Despite all the problems facing automakers, Oxford Economics forecasts that motor vehicles will be the fastest growing industry in the US over the next five years, displacing medical devices which will drop out of the top 10 growth industries list. We are pleased to offer a complimentary download of Oxford Economics Sector Prospects Briefing for the US.
Oxford Economics forecasts annual growth of 16.4% for motor vehicles for the next five years. The sector had the worst performance in 2009 with a 41.6% decline. Other sectors with double digit growth forecast for the next five years are Iron and Steel (15.0%), Electric Components, Computers and Office Equipment, Motor Vehicle Bodies and Parts and Casting.
Tobacco is forecast to be the biggest loser in the next five years (-3.2%), with Garments, Leather goods, Textiles and Ceramics also in negative territory.
Other highlights:
Construction is expected to be flat this year before rebounding to around 11% growth in 2011 and 2011.
Total manufacturing growth is forecast at 4.9% over 2000-2014, reversing an average of -1.5% in 2005-2009
Services are expected to grow at 0.5% this year, rising to 3.4% in 2011 before stabilizing at 2.3-2.6% for the next several years.
The full report is available for free download by Research Recap users for 30 days by special arrangement with Oxford Economics, an Alacra content partner. After 30 days the report will revert to its regular Alacra Store price of $350.00. Similar Oxford Economics Sector Reports on other countries are available here.
For additional free research reports from the Alacra Store click here.
Technorati Tags: (F), (GM), apparel, Auto-Industry, autos, Chrysler, complimentary, computers, construction, electronics, Ford, General-Motors, manufacturing, Oxford Economics, PulseCheck, services, textiles, tobacco, Toyota
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Look for fatter Americans this summer: McDonald’s to Price All Sizes of Soft Drinks At $1 (WSJ)
More US homeowners are opting for ’strategic defaults’ (LA Times)
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Technorati Tags: (BRK.A), (MCD), GEICO, mcdonald's, research, strategic defaults, twitter updates, venture-capital
Retailers, especially grocery retailers such as Wal-Mart, are investing heavily in new technology that will simplify transactions and increase customer service. A host of gadgets, such as touch-screen information monitors, hand-held scanners, RFID tagging and fingerprint identification, are now in place at many stores across the U.S. and in Europe, according to Plunkett Research.
The biggest technology breakthrough in inventory management is RFID (radio frequency identification)—the placement of microchips in product containers, cartons and packaging, combined with the use of special sensors in warehouses or on store shelves that alert a central inventory management system as to shipment arrivals, product purchases and the need to restock inventory, communicating via wireless means. From loading docks to store shelves to cash registers to parking
lots, RFID readers have the potential to wirelessly track the movement of each and every item of inventory.
Checkout stations will be equipped with receivers that automatically calculate purchases a of an entire cart of merchandise at a time, rather than each individual item. These systems can lead to great reductions in shoplifting and the elimination of costly manual inventory counts.
Leading suppliers of RFID tags include Intermec Technologies Corp. (IM) and Symbol Technologies, which is a unit of Motorola (MOT).
Another potential advantage of RFID is that manufacturers and distributors will be able to reduce overall inventory thanks to greater supply chain efficiency. Marks & Spencer (MKS), a major retailer in the U.K., is replacing bar codes with an RFID system, including tags for the millions of containers that hold food being shipped from suppliers to its stores. It takes a mere five seconds to receive data from 50 containers, an 85% improvement in the time it takes to scan bar codes. The savings of time as well as reduced cost of spoiled food are expected to make the system’s $3-million price tag feasible.
Wal-Mart (WMT) is also heavily invested in this new technology. The firm requires most of its top suppliers to have RFID tags on every pallet and case coming to its distribution centers and stores. One industry estimate calculates that the coded cases and pallets will save the retail giant $407 million per year. Should RFID tags be placed on every item in every store, Wal-Mart has the potential to save immense sums yearly through full implementation of RFID systems.
Imagine using a cellphone camera to scan an RFID embedded in the packaging of a steak. The data encrypted in that code links to a web site showing pictures of the ranch from which the meat came and medical and feed records pertaining to the specific cow. Science fiction you say? Software is already on the market that enables camera-enabled phones to read barcodes. Supermarkets in Japan currently provide the technology via meat counter computers that display information relating to specific codes on each package.
The greatest advantage of RFID implementation in stores such as Wal-Mart may be reduction of out-of-stock situations. Proctor & Gamble (PG) a major supplier to Wal-Mart and other mass merchandisers, theorizes it could increase annual sales by $1.2 billion via RFID technology by reducing incidences of out-of-stock items in stores.
In Germany, the grocer Metro AG (MEO) operates an entire store equipped with RFID, as well as several other technologies, called the Future Store (www.future-store.org). Not only is every item equipped with a tag, but a tag reader is also installed in each shelf. Customers are given touch-screen computers that also have readers, which can assist them in finding products in the store by a keyword search as well as ring up each item as it is placed in the cart. Metro recently launched the Mobile Shopping Assistant cellphone application that allows customers to use their phones instead of a store-issued touch screen. Customers can even prepare shopping lists in advance through their phones.
More details on technology use by food companies can be found in this complimentary download of excerpts from Plunkett Research’s Food Industry Almanac.
Technorati Tags: (IM), (MEO), (MKS), (MOT), (WMT), food retailers, Intermec, Marks & Spencer, Metro AG, Motorola, P&G, Procter & Gamble, PulseCheck, RFID, Wal-Mart
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Technorati Tags: financial-regulation, government spending, Hedge-Funds, medical research, pharma, private-equity, social-media
Analysts are more bullish on Kraft Foods (KFT) since its acquisition of Cadbury.
Morgan Stanley resumed coverage of Kraft Foods Inc. (KFT) with an overweight rating on Mar. 15 Analyst Vincent Andrews said the firm had a $32 price target on the shares. (Business Week)
Analysts at Citigroup reiterated their “buy” rating on Mar 9 and raised the target price for KFT $33 to $36. The acquisition of Cadbury would prove favorable for Kraft Foods. KFT’s stock is attractively valued at the current levels, the analysts wrote. (Benzinga)
Credit Suisse analyst Robert Moskow resumed coverage of the company with an “Outperform” rating on Feb 15 and a $35 price target, arguing the price is reasonable given the potential for operating margins to improve over the coming 12 months.(Barrons)
However, Zacks noted Mar 5 that Kraft earnings estimates were declining and rated the company Neutral.
Investor Nelson Peltz has reduced his holdings(Telegraph), but Berkshire Hathaway still has it as a core holding despite Warren Buffett’s earlier misgivings about the Cadbury deal (Business Insider).
For previous posts on this topic click here.
For latest analyst comment on comment on Kraft see Alacra Pulse.
Technorati Tags: (KFT), food, Kraft, PulseCheck
As McDonald’s Corporation (MCD)continues to deliver impressive results in a difficult economy we are pleased to offer a complimentary download of relevant excerpts from Plunkett Research’s Food Industry Almanac. The Almanac also features a spotlight on Wal-Mart (WMT) and covers topics such as organic and “functional” foods, ethanol and the growing use of RFID technology.
The Almanac includes a spotlight on McDonald’s, highlighting the company’s impressive resurgence after posting losses for 13 consecutive months in 2002-2003.
Selected Excerpts:
Growth continues, with $2.1 billion invested in 2009 to further remodel existing locations and build approximately 1,000 new restaurants around the world. 240 of those were in Europe, 165 in the U.S. and 600 in Asia. This is while most restaurant chains are fighting to keep the doors of their existing locations open. McDonald’s has opened large numbers of locations in China’s major cities with good success, but it has not caught up with China’s fast food leader, KFC.
Perhaps the most lucrative focus adopted by McDonald’s is the extension of operating hours, in many cases staying open around-the-clock. Breakfast has become the biggest moneymaker, comprising 30% of a typical day’s sales.
The market for fast food breakfast in the U.S. reached $25 billion in 2008 annual sales, of which McDonald’s claims one-fourth. The company hopes to expand on its breakfast bonanza by extending hours in which breakfast items are available from seven hours in most all-night locations to 24/7.
The 39-page report has been made available free of charge to Research Recap users for 30 days by special arrangement with Plunkett Research, an Alacra content partner. After 30 days, the report will revert to its regular Alacra Store price of $149.99)
For additional free research reports from the Alacra Store click here
Related Research on McDonald’s from Alacra:
Zacks ( Mar 9 ) “We think McDonald’s provides relative safety for the investor, with moderate growth prospects, being exposed to faster-growing international markets. However, the economic headwind, which has affected consumers’ disposable income, is impeding growth”
David Palmer, UBS ( Mar 8 ) “We view McDonald’s results as one of the most impressive we have seen in a while.” Buy, target $72.
Joseph T. Buckley, BofA Merrill Lynch ( Mar 8 ) “We continue to rate MCD shares Buy as a Sales Leader.” Target $71.
Paul Westra, Cowen & Co (Mar 8 ) We continue to believe shares of MCD will outperform the market by over +15% over the next 12 months.”
Jeffrey A. Bernstein, Barclays Capital ( Mar 8 ) “Our price target for McDonald’s remains $71, or ~16x our calendar 2010 EPS estimate of $4.40.” Overweight.
John Glass, Morgan Stanley ( Mar 8 ) “While MCD faces more difficult compares in the months ahead, we remain confident the company will continue to gain share in the US as the McCafé program expands with frappes hitting mid-to-late Spring & smoothies due out this summer. ” Base Case $67.
Gregory R Badishkanian, Citigroup ( Mar 8 ) “We rate McDonald’s Hold/Low Risk (2L), with a target price of $67.”
Matthew DiFrisco, Oppenheimer ( Mar 8 ) “…we maintain our Perform rating and would become more constructive on the shares below $60.”
John Ivankoe, JP Morgan ( Mar 8 ) “We maintain our Dec 2010 price target of $68 with our target reflecting a 15.5x multiple on our C10 estimates.” Overweight.
Fitch Ratings ( Feb 25 US Restaurant/Foodservice Outlook ) “McDonald’s Corporation Ratings (A/Stable) reflect the company’s geographically diverse revenue base, substantial cash flow generation, and stable royalty stream. Industry leading margins and SSS performance further strengthen the company’s credit profile. Fitch believes operating performance will continue to guide the company’s financial strategy. McDonald’s credit statistics are projected to remain relatively stable in 2010.”
Technorati Tags: (MCD), complimentary, ethanol, food industry, mcdonald's, organic food, Plunkett, PulseCheck, restaurants, RFID
Fitch Ratings maintains its negative outlook for the senior living sector as the fragility in the global economic recovery, combined with such sector-specific negative credit factors as renewal risk on letters of credit (LOCs), weaker liquidity, higher capital costs, and uncertainty in the real estate market, outweighs the surprising resiliency that Fitch-rated, senior living credits have shown in the past year.
The negative outlook reflects Fitch’s expectation that rating downgrades will exceed upgrades in the coming year, with affirmations remaining the most frequent rating action in the sector.
For 2010, Fitch expects the following:
- Cash flow should remain stable.
- Occupancy will remain stable as the financial markets continue to stabilize and potential buyers remain convinced that a bottom has been reached in the real estate market.
- The use of incentive programs will decline, which should lead to modestly improved cash flows as the discounting of entrance fees decreases and the timing of entrance fee collections improves.
“The case of Erickson Retirement Communities provides a good example of the sector’s bifurcation between start-up and mature communities. During 2009, Erickson, one of the pioneers in the development and management of nonprofit continuing care retirement communities (CCRCs), filed for bankruptcy protection due to slower than anticipated sales and occupancies at several start-up communities under development and a very tight credit environment. Within the same period, Fitch affirmed ratings on three mature communities that Erickson had fully developed and continues to manage under management contracts; most recently, in early 2010, Fitch placed one on Positive Rating Outlook. For 2009, each of these facilities maintained high levels of occupancy while reporting solid operating performance. With the very tentative return of start-up new issuance in late 2009, 2010 could prove to be a critical year for the re-emergence of start-up CCRCs.”
For details, see 2010 Senior Living Outlook (Premium)
Technorati Tags: retirement, senior living
Led by China, foreign governments/central banks sold record amount of US financial assets in January (FT Alphaville)
US Bank Failures Threaten Small-Business Lending (WSJ)
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Technorati Tags: bank lending, china, financial-regulation, junk bond, small business, Twitter
Blockbuster (BBI) today said it may have to file for bankruptcy protection as it tries to restructure itself.
Business Insider has details of the company’s 10-K filing. A few excerpts:
- It is possible that a successful and efficient implementation of an exchange or any of the other strategies we are pursuing will require us to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code.
- If we are unable to successfully implement our operational and business strategies, if we are unable to reach agreements with our debt holders to restructure a sufficient portion of our debt, or if the major studios tighten or eliminate credit terms, we may voluntarily seek relief under the U.S. Bankruptcy Code.
- We are currently experiencing significant liquidity constraints and have sizable amortization and other debt service requirements. Should we not be able to generate sufficient cash from operations and should the studios tighten or eliminate credit terms, we may determine that it is in the Company’s best interests to voluntarily seek relief through a pre-packaged, pre-arranged or other type of filing under Chapter 11 of the U.S. Bankruptcy Code, including prior to the time we would otherwise be required to do so in an acceleration event.
In related news, AP reports that Kiosk operator NCR Corp.(NCR) said Monday it would place Blockbuster Express-branded DVD rental kiosks at nearly all 365 Sheetz convenience stores in North Carolina, Ohio, Pennsylvania, Maryland, Virginia and West Virginia by the end of March.
Blockbuster has put its European arm up for sale, according to the Sunday Times of London.The paper said the indebted U.S. company wanted to sell its European division, which it values at about 50 million pounds, to raise cash.
See also Research Update: Analysts Divided on Video Rental Business
Technorati Tags: (BBI), (CSTR), (NFLX), Blockbuster, Coinstar, DVD, Netflix, PulseCheck, streaming media, Tivo, video
Standard & Poor’s today indicated that the Greek government has done enough for now to get its fiscal house in order and preserve the country’s credit rating, but at the same time the ratings agency downgraded the banking system and placed a negative outlook on several banks.
Key comments from S&P:
- We view the Greek government’s total package of deficit reduction measures as appropriate to achieve its 2010 fiscal target, given the deterioration in Greece’s growth prospects.
- We are affirming our ‘BBB+/A-2′ sovereign credit ratings on Greece and removing them from CreditWatch negative.
- The negative outlook reflects our view of the government’s ability to sustain reform momentum in the medium term.
S&P also:
- Revised its Banking Industry Country Risk Assessment (BICRA) classification and economic risk score on Greece to ‘5′ from ‘4′.
- Increased its estimate of gross problematic assets (GPAs) for the Greek banking system to 15%-30% of total credit, from 10%-20%.
- Affirmed its ‘BBB/A-2′ long- and short-term counterparty credit ratings on EFG Eurobank Ergasias S.A.(EUROB), Alpha Bank A.E.(ALPHA), and Piraeus Bank S.A.(TPEIR);
- Affirmed its ‘BBB+/A-2′ long- and short-term term counterparty credit ratings on National Bank of Greece S.A. (NBG).
- Removed the ratings on all four Greek banks from CreditWatch, where they had been placed with negative implications on Dec. 17, 2009. All outlooks are negative.
BICRA rankings summarize the strengths and weaknesses of a country’s banking system compared with those of other countries according to a scale ranging from Group 1 (the strongest) to Group 10 (the weakest). Other countries included in BICRA Group 5 with Greece are South Africa, Poland, Brazil, Malta, Kuwait, Oman, and Bahrain.
We believe that the Greek banking system’s economic risks have heightened, due to low economic growth prospects and structural weaknesses, higher vulnerability to capital outflows, and greater credit risk.
However, the banking system has coped with mounting economic challenges and remained broadly profitable, benefiting from its consolidated and modern structure and strong commercial franchises–which we view as main comparative strengths.
For details, see:
Research Update: Greece Sovereign Credit Ratings Affirmed At ‘BBB+/A-2′ And Removed From CreditWatch; Outlook Negative and
Greece BICRA/Economic Risk Score Revised To ‘5′ On Economic Risks; Bank Ratings Affirmed/Off Watch; Outlooks Negative
Technorati Tags: Alpha Bank, banks, EFG Eurobank Ergasias, Greece, National Bank of Greece, Piraeus Bank, PulseCheck, sovereign-debt
