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AMERICAN EXPRESS: GLOBAL STUDY OF 3200 SME BUSINESS LEADERS FINDS THEY ARE CONFIDENT ABOUT FUTURE PROSPECTS

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AMERICAN EXPRESS: GLOBAL STUDY OF 3200 SME BUSINESS LEADERS FINDS THEY ARE CONFIDENT ABOUT FUTURE PROSPECTS

UK SMEs look forward to increased revenues & profits, with plans to focus on expansion and sales growth to drive financial performance

Small and Medium sized businesses[i] (SMEs) in the United Kingdom and globally are confident about their future business performance, optimistic about the economy and believe they have the strategies in place to thrive in an age of uncertainty, according to the American Express® Global SME Pulse[ii].

The research, carried out among senior executives and decision-makers in SMEs across 15 countries, reveals that SMEs are confident in their ability to deliver increased revenues and profitability. Globally, across regions as diverse as the Americas, Asia and Europe, 58 percent of SMEs surveyed expect significant revenue growth over the next 12 months.  Reflecting the global optimism, 50 percent of UK[iii] SMEs surveyed anticipate revenue growth of at least 4 percent over the next 12 months. Furthermore, 16 percent of these look forward to revenue growth of at least 8 percent over the same period.

In terms of profitability, the UK’s SMEs are similarly upbeat with 57 percent forecasting a net profit of 4 percent per annum over the next three years.  22 percent forecast net profit in excess of 8 percent over the same period.

Healthy optimism

More broadly, SMEs across the globe are optimistic about the health of the world economy over the next 12 months, with SME decision-makers more than twice as likely to be positive than negative about the economic climate (39 percent positive versus 16 percent negative).  The UK is similarly upbeat, with decision makers likely to be positive about the global economy.  Looking domestically, this optimism is replicated at a local level with SME leaders in the UK almost twice as likely to be positive than negative about the state of the UK economy over the same period.

Economic and political uncertainty seen as key challenges

While SMEs are optimistic about the economy and their own business, they also identify areas for concern. Economic uncertainty in their home market is seen as the largest threat to the business both globally and in the UK.  Domestic political uncertainty is a further concern for 28 percent of UK SMEs. Meanwhile over one-third (35 percent) of SMEs based in the UK identify uncertainty in their European export markets as a leading threat to the business’s performance.  Interestingly the survey, which was conducted after the Brexit vote, found UK SMEs are more concerned about this threat than their peers in other European markets where the proportion of SMEs seeing this as a concern ranges from 24 percent (Spain) to 32 percent (France).

Focus on expansion and sales growth to drive financial performance

Despite uncertainty, SMEs globally and in the UK are focusing on growth and expansion strategies to improve their financial performance.  Forty-three percent of UK SMEs say expansion into new domestic markets will be a top priority for their business over the next three years, while 33 percent make growing their share of current markets a key focus.

Alongside these growth-focused strategies, UK SMEs will look to increase operational efficiencies to help achieve their financial objectives: over one-third (35 percent) say this will be a key driver of their financial performance over the next three years.

Increasing exports part of the growth push

Exporting is a core pillar of many SMEs’ growth strategies globally and the UK is no exception: almost one third (32 percent) of UK SMEs identify expansion into new international markets as a pathway to improved financial performance over the next three years.  Many UK SMEs are confident they are ready for export growth, with 47 percent strongly believing their company has the right plans in place to increase export sales. Furthermore, half of the SMEs surveyed in the UK agree it is easier to access new export markets than it was three years ago.

Confidence among UK SMEs about exporting is reflected in their turnover projections: the number of UK SMEs generating 50 percent of more of their revenues from exports will more than double, from 21 percent today to 44 percent over the next three years.

Seek more diverse sources of finance to fund growth

Many UK SMEs struggle to finance the investment required for growth. Well over half (57 percent) say they face difficulty accessing the finance they need to grow their business while a sizeable 60 percent say that inadequate cash flow affects their ability to pay suppliers on time.

UK SMEs today rely on existing working capital (54 percent), bank loans (48 percent) and private equity (37 percent) to fund their investment. Over the next year, SMEs plan to continue to take advantage of a diverse set of funding options.  Their existing top options will remain important, but many SMEs will also be looking to non-bank sources of finance such as crowdsourcing and cards to gain access to capital to grow.

Look beyond the short term

As part of the research, top managers in UK SMEs were asked about the long-term goals of the business.  While profit margin growth (54 percent) and revenue growth (47 percent) are identified as the number one and two objectives respectively, well over a quarter (28 percent) of UK SMEs state that sustaining the business for future generations is an important long-term goal.  SMEs in the UK are more likely to take this long-term view than SMEs in the rest of the world (23 percent of respondents outside Europe ranked sustaining the business for future generations as a top objective) which demonstrates the important contribution these businesses make to the UK’s economy.

Commenting on the findings of the research, Jose Carvalho, Senior Vice President, Global Commercial Payments Europe at American Express, said: “It’s very encouraging to see this evidence of optimism and self-confidence among UK Small and Medium-sized enterprises.  Businesses are deftly navigating through challenges and this resilience is helping them to thrive.”

Continuing, Jose Carvalho said: “The research shows SMEs are focusing on expansion and growth opportunities, reaching out to new markets and customers at home and globally.  However, it’s clear these enterprising businesses often find it difficult to access the finance they need to invest, and as a result they’re looking beyond traditional sources to secure funds to enable them to thrive and grow in the long term.”

Spotlight on UK SMEs – additional insights

Priority areas for investment by UK SMEs for the next 3 years:

  1. Quickly responding to changing business demands (79 percent)
  2. Applying the latest technology (63 percent)
  3. Developing and implementing innovations to business models, products and services and ways of working (60 percent)

Getting closer to customers is a priority for UK SMEs:

  • 62 percent agree their customers are demanding more new or tailored products and services
  • Over half (51 percent) say understanding changing customer demands is a key strategy for revenue growth
  • UK SMEs see customer insight as the key to successful innovation: most (over 64 percent) say incorporating customer feedback into the R&D process allows them to improve their innovation

Business

Robinhood plans confidential IPO filing as soon as March – Bloomberg News

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Robinhood plans confidential IPO filing as soon as March - Bloomberg News 1

(Reuters) – Online brokerage Robinhood, at the centre of this year’s retail trading frenzy, is planning to file confidentially for an initial public offering as soon as March, Bloomberg News reported late on Friday, citing sources.

The California-based brokerage has held talks in the past week with underwriters about moving forward with a filing within weeks, Bloomberg said.

Robinhood did not immediately respond to a request for comment.

Reuters reported last year that Robinhood has picked Goldman Sachs Group Inc to lead preparations for an initial public offering which could value it at more than $20 billion.

Robinhood was at the heart of a mania that gripped retail investors in late January following calls on Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.

The online brokerage tapped around $3.4 billion in funding after its finances were strained due to the massive trading in shares of companies such as GameStop Corp.

(Reporting by Ann Maria Shibu in Bengaluru; editing by Richard Pullin)

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Analysis: How idled car factories super-charged a push for U.S. chip subsidies

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Analysis: How idled car factories super-charged a push for U.S. chip subsidies 2

By Stephen Nellis

(Reuters) – When President Joe Biden on Wednesday stood at a lectern holding a microchip and pledged to support $37 billion in federal subsidies for American semiconductor manufacturing, it marked a political breakthrough that happened much more quickly than industry insiders had expected.

For years, chip industry executives and U.S. government officials have been concerned about the slow drift of costly chip factories to Taiwan and Korea. While major American companies such as Qualcomm Inc and Nvidia Corp dominate their fields, they depend on factories abroad to build the chips they design.

As tensions with China heated up last year, U.S. lawmakers authorized manufacturing subsidies as part of an annual military spending bill due to concerns that depending on foreign factories for advanced chips posed national security risks. Yet funding for the subsidies was not guaranteed.

Then came the auto-chip crunch. Ford Motor Co said a lack of chips could slash a fifth of its first-quarter production and General Motors Co cut output across North America.

“It brings home very clearly the message that the semiconductor is really a critical component in a lot of the end products we take for granted,” said Mike Rosa, head of strategic and technical marketing for a group within semiconductor manufacturing toolmaker Applied Materials Inc that sells tools to automotive chip factories.

Within weeks, automakers joined chip companies calling for chip factory subsidies, and U.S. Senate Majority Leader Chuck Schumer and President Biden both pledged to fight for funding.

Industry backers now aim to be part of a package of legislation to counter China that Schumer hopes to bring to the Senate floor this spring. Still, all agree it will do little to solve the immediate auto-chip problem.

Headlines about idled car plants resonated with the public that had shrugged off abstract warnings in the past, said Jim Lewis, a senior fellow at the Center for Strategic and International Studies. Lawmakers, already worried that a promised infrastructure bill will not materialize this year, decided to push for quick solution.

“Nobody wants to be seen as soft on China. No one wants to tell the Ford workers in their district, ‘Sorry, can’t help,'” Lewis said. “It was one of those moments where everything aligned.”

The package includes matching funds for state and local chip-plant subsidies, a provision likely to heat up competition among states including Texas and Arizona to host big new chip plants that can cost as much as $20 billion.

The subsidies could benefit a factory in Arizona proposed by Taiwan Semiconductor Manufacturing Co and one in Texas eyed by Samsung Electronics Co Ltd, even though those factories would be geared toward high-end chips for smartphones and laptops, rather than simpler auto chips. And those factories would not come on line until 2023 or 2024, according to plans disclosed by the companies, the world’s two largest chip manufacturers.

In the longer term, a raft of U.S. companies are also poised to benefit. Any chipmakers that build factories will source many tools from American companies such as Applied, Lam Research Corp and KLA Corp.

Intel Corp, Micron Technology Inc and GlobalFoundries – which already have U.S. factory networks – will also likely benefit.

Smaller, specialty chip factories also could benefit.

“The recent chip shortage in the automotive industry has highlighted the need to strengthen the microelectronics supply chain in the U.S.,” said Thomas Sonderman, chief executive of SkyWater Technology, a Minnesota-based chipmaker that makes automotive and defense chips. “We believe that SkyWater is uniquely positioned due to our differentiated business model and status as a U.S.- owned and U.S.- operated pure play semiconductor contract manufacturer.”

Even with subsidies, the U.S. companies still must compete with low-cost Asian vendors over the long run, and the immediate auto chip troubles will probably persist.

Surya Iyer, a vice president at Minnesota-based Polar Semiconductor, which makes chips for automakers, said his factory is booked beyond capacity and has started to speed some orders up while slowing others down, to meet automakers’ needs as best it can.

“We are expecting this level of demand to continue at least for the next 12 months, maybe even longer,” he said.

(This story has been refiled to add attribution to quote in paragraph 9, add dropped words in paragraphs 10 and 17)

(Reporting by Stephen Nellis and Hyunjoo Jin in San Francisco and Alexandra Alper in Washington. Editing by Jonathan Weber and David Gregorio)

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Atlantia disappointed with CDP bid for unit, continues talks

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Atlantia disappointed with CDP bid for unit, continues talks 3

By Francesca Landini and Stephen Jewkes

MILAN (Reuters) – Italy’s Atlantia said on Friday an offer by a consortium of investors led by state lender CDP for its 88% stake in Autostrade per l’Italia fell short of the mark and asked its top managers to see if the bid could be sweetened.

“The offer falls below expectations,” the Italian infrastructure group said in a statement, adding it had mandated the chief executive and the chairman to assess “the potential for the necessary substantial improvements” to the bid.

Italian state lender CDP, together with co-investors Macquarie and Blackstone, has presented a proposal valuing all of Autostrade per l’Italia at 9.1 billion euros ($11 billion).

The consortium also requested Atlantia guarantee up to 700 million euros in potential damage claims and another roughly 800 million euros for a pending legal case, making the bid less attractive than previously expected.

One source said the consortium estimated overall pending legal claims against Autostrade at 3 billion to 4 billion euros, adding the 700 million euro cap did not mean the amount would be detracted from the offer price from the start.

Earlier on Friday Atlantia’s minority investors TCI and Spinecap had called on Atlantia’s board to reject the offer, saying it undervalued the asset.

“No deal is better than a bad deal, especially a bad deal and a wrong price,” TCI Advisory Services partner Jonathan Amouyal said in a emailed comment to Reuters.

TCI, which holds an indirect stake of around 10% in Atlantia, repeated that the value for 100% of Autostrade should be no less than 12.5 billion euros.

The board will hold a further meeting in order to take a final decision on the offer in due time, Atlantia said.

The negotiations between Atlantia and the CDP-led consortium are part of an effort to end a political dispute over Autostrade’s motorway concession triggered by the collapse of a motorway bridge run by the unit.

(GRAPHIC – Atlantia share performance: https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqggjdpx/image-1614331237501.png)

The bid expires on March 16, but the deadline could be extended in case Atlantia calls an extraordinary shareholders meeting (EGM) on the issue, according to one source with knowledge of the matter.

Shares in the group ended down 0,7%, after recovering some losses, as investors waited for the decision of the board.

Atlantia, which is controlled by the Benetton family, owns 88% of Autostrade, with Germany’s Allianz and funds DIF, EDF Invest and China’s Silk Road Fund holding the rest.

The group also kept open an alternative plan to demerge and sell its stake in Autostrade per l’Italia unit and called an EGM on March 29 to extend to end-July a deadline for offers for the demerged stake.

(Additional reporting by Stefano Bernabei, editing by Louise Heavens and Steve Orlofsky)

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