Rostec, which manufactures arms for the Russian military. The company is headed by sanctioned oligarch Sergey Chemezov, identified as one of President Vladimir Putin’s known close associates. Rostec is subject to some sanctions, too, but VSMPO sales of titanium aren’t. Rostec and VSMPO didn’t respond to requests for comment.

Airbus rival Boeing Co. , which before the war purchased about one third of its titanium from Russia, said at the onset of the invasion of Ukraine that it would suspend its titanium joint venture in Russia and halt purchases of the metal from there. Chief Executive David Calhoun said in April it was “in the spirit of doing the right thing.”

Raytheon Technologies Corp. , which owns engine maker Pratt & Whitney, has halted its $50 million annual spending on Russian titanium and said that would lead to some delivery delays this year. General Electric Co. ’s aviation business had already turned to other supplies after Russia’s annexation of Crimea in 2014, reducing its exposure to Russian titanium to two parts, or about 1% of its total titanium use. The unit has over a year’s supply in storage, the company said.

Part of the challenge for Airbus is the lengthy certification procedure for bringing on new suppliers and components, a process that can take between 18 and 24 months, according to Pascal Fabre, managing director of Alix Partners.

“There is a heavy dependency on one specific supplier,” Mr. Fabre said. “It’s very difficult to radically change the setup.”

Titanium has become an increasingly important material in aircraft production because of its high strength-to-weight ratio and resilience against corrosion. While it is mined the world over, production of titanium sponge, the unfinished raw material, is centered in key areas such as Japan, China and Russia. About 13% of it comes from the latter, according to the U.S. Geological Survey.

The market for titanium is relatively small compared with other metallurgical goods. Russia’s titanium exports amounted to $415 million in 2020, compared with $16 billion for iron and steel, according to Trade Data Monitor.

Even so, the EU has been weighing whether to impose sanctions on the material. In comments in late April, EU trade commissioner Valdis Dombrovskis said the bloc needed to look for new suppliers for raw materials used by aerospace manufacturers, including titanium, palladium and nickel.

Airbus is preparing to bring online secondary sources of titanium, a process that it laid the groundwork for in the wake of the Crimea annexation, Mr. Faury said. He said Airbus had about six to 12 months worth of titanium stored at the outset of Russia’s invasion of Ukraine in February this year. Airbus has said it is looking for new titanium sources in the U.S. and Asia.

(ZH) Netherlands Follows Germany, Lifts Restrictions On Coal-Fired Power Station

Netherlands Follows Germany, Lifts Restrictions On Coal-Fired Power Stations Amid Drop In Russian Gas Supplies

The Netherlands is following in the footsteps of neighboring Germany and lifting a cap on production by coal-fired power stations in an effort to prevent a winter energy crisis amid a drop in gas supplies from Russia.
“Because the risk of gas shortages has increased, the cabinet has decided today to withdraw the production limitation for coal-fired power stations for 2022 to 2024 with immediate effect,” climate and energy minister Rob Jetten said in a statement announcing the move on Monday.
“This means that the coal-fired power stations are allowed to produce at full capacity again so that less gas is needed for the production of electricity by gas-fired power stations. This reduces the risk of gas shortages and makes it easier to fill the gas storage facilities in the Netherlands and Europe.”
The Netherlands is in the first phase of a gas crisis, according to Jetten, which has prompted the government to initiate its Gas Protection and Recovery Plan.
Netherlands Minister for Climate and Energy Rob Jetten after the weekly Council of Ministers at the Binnenhof in The Hague on April 22, 2022. (Bart Maat/ANP/AFP via Getty Images)
Jetten said the overall aim of removing the restrictions on coal-fired power stations is to fill gas storage facilities across the Netherlands with more than had previously been agreed by Europe to ensure that plenty of gas is saved ahead of the winter.
The Netherlands capped its coal-fired power plant production at just 35 percent of capacity as it seeks to transition away from higher carbon dioxide emissions to clearer energy.
Its removal of the cap on coal-fired energy production is expected to save 2 billion cubic meters (bcm) of gas use per year but Jetten noted that the Netherlands would still meet its 2030 climate goals, which included phasing out its last four coal-fired power plants by 2030.
The Dutch cabinet will announce additional measures aimed at reducing the extra CO2 to offset emissions from coal-fired power stations in the near future.
In the short-term, officials are working on a “temporary gas-saving tender that will give large gas consumers a financial incentive to reduce their gas consumption,” Jetten said.
Back in May Russia’s Gazprom cut off gas supplies to Dutch gas trader GasTerra after it had failed to pay for deliveries in Russian rubles as requested by Russian President Vladimir Putin in March.
That decision means Gazprom will not deliver some 2 billion cubic meters of gas to the Netherlands between now through Oct. 1, when its contract with GasTerra was set to end. However, Jetten stressed on Monday that there was currently no shortage of gas in the Netherlands.
“There are currently no acute gas shortages in the Netherlands, but the declining gas supplies could have consequences,” the climate and energy minister said.
“With the declaration of the first level of a gas crisis, gas companies must provide additional detailed information on current gas supplies and stocks on a daily basis. This will enable the government to monitor the gas market even more closely and immediately take additional measures if the situation so requires.”
The latest decision by the Dutch government comes just a day after Germany’s economy minister Robert Habeck said that the country will limit the use of natural gas for electricity production and instead increase coal burning to compensate. The move comes amid decreased supplies from Russia and fears over potential shortages.
Elsewhere on Monday, the Dutch government also announced plans to produce 2.8 billion bcm of gas from the Groningen gas field in the year ending October 2023, scaling back on the 4.5 bcm in the current production year.
“Due to the uncertain geopolitical developments, State Secretary Vijlbrief has decided not to close any wells definitively this year,” the government said.

FT : Terraform: crypto collapses lessen pressure on banks and regulators

Terraform: crypto collapses lessen pressure on banks and regulators
For traditional finance, the sector’s woes could not have come in a handier form


Anti-authoritarian crypto fans are finding out where power really lies. South Korea has banned some employees of Terraform Labs from leaving the country. This unusually strict measure suggests prosecutors are escalating a probe into the spectacular collapse of the TerraUSD stablecoin.

You can almost hear the sighs of relief from so-called “Tradfi” at worldwide reversals for the crypto sector. The pressure is off central bankers to develop digital currencies. Regulators face an easier task reining in an industry battered by price collapses they warned about.

Terraform’s Luna token was once one of the top 10 global cryptocurrencies by market value. It gained over 12,000 per cent in the span of a year. It lost 99.99 per cent of its value in just 48 hours after its paired stablecoin TerraUSD crashed.

Investors had been promised a 20 per cent yield for depositing their TerraUSD coins. Instead, they lost more than $45bn.

Korean authorities are investigating Do Kwon, outspoken co-founder of Terraform Labs. One line of inquiry is alleged tax evasion. Another is alleged embezzlement from the company’s bitcoin holdings. The entrepreneur has said he is innocent of any wrongdoing.

Lawsuits brought by investors could set a wider pattern. They typically claim that TerraUSD depended on incomplete algorithms, vulnerable in times of market declines. Legislation covering digital assets is scanty worldwide, however. That reduces investor protection. For the most part, crypto companies such as Terraform are not even classified as financial institutions.

Terraform’s collapse and the gating of withdrawals by Celsius Network, a crypto lender, have rattled the industry. It was already spooked by bitcoin’s fall of over a half in response to sliding stock prices.

For traditional finance, crypto woes could not have materialised in a handier form. They have disproved claims that prices were uncorrelated to conventional assets. They have shown that investors can easily lose their shirts. And they have had little spillover because the sector is still relatively unconnected and small. For example, the total value of stablecoin assets of around $190bn is less than one per cent of the $50tn market value of US equities.

Regulators cannot dodge every bullet. Investors happy to bank unregulated gains still seek recompense for unregulated losses. Proliferating class-action lawsuits demonstrate this.

In the aftermath of the current shakeout, financial watchdogs around the world will need to carve regulated territory from the crypto badlands. Resistance should be helpfully low.