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Business Times
an hour ago
- Business Times
Porsche plans more cost cuts to counter tariffs, China slump
[Stuttgart] Porsche warned its employees to brace for further cost reductions as the luxury-car maker seeks ways to offset declining sales in China and the escalating cost of US tariffs. The manufacturer will start negotiations on additional reductions in the second half of this year, chief executive officer Oliver Blume wrote in a memo to employees seen by Bloomberg. Management is following through on its pledge to find more savings after taking steps to reduce headcount earlier this year. 'Our business model, which has served us well for many decades, no longer works in its current form,' Blume said in the memo. Porsche is grappling with lower-than-expected demand for EVs and weak luxury sales in China, where the market for battery-powered cars is fiercely competitive. In the US, Porsche's single biggest market where it relies solely on imports, President Donald Trump's trade moves are weighing on margins. 'All of this is hitting us hard – harder than many other car manufacturers,' Blume said. Porsche earlier this month warned of a tough road ahead for sales this year, after a slowdown in the US and its persistent weakness in China. The additional cuts, to be hammered out with labour leaders, are meant to bolster Porsche's profitability in the coming years. The company targets an operating margin of 15 per cent to 17 per cent in the medium term, from 8.6 per cent in the first quarter. The 911 maker is following parent Volkswagen's lead in trying to whittle down its production costs in Germany, where labour and energy are expensive. Volkswagen clinched its own deal with unions late last year to slash production capacity and reduce headcount by 35,000 employees over the next five years. BLOOMBERG
CNA
5 hours ago
- CNA
Japan provides reality check for Couche-Tard's grand retail dream
TOKYO :Alimentation Couche-Tard's attempt to create a global convenience store behemoth was set back when it pulled its $46 billion bid for Seven & i, whose consumers in Japan have emotional ties to their purveyor of rice balls. The Canadian company, which owns Circle-K, withdrew its bid on Thursday after a year-long pursuit, citing "a calculated campaign of obfuscation and delay" by the Seven-Eleven operator and lack of engagement by its founding Ito family. Couche-Tard first disclosed the proposal in August last year, with Seven & i under pressure from shareholders to boost returns by selling off assets and focusing on its mainstay convenience store business. "ACT bid at just the right time... when Seven was at its weakest," said Michael Causton of consultancy JapanConsuming. The possibility of a takeover quickly sparked concern about whether the Seven-Eleven operator's fresh food would be affected. It also generated debate about Japan's openness to foreign takeovers. Convenience stores are an important resource in Japan during natural disasters, but Seven-Eleven's massive global presence made it a target for Couche-Tard. With Seven & i looking to avoid a takeover, it changed its self-reported national security category to "core" in September, a step which raised questions as to whether it was a defensive manoeuvre. In private, it emphasised its importance to Japan's economic security to the government, three sources familiar with the matter said. Seven & i declined to comment. The Canadian company hiked its proposal price in October, with Seven & i revealing plans to hive off assets the same month. The Japanese firm also announced plans to list its North America business. "It has sparked the management into being more proactive," said Lorraine Tan, an analyst at Morningstar. The company had expressed concerns about the regulatory hurdles to a deal. "Couche-Tard seemed to want to iron out the details after Seven & i had agreed to the deal," said Travis Lundy, an analyst who publishes on Smartkarma. PROLONGED NEGOTIATIONS Couche-Tard's approach appeared to gain a tailwind when an attempt by the Ito founding family to buy Seven & i collapsed in February after failing to secure funding. Then, after initially providing little public explanation for pursuing the deal, Couche-Tard in March made a publicity push for the combination emphasising its financial credentials. However, the Canadian retailer faced growing challenges including lacklustre retail spending in the U.S., with its stock price sliding between the end of last year and Wednesday's close. "Couche-Tard may have realised that the cost cannot justify the risks, including prolonged negotiations and uncertain business prospects," said Tatsunori Kawai, chief strategist at Mitsubishi UFJ eSmart Securities. Its shares jumped 8 per cent on Thursday after withdrawing the bid. "To continue further... would ultimately be a lost opportunity for its own growth," said Takahiro Kazahaya, an analyst at UBS. Analysts are also questioning how Seven & i, famed for its ready meals, will drive further growth. On Thursday, Natsuko Douglas, an analyst at Macquarie Capital, downgraded Seven & i to neutral from outperform, citing unclear benefits from the planned listing of the North America business. "Full recovery is a long time away," she wrote in a note. The planned listing is "something they probably don't want to do but were prepared to do to get rid of Couche-Tard," said Tom Leske, director at Churchill Capital. Industry experts point to Seven & i's strengths, honed over decades in Japan's bruising retail market, which has proved tough for many foreign entrants.
CNA
a day ago
- CNA
Waymo expands coverage in Austin, Texas, as robotaxi competition heats up
Alphabet's Waymo is expanding its service in Austin, Texas, to 90 square miles from 37 square miles earlier, the software giant's self-driving unit said on Thursday, seeking to protect its top position in the city from rivals such as Tesla. Waymo, which has over 100 vehicles on the Uber platform in Austin, will now cover new neighborhoods such as Crestview, Windsor Park, Sunset Valley and Franklin Park, the company said. After cautiously expanding its self-driving taxi services across the U.S. for years, Waymo is now largely seen as the frontrunner in the space. It has about 1,500 vehicles across San Francisco and other Bay Area cities, Los Angeles, Phoenix, Atlanta and others. Rival Tesla is looking to catch up, having conducted a small trial last month of about a dozen of its Model Y SUVs in a limited area of Austin. But Tesla still faces a steep challenge to commercialize this technology on a large scale and clear regulatory hurdles. The automaker also does not use sensors such as radar and lidar like Waymo and most rivals; instead, it depends solely on cameras and artificial intelligence. "Austin remains one of the fastest growing cities in the country, and we are doing our part to grow with it," Shweta Shrivastava, the senior director of product management at Waymo, said. Earlier this week, Waymo's vehicles logged a milestone of 100 million miles driven without a human behind the wheel, doubling its mileage in about six months.
