TheChek News Flow

World’s largest carmaker still expects to eke out a profit this year

Volkswagen slumped to a loss in the second quarter, as the German carmaker succumbed to the effects of the pandemic despite cutting costs and re-closing factories in order to reduce output.

The group posted a loss of €1.4bn in the first half of 2020, compared with a profit of €9.6bn in the same period the previous year. Revenues fell 23 per cent to €96bn, and car sales dropped 27 per cent to 3.9m vehicles.

After reopening some of its plants following the shutdowns in March, VW was forced to close some lines again because of weaker-than-expected demand.

The group still expects to make a profit in the full year, though “severely lower” than last year’s level.

“The first half of 2020 was one of the most challenging in the history of our company due to the Covid-19 pandemic,” said finance boss Frank Witter.

“We introduced comprehensive measures aimed at reducing costs and securing liquidity early on, which enabled us to limit the impact of the pandemic on our business to a certain degree.”

He added the group is “cautiously optimistic” about the second half of the year “due to the positive trend exhibited in our business over the past few weeks and the introduction of numerous attractive models”.

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Eur$ 1.1762 CNH 7.0041 CNY 7.0023 JPY 105.26 GBP 1.2961 CHF 0.9135 RUB 72.7035 WTI$ 41.20 -0.15%

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Macro :

- U.S. Investor Bull-Bear Spread -28.2: AAII

- Cohen’s Point72 Closing to New Money After Raising $10 Billion

- Cohen’s Cubist Unit Hiring Dancanet as New Head: Bus. Insider

- Huawei Tops Samsung for First Time in Smartphones, Canalys Says

Keep an eye on :

- ABI BB : AB InBev Second Quarter Adjusted Ebitda Beats Estimates, *AB INBEV 2Q ADJ EBITDA -34.1%, EST. -36.4%

- AIR FP : Airbus Says Unit in Saudi Arabia to Face U.K. Corruption Charge

- AIR FP : Airbus 1H Adj. Cash Burn EU12.4b vs EU3.98b Year-Ago (1)

- MT NA : ArcelorMittal Second Quarter Ebitda Beats Highest Estimate

- AF FP : KLM Expected to Announce Up to 4,000 Job Cuts Friday: Telegraaf

- AI FP : Air Liquide 1H Recurring Operating Income 4.0% Above Est.

- ARGX BB : Argenx 1H Operating Loss EU201.4 Mln Vs. Loss EU54.5 Mln Y/y

- AKE FP : Arkema Second Quarter Ebitda EU286 Mln

- BBVA SM : BBVA Profit Bounces Back After Front Loading Loss Provisions

- BUCN SW : Bucher First Half Ebitda CHF135 Mln, -31% Y/y

- CCL US : Carnival Sees Impairment Charge for Ship Disposals $600m-$650m

- CLN SW : Clariant Second Quarter Adjusted Ebitda Beats Highest Estimate

- COL SM : Colonial 1H Recurring Ebitda EU146 Million Vs. EU138M Year Ago

- COPN SW : Cosmo First Half Cash And Cash Equivalents EU82.6 Mln

- CSGN SW : Credit Suisse Second Quarter Net Income Beats Highest Estimate

- CSGN SW : Credit Suisse to Create Global Investment Bank

- BN FP : Danone Says Worst Is Over After Lockdowns Hurt Water Sales

- DB1 GY : Deutsche Boerse Second Quarter Adjusted Ebitda Meets Estimates

- DNO NO : DNO Second Quarter Loss Wider Than Estimates

- ECONB BB : Econocom First Half Adj Ebita Cont Ops EU43.5 Mln, +5.6% Y/y

- EDF FP : *EDF PLANS EU3B OF DISPOSALS BY 2022, EU500M OF COST CUTS

- ENEL IM : Enel Cuts 2020 Adj. Ebitda, Adj. Net Guidance; Keeps Div Policy

- ERA FP : Eramet 1H Net Loss Widens to EU623M vs EU37M Yr-Earlier

- ENX FP :Euronext Second Quarter Revenue Beats Highest Estimate

- ETL FP : Eutelsat, Intelsat Sign Long-Term Agreement on Orbital Position

- FDJ FP : FDJ First Half Ebitda EU174 Mln

- ENCFP : Euronext Rejects Shorter Trading Hours After Investor Resistance

- FNAC FP : Fnac 1H Rev. Falls 10.1% Like-for-Like, Cautious About 2H

- FNAC FP : Fnac Darty CFO: Capex Set to Fall This Year by More Than 40%

- FME GY : Fresenius Medical Second Quarter Ebit EU656 Mln, +26% Y/y

- FRE GY : Fresenius 2Q Adj. Ebit 4.7% Above Est., Issues New FY Guidance

- FPE GY : Fuchs Petrolub First Half Ebit EU112 Mln, -29% Y/y

- G IM : Generali First-Half Profit Drops as Virus, BSI Led to Writedowns

- GET FP .Getlink SE Cut to Neutral at CaixaBank BPI; PT 14.50 euros

- HAB GY : Hamborner REIT First Half FFO EU27.0 Mln, +1.5% Y/y

- HEI GY : HeidelbergCement Says Business Outlook for 2H Remains Uncertain

- IDR SM : Indra Prepares EU100m Annual Savings Plan After 2Q Loss

- INTER NA : Intertrust Second Quarter Adjusted Ebita EU44.4 Mln

- IPN FP : Ipsen Sees Full Year Sales At Constant Exchange Rates Above +2%

- ISS DC : ISS Says Longview Boosts Stake in Company to 7.18%

- DEC FP : JCDecaux First Half Adjusted Revenue -41.6%

- JMT PL : Jeronimo Martins 1H Revenue Rises 4.6% to EU9.3b on Polish Sales

- KARN SW : Kardex Holding AG First Half Ebit EU24 Mln, -15% Y/y

- KGX GY : Kion Sees Significant Fall in 2020 Revenue, Adj. Ebit, FCF, ROCE

- KRN GY : Krones Second Quarter Ebitda Misses Lowest Estimate

- LI FP : Klepierre 1H Group Net Current Cash Flow Per Share EU1.37

- LHN SW : LafargeHolcim 2Q Sales CHF5.4b, est. CHF5.48b

- MC FP : Prada +6% in HK

- NESN SW : Nestle FY Organic Revenue View Midpoint Misses Est.

- NHH SM : NH Hotel Says It Enters 2H With Nearly EU600M of Liquidity

- ONTEX BB : Ontex First Half Adjusted Ebitda 3.5% Above Estimates

- ORA FP : *ORANGE CEO: AUCTION OF 5G SPECTRUM STILL PLANNED FOR END SEPT

- ORA FP : Orange 1H Net Profit Fell; Confirms 2020 Targets

- PHARM NA : Pharming 1H Operating Profit EU32.3 Million, Up 31%

- RNO FP : Renault Swings to Record $8 Billion Loss Amid Nissan Turmoil

- ROTH FP : Rothschild & Co Won’t Pay Dividend During 2020

- SAF FP : Safran Sees Gradual Recovery After 1H Revenue Drops 28%

- SAS SS : SAS Bondholder Committee Hopeful of Agreement: Dagens Industri

- SEV FP : Suez in Talks for Four ‘Significant’ Asset Sales, CEO Says

- WAF GY : Siltronic Second Quarter Ebitda EU100.4 Mln, +0.4% Y/y

- TKTT FP : Tarkett 1H Adj. Ebitda Falls 16%; 2022 Margin Target Confirmed

- FTI FP : TechnipFMC 2Q Revenue 2.3% Above Est.; Shares Rise 2.5%

- TEF SM : Telefonica Agrees to Sell Costa Rica Unit to Liberty

- TNET BB : Telenet Second Quarter Adjusted Ebitda Beats Highest Estimate

- TEP FP : Teleperformance Sees Full Year Like-for-like Sales About +6%

- TSLA US : Chinese Electric SUV Maker Li Auto Raises $1.1 Billion in IPO

- FP FP : Total Takes $8.1 Billion Writedown as Pandemic Devalues Oil, Gas

- URW NA : Unibail First Half Net Rental Income EU1.07 Bln

- VK FP : Vallourec 2Q Revenue EU843m, Beats Estimates

- VASTN NA : Vastned Sees Full Year EPS EU1.70 to EU1.85

- VIE FP : Veolia 1H Ebit Falls 43%%; Sees 4Q Ebitda Level With Year Ago

- VOS GY : Vossloh First Half Ebit EU30.1 Mln, +47% Y/y

- WCH GY : Wacker Chemie Second Quarter Ebitda Beats Estimates

- WLN FP : Worldline Says Tender Offer for Ingenico Opens Today

- WDI GY : Germany Asks Russia to Help Find Former Wirecard Executive

- ZAL GY : Zalando Adds 1 Billion Euros to Cash, Likely for Deals: React

- ZAL GY : Zalando Converts Tranche A Conversion Premium 42.5%: Terms

- ZAL GY : *ZALANDO DELTA PLACEMENT ORDERS BELOW EU61.50 RISK MISSING:TERMS

The brand plans to reduce the number of collections and cut around 20 jobs in a bid to become a leaner and more efficient operation.

LONDON — London fashion brands and retailers are taking stock of operations in the aftermath of COVID-19, resizing their businesses to cope with lower demand, slashing salaries and reducing head counts, and Victoria Beckham is the latest to join the fray.

The brand has emerged from lockdown with a new structure and vision aimed at making it a leaner and more efficient machine, WWD has learned. To wit, the company plans to reduce the number of sku’s by 30 to 40 percent and to show one collection a season for the signature line, and for the lower-priced, contemporary Victoria Victoria Beckham line.

The main Victoria Beckham collection will show in February and September and, starting in 2021, the plan is to sell those collections to stores in January and July in order to get the merchandise onto the shop floor more quickly, and to maximize the length of time it can sell at full price.

Having seen strong numbers come through during lockdown, the company wants to put an even bigger focus on digital, direct-to-consumer sales, and to ensure the main collection offers a 360-degree wardrobe. There are plans to add more denim, jersey, shirting and casual wear, and as a result of those additions, average selling prices of the main line collection will be reduced.

The brand wants the customer to be able to buy a full wardrobe, rather than pieces, from the main Victoria Beckham collection. As a result of the restructuring, less than 20 percent of the workforce, or around 20 jobs, will be lost.

Beckham and Marie Leblanc, the company’s chief executive officer, are understood to have informed the teams of the changes in person on Wednesday.

Beckham, whose title is founder and creative director, told WWD she “strongly believes the vision we have created will confidently take the business forward. My priority is continuing to respond to the evolving needs of our community and inspiring women to be the best version of themselves.”

Beckham had already alluded to the changes earlier this month during a walk-through of her resort 2021 collection.

“When we were in lockdown, it was a great time to look at the business and the strategy. I really enjoyed brainstorming with my team, and my board, about what the future looks like. The whole industry is changing.”

There remain myriad questions over global fashion weeks and how they will be structured going forward given the global pandemic, with many brands opting not to show at all, to mix digital and physical shows or, in a few cases, sticking with the traditional runway format but with a much smaller audience. Beckham said she wanted to return to an intimate presentation format — which is how she started in New York.

“I really enjoyed that — talking about the collection, and people being able to see it. I love doing a big show — it’s still the best way to see fashion. But a big show in September is not an option for us. And we’re also talking about how we’re communicating through digital, and to our community.”

Leblanc said she is confident the renewed strategy “will future-proof our business and enhance our creative approach while addressing the current industry challenges. Our new vision has taken much planning, and focuses our energy on delivering considered, desirable fashion when and where the customer needs it. It has always been central to our brand to offer a sharp, curated point of view and this makes even more sense today.”

Beckham’s Dover Street flagship in London will remain open, and wholesale sales will remain an important part of the mix. It is understood the focus going forward will be on the bigger accounts.

As reported earlier this week, Victoria Beckham Beauty broke into the Chinese market, opening a flagship on Alibaba’s Tmall Global and telegraphing its “clean beauty” message to a fast-growing market for skin care and color cosmetics.

Beckham herself led the marketing efforts via a livestream Q&A session with Viya, one of China’s biggest influencers.

It is understood the overall Victoria Beckham business was on the path to profitability before the coronavirus struck, as it had already made some staffing and structural changes aimed at tightening operations.

According to Companies House, the official register of U.K. businesses, Victoria Beckham’s brand saw revenues in fiscal 2018 drop to 35 million pounds from 41.7 million pounds, primarily because wholesale sales were down internationally. Losses widened to 12.3 million pounds from 10.3 million pounds in the previous year.

In 2017, Neo Investment Partners took a 30 million-pound minority stake in Victoria Beckham Ltd., which at the time was valued at 100 million pounds.

As reported in April, the company turned down government furlough funds and paid employees itself during lockdown.

Fellow British fashion brands Stella McCartney, Burberry and Mulberry and retailers Harrods, Harvey Nichols and Selfridges, have all been forced to set, or accelerate, restructuring plans and lay off staff due to a decline in demand as a result of quarantines, a drop in international tourism, consumers’ fears about spending in a shrinking economy and a switch from physical to online retail.

Senate investigation says art collectors circumvent U.S. laws to buy, sell and launder millions through art; Rotenbergs deny the claims

Two months after the U.S. imposed sanctions on Russian construction billionaires Arkady and Boris Rotenberg in March 2014, the brothers sent their art adviser on a shopping spree, according to a Senate investigation report released Wednesday. At a Sotheby’s auction that month in New York, the Rotenbergs, who are lifelong friends of Russian President Vladimir Putin, paid $6.8 million for 10 works of art, including a cubist still life by Georges Braque and a swirling tableau by Marc Chagall, the report said.

Days later, the Rotenbergs again added to their collection, paying a private U.S. dealer $7.5 million for “Chest,” René Magritte’s 1961 painting of a colorful pile of buildings, according to the report. When Senate investigators later asked the art dealer if she had vetted the buyers’ identities to make sure they weren’t blacklisted, she said she never asked. When it comes to due diligence, the report said, “She relies on her gut.”

Who is buying art these days? Such disclosure details in art deals like these are being scrutinized following a two-year investigation by the Senate Permanent Subcommittee on Investigations, which alleges art is increasingly being used as a tool by blacklisted individuals to evade sanctions. The report directed sharp criticism at auction houses and art dealers for doing little to screen or stop sanctioned people from trading art in the U.S.

Companies based in the U.S. are forbidden by law from having any financial dealings with sanctioned individuals. Americans caught transacting with the Rotenbergs or any sanctioned individual can face steep fines or even jail terms. The seller of a painting isn’t required to ask or know the identity of the buyer to close a deal, though, because blue-chip art isn’t subject to the same anti-money-laundering disclosure laws that govern U.S. banks.

The art world has installed its own disclosure protocols, but has long struggled to enforce them. Collectors prize discretion and don’t always want their identities or income sources shared. Dealers likewise tend to be tight-lipped about their major clients, and no one wants to cede business to rivals willing to ask less and sell more. This helps explain why so many catalogs brim with works whose only ownership clue is “private collection.”

“I know the auction houses and dealers don’t always want to know who they’re selling to because they’re making significant money, but we also have a national-security interest in making sure sanctions work,” said Sen. Rob Portman (R., Ohio) who led the bipartisan report with Tom Carper (D., Del.). “Secrecy is the problem,” Sen. Portman added.

Even after meeting with Senate investigators in 2018, Sotheby’s and Christie’s competed last year for the chance to auction Lyonel Feininger’s “Bridge II,” a painting investigators said the Rotenbergs likely owned. Christie’s said later it didn’t know the work’s true seller at the time. When Sotheby’s won the consignment, it asked the Rotenbergs’ alleged adviser for the work’s owner and was told it belonged to a Marshall Islands company. The house gave the painting a $5 million estimate and included it in its February 2019 London sale. Just before the auction, the house pulled the work; Sotheby’s told investigators the work hadn’t elicited any potential bidders.

Altogether, the report alleges the Rotenbergs used U.S. dollars to spend or move around funds totaling $91 million, including $18.4 million in art and antiques, since sanctions were imposed.

Sen. Portman said he and Sen. Carper launched the investigation two years ago to research the efficacy of U.S. sanctions imposed on members of President Vladimir Putin’s inner circle in March 2014, weeks after Russia annexed the Crimean Peninsula and launched a covert military operation in eastern Ukraine. Arkady Rotenberg, a St. Petersburg native and industrialist who befriended Mr. Putin when they joined the same judo club as children, was among those sanctioned. His brother Boris was added shortly thereafter. But after more sanctions were imposed on a wider circle of Russian oligarchs in 2018, Sen. Portman said he and other legislators “wanted to figure out why the sanctions didn’t appear to be working.”

Senate investigators who briefed The Wall Street Journal on the report’s findings said they started looking broadly at blacklisted Russians but soon focused on Arkady Rotenberg’s art-collecting activity. Eventually, they expanded their investigation to art bought by his brother and son, Igor, who is also sanctioned. Investigators said the family offers a case study in how some blacklisted Russians are using the opaque art market to circumvent financial restrictions.

Christie’s, Sotheby’s and the smaller London houses, Phillips and Bonhams, are all named in the report for doing business with the Rotenbergs. Spokespeople for each said they had zero tolerance for evasion of sanctions and were willing to work with the U.S. government on this issue. The houses also said they didn’t know the Rotenbergs were bidding through an alleged art adviser, Gregory Baltser, until investigators informed them of the connection. All said they stopped allowing him to bid after Senate investigators came asking questions.

“I was shocked when I found out,” Phillips’ Chief Executive Edward Dolman said.

Mr. Baltser, a naturalized U.S. citizen who lives in Russia, confirmed that his company, Baltzer LLP (the misspelling is intentional), has aided Russian collectors in the past but through his lawyer denied that he ever bid on behalf of the Rotenbergs. His lawyer, in a statement, said the investigation has “done substantial collateral damage to Baltzer and its employees, and has forced Baltzer to largely suspend operations.”

A representative for the Rotenbergs called the Senate allegations “totally absurd” and said they never used any tools, including art, to launder money or circumvent sanctions. “All transactions with works of art made by Rotenberg family members or on their behalf were made openly, strictly with lawful personal purposes and always on market terms,” the statement said.

In 2018, the European Union amended its anti-money-laundering regulations to require businesses to verify the identities of sellers and buyers of art valued over €10,000.

The Senate report recommended ways to alter U.S. laws to compel more disclosure in art sales, but so far two bills that could potentially address the issue are stalled.

Arkady Rotenberg, now 68 years old, built a nearly $3 billion fortune, according to Forbes, overseeing infrastructure companies. His brother Boris and son have made fortunes in industries like energy and real estate.

Until now, little was known about the composition or extent of the Rotenberg collection. The brothers have been seen at judo and ice hockey matches in Russia but seldom attend glamorous gallery dinners or make buzzy purchases.

The report alleged that for at least a decade the brothers have been collecting modern art, particularly surrealists like Salvador Dalí and Giorgio de Chirico as well as Tamara de Lempicka and a few contemporary artists like Andreas Gursky.

To unravel the trail of their art hunt, investigators culled records from auction houses as well as suspicious-activity reports submitted to the Treasury Department. They also tracked payments in Russia through one of their nine offshore accounts to an account managed by the public face of their collection, their alleged adviser Mr. Baltser, according to the report.

Unlike the Rotenbergs, Mr. Baltser appeared to seek the art spotlight, opening a Moscow hangout called the Baltzer Club (the misspelling is intentional) where he invited Russia’s newly wealthy art lovers to watch global auctions and bid, ideally through him. His website offered to help collectors bid with “anonymity,” according to the report.

FCA raps brokers over ‘inappropriate’ use of clients’ assets

UK market regulator makes latest in series of complaints over brokerage industry

The UK market regulator is cracking down on brokers, saying it has seen evidence that some are making “inappropriate” use of clients’ assets through legal loopholes.

In a so-called “Dear CEO” letter — a rare form of correspondence that signals concerns over industry-wide practices — the Financial Conduct Authority gave 357 wholesale brokerages just three weeks to attest they were abiding by the rules.

The warning is the latest example of scrutiny of the conduct of wholesale brokers, which act as middlemen and negotiate trades in equities, energy, commodities and interest rate derivatives markets, for customers such as asset managers and wealthy individuals. They also carry out trades for their own accounts.

In its letter, sent last week, the FCA said some brokers had been inappropriately using a standard legal agreement, in which customers agree to transfer legal ownership of collateral to their broker for use in meeting margin calls on trades. The collateral is designed to be a safety net for customers, and is ringfenced in case the broker itself gets into financial difficulty.

But some brokers have been holding an “inappropriate” amount of money or assets compared to a client’s risk. Some brokers did not have permission from the customer to hold these accounts, while others were not supposed to hold client money, the watchdog added.

“We are especially concerned about such cases where firms lacked arrangements to promptly return collateral to their clients, or to segregate it as required by [client asset standards],” the regulator warned.

Simon Bird, co-founder of Objectivus Financial Consulting, a risk and governance specialist, said that a number of brokers had “transferred all the clients’ money to cover trades, so there’s been a certain amount of free capital available” for the firm.

Brokers were also “misidentifying” some trades, the FCA’s letter said, labelling them as clients’ trades rather than their own, and therefore incurring lighter capital charges. Clients of these brokers include investment banks and smaller independent brokers.

Last year the FCA sent brokers another “Dear CEO” letter warning that they had “not kept pace” with the tougher markets regulations of the previous five years. Moreover, there was a “complacent attitude and resultant failure to meet expectations across all the areas of regulation,” the letter said.

The regulator blamed the industry’s pay and incentive schemes, which typically hand brokers cash payments for generating revenue. The FCA promised to publish a report into market practices but has yet to do so, blaming the coronavirus pandemic for the delay.

In a separate warning last year, it also told brokers to guard against potential conflicts of interests in payments for order flow, when a broker charges fees on both sides — to the client that placed the order, and also the counterpart that matched it.