There are crumbs of comfort for VW and Daimler, and electric-car maker BYD is making lemonade out of lemons. Plus: Chris Hohn at TCI’s take on how to be an activist. Catch up with the latest pandemic-related insights from Breakingviews here:
A pedestrian walks past the Federal Reserve Board building on Constitution Avenue in Washington, U.S., March 19, 2019. REUTERS/Leah Millis- AstraZeneca’s executive pay
GE’S ROUND NUMBER. Covid-19 cost General Electric $1 billion of cash flow in the first quarter of 2020. And things weren’t going swimmingly before the pandemic hit. The U.S. conglomerate burned $2 billion of cash in total in the quarter, frustrating GE’s plans to cut back its mountainous borrowings. Ford’s restructuring plan requires spending $7 billion in cash, now a precious commodity. The car company wasn’t even a fifth of the way through that at the end of 2019 and is now paring back this year’s plans a tad. That’ll make it harder for Ford to compete once the crisis passes – not least on electric and self-driving cars. Hackett is trying to persuade investors that they shouldn’t read anything into the relative lack of action today. But that’s a tough circle to square.
HONG STRONG. Banks everywhere are cranking up bad debt charges due to the pandemic-induced slowdown. Yet Hong Kong looks a financial safe haven, despite being one of the first places outside mainland China to impose a lockdown. Standard Chartered on Wednesday said that first-quarter pre-tax profit in the special administrative region was broadly unchanged from the previous three months, at $378 million, even though bad debt charges almost doubled.
Any resurgence would benefit VW more than Daimler. China accounts for around two-fifths of group sales at the Wolfsburg-based company, versus one-tenth at the Mercedes-Benz maker. That may be why boss Herbert Diess still expects VW to report an operating profit in 2020, albeit “severely” below the prior year. Something is better than nothing.
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