14 ★ FINANCIAL TIMES Wednesday13 November 2019
H A R RY D E M P S E Y —LONDON
Pallinghurst Group, the investment
group chaired by formerBHP ossb
Brian Gilbertson, have announced
plans to invest up to $2bn in mining
projects for battery materials, includ-
ingcopperandnickel.
The Pallinghurst-Traxys Battery Mate-
rials joint venture will look to take con-
trolling stakes in lithium, graphite and
cobalt projects in developed countries
and invest in associated facilities that
processandimproveore.
“The electric vehicle and energy stor-
age revolution is gaining pace. The
future demand for the critical battery
grade materials is set for explosive
growth,” saidArne Frandsen, co-
founderofPallinghurst.
The launch comes as the Trump
administration and other western
countriesseektodeveloptheirownsup-
ply chains of responsibly sourced min-
erals critical to meet the boom in
demand driven by electrification and
greentechnologies.
The groups will not be targeting
investments inresource-rich Africa and
Latin America through the venture but
only projects in North America, Europe
andAustralasia.
David Merriman, a battery metals
analyst at Roskill, a consultancy, said
that “there has been a real focus on
regional supply chains for more
ethical reasons... but also due to a
number of more economic and techni-
calbenefits”.
Underthedeal,Pallinghurstwilliden-
tify and manage projects, whileTraxys
will help to market and deliver the min-
eralstoendusers.
It will allow Traxys to broaden the
range of materials it supplies to battery
manufacturers, which is currently lim-
itedtocobalt,copperandnickel.
Pallinghurst had already pledged
$1bn in July to develop projects to
extract battery metals and the most
recent deal sees Traxys matching the
investmentfund’scommitment.
Mr Merriman said that itwas a good
time to invest, as the market capitalisa-
tion of projects to extract raw materials
for batterieshad “dropped to more rea-
sonable levels” after a wave of investor
excitement.
COMPANIES
K A N A I N AG A K I —TOKYO
Nissan has lowered its annual net profit
forecast by 35 per cent as a stronger yen
cast a shadow over the troubled Japa-
nese carmaker’s turnround efforts and
thearrivalofitsnewleadershipteam.
The downward revision, which was
bigger than expected, came afterNissan
tried to put behind it a chaotic year of
internal turmoil, profit collapse and
tensions with its French partner
Renault ince last November’s arrest ofs
its former chairmanCarlos Ghosn.
Forthe12monthstoMarch,thegroup
said it now expects net profit to fall 66
per cent from a year earlier to ¥110bn
($1bn). That compares with its earlier
forecast of ¥170bn andanalysts’ expec-
tations for a net profit of ¥150bn,said
S&PGlobalMarketIntelligence.
Nissan also cut its revenue target by
6.2 per cent from July to ¥10.6tn, and
warnedthatitwasundecidedonitsdivi-
dendpayout.
In July, Nissan’s then chief executive
Hiroto Saikawa utlined a restructuringo
plan that involved areduction of 12,
jobs lobally and a 10 per cent cut in theg
number of models it produces after its
quarterlyprofitfell95percent.Analysts said the downward revision
may require a new round of restructur-
ing measures afterMakoto Uchida, cur-
rent head of the China business, takes
overaschiefexecutiveonDecember1.
StephenMa,theincomingchieffinan-
cial officer who presented the results
yesterday, stressed that profitability
was stabilising in North America after it
cutbackonsalesincentivesandstoppedchasing market share. “Nissan’s busi-
nessintheUStookthefirststeptowards
itsrecovery,”hesaid.
But Mr Ma did not rule out the possi-
bilityoffurtherrestructuringmeasures:
“Giventhecurrentmarketsituationand
theeconomicsituation,naturallyweare
nowrevisitingallourassumptions.”
The group pinned the blame on the
yen’s appreciation. A strong yen erodes
overseas profits when they are repatri-
ated. In Nissan’s case, it will dent its
annualoperatingprofitsby¥80bn.
Still, the guidance cut reflected
deeper problems at Nissan with its sales
performance estimated todent its prof-
its by a similar amount to the currency
headwind. As such, it cut its global vehi-cles target by 5.4 per cent on weaker-
than-expected sales in China, Japan,
NorthAmericaandEurope.
“Additional restructuring measures
will be necessary for sure,” said Koji
Endo, head of equity research at SBI
Securities. “If they do carry them out,
the costs will be massive and it will put
pressureontheircashflows.”
For the July to September quarter,
Nissan saidnet profit fell 55 per cent to
¥59bnona6.6percentdropinrevenue.
Nissan’s guidance cut came after
Renault also issued a profit warning last
month.“Everybodyisinsuchbadshape
that it’s in everybody’s interests to get
the alliance working,” said Macquarie
analystJanetLewis.Automobiles
Nissan slashes earnings forecast by a third
Firmer yen hits turnround
plan, adding to pressure
on incoming chief Uchida
N I C F I L D E S
TELECOMS CORRESPONDENTVodafonehas upgraded its profit guid-
ance for the year by up to €1bn despite
slumping to a loss in the first half as a
resultofitsIndianturmoil.The future of the UK telecoms com-
pany’s joint venture inIndia remains
uncertain fter it was hit with $4bn ina
backpenalties.
Chief executiveNick Read nd chair-a
manGerard Kleisterlee ravelled tot
India last month to ask the government
for a series ofrelief easures to ensurem
Vodafone Idea does not collapse as a
resultofthepenalty.
“It is fair to say it is a critical situa-
tion,”MrReadsaidyesterday.
He expects New Delhi’s decision on
whether to introduce the relief meas-
ures, which include a pause on spec-
trum payments and lower taxes, to
comewithinweeks.
Mr Read warned that the Indian busi-
ness, which has 300m users, could be
closed down if New Delhidid not accept
thatreliefwasneeded.
“If you’re not a going concern, then
you are moving into a liquidation sce-
nario,” he said. “You don’t get much
clearerthanthat.”
He said Vodafone had been India’s
biggest foreign investor, so the govern-
ment’s reaction would be closely
watchedacrossallindustries.“ Thedeci-
sion they make on this remedy package
willsendasignalaroundtheworld.”
Vodafone has spent €19bn in India
since it enteredin 2007 but will not
inject more capital into theunit, having
merged it withIdea. The “heavy bur-
den”ofIndiapushedtheUKcompanyto
a€1.9bnstatutorylossinthefirsthalf.
The UK telecoms company nonethe-
less raised its profit outlook for the year
as a result of cost-cutting efforts under
Mr Read andMargherita Della Valle,
chief financial officer, and a return to
revenuegrowth.
Vodafone expects adjusted earnings
before interest, tax, depreciation
and amortisation of €14.8bn-€15bn, up
from its previous range of
€13.8bn-€14.2bn. It said the net benefit
ofits€18.4bnacquisitionofLibertyGlo-
bal’s cable assets in Germany, as well as
the disposal of its New Zealand busi-
ness,helpedimprovetheoutlook.
Georgios Ierodiaconou, an analyst
with Citi, said Vodafone “remains on an
improvingpath”.
However, Vodafone altered its free
cash flow guidance to “around” €5.4bn
from “at least” that number because of
thesituationinIndia.
Vodafone reported growth of 0.3 per
centinthefirsthalf,drivenbyastronger
performance in the second quarter.
Group revenue grew 0.4 per cent to
€22bn, and it recorded a pre-tax loss of
€511mintheperiod.
The operational performance of the
group in markets including the UK con-
tinued to improve, although its Spanish
business remained weak. Vodafone said
it expected improvement in the country
in the second half and confirmed it was
not in talks to combine with a rival
despite reports that it could withdraw
fromSpainbysellingouttoMasMovil.
Mr Read said he was pleased to have
delivered a more consistent overall
financialperformanceinthefirsthalf.
“I am pleased by the speed at which
we are executing on the strategic priori-
ties that we announced this time last
year. This is reflected in our return to
top-linegrowthinthesecondquarter.”Telecoms
Vodafone
lifts outlook
despite India
uncertainty
Mining
Ex-BHP boss
to pump $2bn
into battery
materials
mine projects
J O E M I L L E R— FRANKFURTGerman industrial companies are
increasingly feeling the pain of a slow-
ing car market, with three large suppli-
ers reporting steep declines in auto-
related profits yesterday, exacerbated
byweaknessinChina.Dax listed semiconductor groupInfin-
eon nd partsa uppliers Continental
postedlower earnings, as did sensor
makerOsram, while research by IHS
Markit found that 10m fewer vehicles
would be produced in 2019 than
expected.
IHS ata showed that light vehicled
production dropped in all regions in
October, with China registering a 13 per
cent fall. Just 90m cars are expected to
bemanufacturedthisyear.
Infineon saw margins in its automo-
tive unit, the largest ofits segments, fall
to8.7percentinthelastfiscalquarterof
2019, from 14.6 per cent in the same
periodthepreviousyear.
The formerSiemenscompany cited
“the increasing burden of underutilisa-
tion charges” at its production facilities,
as it reported that net income dropped
28 per cent to €161m for the three
monthstotheendofSeptember.“Wearefeelingtheeffectsofweakglo-
bal auto demand, and do not expect any
improvement for the time being,” said
InfineonchiefexecutiveReinhardPloss.
Any pick-up in the car market would
probably not be felt before the second
halfof2020,hesaid.
Subsidy cuts for electric and hybrid
vehicles in China, which led to sales
almosthalvinginOctober,alsohitInfin-
eon, which makes parts for charging
systems,aswellasradarcomponents.
“The Chinese market paints a rather
bleakpicture,asaslowingeconomyand
macro uncertainties are weighing on
consumers’ spending power,” Mr Ploss
said, though heprojected improved
demand for electric vehicles and self-
drivingtechnology.
Continental posted a net loss of
almost €2bn for the third quarter,
largely due to impairment charges on
more than 100 acquisitions made over
the past 30 years, whose book value has
been recalculated based on the gloomy
outlookforthecarindustry.
Margins at the supplier, which
warned last month that 20,000 jobs
were at risk across its operations,
dropped2percentintheninemonthsto
theendofSeptember.“We, like other market participants,
do not expect a material improvement
in global production in the next five
years,” said chief financial officerWolf-
gangSchäfer.“Atbest,weforeseeaside-
ways trend in global automotive pro-
ductionin2020,”hesaid.
Hewarnedthatafallinglobalproduc-
tionremained“adistinctpossibility”.
Echoing Infineon, Mr Schäfersaid
that Continental, which supplied the
electronicarchitectureforVolkswagen’s
mass-market ID.3 electric car, would
benefit from a boom in demand for bat-
tery-poweredvehicles.
“European regulations will force the
market, and in the end consumers, to
adopt EVs,” he said, joining calls by the
German car industry for more charging
pointstobeinstalled.
Osram ooked an 8.6 per cent declineb
in annual revenue, and saw its margins
almost halved to 8.9 per cent, as it
announcedthattheboardwasbackinga
second takeover bid by Austrian sensor
makerAMS.
“The most important thing is that the
employees at German locations are pro-
tected from merger-related lay-offs
until the end of 2022,” said chief execu-
tiveOlafBerlien.Industrials
Cars slowdown takes toll on Deutschland AG
Robotic arms
made by Kuka
scan the body
of an ID.
electric car at
the VW plant in
Zwickau, Saxony
Krisztian Bocsi/Bloomberg‘The Chinese
market paintsa rather bleak
picture...macro
uncertaintiesare weighing
on consumerspending
power’Reinhard Ploss,
Infineon chief‘Given the market situation
and the economic situation,
naturally we are revisitingall our assumptions’
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UK: +44 20 7873 4000 | Email: [email protected]NOVEMBER 13 2019 Section:Companies Time: 12/11/2019- 17:39 User:alistair.fraser Page Name:CONEWS3, Part,Page,Edition:USA, 14, 1