Friday, July 26th, 2019
SINGAPORE: Singapore industrial production for the month of June slipped to a near four-year low, according to official data on Friday, hit by a slowing electronics sector, leading to recessionary fears.
Manufacturing output fell 6.9% in June from a year earlier, data from the Singapore Economic Development Board showed, compared with a revised 2% contraction in May. This was slightly better that the median forecast in a Reuters survey, which had predicted a 7.9% drop.
June’s on-year industrial production print was the worst since December 2015 when it fell 11.9%, according to official data.
On a seasonally-adjusted and month-on-month basis, industrial production rose 1.2% in June, after a revised 0.1% fall in May. The median forecast was for a fall of 0.7%.
Electronics output further contracted in June at 18.8% from a year earlier after declining 10.8% in May.
The slump, in a sector that accounted for nearly a third of Singapore’s manufacturing output last year, has cost hundreds of jobs and is adding to fears that the export-driven economy could slide into recession in the coming months.
Singapore’s economy grew at its slowest annual pace in a decade in the second quarter, preliminary data showed, raising bets that a monetary policy easing could be around the corner.
The slump in the city-state, often seen as a bellwether for the health of the global economy, is the latest evidence that momentum has slowed across Asia, as the protracted trade war between the United States and China, and sliding growth weigh on the region’s export-reliant economies.
PETALING JAYA: Boustead Plantations Bhd has redesignated its new director Datuk Syed Tamim Ansari Syed Mohamed (pix) as the group chairman effective August 1, replacing Tan Sri Mohd Ghazali Hj Che Mat.
It said in a statement that Syed Tamim, 71, has 36 years of experience across diverse fields in both public and private sectors. His areas of specialisation include managing oil palm plantations, from planting to refinery of oil to retail sales and marketing of olein.
“He held several senior managerial positions in the Sime Darby group of companies from 1987 to 2007, with his last position as managing director of consolidated plantation/Sime Darby Plantation from 1999 to 2007.”
Meanwhile, Mohd Ghazali will be stepping down on July 31 together with independent non-executive director Dr Raja Abdul Malek Raja Jallaludin.
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ZURICH: Food giant Nestle posted its fastest organic sales growth in three years on Friday as the KitKat chocolate bar maker’s recovery under Chief Executive Mark Schneider gathered pace.
Makers of packaged foods have been struggling to adjust to consumers’ growing appetite for fresh foods deemed healthier and intense competition from small local startups offering goods ranging from breakfast cereals to coffee and chocolate.
Since taking over in 2017, Schneider, the first outsider to lead Nestle in a nearly a century, has pushed the company into new areas such as plant-based foods, revamped big brands like Nescafe instant coffee and axed under-performers like its U.S. confectionary operation.
Nestle’s organic sales, which strip out currency swings and acquisitions and disposals, accelerated to 3.9% in the three months to the end of June, the highest quarterly rate since the beginning of 2016.
For the half year, it matched analyst expectations for 3.6% growth, an improvement over 2.8% in the year-ago period, and is now on track to meet its target of mid single-digit organic growth by the end of 2020, Schneider told reporters.
“People see good momentum in the company both on growth and earnings and that is not something we would expect to stop in 2020, so the momentum should continue,” Schneider said.
“I think the results show very convincingly we are on a path to meeting those,” he said, referring to Nestle’s targets.
Net profit at the world’s largest food company fell 14.6% to 5.0 billion Swiss francs ($5.05 billion), as the year-ago period benefited from a $2.8 billion one-off gain linked to selling its U.S. confectionery business to Ferrero.
Nestle’s trading operating profit margin improved to a better-than-expected 17.1% as the company pressed ahead with its premiumisation strategy, selling more products with fatter margins and more resilient to economic downturns.
Nestle now gets around 23% of its sales from products such as its rose chocolate flavoured KitKats and flavoured San Pellegrino water, a figure Schneider expected to rise.
“Premium overall is doing very well for us, it tends to be very successful for the top line and the bottom line. That applies to all geographies … and all categories,” he said.
Nestle’s first-half sales rose 3.5% to 45.46 billion francs, short of forecasts of 45.7 billion francs, with the United States and Brazil, Nestle’s number 1 and number 4 markets, doing well.
China, its second biggest market, saw softer growth as categories like mainstream baby foods struggled compared with pricier options.
“We are a little more concerned there by the environment at large,” Chief Financial Officer Francois-Xavier Roger said.
French rival Danone on Thursday reported accelerated sales growth in the second quarter as its baby food products sales in China rebounded.
Nestle confirmed its guidance, saying it expects full-year organic sales growth around 3.5% and an underlying trading operating profit margin at or above 17.5%.
Analysts described the outlook as cautious, although Schneider said Nestle faced tougher comparisons in the second half of the year and higher commodity prices.
They also highlighted the improvement in margins and organic growth.
“What a change at Nestle within a short period of time,” said Bank Vontobel analyst Jean-Philippe Bertschy. “Under the leadership of Mark Schneider, Nestle is being propelled to a higher level of growth and returns.
“This is coming at an even quicker pace that anticipated.”
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KUALA LUMPUR: Malaysia needs to urgently embark on a structural reform to rebuild the country’s strengths and prepare for the future, said Bank Negara Malaysia Governor Datuk Nor Shamsiah Mohd Yunus (pix).
She said the reform should begin with addressing the country immediate economic vulnerabilities and complemented by efforts to raise longer-term growth potentials.
Among the vulnerabilities are enhancing Malaysia’s fiscal position, reducing imbalances in the property market and strengthening household resilience to ensure sustainability of future growth, he added.
“Today, with the global landscape changing more rapidly than ever, with rising protectionism and political efficacy, continued implementation of the structural reform will be paramount for Malaysia to secure a strong foothold in the future,“ she said at Malaysian Economy Symposium at Parliament House here today.
The inaugural symposium themed “Present and Future” was jointly organised by the Office of the Speaker of Dewan Rakyat, the Backbenchers Council and the Parliamentary Caucus on Reform and Governance.
Nor Shamsiah said Malaysia must interact fast in introducing reforms to reduce the current economic complexity by creating high-value jobs, extend domestic linkages, develop new and bolster existing economic cluster, and improve inclusivity.
To develop new and bolster existing economic clusters, she said the country needs to intensify efforts to accelerate investment in the downstream environment sectors such as mining and agriculture and look into the possibility of creating new and sustainable products in existing economic clusters such as palm oil and petroleum.
“We must also remain steadfast to introduce initiatives to support the development and modernisation of digital economy,” she said, adding that this entails a comprehensive intervention to enable business and households to generate income.
She also noted that the Malaysian economic environment is likely to become highly challenging in the immediate term, impacted by a challenging global environment and external headwinds with the ongoing trade dispute affecting Malaysia’s exports with growth to moderate in the range between 4.3 per cent and 4.8 per cent this year.
However, she emphasised that the Malaysian economy remains resilient, with inherent strength working in favour to weather the challenges.
“One of our strengths is multiple engines of growth that is further complimented by a broad export base,“ she explained.
Furthermore, she said Malaysia’s financial system remains stable with banks being well positioned to respond to credit demand from businesses and households.
Financing activity continued to facilitate economic activities with total loan disbursement from January to May this year totalling to RM527 billion, with 14.1 per cent higher than average loan disbursement from 2014 to 2018, she said.
“But higher repayment of RM537 billion during the same period led to lower outstanding loan growth.
“Given the moderate economic growth, it was also natural for the demand in financing to be slower as reflected in a lower loan application growth.
“Nonetheless, moving forward, the strength of credit is expected to remain stable in forthcoming (months) with the banks targeted loan growth of 6.0 to 7.0 per cent this year,“ said the Governor.
For small and medium enterprises (SMEs), she said beyond financing and financial assistance, more needs to be done to elevate the policy.
It is critical to uptake the initiative to enhance the productivity of SMEs by encouraging firms to engage in more higher value-added activities and utilisation of higher automation in their operations, she said.
SME productivity stood about 37.1 per cent of gross domestic product despite high financing support of 53.1 per cent of total business loans.
In comparison, Malaysia’s SME contribution to GDP was rather low compared with that of other countries such as Indonesia (60.6 per cent), China (60 per cent) , Japan (54.5 per cent), the United Kingdom (51 per cent), and Thailand (42.3 per cent), she added.
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