Showing posts with label EBITDA. Show all posts
Showing posts with label EBITDA. Show all posts

Saturday, April 20, 2013

International

Inflation in China
A trade-off between inflation and growth is always difficult to manage for countries and so is China finding it to its discomfiture. Inflation in China soared to new heights, reaching 4.5% in January, the highest in the last three months. Food inflation also witnessed a sharp spike, settling at 10.5%, from the earlier 9.1%. High consumer prices are threatening to derail growth in China. Rising inflation also offers a challenge for policy makers in China who have so far been liberal with the purse strings because of heady growth untrammelled by fears of any creepy inflation. But the recent spike in the inflation breaks several months of easing prices after inflation hit a three-year high of 6.5% in July last. A possible reason being cited for the rise in inflation is the New Year, which sees a lot of consumer activity and shopping. But the rise in the consumer price index, a key indicator for measuring inflation, is surprising since despite factoring the festive season in the calculations, inflation for January was projected at 4.1% by several international experts. What is more startling is that in the same period, imports sank 15.3% y-o-y, while exports saw a decline of 0.5% only. The change in these figures indicates faltering domestic demand, which can be a red signal for the future. The drop in exports left China with a trade surplus of $27.3 billion in January, its biggest in six months.

Sony’s ratings
The changing of the guard at Sony, with Kazuo Hirai set to take over as new CEO in April, has failed to impress the market. Standard and Poor’s has lowered its assessment of Sony’s long-term credit worthiness from A- to BBB+, citing poor earnings, price erosion and falling demand as the main reasons. Stiff competition from Korean and Chinese entities also pose a severe threat to the profitability of the Japanese electronics powerhouse. S&P added that Sony’s rating could see a further downfall if it did not see any recovery in earnings within the next six to 12 months. S&P said that a major blame for the current apathetic situation of Sony rests on its strategy of aggressive expansion despite strong competition, massive erosion of prices and its high cost structure as compared with overseas competitors.

Not a good time for arcelormittal
The year 2011 wasn’t good for the world’s largest steel maker, which made a net loss of $1 billion in the Oct.-Dec quarter. The losses are attributed to large tax payout, downward revaluation of fixed assets and restructuring charges. The company has had to cope with deferred tax payment of $ 0.9 billion, a further $0.2 billion on the cost incurred on downward revaluation of fixed assets and another $0.2 billion spent on restructuring associated with its asset optimisation plans. Profit for the full year 2011 was dragged down 22.43% to $2.2 billion vis-a-vis $2.9 billion for 2010 while EBITDA for quarter (Oct.-Dec. 2011) was down by 7.5% to $1.7 billion.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 

Saturday, February 9, 2013

Back to the drawing boards

DTH players were on a dream flight in India so far, but the delay in rollout of Phase II of CAS has dampened expectations. Vareen Gadhoke Ray & Surbhi Chawla discuss the upcoming trends and how DTH players can make them count

When Direct-to-Home (DTH) first came along, it brought the promise of streamlining the highly fragmented pay-TV market in the country, which had hitherto been the stranglehold of local cable operators (LCOs). All that the players really had to do was conquer, which they continue to do, through mud-slinging, comparative advertising and even some cheap ground level tactics. DTH was a very welcome platform for broadcasters and media houses, which were fighting these LCOs on the grounds that they were not declaring their total subscriber base. The launch of the first phase of Conditional Access System (CAS) brought more transparency, thereby aiding higher yield in subscription revenues. But the launch of the second phase of DTH, which was to make CAS mandatory in more areas of the country, has been delayed quite unexpectedly. This has stymied their dream run, and slowed down their onward march quite considerably. In such a scenario, what does the future portend for these players in India?

Direct to Hell or Heaven

The future of pay-TV in India is being driven by media owners and distributors, which are expanding market share with an eye on profits, rather than at the expense of profits. The major concern for this sector was that at a very nascent stage, seven major players (Dish TV, Tata Sky, BIG TV, Airtel Digital, Sun Direct, DD Direct and the newly launched Videocon d2h) along with organised CAS operators (like Hathaway and Sify) were slugging it out to get the maximum share of this growing pie. As a result, the first phase of growth saw the basic DTH box being offered at a subsidy, and at times, even virtually free of cost to catch hold of the early adopters and get them to experience this new wave of technology. The plus point of this can be seen from the fact that the Indian pay-TV sector generated sales to the tune of $6.5 billion for financial year ending March 2010 [Media Partners Asia (MPA)].

Thanks to the continously intensifying tussle among the players, the sector is facing the same fate as the telecom operators. DTH players too are unable to garner as much in ARPUs. The tempering of their enthusiasm due to delay in Phase 2 rollout make it worse. EBITDA profits for the sector reached $800 million for the financial year ending March 2010, implying a modest profit margin of around 13%.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.