Company news in brief

Audi to cut one in ten jobs

Volkswagen's luxury car unit Audi on Tuesday said it would cut one in ten jobs, freeing up billions of euro to fund its shift towards electric vehicle production.

Carmakers are struggling with an auto industry downturn, particularly in key market China, and the need to increase investment in electric vehicles as several countries move to eventually ban conventional combustion engines.

Audi said it would cut up to 9 500 jobs, or 10.6% of its total staff by 2025, saving 6 billion euros (US$6.61 billion), but also create up to 2 000 new positions in the areas of electric mobility and digitalisation.

The group said the cuts, which would also include management positions, would take place along the demographic curve through employee turnover and early retirement programmes and help it reach a profit margin of 9-11%.

Audi agreed to extend an employment guarantee which rules out forced layoffs for its workforce until the end of 2029, something which had been a sticking point in discussions between management and labour representatives.

The agreement between management and workers sees annual production capacity at Audi's German plants in Ingolstadt and Neckarsulm at 450 000 and 225 000 respectively.

Audi said a fund would be set up at the Neckarsulm site to fund the shift towards electric vehicles and would be worth 300 million euros by 2025. - Nampa/Reuters

Munich Re sees Q4 claims hit but confident for 2020 profit

Munich Re is facing big claims for typhoons and fires in the fourth quarter but has grown more confident about meeting its 2020 profit goal, the reinsurer's chief financial officer said.

Typhoon Hagibis, which struck Japan in October and was the worst storm there in decades, "will surely be costly", CFO Christoph Jurecka told journalists on Monday, as he highlighted losses from forest fires in the U.S. and bush fires in Australia.

Munich Re is also examining whether it will have to increase provisions for its Australia life reinsurance operations, where in recent years it has seen increased claims for its disability business.

"It is entirely possible that we will have to do something for Australia," he said.

Munich Re has said that it will likely exceed its initial profit target for 2019 of 2.5 billion euros (US$2.76 billion).

Jurecka said the company had grown "more confident" about reaching its goal for profit of 2.8 billion euros in 2020. - Nampa/Reuters

Hyundai Motor to invest US$1.55 bn in first Indonesia car plant

South Korea's Hyundai Motor said on Tuesday it has signed a preliminary deal to build a new factory in Indonesia, which would be its first car plant in Southeast Asia and a crack at Japanese rivals that dominate the market.

The deal comes as Hyundai and affiliate Kia Motors struggle with a prolonged sales downturn in China, where they suspended two factories this year.

Hyundai Motor said it will invest about US$1.55 billion in the Indonesia auto manufacturing plant from now until 2030. The facility, to be built in the city of Bekasi, east of Jakarta, will start production in late 2021, with an annual capacity of 150 000 vehicles and a plan to grow that to 250 000 vehicles a year.

Hyundai said it is building the production facilities to avoid import tariffs ranging from 5% to 80% in the ASEAN region.

The plant will cater to Indonesia, the region's largest automobile market, and other countries belonging to the Association of Southeast Asian Nations (ASEAN), it said.

Hyundai is far behind Japanese rivals in Southeast Asia, with its sales reaching 122 883 vehicles versus Toyota's 854 032 from January to September this year.

Hyundai said key ASEAN countries are expected to see combined vehicle sales grow to 4.49 million units in 2026, from 3.16 million in 2017. -Nampa/Reuters

Online sales assemble growth at Ikea unit

A surge in online sales has helped Ikea's main retail unit boost both sales and profits, with the Swedish flat pack furniture firm looking to push further its foray into China.

Ingka Group is the main franchisee of Ikea, accounting for 90 percent of its total sales, managing 374 stores in 30 countries.

In its fiscal year that ended in August, the group saw its net profit jump 24 percent to 1.8 billion euros (US$2 billion), with sales climbing 5.3 percent to 39 billion euros.

"We have a healthy growth in all the sales channels: we are growing online by almost 50 percent over last year which is massive," said Juvencio Maeztu, Ingka Group's deputy CEO and chief financial officer.

Online now accounts for 10 percent of total sales.

"The last six months have been very good for us in China (...) that's why we are committing to keep investing in China," added Maeztu.

Ingka intends to open three new stores in the country by 2024. - Nampa/AFP

BoE hands Citi record fine over UK reporting breaches

The Bank of England on Tuesday said it has handed US banking giant Citigroup a record fine of almost £44 million (US$57 million, 51 million euros) for "serious and widespread" reporting breaches.

The British central bank said in a statement that its Prudential Regulation Authority division has given the penalty to Citigroup for "failings in their regulatory reporting governance and controls".

"The PRA has imposed a combined financial penalty on Citigroup Global Markets Limited (CGML), Citibank N.A. London branch (CBNA London) and Citibank Europe Plc UK branch (CEP UK) of £43.9 million for failings in relation to their internal controls and governance arrangements underpinning compliance with PRA regulatory reporting requirements," the watchdog said.

The PRA added that Citigroup's UK reporting framework was not designed, implemented or operating effectively between June 2014 and December 2018, or for parts of that period.

"This led to them failing to submit complete and accurate regulatory returns to the PRA," it added.

Sam Woods, deputy governor for prudential regulation and head of the PRA, added that Citigroup had "failed" to meet the standards expected of a "systemically important bank".

The US bank agreed to resolve the matter swiftly and therefore qualified for a 30-percent discount. Without this action, the fine would have stood at £62.7 million.- Nampa/AFP