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LVMH sales growth loses fizz as post-pandemic splurge wanes

ALEXANDER NAGLESTAD-UNSPLASH

The wines and spirits division posted a 14% revenue decline over the quarter

PARIS — Luxury goods bellwether LVMH reported a 9% rise in third quarter revenue on Tuesday, marking slower growth as a strong wave of post-pandemic spending eases due to rising inflation and economic turbulence.

“After three roaring years, and outstanding years, growth is converging toward numbers that are more in line with historical average,” LVMH chief financial officer Jean-Jacques Guiony told analysts.

LVMH, which owns labels including Louis Vuitton, Dior, Tiffany, and Bulgari, said revenue came to 19.96 billion euros ($21.16 billion), up 9% year on year, stripping out the effect of currency fluctuations and acquisitions. Total revenue rose 1% year on year.

The fashion and leather goods division, home to Louis Vuitton and Dior, recorded sales growth of 9%, compared to analysts’ expectations for 10% growth.

LVMH is facing slowing demand for high end goods in the United States and Europe, where rising prices have prompted shoppers — especially younger generations — to pull back from a post-pandemic spending euphoria, while the recovery in China has been uneven.

Mr. Guiony noted that while business slowed in Europe over the quarter, there was not a marked change in demand for fashion and leather goods from China compared to two years ago, except that more purchases are being made outside of the mainland as travel resumes.

In the United States, there was little change in trends, according to Mr. Guiony.

The wines and spirits division posted a 14% revenue decline over the quarter, with the company flagging less demand for Champagne over the period, while the weak economic environment in the US, and a slower-than-expected bounce back in China affected demand for Hennessy cognac.

LVMH is the first major global luxury firm to report earnings this quarter and gives investors an insight into what to expect from rivals Hermes and Kering report on Oct. 24.

“This seems good enough to support the share price, as buyside expectations were possibly more muted, as the significant market derating suggests,” said Luca Solca, analyst with Bernstein, noting the company faced a tougher comparison period following strong performances in China, the United States and Europe a year ago.

Investors have recently lowered their expectations for the luxury sector and around 96 billion euros has been knocked off the value of LVMH since April.

The French luxury group was last month unseated as Europe’s most valuable listed company after a 2-1/2 year long reign by Danish drugmaker Novo Nordisk, which was boosted by the growth of anti-obesity drug Wegovy.

A stronger euro against the US dollar than a year earlier also impacted the company as US sales were worth less when converted back into its home currency. The negative currency impact was worse than anticipated, said Mr. Guiony, noting he expected it to negatively affect margins in the second half, although some of that would be offset by hedging strategies.

The currency impact is expected to affect European companies with large US operations this earnings season.

Sony LinkBuds S x Olivia Rodrigo headphones to be available in PHL

SONY Philippines last week announced that its limited-edition collaboration with singer Olivia Rodrigo will be available for pre-order in the country by the end of the month.

The LinkBuds S x Olivia Rodrigo limited edition headphones are priced at P10,999 and will be available for pre-order from Oct. 28 to Nov. 16 at select Sony dealers and the brands official Lazada and Shopee stores. Those who will purchase will get a free Olivia Rodrigo GUTS tote bag.

“Based off Sony’s LinkBuds S noise canceling truly wireless headphones, the new limited edition LinkBuds S x Olivia Rodrigo feature Custom EQs (special equalizers) tuned by Olivia and her producer Daniel Nigro for optimal listening of her albums GUTS and SOUR on any music streaming service and come in a unique violet marble pattern styled by Olivia and made with environmentally conscious materials,” Sony said in a statement.

“I’m so excited that I got to design a limited edition LinkBuds S in the color violet. The sound is incredible, and I can’t wait for my fans to experience GUTS in this way,” Ms. Rodrigo was quoted as saying.

The headphones have two special equalizers customized for Ms. Rodrigo’s music that can be accessed via the Sony | Headphones Connect app, the brand said.

“When designing the LinkBuds S x Olivia Rodrigo, Olivia chose an environmentally conscious design using factory recovered plastic, reclaimed water bottles, and recycled plastic materials from automobile parts to create parts of the case and body of the headphones. Due to the variation in material, the headphones host a violet marble pattern that causes no two pairs of LinkBuds S x Olivia Rodrigo to be the same,” Sony said.

The LinkBuds S x Olivia Rodrigo have noise canceling and high-resolution audio wireless features.

“Smart features such as Adaptive Sound Control and Auto Play learn from the user’s behavior and automatically adjust sound settings to provide the right sound for the moment,” Sony said.

Furnished copies

FREEPIK

THE MEMOS of old had a list of recipients at the end of the typed message just under the sender’s signature. They were categorized under “cc,” which stood for “carbon copies” — if one still remembers those thin sheets of onion-skin paper that record imprints from the typewriter in ever lighter shades as copies were added.

A list of those furnished copies of the now more common e-mail determines the importance of the message and the audience being addressed, aside from the direct recipient. This may even include others outside the organization.

So, after finding out what the e-mail is about (Pending reorganization?), the list of those copied shows how far the ripple effect will go. The longer the list with copies, the more significant the news is likely to be for the main addressee. (It could even be good news, like winning a loyalty award.) Sometimes, the copy involves a whole department (no names needed) in case the subject is about a new head of the department.

The designation of the digital audience revolves around the following possibilities: 1.) The inclusion is simply “For Your Information” (FYI) ensuring that the persons in the list have been looped in and cannot claim later on that they didn’t know what was coming, then hide behind feigned ignorance; 2.) Credit for some success is being shared by the sender; and, 3.) The copied persons are asked to give their opinions, formally being solicited. The list of furnished copies does not include leaks.

There is a difference between the memo addressee at the top and the copied list right under “subject.” The top name, sometimes more than one, is the purported target of the correspondence. Those copied are people who can add to the applause or come to the sender’s aid, if required. This is an important audience for any further exchange of e-mails that may result from the original one.

Most insidious is the box for “bcc” which is a blind list known only to the sender. The blind copies involve people who may have no business being in the loop, maybe even some who are not authorized to know the contents of the message. None of the formally copied know the invisible list added to the correspondence.

The blind copies may also include a person several rungs higher than the sender whose boss (and the blind copy’s subordinate) is the formal addressee or among the copy list. The blind copy seems to say — hey, you shouldn’t get this but it’s good for you to know who your friends are.

What does the copied person do with mail that does not affect how well he sleeps at night or how hefty his bank balances can become? Does he even read what to him may simply be e-junk? And should he react and press “reply to all” to get the whole audience panting for more? “Noted” may be a good enough response. It’s the same as saying — I need to take a nap.

Because of the ease and speed of e-mail, it is important for a sender to be careful with his words. A mis-sent message, or inclusion of someone already forced into early retirement in the copy box, can result in career changes of the worst kind. After pressing “send,” there is no way to retract this digital missile.

It’s safe to follow a simple rule. Just ignore e-mail where you are only copied. Fine, you can still read what the message is about (or simply skip it altogether) but there is no need to react, not right away.

Now Viber groups are formed around some project (Operation Shoelace) to keep each of the designated participants in the loop for the latest updates, sometimes hourly on a hot issue. Here, it is important to routinely check who are the designated participants. An opinion that is carelessly expressed (he is useless and a power tripper besides) may refer to a recently added personality. Can retribution be far behind?

Copied lists are worth studying. They denote the personalities whose opinions are being sought. (Should I go ahead with this?) It is up to the respondent to “reply to all” or just limit his recommendations to the main sender who has the option to share it with the original copy list. By this time anyway, the grapevine has taken over… or lost interest.

 

Tony Samson is chairman and CEO of TOUCH xda

ar.samson@yahoo.com

realme to launch Pad 2 tablet in PHL

realme Philippines is set to launch on Friday its new budget smart tablet, the realme Pad 2.

“Designed to inspire, the realme Pad 2 promises to redefine entertainment, work, and leisure — more especially for those constantly on the move,” realme Philippines said in a statement on Wednesday.

The Pad 2 has an 11.5-inch 2K resolution display with a 120Hz refresh rate.

It is powered by the MediaTek Helio G99 processor, which the brand claims can support casual to average gaming. It has an 8,360mAh battery with 33W fast charging.

It also has a quad speaker setup enhanced by Dolby Atmos.

The realme Pad 2’s 6GB+128GB LTE variant will retail for P13,999, while the 8GB+256GB LTE variant will be priced at P17,999.

The Pad 2 will be launched on Friday at all realme stores and will come with a free portable blender until Oct. 19.

Online availability via Shopee will start on Oct. 17 at P2,000 off for both variants. — MHLA

GCash introduces Visa-powered payment card

INSTAGRAM.COM/GCASHOFFICIAL

GCASH has launched GCash Card, the financial super app’s payment card powered by Visa, Inc. which offers more cashless payment options.

The electronic wallet platform said on Wednesday that any fully verified GCash user can order their payment card through its application without any additional documents required for approval.

“The new card powered by Visa unlocks more payment options for GCash users as they can use at over 100 million merchants in the Philippines and across the world,” said Oscar Enrico A. Reyes, Jr., president and chief executive officer of G-Xchange, Inc., the mobile wallet operator of GCash.

GCash said that with the new card, “more Filipinos, especially those busy with the daily hustle, can have access to another cashless payment option which they can use for their everyday expenses.”

It said the payment card can also be used for overseas payments in more than 200 countries as it is powered by multinational payment card Visa.

“This gives traveling GCash Card users and overseas Filipinos another secure and convenient way of paying abroad,” GCash said.

“We are very happy to partner with GCash to provide the GCash Card to Filipinos, which paves the way to better financial inclusion,” said Jeff Navarro, Visa country manager for the Philippines and Guam. — A.E.O. Jose

BSP says open to granting more digital banking licenses ‘soon’

THE CENTRAL BANK is open to granting licenses to more digital banks “soon,” its top official said on Wednesday.

“There are a lot of good players who are applying [for digital banking licenses]. I’m hoping that we can begin issuing licenses again pretty soon,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. told reporters in mixed English and Filipino.

Many groups are interested in setting up digital banks, Mr. Remolona said.

“But we’re looking at the existing ones — the six digital banks that have licenses. Essentially, we’re looking at their business models, and we’re learning. They’re learning,” Mr. Remolona said.

“Once we get more comfortable with their business models, we will allow more licenses for digital banks,” he added.

BSP Supervisory Policy and Research Department Director Maria Cynthia M. Sison said the central bank has not decided when to lift the moratorium on the grant of digital banking licenses. 

“We’re still doing the study on the existing digital banks. Once we have completed that study, the decision whether to lift the moratorium or not will follow,” Ms. Sison said.

The central bank closed the applications for digital bank licenses in 2021 after allowing six new lenders to operate.

Then-BSP Governor Benjamin E. Diokno said keeping the number of licensed digital banks at six would allow regulators to monitor the industry’s development and ensure healthy competition among the new lenders.

The first six digital banks allowed by the BSP to operate are Overseas Filipino Bank, Tonik Digital Bank, Inc. (Philippines), UNObank, Union Digital Bank, GoTyme Bank, and Maya Bank.

Digital banks are not required to set up branches or even branch-lite units and are only expected to maintain a head office to allow them to focus their investments on technology.

These lenders are subjected to prudential requirements imposed on traditional lenders.

Lenders with digital banking licenses are expected to help the BSP reach its goal to bring 70% of Filipinos into the formal financial system and have 50% of transactions done online by the end of this year. — K.B. Ta-asan

EU sees lower 2023 wine output on big falls in Italy and Spain

APOLO- PHOTOGRAPHER-UNSPLASH

PARIS — Wine production in the European Union (EU) is set to fall 6% this year after steep declines in major producers Italy and Spain following adverse weather, the European Commission said on Monday, as the grape harvest winds down.

In its first estimate for this year’s output, the EU executive forecast 2023 wine production of about 150 million hectoliters, with output in Italy and Spain falling 12% and 14% respectively from last year.

Extreme weather and fungal diseases hit vineyards in Italy so much this year that the country will lose its position as the world’s largest wine producer, with France set to reclaim the number one spot for the first time in nine years, Italian wine lobbies said last month.

France’s farm ministry estimated on Friday that wine output there this year would be similar to 2022 and 3% above the five-year average at 46 million hectoliters, though with big differences between regions. The Commission pegged French wine output at 45 million hectoliters.

A hectoliter is the equivalent of 100 liters, or 133 standard wine bottles. — Reuters

How PSEi member stocks performed — October 11, 2023

Here’s a quick glance at how PSEi stocks fared on Wednesday, October 11, 2023.


Personalized ads seen to stay amid shift to subscription models — analysts

GERALD MCCRAY-PIXABAY

Social media companies are turning to paid subscription models for revenue amid regulatory headwinds and artificial intelligence (AI) advancements, according to analysts. 

“The financial market very generously rewards recurring revenues from subscriptions,” Anthony Oundjian, managing director and senior partner at the Boston Consulting Group in the Philippines, told BusinessWorld on Wednesday. “While ad revenues are seen as more volatile and have proven more challenging to sustain during an economic slowdown,” he added. 

“The effort by social media companies is understandable, but the value they provide to consumers needs to be in line with the fees commitment they ask,” he also said in an e-mailed reply to questions. 

Ronald Gustilo, national campaigner for Digital Pinoys, noted that premium subscribers, mostly monetized content creators, should have “better benefits” aligned with the amount they pay. 

These include ad-free services, platform customization, longer content allocation, or higher resolution for photos and videos, Mr. Gustilo noted. 

However, security features still need to be applied to all users and should not be exclusive to premium users, he added. 

Meta is planning to charge European Union users for ad-free services on Facebook and Instagram to supposedly comply with regulations that impact their revenues and perceived future of free services supported by personalized ads, Reuters reported last week. 

Social media platforms such as X, YouTube, Snapchat, and LinkedIn offer paid subscription models for their users. 

Mr. Oundjian noted the uptick in personalized ads due to the use of advanced algorithm and AI. “Generative AI will help further increase the personalization of engagement through ads and other means, and we see social media companies actively embracing these evolutions.” 

He said that consumers are largely willing to share data for an enhanced social media experience. “Think location for Grab, music preferences for Spotify, etc.” 

“When it comes to ads, while consumers would rather see less — and there are premium models allowing that — most would still prefer to see ads that at least have some relevance to them,” he added. 

In a market like the Philippines, Mr. Oundjian said, people have historically been unwilling to spend on subscriptions, but willingness should increase over time. 

“Pricing has been aggressive to entice people, but we see price increases efforts already. Non-paying users should expect to still see a fair bit of sponsored content, while more tiers of services for paid users could appear,” he noted. — Miguel Hanz L. Antivola

Peso rises as BSP hints at rate hike

BW FILE PHOTO

THE PESO appreciated against the dollar on Wednesday after Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said they could hike benchmark rates next month.

The local currency closed at P56.755 versus the dollar on Wednesday, strengthening by 6.50 centavos from Tuesday’s P56.82 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session at P56.75 per dollar. Its intraday best was at P56.705, while its weakest showing was at P56.777 against the greenback.

Dollars traded went up to $1.19 billion on Wednesday from the $1.05 billion on Tuesday.

The peso strengthened against the dollar on Wednesday after the central bank chief signaled that a 25-basis-point (bp) rate hike could be on the table at their Nov. 16 meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso strengthened after BSP Governor Remolona hinted at a further policy rate hike before yearend,” a trader likewise said in an e-mail.

Mr. Remonola on Wednesday said the Monetary Board is open to hiking borrowing costs by 25 bps in their Nov. 16 review following the release of data showing faster-than-expected September inflation.

The Monetary Board has kept the benchmark interest rate at 6.25% for four straight meetings after it hiked borrowing costs by 425 bps from May 2022 to March 2023 to help tame inflation.

The peso was also supported by the recent downward correction in the dollar due to dovish signals from US Federal Reserve officials, Mr. Ricafort added.

The dollar was largely rangebound on Wednesday, though remained weighed down by dovish US Federal Reserve comments, as traders awaited the central bank’s policy meeting minutes due later in the day for more clues on its interest rate outlook, Reuters reported.

A slew of Fed officials have signaled in recent days that the US central bank may not need to tighten monetary policy much further than initially thought.

Atlanta Fed Bank President Raphael Bostic said on Tuesday the central bank did not need to raise borrowing costs any further, and Minneapolis Fed President Neel Kashkari followed with similar remarks later in the day.

The greenback sat near a two-week low against a basket of currencies on Wednesday and last stood at 105.80.

For Thursday, the trader said peso could depreciate due to expectations of an uptick in US consumer inflation.

The trader sees the peso moving between P56.65 and P56.90 per dollar on Thursday, while Mr. Ricafort expects it to range from P56.65 to P56.85. — AMCS with Reuters

PSEi declines on last-minute selling before US CPI

BW FILE PHOTO

PHILIPPINE SHARES dropped on Wednesday due to last-minute selling as investors await the release of US consumer inflation data.

The Philippine Stock Exchange index (PSEi) went down by 10.11 points or 0.16% to end at 6,253.96 on Wednesday, while the broader all shares index rose by 1.82 points or 0.05% to 3,384.45.

“After spending much of the day in positive territory, the index closed lower again today due to a surge of market-on-close selling. Today’s initial strength could be tied to market optimism given overnight pronouncements from some US Fed officials indicating that US policy rates may have already peaked,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail on Wednesday.

Several Fed official have noted that recent rises in longer-term yields may help do their inflation-fighting work, Reuters reported.

Atlanta Fed President Raphael Bostic was applauded when he told a room full of bankers in Nashville on Tuesday: “I actually don’t think we need to increase rates anymore.”

“We think that selling pressure at the close was likely driven by continued risk aversion amongst investors as they chose to take profit and limit exposures ahead of key US data releases,” Mr. Mercado added.

September US consumer price index (CPI) data will be released on Oct. 12, Thursday.

In August, US CPI stood at 0.6% month on month and at 3.7% annually.

Seedbox Securities, Inc. Equity Trader Jayniel Carl S. Manuel said in an e-mail that a potential pause in US interest rate hikes “has introduced an element of unpredictability, influencing international capital flows and risk perception.”

The geopolitical conflict in the Middle East also affected market sentiment, Mr. Manuel added.

“The ongoing conflict in the Middle East between Israel and Hamas has injected geopolitical uncertainty into the equation, impacting investor sentiment and contributing to the market’s downward trajectory,” he added.

The majority of sectoral indices declined on Wednesday. Mining and oil fell by 90.25 points or 0.81% to 10,983.83; financials dropped by 10.88 points or 0.59% to 1,808.11; industrials went down by 37.93 points or 0.42% to 8,869.95; and services decreased by 1.47 points or 0.09% to 1,518.64.

Meanwhile, property rose by 5.83 points or 0.22% to 2,621.94 and holding firms climbed by 8.63 points or 0.14% to 5,942.97.

Value turnover went up to P10.70 billion on Wednesday with 2.02 billion shares changing hands from the P4.54 billion with 688.96 million shares seen on Tuesday.

Advancers outnumbered decliners, 100 versus 93, while 46 shares closed unchanged.

Net foreign selling went down to P160.31 million on Wednesday from P275.32 million on Tuesday. — SJT with Reuters

DBP wants capital metrics to count Maharlika contribution

COURTESY OF DBP FACEBOOK PAGE

THE Development Bank of the Philippines (DBP) said government banks’ contributions to the Maharlika Investment Fund (MIF) must be included in determining the institutions’ compliance with capitalization requirements.

“I understand both LANDBANK (Land Bank of the Philippines) and DBP requested for regulatory relief from the BSP (Bangko Sentral ng Pilipinas),” DBP President and Chief Executive Officer Michael O. de Jesus said in a Viber message.

“We seek relief that our contribution not be deducted from capital,” he added.

LANDBANK and DBP remitted their P50-billion and P25-billion contributions, respectively, to the Maharlika Investment Corp. (MIC) last month, in compliance with Republic Act No. 11954, which established the MIF.

The legislation was signed into law by President Marcos Jr. on July 18, with the Implementing Rules and Regulations taking effect on Aug. 28.

BSP Governor Eli M. Remolona, Jr. in a news conference on Wednesday acknowledged that both banks’ contributions put them at risk of not meeting the regulatory requirements for capital held.

“It may make (the state banks) non-compliant with our capital requirements,” Mr. Remolona said.

However, the banks may be allowed a degree of “forbearance” after providing capital to Maharlika, he said.

“In principle, we can provide forbearance, which allows them not to comply for a period of time. But they will be expected to comply at some point. Forbearance is always temporary,” he added.

BSP Supervisory Policy and Research Department Director Maria Cynthia M. Sison said if the central bank provides relief to the banks, it will be disclosed to the public.

“It will have to be disclosed that they are under forbearance so that other investors would know they’re in that situation,” she said.

She added that LANDBANK and the DBP do not want their capital positions to decline substantially due to their contributions to the MIC.

Finance Secretary Benjamin E. Diokno has said the completion of the remittance of the two largest state-owned financial institutions will pave the way for the full operationalization of the MIC.

The Maharlika fund is expected to be operational by the end of the year, and will begin market activities early next year.

Meanwhile, Mr. Remolona said the BSP has not received any application for the merger of LANDBANK and DBP.

“It’s not up to us. Once they decide to merge, then we will go in and look at the books of the merged entity,” he said.

LANDBANK was asked to comment on the impact of the contributions to its capital position, but it had not replied at the deadline. — Keisha B. Ta-asan