Business news in brief

Wednesday, June 26, 2013

QUOTE OF THE DAY

“Unambiguously, the economy is showing signs of improvement despite sizable fiscal drag.”

Jim O’Sullivan, chief U.S. economist, High Frequency Economics Article, 1D

Cheaper fuel helps Carnival earn profit

NEW YORK - Passengers remain hesitant to book cruises, despite deep discounts. But that didn’t stop Carnival Corp. from eking out a $41 million second-quarter profit thanks to lower fuel costs and the timing of some administrative expenses.

The Miami-based company also announced Tuesday that Micky Arison, who has been chief executive since 1979 and is the son of Carnival co-founder Ted Arison, is being replaced by Arnold Donald, who has served on the company’s board for the past 12 years. Arison will continue to serve as chairman of the board.

The profit was nearly triple the $14 million the world’s largest cruise company earned during same period last year, a quarter in which it suffered from steep losses on fuel-price bets known as derivatives.

Earnings totaled 5 cents per share this quarter, up from 2 cents per share at this time last year. Revenue fell 1.7 percent to $3.48 billion. Excluding one-time items, Carnival’s earnings were 9 cents per share. Analysts polled by FactSet had expected earnings of 6 cents per share on revenue of $3.56 billion.

Shares of Carnival rose $1.67, or 5 percent, to close Tuesday at $34.89.

Arison was criticized earlier in the year when several of its cruise ships suffered mechanical problems and fires.

Rates rise on auctioned Treasury bills

WASHINGTON - Interest rates on short-term Treasury bills rose in Monday’s auction, with rates on six month bills climbing to the highest level since March.

The Treasury Department auctioned $30 billion in three-month bills at a discount rate of 0.060 percent, up from 0.045 percent last week. Another $25 billion in six month bills was auctioned at a discount rate of 0.105 percent, up from 0.075 percent last week.

The three-month rate was the highest since three month bills averaged 0.065 percent on April 8. The six month rate was the highest since the bills averaged 0.110 percent on March 18.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,998.48 while a six-month bill sold for $9,994.69.

That would equal an annualized rate of 0.061 percent for the three-month bills and 0.107 percent for the six-month bills.

Toy halls of fame announce partnership

ROCHESTER, N.Y. - The great minds of the toy industry will be honored alongside the famous toys they created under a new partnership announced Tuesday at the Strong Museum in Rochester, N.Y.

Museum officials say the National Toy Hall of Fame housed at the museum is being combined with the Toy Industry Hall of Fame, which honors individuals. Past inductees include Milton Bradley, Frederick August Otto Schwarz and George Lucas.

Officials say the groups have been talking for some time about combining their respective halls as a way to raise their visibility and exposure and to promote their educational missions.

Volkswagen to open U.S. logistics center

Volkswagen AG announced the opening of a $40 million logistics center in Roane County, Tenn., on Tuesday to reduce delivery times of components for the U.S. version of the Passat midsize sedan.

The 459,000-square-foot complex is starting as a redistribution center to serve warehouses and will later expand to include spare-parts supply for more than 110 vehicle retailers in the southeast U.S., the Wolfsburg, Germany based car maker said Tuesday in a statement.

Growth in North America is critical to Chief Executive Officer Martin Winterkorn’s strategy for VW to overtake Toyota Motor Corp. and General Motors Co. and become the world’s biggest car maker by 2018. Volkswagen started making the Passat’s U.S. variant in 2011 in Chattanooga, Tenn. The company plans to invest more than $5 billion in North America for new models, technology and infrastructure in the three years through 2015.

Volkswagen already operates five parts warehouses in the U.S.

Chinese, Mideast buyers flock to Harrods

Although seven years ago U.S. visitors were the top foreign spenders at London’s Harrods store, purveyor of luxury fashions and specialty teas, they are now outnumbered by wealthy customers from China and the Middle East, according to Managing Director Michael Ward.

“It is probable today that America will not feature in our top 10 of overseas customers because of the growth of the East and the mineral- and oil-rich nations,” Ward, who has been in charge for more than seven years, said in an interview in his office at the 164-year-old store. China is “by far No. 1.”

Although the credit crunch and falling housing prices have pinched at the purse strings of American shoppers, Harrods has witnessed an increase in spending by visitors from countries such as Thailand, Singapore and Nigeria.

That’s just as well for the retailer’s Qatari owners, who paid $2.3 billion for the store in 2010.

Harrods, which has more than 1 million square feet of selling space, isn’t concerned about the outlook for spending on luxury goods, Ward said.

Pandora: 2.5 million use service in cars

LOS ANGELES - Pandora Media Inc., the biggest online radio service, said the number of U.S. listeners in cars has topped 2.5 million, a milestone in efforts to win customers from traditional stations.

Listeners obtain the service from 23 auto brands and eight car-stereo makers, Oakland, Calif.-based Pandora said Tuesday in a statement. This year, Pandora will become available in more than 100 models, Chief Marketing Officer Simon Fleming-Wood said.

About half of all listening takes place in autos, a crucial battleground in the $15 billion local radio advertising market. Pandora, with more than 70 million monthly users, will come installed in one-third of all new vehicles sold in the U.S. this year, the company said.

Pandora also plans to make the service available in Dodge, Infiniti, Jeep, Kia and Ram brands. Its partnerships with the auto industry started with Ford Motor Co. in 2010.

Business, Pages 26 on 06/26/2013