Major International Business Headlines Brief::: 14 September 2018

Fri Sep 14 06:28:43 CAT 2018

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Major International Business Headlines Brief::: 14 September 2018

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*  Moody's sees little chance of South Africa downgrade

*  Drugmaker Aspen sells baby milk business to dairy giant Lactalis

*  South Africa's rand shines after Turkish rate hike, Moody's comments

*  Kenya says IMF stand-by arrangement over, still engaging with the fund

*  ICE launches West African crude oil swaps

*  Ghana agrees with Ivory Coast to announce bean prices at start of cocoa season

*  Turkey raises interest rates to 24% in new bid to boost lira

*  Amazon chief Jeff Bezos gives $2bn to help the homeless

*  Turkey bans use of foreign currency in property market

*  GM recalls 1.2 million 2015 pickup trucks and SUVs

*  Bank of England leaves rates on hold amid Brexit uncertainty

*  John Lewis profits slump 99% in 'challenging times'

*  Huawei promises foldable phone within a year

 <mailto:info at bulls.co.zw> 

Moody's sees little chance of South Africa downgrade

JOHANNESBURG (Reuters) - Moody’s said on Thursday there was little chance it would strip South Africa of its investment grade credit rating this year - giving some respite to President Cyril Ramaphosa after the economy moved into recession.

But the agency - the last of the top three ratings firms to have Pretoria’s long-term foreign-currency debt at investment grade - said it was critical that South Africa keep its finances tight if it wanted to keep that rating in the longer term.

South Africa entered recession for the first time since 2009, data showed last week, a particular blow for Ramaphosa who has said he is trying to revive the economy after years of stagnation under former president Jacob Zuma.

Moody’s said the recovery in South Africa’s economy would be slow - slower than the Treasury’s estimate of 1.5 percent growth for 2018 after a surprise contraction in the first two quarters.

“Growth is going to be below 1 percent, to what extent it’s difficult to say,” Lucie Villa, Moody’s lead analyst for South Africa, told the agency’s annual Sub-Saharan Africa conference, referring to this calendar year.

But she brushed off talk of a possible downgrade at a review scheduled for next month.

“South Africa has a stable outlook ... there is little chance of a rating action,” she said.

Finance Minister Nhlanhla Nene told the same conference that South Africa was committed to prudent fiscal policy aimed at stabilising the ratio of its debt to gross domestic product.

Nene also said the government was working on a package of measures to stimulate economic growth by reprioritising existing resources.

“The focus on trying to improve on the side of growth because that creates space for us to spend,” he said.

RECESSION

Since the recession shock last week, economic data has pointed to a mixed start to the third quarter.

Retail sales for July showed an expansion in activity, but mining data and business confidence figures have been weak.

Africa’s most developed economy needs faster economic growth if it is to reduce high unemployment - currently at 27 percent - a hot-button issue ahead of national elections in 2019.

Villa said two ratings strengths for South Africa were that its government debt had a long maturity and that relatively little of the debt was foreign-currency denominated.

She said Moody’s would pay close attention to next month’s budget statement to assess the government’s commitment to fiscal consolidation.

Plans by the ruling African National Congress (ANC) to nationalise the Reserve Bank were not “rating-relevant,” assuming the bank’s mandate would not be affected, Villa added.

The central bank has said any change of ownership would not affect its mandate or independence.

($1 = 14.8287 rand)

 <mailto:info at bulls.co.zw> 

Drugmaker Aspen sells baby milk business to dairy giant Lactalis

JOHANNESBURG (Reuters) - Aspen Pharmacare has agreed to sell its infant formula business to Lactalis for 12.9 billion rand ($865 million) to focus on core activities while the French buyer looks to revive its baby milk expansion after a health scandal.

Investors in the South African drugmaker appeared unimpressed, however, after expectations that the deal could top $1 billion. The company’s share price tumbled after the deal’s announcement on Thursday alongside full-year earnings, dropping 26 percent before paring losses to stand 16.3 percent down at 228.06 rand by 1430 GMT.

Rising incomes in emerging markets coupled with global population growth have made infant formula an attractive proposition in a market dominated by Nestle, Danone and Reckitt Benckiser, which acquired Mead Johnson of the United States last year.

“The market expected Aspen to get $1 billion to $1.5 billion dollars,” Cratos Capital equity trader Greg Davies said, adding that there is also some doubt over Aspen’s stated growth expectations.

FNB Wealth and Investments portfolio manager Wayne McCurrie said a “second disappointment” concerned Aspen’s rising debt levels and whether Africa’s biggest manufacturer of generic drugs had been forced to sell the infant milk business to reduce gearing levels.

“The market is worried that they took a decision just on debt and not on the growth prospects of the business, because this business looked quite good,” McCurrie said.

“They were pumping it massively over the last year or so and all of a sudden say they are selling it.”

Aspen CEO Stephen Saad said the disposal was in line with “our strategic intention to focus attention on our core pharmaceutical business, which includes the anaesthetics, thrombosis and high potency and cytotoxic portfolios”.

After 1.1 billion rand to be paid to partners in Asia-Pacific, Aspen will receive 11.8 billion rand, representing 23 times the unit’s earnings of 512 million rand, Deputy Chief Executive Gus Attridge said.

CHANCE TO REBUILD

For Lactalis, meanwhile, the deal represents an opportunity to rebuild its baby milk business after a salmonella outbreak at its production site in northwest France caused dozens of babies to fall sick and led to a global product recall.

Lactalis is the world’s largest dairy firm, with annual sales of 18.4 billion euros ($21.4 billion), but baby milk has been a relatively small part of its activities and is now at a standstill after the health scare.

The company’s head of communications, Michel Nalet, said the production halt in France was “one of the factors” behind the move for the Aspen business

“In infant formula, we didn’t have a base outside France. We had the desire to be a global player in all dairy businesses,” he said.

Aspen’s nutritionals business sells infant milk formula in the Asia-Pacific region, sub-Saharan Africa and Latin America, and has been building a growing presence in the Middle East and China.

Privately owned Lactalis, which said the crisis could cost it hundreds of million of euros, decided the production line linked to the contamination should be closed permanently and is now awaiting permission from French authorities to restart output at its other production line.

The acquisition will be funded with cash, Aspen said, adding that the proceeds will reduce its debt and that the deal is expected to close in the next six months.

Lactalis will also receive any intellectual property and goodwill presently owned by Aspen Holdings and Pharmacare Ltd and Aspen Global Incorporated.

Aspen’s infant formula business contributed 3.1 billion rand to group revenue in the year to June 30.

The drugmaker posted full-year normalised earnings before interest, tax, depreciation and amortisation of 12 billion rand, up 5 percent, helped by strong growth in China, inclusion of anaesthetics portfolios acquired the previous year and positive organic growth in commercial pharmaceuticals.

Aspen declared a dividend of 315 cents per share, up 10 percent.

($1 = 0.8601 euros)

($1 = 14.9147 rand)

South Africa's rand shines after Turkish rate hike, Moody's comments

JOHANNESBURG (Reuters) - South Africa’s rand raced to its highest in over a week on Thursday, erasing all of the losses suffered after the economy slipped into recession, as a rate hike in Turkey and Moody’s decision to hold fire on a downgrade boosted demand.

At 1215 GMT, the rand was 1.4 percent firmer at 14.7700 per dollar, just shy of its session-best 14.7000 touched immediately after Turkey’s central bank raised its benchmark rate by 625 basis points.

The Turkish lira firmed 6 percent following the decision.

Before that, the rand had been rising as easing tensions between the United States and China fuelled risk demand in early, low liquidity trade.

Moody’s comment at a conference in Johannesburg that it was unlikely to cut Pretoria’s foreign debt to subinvestment, despite last week’s surprise slide into recession, pushed the rand’s gains to more than 1 percent.

“Emerging market currencies have been moving as a basket recently and the Turkish central bank’s rate move was definitely a catalyst for the rand move. The Moody’s comment is the second catalyst,” said IG Markets strategist Shaun Murison.

“Overall sentiment remains negative around emerging markets as a whole. So this is likely a short term recovery, sort of the inverse of a dead cat bounce,” Murison said.

Moody’s warned any growth recovery would be slow and that commitment to fiscal consolidation would be key to maintaining the country’s rating.

Data on the day showing mining output had shrunk again, 5.2 percent year-on-year in July, hardly upset the currency, which is now trading back where it was before the recession data last Tuesday.

Bonds also gained, with the yield on benchmark government paper due in 2026 down 5.5 basis points to 9.14 percent.

Stocks, however, remained on the ropes, with the Johannesburg Stock Exchange’s Top-4- index down 0.23 percent to 49,662 points and the wider All-Share index 0.31 percent softer at 55,780 points.

The sell-off that battered emerging currencies in August has spread to global equities in September, with risk-shy investors flocking to the greenback and U.S. treasuries.

The local bourse has seen five consecutive sessions of losses, with the decline particularly sharp among firms exposed to the local economy - mainly retailers, banks and miners.

On the day, drugmaker Aspen was down more than 20 percent to 217.94 rand after it announced the sale of its infant formula business.

Kenya says IMF stand-by arrangement over, still engaging with the fund

NAIROBI (Reuters) - Kenya’s stand-by loan deal with the International Monetary Fund has expired but the country will continue to talk to the Fund about what funding facilities it can access in future, Finance Minister Henry Rotich said on Thursday.

Kenya had secured a six-month extension in March of the $989.8 million arrangement, agreed in 2016 to help cushion the economy in case of unforeseen external shocks that could upset the balance of payments. It included a stand-by credit facility of $494.9 million that expired in March.

No funds were ever drawn down.

Rotich told reporters the expiration of the programme was not unusual, since Kenya has had more than a dozen such programmes over the last 15 years that came and went.

“There is nothing unique about any programme ending. I think what’s important is that we did have a very successful two-year programme, which is now coming to an end,” he told reporters after a meeting on the budget.

The shilling weakened by as much as 0.3 percent from Wednesday’s close after news of the expiry of the facility with IMF, forcing the central bank to intervene through the sale of dollars to banks in the afternoon.

Talks with the Washington-based fund were now focusing on the next type of facility the country can secure, Rotich said.

When Reuters contacted its local office, the IMF said it would comment later.

Rotich said East Africa’s biggest economy should wean itself off support from the IMF.

“As a country that is entering into the medium and developed countries, we should be relying less and less on IMF facilities, especially if you have come of age in our macroeconomic management,” he said.

“But we can still engage and get back to it if we feel it is still necessary. We will continue to engage with the fund going forward, the way we have done it in the past.”

The IMF had set conditions for extending the stand-by arrangement, including the repeal of a cap on commercial lending rates which was imposed in 2016.

Rotich tried to repeal the cap in his June budget, but parliament voted to keep the upper limit of the rate cap while getting rid of a minimum deposit rate it had previously imposed.

Kamau Thugge, the principal secretary to the ministry of finance, had earlier told the budget meeting that not having an IMF precautionary arrangement would not hurt the economy.

The economy was expected to grow 6.2 percent in 2019, up from a forecast 6.0 percent this year, Thugge said in a presentation.

ICE launches West African crude oil swaps

LONDON (Reuters) - The InterContinental Exchange (ICE) on Monday launches its first set of derivatives linked to the West African crude oil market, aimed at an industry that has called for a strengtening of the dated Brent benchmark.

Traders will be able to use the ICE platform from Sept. 17 to trade a derivatives contract linked to Nigeria’s four largest crude oil grades - Bonny Light, Forcados, Qua Iboe and Bonga.

The cash-settled future will be based on a daily assessment by pricing agency S&P Global Platts for a “WAF index” backed by the four grades, each of which will carry a weighting of 25 percent, according to a note on the ICE website.

The contract will be based on the differential of the four crudes to the dated Brent benchmark price and will represent 1,000 barrels of oil.

Dated Brent is currently underpinned by five North Sea crudes - Brent itself, Forties, Oseberg, Ekofisk and Troll. That quintet together accounts for less than 1 percent of the roughly 99 million barrels per day of global oil production.

Leading traders such as Vitol CEO Ian Taylor and Royal Dutch Shell’s former head of crude trading Mike Mueller have been among those to express concern about the long-term decline in North Sea production and its impact on the liquidity of the market that sets the price of dated Brent.

S&P Global Platts, in response to concern from the industry over liquidity, added the Troll grade to the basket in January 2018

Taylor, who heads of the world’s largest oil trader, has said the Brent benchmark should be broadened to include grades from West Africa, Kazakhstan and Algeria, with the possible inclusion of Russia and even the United States.

“As an industry we have a major problem that we have to solve,” he told an IP Week industry conference in 2014.

In 2017 Shell’s Mueller, who has since moved to Vitol to lead the company’s crude trading operations, urged S&P Global Platts to consider including other regional grades, such as Russian Urals, given that dated Brent is the backbone of about two thirds of the world’s daily oil trades.

Ghana agrees with Ivory Coast to announce bean prices at start of cocoa season

ACCRA (Reuters) - Ghana and Ivory Coast have agreed to coordinate the announcement of bean prices with the opening of cocoa season, part of a bid by the world’s top producers to harmonise operations and boost producer profits, industry regulator Cocobod said on Wednesday.

The two countries, which account for more than 40 percent of global cocoa supply, will jointly conduct a study to determine the floor price of cocoa, the regular said in a statement.

The agreements will take effect in the 2018/19 cocoa season which starts in October, subject to approval by the two countries’ parliaments, a Cocobod official close to the talks told Reuters.

Ghana and Ivory Coast began talks in June after consultations between President Nana Akufo-Addo and his Ivorian counterpart Alassane Ouattara on a strategic plan to harmonise cocoa production and marketing.

Wednesday’s statement said both countries would continue to cut cocoa trees infected by swollen shoot virus in their respective cocoa belts, and work together to mitigate adverse of climate change on the crop.

Turkey raises interest rates to 24% in new bid to boost lira

The lira has risen against the dollar after Turkey's central bank hiked interest rates to 24% on Thursday - the biggest increase in President Tayyip Erdogan's 15-year rule.

The hefty 6.25 percentage point rise is the bank's latest attempt to stem the currency's collapse.

The lira is down 38% against the dollar this year despite Thursday's slim gain.

The move came despite Mr Erdogan repeating his opposition to high interest rates earlier in the day.

He has repeatedly blamed the central bank for high inflation, which hit almost 18% last month, its highest level since 2003.

However, a diplomatic row with the United States and concerns about the president's influence on monetary policy have eroded investor confidence in Turkey in recent months.

Turkey's lira slump explained

Turkey bans foreign currency for property market

Mr Erdogan, who has called himself an "enemy of interest rates", chose his son-in-law, Berat Albayrak, as finance minister in July.

Phoenix Kalen at Societe Generale said the market was both pleased and confused by the bank's move.

"It almost seems like it's a game of 'good cop, bad cop' being played out between the Turkish authorities - with President Erdogan on the one hand still making statements regarding his dislike of interest rates and... a very sizeable reaction from the central bank in response to the recent inflationary and geopolitical developments," she said.

Brett Diment at Aberdeen Standard Investments said raising rates would put "Turkey on the slow road to recovering some monetary policy credibility, and that is critical".

Piotr Matys at Rabobank said Turkey also needed to resolve its trade dispute with the US and rebalance the economy away from big infrastructure projects and consumer spending.

The central bank surprised investors by not raising rates when it last met in July.

That decision sent the lira tumbling by a quarter and prompted Turkish authorities to impose a series of measures intended to support the currency.

On Thursday Turkey banned the use of foreign currencies in the country's property market.--BBC

Amazon chief Jeff Bezos gives $2bn to help the homeless

Amazon chief Jeff Bezos is putting $2bn (£1.5bn) into a charitable fund he has established to help the homeless and set up a new network of schools.

The world's richest man announced the move in a tweet, saying the charity would be called the Day One Fund.

Mr Bezos - reportedly worth more than $164bn - has faced criticism for not doing more philanthropic work.

And US Senator Bernie Sanders has criticised working conditions in Amazon warehouses.

Mr Bezos asked on Twitter last year for suggestions on how he might use his personal fortune, which this year has soared due to Amazon's surging share price and US tax cuts.

He said on Thursday that the "Bezos Day One Fund" will contribute to "existing nonprofits that help homeless families" and also fund "a network of new, nonprofit, tier-one preschools in low-income communities".

The fund will be split between Day 1 Families Fund and Day 1 Academies Fund.

"The Day 1 Families Fund will issue annual leadership awards to organizations and civic groups doing compassionate, needle-moving work to provide shelter and hunger support to address the immediate needs of young families," Mr Bezos said in a tweet.

The Day 1 Academies Fund will launch and operate a network of high-quality, full-scholarship, Montessori-inspired pre-schools in low-income and underserved communities, he said. "We will build an organization to directly operate these schools," he added.

Earlier this month Amazon, which Mr Bezos founded in 1994, became only the second stock market company to be valued at $1tn. Apple reached that milestone a few weeks earlier.

Despite the huge amount of money being given, it is far less than the philanthropy of other billionaires such as Microsoft's Bill Gates, who has donated tens of billions to his foundation, and Facebook's Mark Zuckerberg, who has pledged to donate 99% of his shares in the social media giant to an organization focused on public good.

The $2bn also falls short of the "giving pledge" initiative launched by Mr Gates and billionaire investor Warren Buffett, who have encouraged wealthy individuals to pledge half their fortunes for philanthropy.

Mr Bezos, who operates the Blue Origin space rocket project and who owns the Washington Post newspaper, has given donations to a scheme to help the children of immigrants, cancer research, and Princeton University.--BBC

Turkey bans use of foreign currency in property market

Turkey is banning the use of foreign currencies in the country's property market as it looks to stem the dramatic fall of its own currency, the lira.

President Recep Tayyip Erdogan issued a decree on Thursday announcing that contracts for sales, rent and leasing must in future be made in lira.

Mr Erdogan has previously urged Turks to sell their dollars and euros.

The move came as Turkey's central bank increased interest rates sharply in an attempt to curb the tumbling lira.

The currency has lost almost a third of its value against the dollar since January.

Thursday's decree, which was published in the government's official gazette, said all current agreements in the property sector made in foreign currencies must be changed within 30 days.

Rental and sale agreements in Turkey are often offered in euros and dollars to foreigners living in the country.

However, the property and construction market has become a concern for investors worried that Turkish companies that borrowed heavily to profit from a boom may struggle to repay loans in foreign currencies, as the weakened lira means there is now more to pay back.

Turkey's lira crisis explained

Is Turkey heading for an economic crisis?

In a speech to a traders' confederation in the capital, Ankara, Mr Erdogan said on Thursday that nobody should carry out business in foreign currency apart from exporters and importers.

He also criticised Turkey's central bank, accusing it of failing to control inflation and urging it to cut interest rates just hours ahead of its announcement that it was raising rates to 24%.

"As of today I have not seen the central bank fix inflation rates as they promised," Mr Erdogan said.

"Interest rates are the cause, inflation is the result. If you say 'inflation is cause, the rate is the result', you do not know this business, friend," he added.

Turkey's lira jumped sharply following news of the rate increase.

The new decree received limited attention from people in Turkey as most property sold or rented in foreign currency tends to be either commercial or high-end.

Social media users commented that even if contracts were to change on paper, people who have valuable property would continue to receive their rent in dollars. Those who cannot "were renting out in Turkish liras anyway", one said.

Critics of the government called on the authorities to apply the new rule to its own agreements too.

The changes are expected to affect mostly businesses, and many retailers have previously criticised the dollar-based rent policy in shopping centres, where it has been blamed for the bankruptcy of at least one major company. Shopping centre managers, however, say the change could be dangerous as it could be costly to repay bank loans taken out in dollars.

Car rental companies, who would also be affected by the decree, are "in shock", according to Turkish news website Dünya. A representative from the industry was quoted as saying that the move could "drive the industry to calamity".

Last month, Turkey's weak currency received a small boost after Mr Erdogan raised tariffs on US imports including cars, alcohol and tobacco.

The US earlier hit Turkey with tariffs on items such as steel and aluminium in an effort to increase pressure on the country to free the detained American pastor Andrew Brunson.

Mr Brunson has been held for almost two years because of his alleged links to political groups that are outlawed in Turkey, which accuses the US of trying to bring it "to its knees" over the administration's demands.

US-Turkey row: Pastor a 'pawn in personal feud'

The fall in the value of the lira in recent months has pushed up the price of everyday items in Turkey and raised fears the country is sliding into an economic crisis.

Experts have also warned that its weakness could infect other emerging market currencies.--BBC

GM recalls 1.2 million 2015 pickup trucks and SUVs

General Motors Co has issued a safety recall for about 1.2 million pickup trucks and SUVs globally, citing problems with the power steering function.

The same issue prompted the firm to recall about 800,000 pickup trucks last year.

GM said dealerships will provide free software updates to fix the problem.

About 1 million of the vehicles were sold in the United States. The models involved in the recall date from 2015.

They include the Chevrolet Silverado SD; the GMC Yukon; the GMC Sierra LD; and the Chevrolet Tahoe.

Canada and Mexico are the biggest markets outside of the US for those vehicles.

The firm, which started investigating the issue in June after complaints, said the issue is linked to 30 crashes and two injuries but no deaths.

It said it has introduced changes since 2015 to mitigate the problem, which causes temporary loss of power steering and makes it difficult to steer, especially under low-speed conditions.--BBC

Bank of England leaves rates on hold amid Brexit uncertainty

The Bank of England has left interest rates on hold at 0.75% as expected but flagged "greater uncertainty" around the Brexit negotiations.

The Bank's Monetary Policy Committee (MPC) voted 9-0 to leave rates unchanged.

A quarter of a percentage point rise last month took rates to the highest level since March 2009.

The European Central Bank also kept eurozone interest rates unchanged at 0% on Thursday.

The MPC said in the minutes of its September meeting there were mounting fears about the UK leaving with the EU without a deal agreed.

"Since the committee's previous meeting, there had been indications, most prominently in financial markets, of greater uncertainty about future developments in the withdrawal process," it said.

The Bank's regional staff reported that businesses were cracking down on costs and holding back on investment ahead of Brexit.

UK wages rise faster than expected

World Cup and hot weather boost UK growth

However, it raised the forecast for UK economic growth in the third quarter from 0.4% to 0.5%, partly due to stronger consumer spending over the unusually warm summer.

The MPC flagged heightened risks to global growth following trade tensions between the US and China and turbulence in some emerging markets.

Sterling was flat at $1.3051 and €1.1221 after the decision was announced.

The minutes showed recent rises in economic and wages growth had not affected the MPC's commitment to "gradual" and "limited" rate rises in the coming years, said Samuel Tombs at Pantheon Macroeconomics.

Ruth Gregory at Capital Economics said expected two rate rises next year and another two in 2020, bringing rates to 1.75%, assuming a Brexit deal was struck and the economy held up well.

"That would be above the market expectation for just two hikes over the next three years - but still consistent with the MPC's guidance," she said.

Ben Brettell at Hargreaves Lansdown said: "Policymakers are firmly in 'wait-and-see' mode having raised rates last month, and will be reluctant to even consider another move until they have a clear idea of what Brexit will look like.

"Realistically May next year looks the first available opportunity to raise rates to 1%."

Last month the Bank signalled that rates would need to rise by about 0.25 percentage points over the next two or three years to bring inflation, which stands at 2.5%, back to target.

September's MPC minutes also revealed that the recent energy price cap announced by Ofgem would reduce inflation by more than expected over the course of 2019.--BBC

John Lewis profits slump 99% in 'challenging times'

Profits at the John Lewis Partnership have fallen to almost zero in the first half of the year as its department store chain matched discounting "extravaganza days" by rivals.

John Lewis Partnership chairman Sir Charlie Mayfield said the retail sector was facing "challenging times".

Its results, which include Waitrose, showed profits for the six months to 28 July sank 99% from last year to £1.2m.

The retailer also warned that full-year profits would be "substantially lower".

The company is rebranding its stores to John Lewis & Partners and Waitrose & Partners to highlight the chain's 85,000 members of staff, known as "partners" who are given an annual bonus based on the chain's profits.

Margin squeeze

"With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult but we continue to expect full year profits to be substantially lower than last year for the partnership as a whole," the retailer said.

In the first six months, profits at the John Lewis department store business were hit hardest. Sir Charlie said that the stores' profit margins had been squeezed in "what has been the most promotional market we've seen in almost a decade".

John Lewis boss rejects Dominic Raab Brexit jibe

Is it time to ditch "Never knowingly undersold"?

Why we no longer love department stores

Six reasons behind the High Street crisis

He told the BBC's Today programme: "The biggest single reason for the decline in profits is all about margin".

The department store pledges to be "never knowingly undersold" - cutting prices to match those of competitors, which have also been discounting.

"This year there has been twice as many extravaganza days as there were a year ago and actually the discounts have been even deeper," he said.

"We're never knowingly undersold at John Lewis, so of course we are matching that, and that affects margins."

It was an "extremely valuable" promise, he added.

Sir Charlie said the chain had also not been passing on to consumers all of the inflationary impact from the weakness in sterling. The pound has slumped since the vote to leave the EU, pushing up the cost of imported produce.

Analysts said the results demonstrated the impact of the price-matching promise.

Steve Dresser, retail analyst at Grocery Insight, tweeted that "the business feels like it's broken", adding that the never knowingly undersold pledge "needs refining, badly".

The department store sector has been undergoing a period of change. Sports Direct bought House of Fraser in August while Debenhams, in which Sports Direct has a 29.7% stake, was this week forced to stress that its sales had not collapsed. Sport Direct has also been forced to deny that it does intend to make a full bid for Debenhams.

Julie Palmer, partner at Begbies Traynor, said the profits fall at John Lewis heralded further problems for the retail sector.

"This brand was hailed as the model to which all should follow, and as a commercial and customer success - make no mistake, for the high street this is as significant as the fall of the Roman empire.

"And much like the fall of Rome, it's not just the empire that suffers, the infrastructure that supplies it will too. The UK industry must steel itself for dark times to rise again."

For most of the last decade John Lewis appeared to defy gravity.

While its High Street rivals were brought crashing down by the combined pull of the internet and ever-higher costs, it seemed to sail serenely on, smartly moving sales online while keeping customers coming to its stores.

Now gravity has finally exerted itself. John Lewis sold £5.5bn worth of goods in the first six months of this year, and made just £1.2m profit - close enough to nothing.

The partnership's chairman, Sir Charlie Mayfield, has rejected the obvious response.

This is not the time, he said, to be cutting back, closing stores and stopping investment. Instead, he has stepped up investment in stores, while also husbanding costs, as can be seen in a review of the future of the retailer's final-salary pension scheme.

Sir Charlie's main strategic move, however, is hidden in the fine print of the financial statements.

He is paying down John Lewis's debt as fast as he can.

In a downturn this severe, the last person standing is often the winner - and by getting rid of debt, Sir Charles is doing his best to make sure that is John Lewis.

'Cool heads'

Like-for-like sales - which strip out new floor space - at the John Lewis stores fell 1.2%, and it reported an underlying operating loss of £19m compared with a £54m profit a year earlier.

At Waitrose, like-for-like sales were up 2.6%, but operating profits fell 12% to £96.4m.

The group had warned in June that its half-year profits would be wiped out and that it would invest more in developing "unique" products and services, as well as placing more emphasis on its own brand.

It said it would continue to invest between £400m and £500m per year in the business.

Sir Charlie said: "You don't succeed by retrenching so if anything we are investing more and pushing on with differentiation.

"The simple truth is that times like these call for cool heads and really determined ambition."--BBC

Huawei promises foldable phone within a year

Huawei is planning to launch a smartphone with a fold-out screen within a year, according to the firm's chief executive.

Richard Yu told German newspaper Die Welt that Huawei was "already working on it".

Earlier this month, an executive at Huawei's South Korean rival Samsung said it was time for his company to deliver a foldable smartphone.

One analyst said the commercial appeal of foldable displays was unclear.

"Why are you still using a computer?" replied Mr Yu, when asked about forthcoming tech innovations by Die Welt. "Probably because you find a smartphone display too small.

"We will change that. It is conceivable that you could fold out a display."

Huawei was working on such a device, he added, and it would be ready within a year.

The comments suggest close competition between Huawei and Samsung, both of which are aiming to become the first smartphone maker to release a device with a flexible display of some kind.

"The industry is very close now to foldable phones becoming a commercial reality," said Ben Stanton, at market research firm Canalys.

However, he added that he was not sure Mr Yu's idea of replacing computers with smartphones that have fold-out screens would appeal to many consumers.

"It almost feels with foldable displays that technology companies are using this as something to highlight how innovative and technologically advanced they are... without really considering the nuts and bolts that would make it a commercial success," he added.--BBC

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Hippo

AGM

Meikles

26/09/2018 12PM

Bindura

AGM

Chapman Golf Club, Eastlea

27/09/2018 9AM

CBZH

interim dividend of 0.5c per share record date

28/09/2018

Hippo

final dividend of 2c per share record date

28/09/2018

Star Africa

AGM

45 Douglas Road, Workington

28/09/2018 11AM

 <mailto:info at bulls.co.zw> 

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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Bulls n Bears 

Telephone:      <tel:%2B263%204%202927658> +263 4 2927658

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

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