18/07/2025

BIZ & FINANCE FRIDAY | JULY 18, 2025

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New Zealand endures butter price shock o Local supplies cut short as industry chases fatter profits overseas

Novartis nudges up 2025 earnings forecast BERN: Swiss drugmaker Novartis nudged up its full-year earnings forecast yesterday, citing strong revenue growth from products such as breast cancer drug Kisqali during the second quarter. Novartis said it now expects core operating income to increase by a low-teens percentage, compared with the low double-digits cited previously. In April, Novartis had narrowed its earnings target range to rule out growth below 10%. Second-quarter operating income, adjusted for special items, rose 20% to US$5.9 billion, slightly above analyst forecasts, while sales climbed 12% to US$14 billion. Jefferies analysts attributed share decline to weaker-than-expected sales due to a miss by psoriasis drug Cosentyx, while JP Morgan noted that finance chief Harry Kirsch’s retirement announcement may have tempered investor enthusiasm. The company’s Kisqali drug saw quarterly revenue jump 64% to US$1.2 billion, while sales of multiple sclerosis drug Kesimpta surged 35% to US$1.1 billion. “Our robust balance sheet and confidence in our mid- and long-term growth enable us to initiate an up-to US$10 billion share buyback as part of our commitment to balanced capital allocation,” said chief executive Vas Narasimhan. Sales of Novartis’blockbuster heart medication Entresto rose 24% to US$2.36 billion, though analysts expect headwinds from the market entry of a cheaper generic drug from the second half. Novartis suffered a legal setback this week in its attempt to block MSN Pharmaceuticals from launching a generic version of Entresto, after a US court denied a request for a preliminary injunction. The company is also facing the possibility of steep US tariffs on drugs, though Narasimhan has said that Novartis can manage their effects. – Reuters LONDON: EasyJet warned yesterday that a strike by French air traffic controllers earlier this month and rising fuel costs would hit its annual profit, sending the low-cost airline’s shares down 8%. The carrier said it still expects “good profit growth” for the year ending September, but forecast a hit of £25 million (RM142 million) from the French strike on July 3 and 4, at the start of Europe’s peak travel season, and higher fuel costs. EasyJet reported pretax profit for the third quarter rose by about £50 million to £286 million, in line with expectations. “We are extremely unhappy with the strike action by the French ATC in early July, which as well as presenting unacceptable challenges for customers and crew also created unexpected and significant costs for all airlines,” easyJet CEO Kenton Jarvis said in a statement. Some analysts said they cut forecasts for the year based on yesterday’s results. While demand has remained strong for easyJet’s budget-friendly flights and holiday packages, travellers overall are taking longer to book tickets amid worsening global macroeconomic sentiment, which the UK-based airline said has continued. Jarvis said on a media call that the later booking trend “could have something to do with hot weather”because travellers are waiting to see how heatwaves, which have seen temperatures top 40°C in some parts of Europe, play out. Still, European airlines have continued to report relatively solid results this year, with few signs that travel demand in the summer is substantially lagging last year. – Reuters EasyJet warns on profit hit from French air strike

our dairy products. So if you’re a company that’s exporting butter, you’ve got to make a decision. “Do you sell it at the international price overseas, or do you sell it cheaper in New Zealand?” the economist said. “No business is going to sell it cheaper ... if they can get a better price overseas.” But while New Zealand consumers were feeling the price pinch, the overall economy was benefiting as exporters creamed off larger profits from sales overseas. “The sort of returns that our farmers and the primary sector more broadly are getting, and the economic benefit that brings, is actually far more substantial,” Olsen said. “It’s an extra NZ$4.6 billion that has been flowing into the economy from the higher dairy payout. That’s a significant boost.” New Zealand butter lovers are actually faring better than some, he said, adding they still pay 46% less than Americans. – AFP

High dairy prices have hit the headlines in New Zealand, with media outlet Stuff reporting that “exorbitant” prices are unlikely to “melt away” any time soon. Wholesale and retail store Costco restricted butter sales to a maximum of 30 blocks per customer in June, but still sold out, according to the New Zealand Herald . The prices are hurting consumers, said independent economist and Infometrics chief executive Brad Olsen. “At the moment, I’m going with any other alternative I can find,” Olsen said of butter prices. “I’d also say, the cheap option for breakfast at the moment seems to be to try cereal without the milk.” The phenomenon was driven by international prices and demand, Olsen said. Butter supplies had failed to keep up with rising demand over the past two years, he said. “New Zealand exports the vast majority of

WELLINGTON: Butter prices have soared in dairy export giant New Zealand, latest figures showed yesterday, with local supplies cut short as the industry chases fatter profits overseas. The dairy price shock spreads as far as cheese and milk, leading one economist to suggest locals face the grim prospect of cereal without milk if they want to save money. Butter prices leapt 46.5% in the year to June to an average of NZ$8.60 (RM21.60) for a 500gm block, according to official data from Stats New Zealand. Milk prices surged 14.3% over the same period, while cheese shot up 30%.

Volvo cars are seen on the forecourt of a dealership in Reading, west of London. – AFPPIC

Volvo Cars swings into Q2 loss on EV, revamp charges STOCKHOLM: Volvo Cars announced

higher as trading got underway on the Stockholm stock exchange. Volvo Cars announced in April an 18 billion kronor cost-cutting plan, part of efforts to navigate a car market buffeted by US tariffs and a costly switch to electric vehicles. It said then it would adapt to the increasing regionalisation in trade. And on Wednesday it announced it would begin building its XC60 SUV in the United States next year to avoid the 25% US tariffs applied to its vehicles. The company said it would no longer provide financial guidance for 2025 and 2026 due to “external developments and increased uncertainties”. – AFP

The Sweden-based manufacturer owned by China’s Geely also took a 1.4-billion-kronor restructuring charge, having announced 3,000 job cuts in May. The group had booked a net profit of 5.7 billion kronor in the same quarter last year. Excluding exceptional items, it estimated its quarterly operating profit at 2.9 billion kronor, down from 8 billion last year. Retail sales of cars dropped by 12% by volume, while revenue fell by 8% to 93.5 billion kronor due to lower volumes and the higher value of the Swedish kronor. That beat the analyst consensus of 88.2 billion kronor compiled by Bloomberg. Shares in Volvo Cars shot more than 7%

yesterday it had swung into loss in the second quarter, after it took an impairment charge for its electric cars, booked restructuring charges and dealt with a slower, tariff-troubled market. The net loss of 8.1 billion kronor (RM3.5 billion) was due to a 11.4-billion-kronor writedown in the value of its EX90 electric SUV and ES90 electric sedan due to production delays, higher development costs than planned and now US tariffs making sales there unprofitable. “Demand remains under pressure from the macroeconomic environment, tariff-related uncertainties and tougher competition,” chief executive Hakan Samuelsson said in the quarterly earnings report.