Trade deal, Netflix, Eurostar: Business news in brief Wednesday 19 October
Europe-Canada trade deal suffers setback
European Union nations failed to endorse a landmark trade deal with Canada as scheduled on Tuesday, but remain optimistic they can do so by next week, when Prime Minister Justin Trudeau is due to fly over to sign it. Where the EU foreign trade ministers failed, the EU leaders will now step in to try and clinch a deal when they meet for a two-day summit starting Thursday. “It is up to the European (summit) to settle these final reservations,” said Slovakia’s foreign trade minister, Peter Ziga.
Belgian Foreign Minister Didier Reynders said that divisions within his nation over the deal remained. The trade pact requires backing from all 28 member states, and Belgium can only back it if all of its regions do so. Trudeau is due to travel to Brussels to sign the agreement on October 27.
EU Foreign Trade Commissioner Margot Malmstroem said there was still time to overcome Belgian objections right up to “when the prime minister needs to book his tickets from Canada.” The francophone southern region of Wallonia of 3.5m again rejected the deal last week. EU and Belgian officials are now working on an interpretive text that goes with the agreement to pull them on board and save the deal between 500m EU citizens and 35m Canadians.
EU countries fear that the bloc will lose credibility if a deal of this size can be scuppered by a member state’s single region. AP
Netflix’s big bet on original shows finally pays off
Original programmes like sci-fi drama Stranger Things have paid off for the streaming service
Netflix’s shares looked set for their best day in 15 months on Tuesday, after the company added 50 per cent more subscribers than expected in the third quarter. At least 10 brokerages, including Goldman Sachs and RBC Capital Markets, raised their price targets on the stock, praising the company’s focus on developing original content.
Netflix’s shares were up 18 per cent at £117.93 in premarket trading. The video streaming company also said it was getting ready to spend £6bn on content next year, up £1bn from 2016. “The benefits of NFLX-produced original content including attractive economics and greater control are clear and we believe returns on original spend are high,” J.P.
Morgan Securities analyst Doug Anmuth said in a research note. Strong subscriber additions after two quarters of disappointing growth helped Netflix post a 31.7 per cent jump in third-quarter revenue. Anmuth said he believed Netflix was on track toward 60m plus subscribers in the United States and about 100m internationally by 2020.
The company has often been criticized for spending too much on content as it tries to aggressively gain subscribers outside the United States, its main market. The company added about 3.20m subscribers internationally in the third quarter, compared with the 2.01m average analyst estimate. The second season of “Narcos”, a Netflix original show on Colombian kingpin Pablo Escobar, has proved highly popular, following up on the success of “Orange is the New Black” and “House of Cards”.
Eurostar aims to cut 80 jobs as traffic suffers after attacks
Armed police patrol the Eurostar platforms at St Pancras station (Getty)
Train operator Eurostar wants to cut 80 jobs this year as it struggles with weak traffic on the service that links Britain with continental Europe after a string of deadly attacks in Paris and Brussels, a spokeswoman said on Tuesday.
“We are offering voluntary redundancies, that’s true. We are looking at cutting 80 jobs this year,” a spokesperson said. Britain’s decision to leave the European Union has also taken its toll, Eurostar has said.
“In the run up to the EU referendum we experienced a slowdown in business travel and the uncertainty following the vote to leave, combined with the Brussels terrorist attack, has continued to dampen demand,” chief executive Nicolas Petrovic said in July. Foreign tourists have avoided France since militant Islamist gunmen killed 130 people in an attack in Paris last November. In July, an assailant drove a truck into crowds celebrating the Bastille Day national holiday on 14 July in the city of Nice, killing 86.
Germany: Panama taking right steps after accounts scandal
German Chancellor Angela Merkel (Reuters)
German Chancellor Angela Merkel has praised Panama’s response to the offshore accounts scandal that followed leaks of documents from a Panamanian law firm. Following a meeting with Panamanian president Juan Carlos Varela on Tuesday, Merkel says “Panama has taken the right steps” but that it needs to “deal clearly” with the past in order to regain trust. Merkel backed Panama’s intention to apply the financial transparency standards of the Organization for Economic Cooperation and Development.
She said negotiations on an information-sharing agreement between the two countries that started in July should be completed by early 2017. AP
Britain’s largest rail freight firm to cut a quarter of its workforce
Britain’s largest rail freight firm DB Cargo UK plans to cut 893 jobs, over a quarter of its workforce, as the industry faces “unprecedented challenges” from difficult core markets such as coal, it said on Tuesday. The company, a subsidiary of German rail company Deutsche Bahn which employs 3,400 people in Britain, said in a statement it would further reduce its locomotive and wagon fleet and revise the number and locations of its operational sites.
DB Cargo UK, headquartered in Doncaster, northern England, operates over 5,000 trains each month including services to and from mainland Europe through the Channel Tunnel. “We firmly believe in the future of rail freight in the UK,” DB Cargo UK chief executive Hans-Georg Werner said. Reuters
Johnson & Johnson posts third quarter drug sales surge
Johnson & Johnson posted a 27 per cent jump in third-quarter profit, as restrained spending and soaring prescription drug sales more than offset a dip in consumer product sales for the health care bellwether.
The world’s biggest maker of health care products handily beat Wall Street’s expectations and raised the lower end of its 2016 profit forecast. The maker of Band-Aids, medical devices and biologic drugs such as psoriasis treatment Stelara on Tuesday reported net income of £4.27bn, or £1.53 per share. That’s up from £3.36bn, or £1.20 per share, in 2015’s third quarter.
Goldman Sachs’ profit jumps 58 per cent as bond trading surges
Goldman Sachs reported a stronger-than-expected 57.9 per cent rise in quarterly profit on Tuesday as revenue from trading bonds, currencies and commodities surged. Net income applicable to shareholders jumped to £2.10bn (?1.72bn) in the third quarter ended Sept.
30 from £1.33bn a year earlier, while earnings per share rose to £4.88 from £2.90. Analysts on average had expected earnings of £3.82 per share, according to Thomson Reuters.
It was the bank’s second straight rise in quarterly profit after four quarters of decline.
Revenue from trading fixed-income securities, commodities and currencies increased 34 per cent to £1.96bn, helping to boost total net revenue by 19 per cent to £8.17bn.