29/10/2015 BBC Business Live


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This is Business Live from BBC News with Ben Thompson and Sally Bundock.


Oil giant Shell posts a $6 billion loss compared to a year ago as


falling prices and BIG write-downs drag on the bottom line.


Live from London, that's our top story on Thursday 29th October.


Across the board - Shell's results have nose dived,


with plans for drilling in the Arctic and Alberta shelved.


Can the oil giant turn its fortunes or is this the new normal?


Also in the programme - the novel way to spread


Google is on course to use helium balloons to connect


And a mixed picture for markets. We will have all the details for you


And we will be taking "time" out to talk about the


lucrative business of selling high end watches and jewellery.


Brian Duffy - the boss of Aurum Holdings - the biggest


British distributor of Rolex and Cartier time pieces will join us.


And as one woman admits to spending 6,000 dollars a week outsourcing her


chores we want to know what would you pay someone else to do for you?


Oil giant Shell has announced third quarter results


The company posted a $6.1 billion loss -


a huge slide into the red compared with a profit of $5.3 billion


One of the main factors, unsurprisingly,


Brent prices have been hovering around $50 a barrel


and Shell has said that will cost them billions as the weak price is


And that fall is dragging on Shell's market value.


Shares are down by more than 17% since the beginning of the year.


Another reason for the lacklustre share price - Shell's proposed


After spending over $7 billion searching for oil in the Arctic, the


company announced last month that it would be pulling out of the region


It has written off $2.6 billion in this latest report.


And another project was shelved just this week - Shell said it will take


a $2 billion charge as it ends an oil-sands project in Alberta.


Elet us get analysis. A lot of big numbers there and they are mostly


bad news numbersers how bad is it? It is an enormous loss. It's the


most valuable company in the FTSE 100, so what happens to Shell really


matters. The thing is that projects that make


sense when e most valuable company in the FTSE 100, so what happens to


Shell really matters. The thing is that projects that make


sense when oil is at 100 $s a barrel don't make sense at $48s a barrel.


Also, the, parts of Russia where there are Shell projects there. So


if you think of Shell like a sort of sinking balloon, what they are


trying to do is chuck over the heaviest objects they have got to


regain altitude because the gravitational pull is down because


of the fall in oil prices we were talking about. And that going to


stay in the downward direction and people are saying $50s a barrel is


going to be the new normal for some time. How long will the blood


letting last for? We have seen the same with BP and the boss of Shell


have said, we need to make these businesses competitive, with oil at


$50-60 a barrel. They are adjusting for a new normal. They are looking


at places which are lower cost producing. As all of the additional


supply sources get abandon the secure to low prices is low prices


because people stop investing, the seeds of the future price spike in


oil is being sown now. Don't rule out a return to high prices in the


future. Investors are keeping the sweet ens in there, to keep


investors pension funds onboard, to keep them hanging in. BP and Shell,


between them paid something like 15% of all tiff depends in the FTSE 100,


so they are massively important. So they are trying to keep investors on


side. They know they will have to go back to them, so they need to keep


them in return so they keep them onside. A lot more analysis on the


business page online. Deutsche Bank has just announced


it will axe 15,000 people from its The lender said it would cut 9,000


full-time jobs and 6,000 external contractor


positions as Germany's biggest bank It plans to dispose


of $4.7 billion worth of assets. The bank has just reported a third


quarter loss of $6.6 billion. Samsung posted


its third-quarter earnings today, revealing that - the company is


back to operating profit growth made $6.42 billion in operating


profit during the Q3 period, a hefty The South Korean tech giant


attributed its overall profit increase to


strong shipment growth in its smartphones, including the S6 Edge+,


the Note five, the A8, and the J5. The European Union says emissions


tests for new models of cars will be changed to ensure that that harmful


nitrogen oxides are measured under real-world driving conditions -


not just in a test lab. The new rules will come


into effect from 2017. Emission testing has come under


scrutiny since the Volkwagen scandal when so called cheat software was


used to manipulate results. It is looking at stories as they


break. Let us look at some of the raking stories now. We mentioned


Shell of course, there is lots of other companies with news, Lloyds


bank, Barclays is very much in the news, we will talk about that later


but Lloyds bank as well, share sale confirm. The crucial thing is that


the Government stake below 10%. It has been slowly returning it to


private hands, ahead of that big sell off at the end of the year.


Some progress there. Progress for Lloyds, Barclays results have come


through, we will talk about that in a second. There is more news about


Deutsche Bank. All the banks have been to readjust their business


models in a similar way to the oil giants, talking about Shell and BP.


We have had Total earnings, the French oil company doing better than


the likes of Shell, increasing its production, which is bucking the


trend among the oil majors, Total Let's go to China,


where a top-level Communist party meeting where the nation's economic


and social policies for We're waiting for the official


announcement - but expecting John Sudowrth is in the town


of Rudong in Jiangsu province province once held up as a model


for that policy, but now weighed There are too few young people to


support the population. That is right. It's a County of one million


or so people, and there has been nowhere in China that has been quite


ass enthusiastic as this place, in terms of enforcing the one child


policy, and the results are now everywhere to see. One of them,


right here behind me. Closed schools, almost half of the schools


in this County have closed their doors over the past decade or so.


And although this has been the most enthusiastic enforcer of the one


child policies, the rest of the country is not so far behind. So


what they are looking at here, is staring into the abyss of that


demographic time bomb. Falling birth rates, falling worker numbers and


this real economic drag on growth, and that is why some people suggest


that it is now high time that the issue, they have been encouraging to


do so for a long time by analysts and advisers and a lot of


speculation it will be at this party, in this plan we will see the


back of the one child policy. As you say we could hear that announcement


imminently. If they went from, to a two child policy is it would take


decades get a communique this evening which


may give us some hints about the sort of direction of travel. But


analysts we have spoken to say that they are certain in the end it will


be confirmed that this issue will be in there, although as you say, the


big concern is that even allowing everybody to have two children will


still not do enough to boost the population, and will still leave


China with this giant change. Thank you John.


So that is what the markets in the region are done, you see the Nikkei


up 0.2%. Really all eyes on the fed last night, America's central bank


signalling that interest rates could rise as soon as December, that was


enough to push the Dow up. A tougher tone than its last meeting, but what


is interesting is that tougher tone came despite weaker economic data.


If you look at the data. The possibility of more moves by the


European Central Bank, but, borrowing costing soared. We will


get more on that in a moment but I want to take you to Europe. It has


results from the likes of Barclay, results from the likes of Barclay,


Shell, BT. Deutsche Bank, a mixed bag, that has left the markets mixed


over the course of early trade. Bar kiss profited down sharply. Not a


shuerge price. BT seeing a 15% rise in profit, and Santander up posting


a near 5% rise in profit, but as we said Deutsche faring worse.


Announcing plans to cut more jobs. But of coarse those details


filletsering there. We will assess them later. What about the US? We


have more on what we can expect out of the US today, particularly those


long' waited GDP numbers. On Thursday we will get a look at


American economic performance in the third quarter which is likely to


show the US recovery is not as robust as thought. GDP expanded at a


1.5% rate. If true, that would mark a slow down from the second quarter.


The GDP report will serve as a barometer for how well the US is


handling weakness oversea, growth was likely head back by trade and


fallen exports. Analysts will see if lower oil prices encouraged more


consumer spending and if the housing sector made gains, which could help


off set the weak economy. Watch out for earnings results from MasterCard


and Starbucks. Growth numbers coming out, other


figure, earnings, give us your take on the US, in the light of the fed


and last night. That is right. So the focus is now back to will the


data be strong enough for the fed to move in December? Previously, last


month in September, markets had assumed that rate rises for 2015


were really off the table. It was a 2016 story. But last night, the


commentary took away that... That bit about overseas economies and


market, turbulence we saw in August, that really unnerved the fed and


took away that impetus for rate rice. The door is wide-open. It S we


have seen markets move to discount that, so from a one third chance to


half a chance now. By December. So it all moves round. It did. It does.


Let us touch briefly on Deutsche, we have heard about the job loss, not


wholly unexpected, we knew they had to cut costs but the latest figure


15,000. Significant number. Very big numbers, they are under pressure to


do a number of thing, to lower the cost, so clearly staff cuts are part


of that lower cost part, and the other aspect is to raise capital,


now they have done two things, they have suspended their dividend for


the next two years, so that will retain resources within the company


and help that capital number and they will be selling is off parts of


the business. Some staff will clearly go with the new business


owners but that will also reduce the capital requirements for the


remaining Deutsche group. OK, thank you Sue. Sue will be back in five


minutes to look at some other stories. Still to come it is an


age-old industry but there is a new player in town, can the smartwatch


ever take on the luxury watch makers? And faced with a slow down


in key markets for luxury goods we will meet the boss of watches of


Switzerland as well as other outlets as it plans a major expansion.


Let us discuss Barclay, because it is among those out with earnings


today, reporting pre-tax profits of 861 million, that is for the three


months to end the of September. That is half the profit the bank posted


for the second quarter, our business editor has the details. A


significant fall but once again, a company that we weren't expecting


anything amazing and this confirming what we thought might happen?


Barclays, yes, slightly treading water at the moment. They are the


second of the Big Four UK banks to report. Yesterday we had Lloyds,


tomorrow RBS and Monday HSBC. As you say, their profits slightly softer.


Statutory profit, year or year are up slightly. ?560 million for


foreign exchange mis-selling provisions and issues around


mortgage-backed securities in America. Let's look at the share


price this morning. Slightly soft profits, share price slightly down.


Over the last six months, interesting things. This is when


Anthony Jenkins, the previous chief executive, was fired. Investors


quite liked that, they thought they might be a new focus on the


investment bank. And recently the new Chief Executive was announced. A


little uptick in the share price. What we are really waiting for is


their full-year results, March one next spring. That's likely to be the


chief executive's first outing in public in the UK and people here


will be seeing what kind of Chief Executive he wants to be for


Barclays. We'll watch closely to see what he manages to do with the bank.


Thank you. A report will be released today to


talk about how a government initiative will allow more women to


get into the boardroom. They set themselves a target of 25% of women


on the boards of fifth -- FTSE 100 companies. They are expected to say


they have reached new milestones as far as that is concerned. That


picture is Martha Lane Fox. She's on the board of Marks and Spencer. Now


they want to extend it to the boardrooms of FTSE 250 companies and


they want to increase that target to 33%.


Clearly implications about whether quotas are the way to do that, but


nonetheless some progress there. You're watching Business Live -


our top story: Profits at the oil giant Shell have


slumped, posting a $6 billion loss as falling oil prices take


a bite out of its bottom line. Has the humble wristwatch had


its day? Or does new technology mean that


the craftsmanship and design that goes into watchmaking is more


important than ever? Well, our next guest probably agrees


that watchmaking is alive and well. Brian Duffy is the chief


executive of Aurum Holdings. Aurum runs luxury and jewellery


stores like Watches of Switzerland, It operates 139 shops across Britain


and employs more than 1,500 people, with plans to expand into the US


and Europe. They are currently the Crown


jeweller and have a Royal warrant from both


the Queen and Prince Charles The average timepiece costs


around ?10,000 - about $15,000. The group is Britain's biggest


distributor of Rolex, Patek Philippe, Jaeger-leCoultre


and Cartier watches. Just to give you an idea,


the global jewellery and watches market had a total revenue


of $290 billion in the last year. And that represented a growth rate


of nearly 7% between 2010 and 2014. I'm not wearing a watch today, I was


too ashamed! Thank you for coming in. Before we talk about watches,


let's find out how you got into this business. You've been working in the


realm of luxury goods for some time. When the luxury goods player Ralph


Lorenzo knocked on your door, you watch on a career break studying


rock and roll. I was at the Academy of contemporary music in Guildford


doing rock 'n' roll and blues and jazz, something I'd always wanted to


do, study and learn guitar and music. Rav Lauren came knocking and


your reaction was? It was irresistible. I've always loved


Ralph Lauren. I effectively became the first president for Europe, a


big new beginning for the brand. Right place, right time and an


irresistible knock on the door. But I did regret not finishing my


degree. Let's talk watches. It's an age-old industry, but we are talking


about high end luxury watches, $10,000, $15,000. These are not just


timepieces, they are things you inherit and pass on. It's about an


investment not necessarily a product. It's the wonders of


mechanical craftsmanship. They are precious materials. They are family


heirlooms. They work every minute of every hour of every day of every


year for your life and hopefully the life of generations to come. They


are beautiful things to have. How do you convince people to part with


that sort of cash in a market or an environment where the recession has


taken its toll on some of the luxury goods maker 's? Markets are slowing


down, like China. How do you convince people to part with cash


for something that will live well beyond them? On some of the luxury


goods maker 's? Markets are slowing down, like China. How do you


convince people to part with cash for something that will live well


beyond them? Honestly I call it rational indulgence. You don't need


it to tell the time, your phone can tell you the time, or something much


less expensive. But you're taking the money out of you your bank and


putting it on your wrist. They generally don't do appreciate,


values go up, they are made of precious materials which have gone


up a great deal recently. It's a wonderful thing to have and enjoy


and to pass on to the next generation. When it comes to


persuasion, how important are the marketing sites? The likes of George


Clooney and other big international stars becoming the face of a brand?


I know Oma go -- pomade is the watch 007 is wearing inspector and you


were at the premiere because your company is involved in the process.


How important is that the sales? Marketing is very important. The


image and association you want to have can be through celebrity


endorsement, sports endorsement. Rolex, visibility at Formula one for


example. Marketing is important for those brands who have global reach.


Some brands are very... They trade on discretion because you have to go


and find them. You've been with 2-1 for two years. What difference have


you seen in terms of how to sell? Is it easier to sell a luxury watch in


this environment rather than Ralph Lauren clothing? With the cooling of


the global economy and the emerging market economy, people are thinking


more about value. We can offer value. They are financial


investments. That's a tougher argument if you're talking about


fashion or high heels. Interesting when this March watch does a million


thing and this is a watch that simply tells the time and date. -- a


smartwatch. Interesting to meet you, thank you for coming in, but we've


run out of time. That was a joke! Everybody is


catching on. Here's a reminder of how to get


in touch with us. The web pages where you can stay


ahead of the news. We'll keep you up-to-date with the latest details,


insight and analysis from the BBC's team of editors around the world.


And we want to hear from you. Get involved on the web page. Or on


Twitter. And you can find us on Facebook. On TV and online.


Keep your messages coming in, particularly about things you would


like to outsource. We'll run through some of those in a second. Sue is


back with us to look at some of the stories in the papers. We want to


talk about this Google story. It is amazing. This massive project to


launch balloons into space. To create more bandwidth for areas that


can't have, because of their geography, fibre networks or antenna


networks. The balloons go up into the air and beam down bandwidth that


will broadly make a 4G network available to a number of Indonesian


islands. Indonesia is a very large, populous country and that the moment


they are struggling to get connected. About 50% of people are


not connected. This is one way, a cost-effective way, for Google to do


it. It only takes 300 balloons to make a continuous string around the


world, I'd imagine it would be much more. They will start off with a


regional area, but that's claim. They go 20 kilometres up in the air.


You can get quite a decent range on the ground. It sounds like a crazy


project, Micah Richards Branson kind of project. We'll see how it works


out. -- Richard like -- like a Richard Branson project. Let's talk


about outsourcing in your private life. This is a mother in Sydney who


is said she's spent $6,500 outsourcing things like cleaning,


shopping, cooking. And a nanny. She has five children.


$6,500 a week! About ?3000 a week. $4500. That's a lot of money. She


says it's worth her while because she gets to spend quality time with


her family, a bit of time for herself, enough sleep. She can


afford it. Many working women and dads who can't afford to outsource


the chores, unfortunately. We've been asking people to get in


touch. The common theme is coffee, someone to buy copy for you in the


morning. We share that feeling! Thank you for sending those in. What


would you outsource? I do outsource some things. The things that take a


lot of time, that allow me to have time to spend with my family. Spend


money on the things you don't want to do, that's why you earn money.


Thanks so much for coming in. Thank you for your company today.


Thank you for your comments about my glasses, they've made their debut.


We like those! You can wear those again. See you soon.


Good morning. The general story today is of rain crossing from west


to east across the country with sunny skies following on. A wet




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