Thursday, 17 July 2014

AutoNation 2Q profit climbs 12 percent


AutoNation Inc. (AN) on Thursday reported earnings that rose by 12 percent in its second quarter, and fell short of analysts' expectations.


Shares of the auto dealership chain fell more than 3 percent in premarket trading.


The Fort Lauderdale, Florida-based company said net income increased to $100.4 million, or 83 cents per share, from $89.9 million, or 73 cents per share, in the same quarter a year ago. The average estimate of analysts surveyed by Zacks Investment Research was for profit of 87 cents per share.


The company said revenue rose 8.2 percent to $4.79 billion from $4.43 billion in the same quarter a year earlier, and beat Wall Street forecasts. Analysts expected $4.77 billion, according to Zacks.


AutoNation shares fell 2.03, or 3.3 percent, to $58.80 before the stock market opened Thursday. They have risen $11.14, or 22 percent, to $60.83 since the beginning of the year, while the Standard & Poor's 500 index has increased 7.2 percent. The stock has increased $15.36, or 34 percent, in the last 12 months.



Arabtec shares suspended on Dubai Financial Market


The Dubai Financial Market says it has suspended trading shares of Arabtec, Dubai's largest construction company, pending clarification of media reports about strategic partners' stakes in the firm.


The decision was announced on the market's website Thursday following instructions from the United Arab Emirates' Securities and Commodities Authority.


UAE newspaper The National reported that shares in Arabtec soared earlier this week when it emerged that the firm's second largest shareholder Aabar Investments may be in talks with Arabtec's former CEO Hasan Ismaik to buy at least half of his stake in the contracting giant.


The chairman of Arabtec Holdings, Khadem al-Qubaisi, said earlier this month that Ismaik holds a nearly 29 percent stake in Arabtec, making him the firm's largest shareholder.



Nissan signs as sponsor of Man City, global clubs


Premier League champion Manchester City has signed Nissan Motor Co. as the first global sponsor of its portfolio of clubs.


The five-year deal with Nissan was announced on Thursday, two months after City bought a stake in Japanese team Yokohama F Marinos from the car giant.


Man City, which has been rapidly remodeled on and off the pitch since being bought by Sheikh Mansour in 2008, turned its focus to building a network of teams through its Abu Dhabi backing.


A Major League Soccer expansion team, New York City FC, has been formed with the NY Yankees which has a minority stake, and City recently bought Australian side Melbourne Heart, which has subsequently been renamed Melbourne City.


Nissan will be the automotive partner of the whole City Football Group, with the company branding to feature prominently at the Etihad Stadium where Man City won the Premier League title for the second time in three seasons in May.


"This innovative partnership enhances Nissan's investment in the game of soccer, which is a key platform to further strengthen our brand globally," Nissan President Carlos Ghosn said.


Financial terms were not disclosed, although the Nissan partnership would not be as lucrative as Manchester United's $559 million, seven-year deal with General Motors Co.'s Chevrolet division, which is the jersey sponsor.


"This new partnership presents us both with incredibly exciting opportunities to collaborate through football both in Japan and across the world," City Football Group chairman Khaldoon al Mubarak said in a statement.


The deal is a further sign of how the pulling power of the 134-year-old parent club will be utilized to help the growth of its spin-off teams.


Spain forward David Villa last month joined NYCFC on a 3-year deal, and will stay match fit until the American team starts playing in March 2015 with a loan spell at Melbourne City. City said the Nissan and Villa deals reflect the "potential of the network's unique business model."



After hybrid success, Toyota gambles on fuel cell


Rocket science long dismissed as too impractical and expensive for everyday cars is getting a push into the mainstream by Toyota, the world's top-selling automaker.


Buoyed by its success with electric-gasoline hybrid vehicles, Toyota is betting that drivers will embrace hydrogen fuel cells, an even cleaner technology that runs on the energy created by an electrochemical reaction when oxygen in the air combines with hydrogen stored as fuel.


Unlike internal combustion engines which power most vehicles on roads today, a pure hydrogen fuel cell emits no exhaust, only some heat and a trickle of pure water. Fuel cells also boast greater efficiency than the internal combustion process, which expends about two-thirds of the energy in gasoline as heat.


Toyota's fuel cell car will go on sale before April next year. Despite advantages that are seemingly compelling, the technology has struggled to move beyond its prototypes after several decades of research and development by industry and backing from governments.


For the auto industry in particular, there have been significant hurdles to commercialization including the prohibitive expense of such vehicles. On top of that, fueling stations are almost nonexistent. Doubters also quibble about the green credentials of fuel cells because hydrogen is produced from fossil fuels.


But Satoshi Ogiso, the engineer leading the Toyota project, is confident there's a market that will grow in significance over time.


Part of Ogiso's optimism stems from his background. He worked for 20 years on Toyota's Prius hybrid.


The Prius, which has an electric motor in addition to a regular gasoline engine, was met with extreme skepticism at the start. But it went on to win over the public as a stylish way to limit the environmental damage of motoring. Worldwide sales of Toyota's hybrids have topped 6 million vehicles since their debut in 1997.


"The environment has become an ever more pressing problem than in 1997," Ogiso said in an interview at the automaker's Tokyo office.


"Hydrogen marks an even bigger step than a hybrid. It is our proposal for a totally new kind of car. If you want to experience this new world, if you want to go green, this is it."


Toyota, which began working on fuel cells in 1992 but won't disclose how much it has invested, is not the first automaker to produce such a vehicle. Forklifts powered by fuel cells are becoming more common in factories and fuel cell buses have been trialed in some cities. General Motors Co. has also been working on the technology and Honda Motor Co. already sells the FCX Clarity fuel cell sedan in limited numbers and is planning a new fuel cell car, with a more powerful fuel cell stack, next year.


But Toyota's decision as the world's top-selling automaker to start commercial production of a fuel cell car is an important boost to the technology's prospects for wider adoption. Its release will also win the automaker plaudits for corporate responsibility.


"It works to symbolically enhance the automaker's ecological image," said Yoshihiro Okumura, auto analyst at Chiba-gin Asset Management.


Toyota's still-to-be-officially-named vehicle goes on sale in Japan sometime before April 2015, and within a half year after that in the U.S. and Europe.


The four-seater sedan, while sporting an aggressive grille and fluid body curves, looks pretty much like a regular car. Those who have test driven fuel cell vehicles say they have a powerful torque, with quick acceleration, akin to the thrill of driving a sports car. Yet they are quiet like electric cars, purring on the roads with no engine roar.


Ogiso, like many other experts, believes that reliance on gasoline is not sustainable in the long-run particularly with rapid growth in vehicle ownership in developing nations, which could translate into hundreds of millions of additional cars on the roads globally.


Working on the Prius and the fuel cell, he said, was a similar process: Painstakingly tackling the challenge of packaging all the special parts needed for a new type of car.


Like the initial years of the Prius, subsidies and tax breaks are expected to substantially lower the fuel cell price tag in Japan.


Ogiso said at the beginning it cost more than 100 million ($1 million) to build just a test car.


The planned commercial model will sell for about 7 million yen ($70,000). Initially, Toyota had said the car might cost as much as 10 million yen ($100,000). Overseas prices have not yet been announced.


Factoring in subsidies and tax breaks, buyers might be able to get the fuel cell for about 5 million yen ($50,000), said Okumura, the Chiba-gin analyst.


That is still more than double the Prius, which with no frills sells for a little above 2 million yen ($20,000). It no longer gets green subsidies but still is eligible for a 100,000 yen ($1,000) tax break in Japan. Plug-in versions, which sell for nearly 3 million yen ($30,000), get bigger discounts, totaling as much as 420,000 yen ($4,200).


Toyota has not given sales projections but says interest in the fuel cell has been strong.


Apart from cost, the other big drawback is lack of hydrogen fueling stations. Only about 30 of them exist throughout Japan so far, although the government is leading a push to get more built in coming months.


Lack of charging stations is also a weakness for electric cars but there are fewer obstacles to establishing and supplying that infrastructure because electricity networks are already in place.


That is one of the reasons why automakers such as Nissan Motor Co. and Tesla Motors are pushing electric vehicles as the most practical way to be a green driver.


"We are a little bit skeptical," Nissan CEO Carlos Ghosn said of fuel cells. "Who's going to build the infrastructure?"


Selling 500 or 1,000 fuel cell vehicles a year might be easy, but getting sales to mass levels, such as 500,000 vehicles or more a year, would be difficult, he said.


Toyota, however, counters that electric cars tend to have limited cruise ranges, relegating them to a niche. Hydrogen fueling takes only three minutes versus several hours to charge an electric vehicle.


The planned fuel cell runs about 700 kilometers (430 miles) on a single hydrogen fueling.


Toru Hatano, auto analyst at IHS Automotive in Tokyo overseeing powertrains, forecasts that only several thousand fuel cell cars will sell per year globally.


"There really isn't anything good that happens for the consumer by getting a fuel cell," he said, compared to a hybrid's savings on gas consumption.


Beyond that, he said hydrogen is now mostly produced from fossil fuels.


"You are using energy to create hydrogen, and then using more energy to pressurize it for storage, and so overall you aren't saving on energy at all," said Hatano.


But scientists are working on cleaner ways to make hydrogen, and in theory hydrogen is cheap, plentiful and possibly the next-generation fuel for motorists.


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Australia Repeals An Unpopular Tax On Carbon Emissions



An oil refinery is pictured in the southern Sydney suburb of Kurnell, earlier this week. Australia's Senate voted on Thursday to scrap the country's carbon tax and plans for emissions trading — a major victory for conservative Prime Minister Tony Abbott.i i


hide captionAn oil refinery is pictured in the southern Sydney suburb of Kurnell, earlier this week. Australia's Senate voted on Thursday to scrap the country's carbon tax and plans for emissions trading — a major victory for conservative Prime Minister Tony Abbott.



Jason Reed/Reuters/Landov

An oil refinery is pictured in the southern Sydney suburb of Kurnell, earlier this week. Australia's Senate voted on Thursday to scrap the country's carbon tax and plans for emissions trading — a major victory for conservative Prime Minister Tony Abbott.



An oil refinery is pictured in the southern Sydney suburb of Kurnell, earlier this week. Australia's Senate voted on Thursday to scrap the country's carbon tax and plans for emissions trading — a major victory for conservative Prime Minister Tony Abbott.


Jason Reed/Reuters/Landov


Australia became the first country in the world to repeal a carbon tax on the nation's worst greenhouse gas polluters, as Prime Minister Tony Abbott made good on a campaign promise to get rid of the unpopular law.


The Senate voted 39 to 32 to eliminate the tax enacted by the previous center-left government two years ago. The law imposed the equivalent of a $22.60 tax per metric ton of carbon dioxide emissions on about 350 of the nation's worst polluters.


"Today, the tax that you voted to get rid of is finally gone: a useless, destructive tax which damaged jobs, which hurt families' cost of living and which didn't actually help the environment," Abbott told reporters in Canberra.


Abbott's government came to power on a promise to eliminate the tax, "assuring voters that removing it would reduce household electricity bills. He plans to replace the measure with a taxpayer-financed AU$2.55 billion fund to pay industry incentives to use cleaner energy," according to The Associated Press.


However, Abbott and Environment Minister Greg Hunt have repeatedly refused to rule out a price on carbon in the future.


The Sydney Morning Herald says:




"Mr Abbott said he did not accept that with the carbon price now abolished, and legislation needed for Direct Action yet to pass the Senate, his government was leaving Australia without a mechanism to reduce greenhouse gas emissions.


"'We are a government which absolutely appreciates that we have only got one planet and we should pass it on to our children and grandchildren in at least as good shape as we found it,' he said.


"'So we are a conservationist government and we will do what we think is the sensible thing to try to bring emissions down.'"




By way of background, the AP reports:




"Former Prime Minister Julia Gillard had initially vowed not to introduce a tax on carbon emissions. But after her Labor party was elected in 2010, she needed the support of the minor Greens party to form a government - and the Greens wanted a carbon tax. Gillard agreed, infuriating a public that viewed the measure's imposition as a broken promise.


Labor's popularity plummeted, particularly when consumers saw their power bills soar. In reality, the tax accounted for a relatively small portion of that increase, but many blamed it for the hike nonetheless."





UnitedHealth's 2Q profit slips 2 percent


UnitedHealth Group's second-quarter earnings slipped 2 percent on a rise in taxes and other expenses, but the nation's largest health insurer still trumped analysts' expectations.


The Minnetonka, Minnesota, company also raised the low end of the earnings range it forecasts for this year. Its shares rose about 1 percent in premarket trading Thursday.


UnitedHealth said it earned $1.41 billion, or $1.42 per share, in the three months that ended June 30. That's down from $1.44 billion, or $1.40 per share, in the 2013 quarter, when it had more shares outstanding.


Revenue rose 7 percent to $32.57 billion.


Analysts expected, on average, earnings of $1.26 per share on $31.9 billion in revenue, according to FactSet.


UnitedHealth said its income tax rate for the second quarter climbed from around 35 percent to more than 41 percent this year due to provisions from the health care overhaul, the federal law that aims to provide insurance coverage to millions of people. Health insurers started paying an industry-wide tax that is non-deductible this year.


UnitedHealth said its provision for income taxes in the second quarter jumped 25 percent to $989 million. The insurer's largest operating expense, medical costs, also climbed 6 percent to $23.52 billion.


UnitedHealth also cited the health care law as a chief reason its first-quarter profit slid 8 percent. The overhaul-related hits shouldn't surprise investors. The insurer said back in December that it expected the federal law to reduce its after-tax operating earnings by $1.1 billion in 2014.


UnitedHealth now expects 2014 earnings to range between $5.50 and $5.60 per share, compared to its previous forecast for $5.40 to $5.60 per share.


Analysts predict, on average, earnings of $5.52 per share.


UnitedHealth Group Inc. is the first insurer to report earnings every quarter. Many see it as a bellwether for other insurers.


Company shares climbed 84 cents to $84.60 in premarket trading Thursday. Its shares are up more than 11 percent for 2014 through Wednesday's close.



Justice Dept: Missing emails now part of IRS probe


A Justice Department investigation into the Internal Revenue Service has expanded to include an inquiry into the disappearance of emails from a former senior IRS official.


Deputy Attorney General James Cole was to update Congress on Thursday about the department's investigation into whether the agency targeted conservative groups seeking tax-exempt status. He also was expected to tell members of the House Oversight and Government Reform Committee that investigators now were looking into emails that went missing from the computer of Lois Lerner, who headed the IRS division that deals with tax-exempt organizations.


The IRS has said it lost the emails in 2011 when Lerner's computer crashed.


Lerner, who refused to answer questions at two House committee hearings, has become a central figure in several congressional investigations into the handling of applications for tax-exempt status by tea party groups. At both hearings, Lerner cited her Fifth Amendment right not to incriminate herself. In May, the Republican-led House voted to hold Lerner in contempt of Congress for refusing to testify.


Lerner's attorney, William Taylor III, declined to comment Wednesday.


The disclosure by Lerner in May 2013 that the IRS had engaged in "inappropriate" targeting of conservatives set off a political firestorm that continues to flare this election year. And Wednesday's revelation that investigators were broadening their inquiry to include the missing emails comes as Republican members of Congress accuse the Obama administration of not cooperating with their investigation and failing to take the matter seriously enough. They have asked Attorney General Eric Holder to appoint a special prosecutor to investigate, which he has resisted.


"The IRS investigation was launched by the department without hesitation and immediately after Ms. Lerner publicly acknowledged the potential misconduct," Justice Department spokeswoman Emily Pierce said in a statement. The probe remains a top priority for the department, she said.


IRS Commissioner John Koskinen has said that he has seen no evidence anyone committed a crime when the agency lost emails. He said that there was no evidence Lerner intentionally destroyed the missing emails and that the IRS was going to great lengths trying to retrieve lost documents on Lerner's computer, even sending it to the agency's forensic lab.


In 2011, the IRS had a policy of backing up emails on computer tapes, but the tapes were recycled every six months, Koskinen told Congress. He said Lerner's hard drive was recycled after technicians in the agency's forensics lab tried unsuccessfully to restore it.


Two federal judges in Washington last week ordered the IRS to explain how it lost a trove of emails to and from Lerner.