Dollar poised for weekly loss, hurt by economic weakness and trade limbo
The U.S. nonfarm payrolls report expected later on will draw greater scrutiny after a slew of weaker-than-expected economic data this week underscored that President Donald Trump's tariffs were taking a toll on the economy.
Currencies were mostly rangebound in early European hours as traders steered clear of large bets ahead of the data release.
The euro was taking a breather after hitting a 1-1/2-month top on Thursday following hawkish remarks from the European Central Bank. It last bought roughly $1.1422, down just 0.2% on the day.
Traders have pushed back expectations on the timing of the next rate cut, but continue to anticipate a 25 basis point reduction by year-end.
Deutsche Bank's Mark Wall said he still expects 50 basis points worth of ECB rate cuts, adding "it is still too early to judge the impact of trade war, and the path of the trade war is in any case still inherently unpredictable."
Reflecting a struggling economy, data showed that German exports and industrial output fell more than expected in April and data on euro zone retail sales is expected later in the day.
Sterling dipped 0.2% at around $1.3546 having scaled a more than three-year peak in the previous session, and was set to rise about 0.6% for the week.
The yen fell 0.18% to 143.90 per dollar.
Most currencies had surged against the dollar late on Thursday, helped by news that Trump and Chinese President Xi Jinping spoke on a call for more than an hour, before paring some of their gains.
Against a basket of currencies, the dollar edged up to 98.9, and was headed for a weekly loss of 0.5%.
Analysts said Friday's U.S. jobs data would likely be the next catalyst for currencies.
Economists polled by Reuters forecast the U.S. economy created 130,000 new jobs in May versus 177,000 in April.
Job growth likely slowed considerably in May as businesses struggled with headwinds from tariff uncertainty, but probably not enough for a cautious Federal Reserve to resume cutting interest rates anytime soon, analysts said.
"Within all the noise... the softness that we've seen in the data this week has probably been more responsible for rejuvenating the bearish U.S. dollar narrative than anything else that's gone on," said Ray Attrill, head of FX research at National Australia Bank.
"We've always taken the view that once it becomes clear that the U.S. economy is no longer exceptional, and that the policy actions that we've seen to date, together with the relative tightness of Fed policy, will start to show through particularly in a weakening labor market. Hence the importance of tonight's numbers."
Adding to headwinds for the dollar, investors remain worried about U.S. trade negotiations and the lack of progress in hashing out deals ahead of an early July deadline.
The highly anticipated call between Trump and Xi also provided little clarity and the spotlight on it was quickly stolen by a public fallout between Trump and Elon Musk.
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Business Wire
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PHINIA Reports Second Quarter 2025 Results
AUBURN HILLS, Mich.--(BUSINESS WIRE)--PHINIA Inc. (NYSE: PHIN), a leader in premium fuel systems, electrical systems, and aftermarket solutions, today reported results for the second quarter ended June 30, 2025. Second Quarter Highlights: On June 10, 2025, PHINIA entered into a definitive agreement to acquire Swedish Electromagnet Invest AB (SEM), a prominent provider of advanced natural gas, hydrogen and other alternative fuel ignition systems, injector stators and linear position sensors for approximately $47 million. The transaction is expected to close in the third quarter of 2025. Net sales of $890 million, an increase of 2.5% compared with Q2 2024. Excluding the impacts of foreign currency and contract manufacturing agreements that ended in 2024, an increase of $18 million and decrease of $5 million, respectively, net sales increased $9 million or 1.0%, driven by customer pricing, primarily related to tariff recoveries. 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A few examples of new business awards in Q2 are: New business award for Gas Direct Injection (GDi) Fuel Rail Assembly and pump for a leading domestic Chinese OEM, to be applied on new hybrid engine platform for multiple vehicle models within China and for the Brazilian market flex-fuel (E100) application. First GDi pump business with a top three North America OEM. Aftermarket business win for new diesel fuel injection service with major off-road equipment supplier. Continued to increase share of wallet with customers leveraging market-leading range coverage in braking and suspension components. Business expansion with a major U.S. distributor, which is a consolidator in the warehouse distribution space. Brady Ericson, President and Chief Executive Officer of PHINIA commented: 'Our team continues to navigate a dynamic landscape shaped by economic uncertainties, tariff impacts, and evolving customer demands. As demonstrated by our second-quarter results, we remain focused on cost management and supply chain resilience. Delivering on our commitment to strategic growth, we announced a definitive agreement to acquire SEM, which will expand our footprint in the commercial vehicle, industrial, and aftermarket sectors and supports our strategy of exploring alternative, zero carbon and lower carbon fuels.' Balance Sheet and Cash Flow: The Company ended the quarter with cash and cash equivalents of $347 million and $499 million of available capacity under its Revolving Credit Facility. Total debt at quarter end was $990 million. Net cash generated by operating activities was $57 million, representing a year-over-year decrease of $52 million. Adjusted free cash flow was $20 million compared to $108 million in Q2 2024. The decrease was primarily driven by increased working capital demands as the Company navigates fluctuating volumes and other shifting industry conditions and the timing of capital expenditures. 2025 Full Year Guidance: The Company refined its expected 2025 net sales to $3.33 billion to $3.43 billion. Excluding the impacts of foreign exchange and contract manufacturing arrangements in 2024, this implies a year-over-year sales range of 3% decline to breakeven in 2025. The Company's net earnings and adjusted EBITDA are projected to be $140 million to $170 million and $455 million to $485 million, respectively, with net earnings margin of 4.2% to 5.0% and adjusted EBITDA margin of 13.7% to 14.1%. The Company expects to generate $160 million to $200 million in adjusted free cash flow. Adjusted tax rate is expected to be in the range of 36% to 40%. The Company will host a conference call to review second quarter 2025 results and take questions from the investment community at 8:30 a.m. ET today. This call will be webcast at PHINIA Q2 2025 Earnings Call. Additional presentation materials will be available at About PHINIA PHINIA is an independent, market-leading, premium solutions and components provider with over 100 years of manufacturing expertise and industry relationships, with a strong brand portfolio that includes DELPHI ®, DELCO REMY ® and HARTRIDGE™. With over 12,500 employees across 43 locations in 20 countries, PHINIA is headquartered in Auburn Hills, Michigan, USA. Across commercial vehicles and industrial applications (medium-duty and heavy-duty trucks, buses and other off-highway construction, marine, agricultural and aerospace and defense), light commercial vehicles (vans and trucks) and light passenger vehicles (passenger cars, mini-vans, cross-overs and sport-utility vehicles), we develop fuel systems, electrical systems and aftermarket solutions designed to keep combustion engines operating at peak performance, while at the same time investing in advanced technologies to unlock the potential of alternative fuels. By providing what the market needs today to become more efficient and sustainable, while also developing innovative products and solutions to contribute to lower carbon mobility, we are the partner of choice for a diverse array of customers – powering our shared journey toward a cleaner tomorrow. © 2025 PHINIA Inc. All Rights Reserved. (DELCO REMY is a registered trademark of General Motors LLC, licensed to PHINIA Technologies Inc.) Forward-Looking Statements: This press release contains forward-looking statements within the meaning of U.S. federal securities laws. Forward-looking statements are statements other than historical fact that provide current expectations or forecasts of future events based on certain assumptions and are not guarantees of future performance. Forward-looking statements use words such as 'anticipate,' 'believe,' 'continue,' 'could,' 'designed,' 'effect,' 'estimate,' 'evaluate,' 'expect,' 'forecast,' 'goal,' 'initiative,' 'intend,' 'likely,' 'may,' 'outlook,' 'plan,' 'potential,' 'predict,' 'project,' 'pursue,' 'seek,' 'should,' 'target,' 'when,' 'will,' 'would,' and other words of similar meaning. Forward-looking statements are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and which could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. Risks, uncertainties, and factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to: adverse changes in general business and economic conditions, including recessions, adverse market conditions or downturns impacting the vehicle and industrial equipment industries; our ability to deliver new products, services and technologies in response to changing consumer preferences, increased regulation of greenhouse gas emissions, and acceleration of the market for electric vehicles; competitive industry conditions; failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions or partnerships; pricing pressures from original equipment manufacturers (OEMs); inflation rates and volatility in the costs of commodities used in the production of our products; changes in U.S. and foreign administrative policy, including tariffs, changes to existing trade agreements and import or export licensing requirements, and any resulting changes in international trade relations; our ability to protect our intellectual property; failure of or disruption in our information technology infrastructure, including a disruption related to cybersecurity; our ability to identify, attract, retain and develop a qualified global workforce; difficulties launching new vehicle programs; failure to achieve the anticipated savings and benefits from restructuring and product portfolio optimization actions; extraordinary events, including natural disasters or extreme weather events, fires or similar catastrophic events, political disruptions, terrorist attacks, pandemics or other public health crises, and acts of war; risks related to our international operations; the impact of economic, political, social and market conditions on our business in China; our reliance on a limited number of OEM customers; supply chain disruptions, including due to U.S. and foreign government action; work stoppages, production shutdowns and similar events or conditions; governmental investigations and related proceedings regarding vehicle emissions standards, including the ongoing investigation into diesel defeat devices; current and future environmental, health and safety, human rights and other laws and regulations; the impacts of climate change, regulations related to climate change and various stakeholders' emphasis on climate change and other related matters; compliance with and changes in other laws and regulations; liabilities related to product warranties, litigation and other claims; tax audits and changes in tax laws or tax rates taken by taxing authorities; impairment charges on goodwill and indefinite-lived intangible assets; the impact of changes in interest rates and asset returns on our pension funding obligations; the impact of restrictive covenants and other requirements on our financial and operating flexibility pursuant to the agreements governing our indebtedness; risks relating to the spin-off from our former parent, including our ability to achieve some or all of the benefits that we expect to achieve from the spin-off, a determination that the spin-off does not qualify as tax-free for U.S. federal income tax purposes, and our or our former parent's failure to perform under, or additional disputes that may arise between the parties relating to, various transaction agreements executed in connection with the spin-off; and other risks and uncertainties described in our reports filed from time to time with the Securities and Exchange Commission. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. PHINIA Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) Three Months Ended June 30, Six Months Ended June 30, OPERATING Net cash provided by operating activities $ 57 $ 109 $ 97 $ 140 INVESTING Capital expenditures, including tooling outlays (34 ) (17 ) (69 ) (60 ) Proceeds from asset disposals and other, net 1 — 1 1 Net cash used in investing activities (33 ) (17 ) (68 ) (59 ) FINANCING Net decrease in notes payable — (75 ) — (75 ) Proceeds from issuance of long-term debt, net of discount — 525 — 525 Payments for debt issuance costs — (9 ) — (9 ) Repayments of debt, including current portion — (425 ) — (428 ) Dividends paid to PHINIA stockholders (10 ) (11 ) (21 ) (23 ) Payments for purchase of treasury stock, including excise tax (42 ) (90 ) (142 ) (113 ) Payments for stock-based compensation items — — (6 ) (3 ) Net cash used in financing activities (52 ) (85 ) (169 ) (126 ) Effect of exchange rate changes on cash 2 7 3 19 Net decrease in cash and cash equivalents (26 ) 14 (137 ) (26 ) Cash and cash equivalents at beginning of period 373 325 484 365 Cash and cash equivalents at end of period $ 347 $ 339 $ 347 $ 339 Expand Use of Non-GAAP Financial Measures This press release contains information about PHINIA's financial results that is not presented in accordance with accounting principles generally accepted in the United States (GAAP). Such non-GAAP financial measures are reconciled to their most directly comparable GAAP financial measures below. The reconciliations include all information reasonably available to the Company at the date of this press release and the adjustments that management can reasonably predict. Management believes that these non-GAAP financial measures are useful to management, investors, and banking institutions in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, because not all companies use identical calculations, the non-GAAP financial measures as presented by PHINIA may not be comparable to similarly titled measures reported by other companies. A reconciliation of each of projected Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Free Cash Flow, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliation without unreasonable effort. The inability to provide each reconciliation is due to the unpredictability of the amounts and timing of events affecting the items we exclude from the non-GAAP measure. Adjusted EBITDA and Adjusted EBITDA Margin The Company defines adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) as net earnings less interest, taxes, depreciation and amortization, adjusted to exclude the impact of restructuring expense, transaction-related (benefits) costs, other postretirement income and expense, equity in affiliates' earnings, net of tax, impairment charges, other net expenses, and other gains and losses not reflective of our ongoing operations. 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Management believes that adjusted sales is useful to investors, as it provides improved comparability between periods through the exclusion of certain temporary agreements with our former parent that are not indicative of the Company's ongoing operations. Adjusted Net Earnings and Adjusted Net Earnings Per Diluted Share The Company defines adjusted net earnings and adjusted net earnings per diluted share as net earnings and net earnings per share, each adjusted to exclude: (i) the tax-effected impact of restructuring expense, transaction-related (benefits) costs, impairment charges and other gains, losses and tax effects and adjustments not reflective of the Company's ongoing operations; and (ii) acquisition-related intangibles amortization expense because it pertains to non-cash expenses that the Company does not use to evaluate core operating performance. Management believes that adjusted net earnings and adjusted net earnings per diluted share are useful to investors in assessing the Company's ongoing financial performance, as they provide improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company's core operating performance. Adjusted Free Cash Flow The Company defines adjusted free cash flow as net cash provided by operating activities after adding back adjustments related to the ongoing effects of separation-related transactions, less capital expenditures, including tooling outlays. Management believes that adjusted free cash flow is useful to investors in assessing the Company's ability to service and repay its debt and return capital to shareholders. Further, management uses this non-GAAP measure for planning and forecasting purposes. 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Expand
CNBC
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