Business news in brief

Profit falls for Wal-Mart unit in S. Africa

Massmart Holdings Ltd., the South African food and goods wholesaler owned by Wal-Mart Stores Inc., said the country's retailers may face head winds into next year as higher interest rates and prices sap consumer confidence.

Earnings excluding one-time items declined 26 percent to $34.3 million in the 26 weeks through June 29, the Johannesburg-based company said in a statement Thursday. At constant exchange rates, profit fell 5.7 percent.

"In wholesale, it was very tough going, obviously reflecting the lower-income group that was struggling," Chief Executive Officer Guy Hayward said. The company will close some of its 77 wholesale stores.

South African retailers are struggling as high unemployment and inflation force shoppers to cut down on major purchases. Retail sales were unchanged in June, the worst performance since December 2009. These factors "seem likely to persist for 2014 and possibly 2015," said the company, which owns cash-and-carry chain Makro and do-it-yourself specialist Builders Warehouse.

Sales gained 10 percent to $3.36 billion and continued the same growth increase in the weeks until Sunday. The dividend for the period was unchanged at about 14 cents a share.

-- Bloomberg News

Fannie Mae to sell D.C. headquarters

Fannie Mae plans to sell its Washington, D.C., headquarters building within the next three years as it consolidates several office locations, according to an emailed statement.

The mortgage-finance company has space in five owned and leased buildings in the area, including its headquarters at 3900 Wisconsin Ave. Fannie Mae, the Federal National Mortgage Association, would prefer to lease in a location in downtown Washington, spokesman Keosha Burns said in the statement.

"This move comes ahead of the expiration of two leases on buildings that house many of our employees in the district," Burns said. "We are focused on making responsible real estate decisions to ensure the wise use of resources."

Fannie Mae and Freddie Mac, the Federal Home Loan Mortgage Corp., based in McLean, Va., provide liquidity to the mortgage market by buying loans and packaging them into guaranteed securities. The two companies, which are under U.S. conservatorship, are required to pay the government all of their earnings and aren't allowed to hold capital beyond a cushion of $2.4 billion each.

-- Bloomberg News

Vodka maker to cut jobs after China dip

PARIS -- Pernod Ricard, the world's second-largest distiller, plans to eliminate jobs as it seeks to generate $198 million of savings after a slump in demand in China.

The cuts, which represent about 900 jobs or 5 percent of the Paris-based distiller's workforce, are part of a program of measures to help the company operate more efficiently, Chief Executive Officer Pierre Pringuet said Thursday.

Pernod reported an 8 percent drop in annual earnings as currency fluctuations and a Chinese government clampdown on conspicuous consumption weighed on revenue growth. Earnings before interest, taxes and some one-time items totaled $2.7 billion, the maker of Absolut vodka said.

"These are moderately disappointing results," James Edwardes Jones, an analyst at RBC Capital Markets, said in a note to clients. "We believe that improving profitability is geared to a recovery in" Pernod's so-called top 14 brands.

Sales of Pernod's brands, which include Chivas Regal scotch and Kahlua liqueur, fell 2 percent, dragged down by Martell cognac in China, Pernod said.

-- The Associated Press

IMF director to explain negligence probe

The International Monetary Fund's board will meet as early as this week to hear Managing Director Christine Lagarde explain a French court decision to place her under formal investigation on accusations of "negligence."

The fund's 24 directors are awaiting details from Lagarde, who has now returned from Paris. The court's move is based on a 2008 decision she made as French finance minister. Lagarde has denied any wrongdoing. She received public support from the board in previous steps of the legal process.

"I don't think this is going to trigger any drastic option or reaction by the board any time soon," said Domenico Lombardi, a former IMF board official. "What is most plausible is that they will want to wait for more elements to come up."

The board's meeting is tentatively planned for today, according to two board officials who asked not to be named because the information isn't public. IMF spokesman Gerry Rice said Thursday that the meeting will take place "very soon," declining to give an exact day, with the board expected to release a statement afterward.

The IMF board would only dismiss Lagarde if faced with "substantive and substantial evidence," said Lombardi, now the director of the global economy program at the Waterloo, Ontario-based Centre for International Governance Innovation. "We do not have that evidence so far."

-- Bloomberg News

Copter plant's startup expected in 2016

LAFAYETTE, La. -- Company officials say Bell Helicopter is expected to begin assembly operations by 2016 at a new $26.3 million facility at Lafayette Regional Airport.

The Advocate reports the company is set to start hiring next year for the estimated 115 new jobs at the assembly plant, which comes in addition to Bell's two existing repair and overhaul facilities in the Lafayette area.

"We know the dedication of the workforce here, and that was a big driver," Bell Helicopter President and Chief Executive Officer John Garrison said at a Wednesday event to mark the start of construction for the facility.

The 82,300-square-foot assembly plant is taking shape on 14.5 acres at the airport.

The state is paying for construction of the plant, which will be owned by the airport and leased to Bell.

"We are proud to have a leader in the industry locate in Lafayette," Lafayette Regional Airport commissioner Paul Segura said.

The plant will produce the Bell 505 Jet Ranger X.

In addition to funding construction of the new Bell Plant, the state has offered incentives that include $4 million in lease support, $3.8 million for infrastructure and equipment, and $200,000 in relocation expenses.

Bell officials said the company will invest $11.4 million in equipment.

-- The Associated Press

Business on 08/29/2014

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