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Author: Mei Ling Tan

  • First Japanese apartments in Phu My Hung launched

    First Japanese apartments in Phu My Hung launched

    Prestigious real estate developer Phu My Hung plans to launch its new apartments, developed in cooperation with three leading Japanese partners, in Ho Chi Minh City in the coming weeks.

    The Grande is built over 5,540 square meters. The 26-floor building, with two basements, has 309 apartments and 13 shops. There are options for apartments ranging from 69 and 249 square meters with one to four bedrooms. Two-bedroom apartments account for 62 percent of all the units.

    Customers will have 28 months to pay for half of the prices, the investors said. They will pay another 45 percent when receiving the apartment and the remaining 5 percent when receiving the ownership certificate.

    The project is guaranteed by Vietcombank’s South Saigon Branch and Vietnam International Bank, which also work with the investors to provide interest rate support for customers seeking bank loans.

    Midtown, a complex of condos, office and retail space and amusement centers, is Phu My Hung’s biggest investment the past three years, with many high-end facilities, some of which have never appeared at any Phu My Hung projects.

    Phu My Hung Midtown hopes to bring a new concept about living space, which should be a perfect combination of facilities instead of an individual house.

    The complex is the first one built with cooperation from three leading Japanese property developers – Daiwa House Group, Nomura Real Estate Group and Sumitomo Forestry Group, which together account for 50 percent of the property market in Japan.

    A Phu My Hung executive said Japan is a country with good infrastructure and great experience in infrastructure development, especially for complex and high-rise buildings.

    “Our meaningful cooperation with strong, experienced partners will help achieve desired goals and quality in our construction projects,” he said.

    The complex is designed as a multi-facility zone at different levels, allowing its residents to access all kinds of services from inside to outside the house without having to go far.

    Golf simulation studio inside The Grande.

    Golf simulation studio inside The Grande.

    The Grande, for example, is designed with many exclusive services for its residents such as swimming pools, BBQ areas, gardens, yoga courts, golf simulation studio and libraries.

    All the facilities are built based on careful research of the habits and interests of residents, making sure all members of a family can find some activities that suit them.

    The residents will also be able to enjoy the value of Sakura Park, which stands across the apartments with riverside views of beautiful trees and flowers.

    There are other facilities such as a sports complex, a recreational area for children with sections for different ages, a flower square, a water fountain and a pavilion. The project is entirely protected with a security system that will guarantee the privacy of all residents.

    Sakura Park runs 602 meters along the Ca Cam River. It covers 11,722 square meters, with construction on 6,414 square meters or 54.7 percent of the area, and natural plants on 5,308 square meters (45.3 percent). The park comprises three parts – the main square, a kids playground and a sports area.

    Facilities around the complex, including a cherry blossom park, represent a new style in Phu My Hungs quality housing development.

    Facilities around the complex, including a cherry blossom park, represent a new style in Phu My Hung’s quality housing development.

    The recreational area for children and two gardens nearby allow residents to relax while watching their children. Sakura Plaza, a square at the center of the park, carries the shape of a cherry blossom. The square features a fountain with beautiful jets at different heights, dotted by colorful flowers.

    Besides the sports complex and the mini football court, the sports area of the park also gives families some space if they want to have a picnic day and enjoy the fresh air.

    The park also has parking space for more than 150 cars, which is conveniently connected to other parts in Midtown.

    “Phu My Hung Midtown complex with the impressive Sakura Park promises to be a must-visit place for Saigon residents in the future. Here we have a lot of green space, natural harmony and many interesting activities for sports, dining and entertainment,” the investor said.

    The first phase of Sakura Park will complete in 2019, around the same time with the first apartment building of the complex, The Grande.

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  • Image leak suggests new Samsung phone ‘made in Vietnam’

    Image leak suggests new Samsung phone ‘made in Vietnam’

    A leaked picture would suggest Samsung’s latest smartphone, the Galaxy S8+, is being manufactured in Vietnam, despite last year’s Galaxy Note 7 saga.

    The picture shows the back panel of a phone tagged with “Made in Vietnam” below the “Galaxy S8 6” branding.

    The number “6” has been interpreted by people familiar with the matter as the 6 GB RAM variant of the Samsung Galaxy S8.

    Samsung is expected to officially unveil its next flagship devices, the Galaxy S8 and Galaxy S8+, on March 29 in New York. The phones will go on sale on April 21.

    Other leaked images of purported technical specifications have fueled rumors of a 5.8 inch and 6.2 inch display, backed by a 3000 mAh battery or 3500 mAh battery.

    Samsung’s production in Vietnam incurred a loss of $122.6 million in the third quarter of last year after it was forced to recall 2.5 million Galaxy Note 7s globally following battery explosions.

    The recall affected production at its two plants in the northern provinces of Bac Ninh and Thai Nguyen, which produce a combined 35 percent of all smartphones that Samsung supplies to the global market.

    However, that did not affect Samsung’s dominant position in Vietnam’s export sector last year. The company earned $39.9 billion in revenue from shipping electronics, up 10 percent against 2015 and contributing 23 percent to Vietnam’s total export revenue.

    Samsung Vietnam said no jobs had been cut due to the Galaxy Note 7 incident. The company is targeting an export growth rate of between 7 and 10 percent this year.

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  • SIA among 5 airlines told to compensate passengers for delays

    SIA among 5 airlines told to compensate passengers for delays

    Singapore Airlines (SIA) is among five international airlines that fly into Europe that have been told to pay passengers for delays they may have experienced.

    The UK Civil Aviation Authority (CAA) said in its press release on Wednesday (Feb 22) that American Airlines, Etihad Airways, Emirates, SIA and Turkish Airlines will have to obey European laws or be taken to court. They all face enforcement action after a CAA review found them to be breaching consumer law, it added.

    These airlines had told the UK Civil Aviation Authority (CAA) that they did not pay compensation to passengers who had experienced a delay on the first leg of a flight that caused them to miss a connecting flight and, as a result, arrive at their final destination more than three hours late, the press release said.

    CAA added that SIA currently places compensation claims for these delays “on hold”.

    Under European Union (EU) law, airlines may have to provide compensation if passengers arrive at their destinations late. These rules, however, only apply to certain flights to, from or within the EU and only if the airline was at fault, such as if it was through poor aircraft maintenance or flight crew being available, the UK CAA website said.

    Compensation ranges from 250 euros (S$372.70) for delays of more than three hours for short-haul flights to 600 euros for delays of more than four hours for long-haul flights, it added.

    Mr Richard Moriarty, director of Consumers and Markets at the CAA, said: “Airlines’ first responsibility should be looking after their passengers, not finding ways in which they can prevent passengers upholding their rights.

    “So it’s disappointing to see a small number of airlines continuing to let a number of their passengers down by refusing to pay them the compensation they are entitled to,” he said.

    In response to queries, SIA said it has been in contact with the UK’s CAA on the issue “for some time”.

    “There is a lack of clarity in the law which is currently the subject of ongoing litigation before the Court of Appeal,” a spokesperson for the airline said, adding that SIA will continue to work with the CAA to resolve differences with respect to the application of the regulation to missed connections.

  • Vietnam now ranks among the world’s top 5 most optimistic nations

    Vietnam now ranks among the world’s top 5 most optimistic nations

    Vietnamese consumers’ higher confidence late last year has helped lift the country to be among the world’s five most optimistic nations, Nielsen said.

    The ranking is measured for the fourth quarter of 2016, with Vietnam’s Consumer Confidence Index moving up five percentage points from the July-September quarter to a score of 112, the global information and measurement company said in a statement following a survey that ended last November.

    The Southeast Asian nation now ranks behind India, the Philippines, the U.S. and Indonesia. At 112, Vietnam ranks third in Southeast Asia after the Philippines and Indonesia, Nielsen said in the poll attended by more than 30,000 online consumers in 63 countries.

    Vietnam’s growing middle class population with rising disposable income, higher education level plus the country’s stable economic outlook remain the main drivers for its ranking, Nguyen Huong Quynh, Nielson managing director in Vietnam, said in the statement.

    Up to 76 percent of the Vietnamese consumers surveyed said they would place spare cash in savings, down from 78 percent in the previous quarter. Vietnam remains in its top position globally on keeping savings, the survey found.

    It also found that, after covering essential living expenses, around two in five Vietnamese consumers were willing to spend big on holidays and vacations (35 percent), new clothes (33 percent), new technology products (30 percent), home improvements (27 percent) and out of home entertainment (26 percent).

    “Vietnamese consumers have a strong desire for a better life,” Quynh said. “This reflects in their saving intention to prepare for the better future.”

    Health and job security topped the list of Vietnamese consumers’ concerns, the survey showed.

    “As consumers are looking to lead healthier lives, the need for food safety and product’s quality arise,” Quynh said, suggesting manufactures and retailers could get opportunity to tap into new markets to meet the consumer’s demand.

    Just 20 percent of the respondents in the survey expressed concern over Vietnam’s economic growth prospect, down from 26 percent in the second quarter.

    Vietnamese consumers’ rising confidence is in line with the trend in Southeast Asia, which grew five points between the first and the fourth quarter to 115, the index showed.

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  • The Burger Laboratory by Lotteria

    The Burger Laboratory by Lotteria

    In recent years the world of fast food has been in panic mode. An explosion of casual dining brands and a public that perceives fast food as poorly sourced, artificially flavoured, and uncaring of animals and the environment has reduced both credibility and revenue.

    LOTTERIA’s response was to follow the lead of discount supermarkets, reducing ranges and hugely improving the provenance and quality of ingredients. Fresh sustainable and well sourced meat and vegetables are now at the heart of the offer, which is completely made to order, all achieved by efficient, transparent and sustainable logistics and sourcing.

    JHP’s commission was to design and develop this new experience, including the store architecture, internal environment, brand identity, product strategy, packaging, internal communication, multi-sensory strategy, advertising and service strategy.

    The Response

    The BURGER LABORATORY’s ingredients are entirely sourced from LOTTERIA’s own vertically integrated farms and are of the highest quality in terms of both environmental sustainability and animal husbandry. In addition to beef, chicken and shrimp burgers and fries, LOTTERIA’s new BURGER LABORATORY offers local specialties and vegetarian options.

    An entirely open kitchen has been introduced combined with a made-to-order process allowing customers to watch the BURGERISTA preparing every stage of their meal. Customers can place orders via an app on their journey to the LAB, in-store through bespoke tablets or in person at the counter.

    The BURGER LABORATORY’s science and experimental theme is reflected in every aspect of the customer experience.

    A red industrial ceiling mounted pipe winds its way from the front of the laboratory to the back guiding the customer journey. The ceiling also features an illuminated digital clock indicating how long customers must wait for their order to be ready.

    The restaurant’s walls are decorated with periodic tables, food assembly diagrams and science based icons. Chairs have chemical resistant wire frames whilst tables are equipped with power plugs for charging mobile devices instead of Bunsen Burners. (Free WI-FI access is of course a hygiene factor in Korea).

    The stainless steel drinks machine enables customers to mix and refill their own beakers. The seating area offers individual code writing tables, long laboratory benches and breakout booths reminiscent of those found in high tech start-ups.

    Restrooms use acid resistant white glazed tiles with ‘radioactive’ yellow and black doors and frames. The materials used are not only consistent with the laboratory’s look and feel but were also selected for their low environmental impact.

    Recycled strawboard, reclaimed porcelains and salvaged waste pipes have all been combined in an environment that is lit entirely with low energy LED sources and uses hyper-efficient induction cooking equipment. All packaging is recycled and biodegradable.

    The Outcome

    The first 300 M2 BURGER LAB opened its doors in Seoul’s Jonjak in November 2016. Built in a remarkable four weeks including all equipment and services, the total project cost was a modest $480,000.

    The BURGER LABORATORY’s results have been outstanding consistently trading 35% higher than its previous incarnation.

    The concept is now being rolled out across the companies 3,000 outlets throughout Asia and has received numerous positive comments in the press and on social media.

     

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  • 7-Eleven starts hiring ahead of Vietnam debut

    7-Eleven starts hiring ahead of Vietnam debut

    Japan’s convenience store chain 7-Eleven has started hiring staff for its Vietnam operation, as it seeks to expand retail business to one of Asia’s fastest-growing economies.

    The retailer is looking for full-time staff, including shop manager, salesperson, shop developer, marketing associate and trainer, all to be based in Ho Chi Minh City, Seven System Viet Nam Company said in a statement Monday.

    In 2015 7-Eleven’s U.S. subsidiary signed with the firm a licensing agreement to open stores in the Southeast Asian country.

    The date of opening or the number of outlets planned for the city are not yet disclosed. 7-Eleven has said the first store was expected in spring 2017.

    The launch of 7-Eleven stores is believed to heat the stiff competition among foreign investors in Vietnam’s retail market, which has grown at around 10 percent annually in recent years, and sales are likely to reach $109 billion in 2017, according to the Economist Intelligence Unit.

    7-Eleven, owned by Japan’s Seven & I Holdings, is an international chain of convenience stores with over 60,000 stores across 17 countries and territories. It has stores in five Southeast Asian markets, namely Thailand, Malaysia, the Philippines, Singapore and Indonesia.

  • T Galleria By DFS Celebrates Our Love of Travel With Exclusive Collection

    T Galleria By DFS Celebrates Our Love of Travel With Exclusive Collection

    T Galleria by DFS, the world’s leading luxury travel retailer, is proud to announce the launch of “From Venice with Love”, an exclusive collection of over 50 covetable products celebrating the most romantic city in the world, Venice, and our love of travel. Inspired by the colors of Italy and the opening of T Fondaco dei Tedeschi in Venice, DFS partnered with over 30 brands across the retailer’s five pillars of luxury to create the exclusive collection available in T Galleria and DFS stores worldwide beginning March 1. From the best of Italian fashion to fragrance to food, the collection features a range of international and Italian designers with standout pieces from Armani, Aquazzura, Gucci, Longines, Salvatore Ferragamo and Valentino.

    “For centuries, Venice has inspired generations of craftsmen with its heritage of luxury. With the opening of our first European location at T Fondaco dei Tedeschi in Venice, we wanted to create a collection that epitomizes a sense of place and captures the essence of Italy for travelers visiting DFS locations all over the world,” said Sibylle Scherer, President Merchandising and Consumer Marketing, DFS Group.

    Located on the Grand Canal, a few steps away from the famous Rialto Bridge and within walking distance from St. Mark’s Square, T Fondaco dei Tedeschi occupies one of the city’s most venerated buildings, the 800-year old Fondaco dei Tedeschi, which began its life as a place of exchange for northern merchants and was used for centuries to trade spices, silk and other goods between the Orient and Europe. Renowned for its curated collection of over 200 brands, the Alajmo family’s latest restaurant AMO and an Events Pavilion dedicated to showcasing Venice’s arts and culture, T Fondaco dei Tedeschi is a destination unto itself, encapsulating the spirit of Venice within its ancient walls.
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    The launch of “From Venice with Love” corresponds with the debut of T Galleria’s Spring 2017 campaign – “Love of Travel” which follows British model Alex Libby and Hong Kong fashion blogger Cindy Ko as they embark on a journey of discovery through the maze of Venice’s streets and canals, all captured by British documentary photographer Tom Craig.

    “This season we were inspired by travel and the way a place or experience shapes and changes you. Alex and Cindy bring that journey to life as they share their adventure of exploration, uncovering Venice’s beauty, art, architecture, music and people. Through Tom’s lens, we created a visual love affair with Venice, sharing with our customers that joy of discovering something for the first time and providing a new take on the Floating City,” said John Gerhardt, Senior Vice President Creative Branding Direction, DFS Group.

    Throughout March, April and May, customers can immerse themselves in the campaign across DFS’ 17 airport and 18 downtown T Galleria stores as well as online and on DFS’ social media channels. Visitors to DFS.com will encounter a dedicated microsite that utilizes 360-degree video to transport viewers to hotspots around Venice, including the Peggy Guggenheim Museum, Harry’s Bar and T Fondaco dei Tedeschi. In stores, shoppers will discover window displays and photo opportunities that serve as jumping off points to their next journey as well as art installations and in store activations that bring the spirit of Venice to life.

    All T Galleria and DFS stores will have dedicated pop-up spaces to showcase the “From Venice with Love” collection, allowing travelers to take home a piece of Italy no matter which DFS location they visit.

    “Ultimately, both our campaign and collection speak to a value at the core of the DFS experience – that thrill of discovery and passion for travel,” added Scherer. “We’re confident travelers will love joining us for this new and exciting journey as they continue to make memories with DFS.”

    Discover the exclusive “From Venice with Love” collection of great gifts and covetable pieces starting March 1 at T Galleria and DFS stores worldwide.

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  • Ho Chi Minh City seeks to tax sales on Facebook

    Ho Chi Minh City seeks to tax sales on Facebook

    The Ho Chi Minh City government should work with Facebook on how to collect tax from businesses running on the social media site, officials said.

    The city currently hosts a dynamic e-commerce scene with more than 80,000 websites, half of which have stable business, but tax collection from the segment is low, said Pham Thanh Kien, head of the city’s trade department.

    “In particular tax collection has not been done from sales via Facebook,” Kien said at a meeting with the city’s tax authority. “(We) propose the People’s Committee work with Facebook on a mechanism to control tax collection.”

    Ho Chi Minh City, where the most active e-commerce in Vietnam takes place, should find out measures to prevent losses in tax revenues, Deputy Finance Minister Vu Thi Mai told tax officials at the meeting on Sunday.

    Just a quarter of Vietnam’s non-state businesses have declared value-added tax, Mai was quoted by the Tuoi Tre (Youth) newspaper as saying at the meeting.

    A majority of online businesses using social networking sites such as Facebook do not issue invoices, which has prevented the authority from collecting tax.

    Vietnam’s e-commerce market, which has one of the world’s fastest growth rates, jumped 37 percent in 2015 to around $4 billion, based on government statistics.

    The growth rate is about 2.5 times faster than that in Japan, according to Tran Duc Tam, an industry expert.

    The government has projected revenue by Vietnam’s online retail to hit $10 billion by 2020, accounting for 5 percent of the country’s retail market. Last year retail sales rose 10.2 percent from 2015 to $118 billion, based on government data.

    The online tax tightening plan has received mixed responses.

    “Facebook is just a channel to advertise products and communicate with customers. With no electronic invoicing, how to tax them?” a reader’s comment.

    Others raised concerns that many online retailers use anonymous accounts for transactions, while some others could be one-time or small-time sellers with insignificant revenues, making it hard for tax authorities to regulate activities.

    Online marketplaces such as Facebook have made it easy for small businesses and start-ups to set up business due mainly to the convenience they provide and the opportunity to connect with customers, Tuan Anh Pham wrote in another comment. He suggested market regulators take a cautious approach when it comes to requiring online retailers to pay taxes.

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  • Vietnam’s fast moving consumer goods market ends 2016 on a high note

    Vietnam’s fast moving consumer goods market ends 2016 on a high note

    Fast moving consumer goods (FMCG) sales showed the best improvement in three years in the last quarter of 2016, with 7.3 percent growth against the same period last year, according to the latest Market Pulse quarterly report released by Nielsen on Thursday.

    “The build-up and positive sentiment towards the Tet period was one of the key drivers for FMCG growth,” said Nguyen Anh Dung, Nielsen Director of Retail Measurement Services.

    Beverages continued to be the key contributor to the total FMCG sales in the last quarter, accounting for 40 percent, followed by food and milk based products, which made up 15 percent each of the total.

    After being hit by a year of adverse weather conditions, growth in rural areas experienced a strong bounce-back from October-December with a 7 percent on-year jump, contributing 51 percent to total FMCG sales nationwide.

    “Rural areas are still the biggest consumer base and these consumers have increasing incomes that give them higher spending power,” Dung said.

    The Market Pulse Report is published quarterly based on the results of a Nielsen Retail Measurement study of FMCG in six cities across the country: Hanoi, Ho Chi Minh City, Hai Phong, Can Tho, Nha Trang and Da Nang.

    Fast-moving consumer goods refers to products that are sold quickly and at a relatively low cost.

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  • SM Prime Holdings’ net profit rises 14 per cent

    SM Prime Holdings’ net profit rises 14 per cent

    Continuing mall expansion helped drive a 14 per cent rise in SM Prime Holdings’ net profit last year.

    In a stock exchange filing yesterday, the company said it achieved a net income of P23.8 billion (US$473.7 million) last year. Strong sales by its residential arm, which accounts for 32 per cent of its business, also contributed to the healthy profit rise.

    SM Prime has 60 shopping malls in the Philippines, with 7.7 million sqm of gross floor area and seven in China, with 1.3 million sqm of GFA. The company plans to open at least four more centres in its home market in 2017, adding a further 300,000 sqm of space.

    Total revenue last year rose 12 per cent to P79.8 billion.

    “SM Prime sustained its overall performance in 2016 on the account of focusing more on recurring income stream complemented by the solid performance of the housing group,” said president Jeffrey Lim in a statement.

    “SM Prime is well-positioned to capture the positive impact of the higher infrastructure spending intended by the government that will also spur overall economic growth of the country,” he added.

    Revenues from shopping malls rose by 9 per cent last year to P48.6 billion, driven by the addition of 1.5 million sqm of additional space during the past two years.

    Excluding new openings, sales growth was up 7 per cent, but cinema sales were down 3 per cent.

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  • Cosmetics dominate Korean duty-free sector in 2016

    Cosmetics dominate Korean duty-free sector in 2016

    Make-up products accounted for more than half of the annual sales at duty-free shops in South Korea last year, fueled by brisk demand from foreign tourists immersed in Korean entertainment culture.

    Fresh data from the Korea Customs Service and companies reveals the combined cosmetics revenue from duty-free chains, including top players Lotte Duty Free and Shilla Duty Free, stood at 6.28 trillion won (US$5.48 billion) at the end of 2016, up 51.7 per cent from a year earlier.

    The sales of such beauty products took up 51.2 per cent of all sales, jumping from 45.1 per cent in 2015.

    Their proportion far outstripped those of other products, such as handbags or watches, whose sales grew 14 per cent and 7.6 per cent on-year in 2016, respectively.

    The upbeat figure came as Korean-made cosmetics have become very popular among Asian tourists who come here to shop, fascinated by Korean pop culture and TV drama series, a phenomenon commonly referred to as the Korean Wave or Hallyu.

    Local cosmetics companies have rushed to boost their marketing targeting these Hallyu fans, making advertisement clips using the celebrities who have gained popularity through movies and dramas exported to those countries.

    Thanks to such efforts, the revenue portion of domestic cosmetics brands at duty-free stores also made a big leap, accounting for nearly 40 per cent of the overall sales, the data showed.

    “The portion of Korean brands being sold at duty-free shops is growing rapidly unlike in the past when most of the top-selling items were imported products,” Ahn Ji-young, a market analyst at IBK Securities Co.

    Industry watchers said the cosmetics firms should plan ahead in developing products in line with a fast-changing beauty trends and discriminate their strategy by country or region.

    “Younger Chinese tourists these days are showing a tendency to fall for color make-up so the companies need to closely track such trend,” an industry source said.

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  • Henkel reports sales and earnings at record levels

    Henkel reports sales and earnings at record levels

    “2016 was a very successful year for Henkel. In a challenging market environment, we achieved again new record levels for sales and earnings and met our financial targets for the fiscal year. We delivered a high quality of earnings. For the first time we reached an adjusted operating profit of more than 3 billion euros,” said Henkel CEO Hans Van Bylen. “In September, we closed the acquisition of Sun Products, which was the second-largest transaction in our company’s history. This marks a major step for Henkel and substantially strengthens our Laundry & Home Care business in North America. In November, we presented our new ambitions and strategic priorities for 2020 and beyond. Based on our strong foundation, our excellent results in 2016 and our clear priorities for the coming years, we are committed to continue our successful development in the future.”

    Outlook for 2017 

    Looking at the current fiscal year 2017, Hans Van Bylen said: “We expect the highly volatile and uncertain market environment to continue. Nevertheless, based on our clear strategic direction, our strong global team and our innovative brands and technologies with leading market positions, we are well-positioned for further profitable growth: For the full fiscal year 2017, we expect organic sales growth of 2 to 4 percent. We expect our adjusted EBIT margin to increase to more than 17.0 percent and adjusted earnings per preferred share to grow between 7 and 9 percent.”

    Sales and earnings performance 2016 

    At 18,714 million euros, sales in the fiscal year 2016 reached a new record level and grew by 3.5 percent compared to the previous year. Adjusted for foreign exchange effects, sales grew by 7.1 percent. The positive effect from acquisitions and divestments amounted to 4.0 percent, mainly as a result of acquiring The Sun Products Corporation. Organic sales, which exclude the impact of foreign exchange and acquisitions/divestments, showed a solid increase of 3.1 percent.

    All business units reported solid organic sales growth. The Adhesive Technologies business unit achieved organic sales growth of 2.8 percent. Sales in the Beauty Care business unit grew organically by 2.1 percent and the Laundry & Home Care business unit recorded organic sales growth of 4.7 percent.

    After allowing for one-time charges, one-time gains and restructuring charges, adjusted operating profit (EBIT) improved by 8.5 percent to a new high of 3,172 million euros (previous year: 2,923 million euros). All three business units contributed to this positive performance. Reported operating profit (EBIT) amounted to 2,775 million euros compared to 2,645 million euros in the previous year.

    Adjusted return on sales (EBIT margin) rose by 0.7 percentage points from 16.2 percent to 16.9 percent, reaching a new record level. Reported return on sales increased by 0.2 percentage points to 14.8 percent (previous year: 14.6 percent).

    The financial result improved from -42 million euros to -33 million euros. The financing costs relating to the acquisition of The Sun Products Corporation were more than offset by the positive effects from the repayment of the hybrid bond.

    Adjusted net income for the year after non-controlling interests increased by 10.0 percent to 2,323 million euros (2015: 2,112 million euros). After deducting 40 million euros attributable to non-controlling interests, reported net income increased by 6.9 percent from 1,921 million euros to 2,053 million euros.

    Adjusted earnings per preferred share grew by 9.8 percent from 4.88 euros to 5.36 euros and reached a new record level. Reported earnings per preferred share rose from 4.44 euros to 4.74 euros.

    The Management Board, Supervisory Board and Shareholders’ Committee will propose to the Annual General Meeting on April 6, 2017 an increase in the dividend per preferred share of 10.2 percent to 1.62 euros (previous year: 1.47 euros) and an increase in the dividend per ordinary share of 10.3 percent to 1.60 euros (previous year: 1.45 euros). This would be the highest dividend in the company’s history and equal a payout ratio of 30.3 percent.

    Net working capital as a percentage of sales improved by 0.3 percentage points from 3.8 percent to 3.5 percent.

    The net financial position closed the year at -2,301 million euros (December 31, 2015: 335 million euros). The change compared to the end of the previous year was primarily due to payments for acquisitions.

    Business unit performance

    The Adhesive Technologies business unit generated solid organic sales growth of 2.8 percent in fiscal 2016, thus outperforming market expansion. Nominally, sales were at 8,961 million euros after 8,992 million euros in the previous year.

    The emerging markets continued their successful performance with strong organic sales growth, with double-digit increases in the Latin America region and strong growth in the Eastern Europe region. Sales in Asia (excluding Japan) showed a solid development. Sales performance in the Africa/Middle East region was positive, despite the ongoing uncertain political situation and deterioration in the economic conditions prevailing in parts of the region. Sales in the mature markets were on prior-year level. Sales performance in North America was positive, while sales in the Western Europe region were the same year-on-year. In the mature markets of the Asia-Pacific region, sales remained below the level of the prior year.

    Adjusted operating profit of the Adhesive Technologies business unit rose by 6.2 percent to 1,629 million euros compared to the previous year. Adjusted return on sales showed an excellent increase of 1.1 percentage points, reaching a new high of 18.2 percent. Reported operating profit increased by 6.8 percent to 1,561 million euros.

    In 2016, the Beauty Care business unit continued its profitable growth path of previous years. At 2.1 percent, organic sales growth was once again above that of the relevant markets. Nominally, sales rose to 3,838 million euros (2015: 3,833 million euros).

    From a regional perspective, business performance was very strong in the emerging markets. Eastern Europe and Latin America achieved double-digit organic sales growth. Sales in Asia (excluding Japan) and in Africa/Middle East showed a positive development. Mature markets continued to be impacted by intense price and promotional pressure. In this challenging environment, sales in mature markets remained slightly below the level of the prior year. In Western Europe and in the mature markets of the Asia-Pacific region, sales were lower year-on-year. Beauty Care recorded solid growth compared to the previous year in North America.

    Adjusted operating profit of the Beauty Care business unit increased by 6.1 percent to 647 million euros. Adjusted return on sales showed an excellent increase of 1.0 percentage points to a new high of 16.9 percent. Reported operating profit amounted to 526 million euros, after 561 million euros in the previous year.

    The Laundry & Home Care business unit also continued the profitable growth of previous years in the fiscal year 2016. Sales grew organically by 4.7 percent year-on-year, significantly outperforming the relevant markets. Nominally, sales increased by 12.8 percent to 5,795 million euros, driven by the acquisitions closed in 2016.

    With a very strong increase, emerging markets were once again the major driver of organic sales growth. In Asia (excluding Japan), Laundry & Home Care recorded double-digit organic sales growth. Sales in Africa/Middle East showed a very strong development. Sales in the Eastern Europe and Latin America regions achieved a strong increase, contributing to the successful development. Performance in the mature markets was solid. North America recorded a solid increase in sales, while sales growth in Western Europe was positive.

    Adjusted operating profit of the Laundry & Home Care business unit increased double-digit by 13.7 percent to 1,000 million euros. Adjusted return on sales increased by 0.2 percentage points, reaching a new high of 17.3 percent. Reported operating profit rose by 2.2 percent from 786 million euros to 803 million euros.

    Regional performance

    In a market environment that continues to be highly competitive, sales in Western Europe were organically on the level of the previous year. The positive performance in Southern Europe could not entirely compensate the decline in France. At 5,999 million euros, nominal sales in the region were slightly down year-on-year, due to negative currency effects. In Eastern Europe, sales grew organically by 7.0 percent. The main contribution to this performance came from the businesses in Russia and Turkey. Nominally, sales in the region increased by 0.7 percent to 2,713 million euros (2015: 2,695 million euros). Despite the political and social unrest in some countries, organic sales growth of 5.6 percent was achieved in the Africa/Middle East region. Nominal sales increased by 3.7 percent to 1,378 million euros (2015: 1,329 million euros).

    Sales in the North America region increased organically by 1.7 percent. At 4,202 million euros, nominal sales increased by 15.2 percent (2015: 3,648 million euros). The acquisition of The Sun Products Corporation contributed substantially to the increase in nominal sales. Organic sales in Latin America increased by 13.8 percent, with business performance in Mexico making a significant contribution to this improvement, delivering a double-digit increase. Nominal sales amounted to 1,055 million euros, following 1,110 million euros in the previous year. Sales in the Asia-Pacific region grew organically by 3.2 percent. Nominal sales increased by 3.6 percent to 3,246 million euros.

    With an increase in organic sales of 6.8 percent, driven by all business units, the emerging markets again made an above-average contribution to the organic growth of the Group. Nominal sales were slightly higher year-on-year at 7,814 million euros. The share of sales from emerging markets was 42 percent, which was slightly lower year-on-year due to foreign exchange and acquisition effects. In the mature markets, sales grew organically by 0.4 percent to 10,779 million euros.

    Outlook for the Henkel Group 2017

    Henkel expects to generate organic sales growth of 2 to 4 percent in the fiscal year 2017. Henkel expects that each business unit will generate organic sales growth within this range. For adjusted return on sales (EBIT), Henkel expects an increase versus the prior year to more than 17.0 percent. Henkel expects an increase in adjusted earnings per preferred share of between 7 and 9 percent.

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  • Esprit Holdings moves out of the red

    Esprit Holdings moves out of the red

    Fashion group Esprit Holdings says it has made a “significant recovery”, turning around its HK$238 million (US$30.6 million) loss to record a net profit of HK$61 million for its first half.

    While the improvement was driven by retail sales, the group says two other major developments were a vital element of the growth in overall profitability for the half-year, to December 31:

    • The ongoing downsizing of the scale of the business, including the closure of unprofitable stores and low-performing wholesale locations.
    • Management moves increased the group’s gross profit margin, including fewer promotional activities, price markdowns and discounts for wholesale partners.

    As a result, the first-half unaudited figures show a 9.9 per cent drop in revenue to $8.323 billion. However, the measures produced the intended improvement in profitability, with gross profit margin increasing by 2 per cent .

    During the period, the group closed 9412 sqm of retail space, with coupled with the closure of 25,806 sqm in the previous six months represented a 11.1 per cent year-on-year reduction.

    Asia Pacific retail, excluding online sales, at HK$951 million, fell by 21.5 per cent. Retail space was reduced by 18.5 per cent.

    “It is important to note that in APAC we had the most drastic reduction of promotional activities and price markdowns,” says the company.

    Esprit’s Eshop brought in 24 per cent of total group revenue, generating HK$1.993 billion, down by 2.4 per cent. However, there was a 58.7 per cent leap in revenue for Eshop APAC to HK$119 million.

    China represented more than 80 per cent of the Eshop sales in the region. It recorded revenue growth of 54.9 per cent, fuelled by the integration of the Esprit Friends loyalty program, the strengthening of activities with Tmall, the expansion of its online presence through platforms such as WeChat and Weibo, and collaborations with celebrities and opinion leaders to enhance brand equity through social media.

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  • McDonald’s China does nothing, but under attack anyway

    McDonald’s China does nothing, but under attack anyway

    McDonald’s China is drawing criticism from Hong Kong trade unions, who fear the impact of the new owners on employment conditions.

    Despite reassurances from local McDonald’s management – or any evidence at all suggesting changes to labour policies are looming – the fast food giant has come under attack on both sides of the border.

    The new business unit taking over the McDonald’s business in China and Hong Kong is jointly owned by state investment group Citic Ltd and US private equity company Carlyle Group. McDonald’s Corporation (US) will maintain a cornerstone minority stake. The new company holds 20-year franchise rights.

    In a statement issued this week, the Hong Kong Confederation of Trade Unions (HKCTU) said the change of ownership will put further pressure on pay rates at Hong Kong outlets, where it says many workers earn little more than the minimum wage of HK$32.50 (US$4) per hour.

    “In other countries where McDonald’s has sold a large stake of its business, the resulting model has placed enormous pressure on franchisees, which has made it harder for franchise operators to provide adequate pay and conditions for their workers,” HKCTU official Wong Yu Loy said.

    “If the buyers in Hong Kong get squeezed by McDonald’s as they have in other countries, workers here may get even less as a result,” Wong said.

    Last week, a Chinese labour consultancy Hejun Vanguard Group filed a formal complaint with the mainland’s Ministry of Commerce claiming the move to the new business model may adversely impact its 120,000 workers in China – and McDonald’s customers.

    But McDonald’s has rushed to placate concerns saying its franchise models all over the world are based on “mutually beneficial partnerships” and the company “treasures” its employees.

    “The level of remuneration of our employees is based on their positions, working experience, expertise, performance, as well as market conditions,” said a spokeswoman.

    “McDonald’s strictly abides by Hong Kong labor legislation and the statutory requirements. The current compensation and benefits of McDonald’s Hong Kong will not be affected as a result of bringing in strategic partners.”

    The HKCTU, which represents 90 affiliate labour organisations covering 170,000 workers, appears unmoved.

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  • 25 operators are already testing 5G

    25 operators are already testing 5G

    Despite 5G standardization not being expected until 2020, 25 mobile operators have already commenced lab testing 5G technologies, according to industry data from network testing company Viavi.

    Of the 25 operators testing 5G, 12 have progressed to field testing, the company said. An additional four operators have announced plans for 5G trials but have not yet commenced them.

    Five operators have achieved data speeds of at least 35 Gbps in 5G trials, including Optus, M1 and StarHub.

    To date, Etisalat has the speed record at 36Gbps, Viavi said, with Ooredoo close behind at 35.46Gbps. All operators conducting 5G trials have reported data transmission speeds of at least 2Gbps.

    Viavi’s data also show that operators are testing 5G across a wide range of bands, ranging from sub 3-GHz up to 86-GHz.

    The most commonly trialed bandwidth among operators that have disclosed their test spectrum is currently 28-GHz – with eight operators using it – followed by 15-GHz, which is being used by seven operators.

    Among equipment suppliers, five major vendors have announced an involvement in 5G trials – Ericsson, Huawei, Nokia, Samsung and ZTE. Many operators are working with multiple vendors on their trials, with KT including all five equipment providers.

    “The pace of 5G development is already beyond the expectations of many observers,” Viavi CTO Sameh Yamany commented.

    “Now, as the technical delivery of data is starting to coalesce, it is time to think ahead to how future 5G networks can manage the disparate requirements of high data rates, very low latency applications and large-scale IoT services while maintaining QoS.”

    He said network slicing, involving the automation and programming of multiple cloud-based functions within a virtualized network, will be important to achieving these goals.

    “Service providers and their partners will require solutions that are virtualized from one end of the network to the other and have automated and correlated intelligence across each network slice for monitoring, optimization and service assurance.”

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