US economy shrinks again in second quarter
(dpa) The American economy shrank in the spring. After a decline in economic output at the beginning of the year, gross domestic product fell by 0.9 percent on an annualized basis in the second quarter, the Ministry of Commerce announced on Thursday. However, experts had expected growth of 0.4 percent.
Since the US economy shrank by an annualized 1.6 percent in the first quarter, the definition of a recession is met. This is what economists talk about when economic output falls two quarters in a row.
However, the National Bureau of Economic Research (NBER) vehemently disagrees. However, the official arbiter of recessions in the United States, defines a recession as “a significant decline in economic activity across the economy, lasting more than a few months, usually reflected in output, employment, real income and other indicators.” . The researchers therefore refuse to speak of a recession.
This supports the number of newly created jobs. In the first half of the year, the number of jobs increased by an average of 456,700 per month, leading to strong wage increases. Nevertheless, the risks of a downturn have increased. Residential construction and home sales have slowed, and business and consumer sentiment have deteriorated in recent months.
The White House has also firmly opposed the term “recession,” trying to reassure voters ahead of the Nov. 8 midterm elections that will decide whether President Joe Biden’s Democratic Party retains control of the US Congress.
Nestlé increases prices sharply, but earns less
The Nestlé Group has grown significantly in recent months.
tsf. The food group Nestlé increased sales by 8.1 percent to 45.58 billion francs in the first half of the year. The increase is due to an important part (6.5 percentage points) to price increases. Only 1.7 percent is accounted for by additional sales.
The company had implemented price adjustments in a “responsible manner,” said CEO Mark Schneider in a statement on Thursday. The price increases primarily reflected “the significant and unprecedented increase in purchase prices”.
Nestlé is not alone with these price premiums. Competitors Unilever, Danone and Reckitt Benckiser have also raised prices, citing continued demand for more expensive branded items.
Operating Nestlé profit rose 6 percent to 7.7 billion. Because the increase is below sales growth, the EBIT margin fell by 50 basis points to 16.9 percent. The bottom line is that net profit fell by 11.7 percent to 5.2 billion francs. This was due to higher depreciation and taxes.
Calida founding family wants to sell stake
tsf. The Kellenberger family, founding family and anchor shareholder of the clothing company Calida, wants to sell its 33.5 percent stake. Within the family, there will be no successor for Erich Kellenberger with the necessary industrial expertise in the foreseeable future, the family announced on Thursday.
At the same time, Calida published the results for the first half of the year. You look good, the company has not only grown, but has also become more profitable: Calida’s adjusted operating profit (EBIT) rose by 13.6 percent to CHF 17.8 million in the first half of the year. At CHF 13.1 million, the net result was slightly higher than in the previous year (CHF 12.7 million). Annual organic growth of between four and six percent will continue to be targeted until 2026 – this goal should also be achieved in the current year, according to the statement.
Bucher is making good progress
tsf. The machine and vehicle manufacturer Bucher Industries has had a good first half of the year. Sales increased by 10 percent to CHF 1.78 billion. Despite ongoing difficulties in procurement and logistics, sales have increased, the company announced on Thursday. Bucher was also able to pass on the rising costs.
Incoming orders increased by a good 9 percent to CHF 1.72 billion. All divisions except Bucher Hydraulics contributed to the increase in order intake.
Operating profit at EBIT level increased by more than 13 percent to CHF 203 million. The operating profit margin rose to 11.4 percent from 11.2 percent last year. Reasons for the good margin are the high capacity utilization, the passing on of the high material and transport costs and the continued low cost base, according to the press release. Net income climbed 11.6 percent to CHF 154 million.
The Group assumes that demand will drop to a very high level in the second half of the year. However, the difficulties in procurement and logistics are likely to persist, the statement said. The shortage of qualified workers will make it even more difficult to process the record high order backlog. The resulting inefficiencies in production and the generally rising cost base will increase the pressure on margins.
The Group expects higher sales and a slightly lower, double-digit operating profit margin in the current year compared to the previous year. The consolidated result should reach the high level of the previous year.
Vontobel feels the difficult environment
tsf. The private bank Vontobel also felt the effects of the difficult environment. As the company announced on Thursday, it achieved earnings (before taxes) of CHF 180.4 million in the first half of the year. The bank is thus well below the record value of CHF 233.4 million that it achieved in the same period of the previous year. The result is still satisfactory, writes the bank. After all, it is above the result of 2020, the second best result so far for the first six months after the financial market crisis.
In doing so, Vontobel has shown, even in poor markets, that it has a balanced business model and an adequate appetite for risk. That paid off. In the first half of the year, the company generated a strong return on equity of 14.6 percent (18.7 percent in the first half of 2021). This is above the company’s own ambitious target of at least 14 percent. Operating income fell from CHF 779.5 million in the previous year to CHF 686.1 million.
The difficult markets had an impact on client assets under management, which fell from CHF 243.7 billion at the end of the year to CHF 208.6 million now. Client assets under management amounted to CHF 229.0 billion (end of 2021: CHF 268.1 billion).
The bottom line is that the bank has a net outflow of new money of CHF 1 billion. In the area of asset management, there was even a net outflow of CHF 4 billion. As Vontobel writes, institutional investors in particular have reduced the risks in actively managed assets and postponed new reinvestments into the future. In wealth management, i.e. business with private customers, the bank received new money of 3 billion francs.
Facebook on a shrinking course for the first time
(dpa) The Facebook group Meta has reported its first decline in sales and blames it on economic fears. Meta does not expect an improvement for the next few months either. The development is tantamount to the end of an era: Since the IPO in 2012, things have only gone up rapidly. Founder and CEO Mark Zuckerberg said the company wants to focus on the long term.
Meta revenue fell about 1 percent year over year to $28.8 billion in the second quarter. Bottom line, profits shrank by 27 percent to just under $ 6.7 billion. Top executive Sheryl Sandberg also pointed to the strong dollar leading to an unfavorable translation of foreign earnings on the balance sheet. Without the rise in the dollar exchange rate, sales would have increased by three percent, she emphasized in a conference call with analysts.
The revenue forecast for the current quarter was lower than analysts had expected, ranging from $26 billion to $28.5 billion. CFO Dave Wehner cited the weakening of the online advertising market, which was already noticeable in the second quarter, in view of the economic uncertainty.
So far, Facebook and Meta have shown themselves to be resilient to all economic downturns. With knowledge of the interests and social connections of billions of users, the platform offered advertisers the ability to target their ads to the desired audiences.
But the first cracks in the system appeared last year after Apple introduced new rules to protect privacy. Developers like Facebook are now required to explicitly ask iPhone users for permission if they want to track their behavior across different apps and services. Many users rejected this – and the torpedoed ad models on Facebook, among others.
The number of users who access at least one app from the group every day rose from 2.87 to 2.88 billion within three months. Facebook saw an increase from 1.96 to 1.97 billion daily users. The group also includes Instagram and Whatsapp.
According to the figures, investors initially dropped the share by around five percent in after-hours trading, and the price later recovered to a minus of 2.8 percent.
Meta also announced a change in leadership on Wednesday. The previous CFO Wehner is to take over the newly created position of strategy chief in November. The new chief financial officer will therefore be Susan Li. A gap opened up on the executive floor after Sandberg announced her retirement. She was regarded as Zuckerberg’s right-hand man and an architect of Facebook’s business model.
Among Zuckerberg’s long-term initiatives is the company’s focus on the “metaverse” – a virtual world into which he envisions business and social life will shift. Facebook pioneered the movement with its virtual reality (VR) activities, which see users wearing special glasses immersing themselves in digital worlds. The Reality Labs division, in which the “Metaverse” development and the previous VR business are bundled, posted an operating loss of $2.8 billion last quarter. Meta announced a price increase for its VR glasses a few days ago.