21/04/2016 BBC Business Live


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


Volkswagen set to announce it's buying back


around half a million diesel cars in the US.


It will also pay over $1 billion in compensation


Live from London, that's our top story today, Thursday 21st April.


VW makes a deal with US authorities after rigging emissions tests,


but who gets what and when is still to be determined.


And other car-maker in the headlines for fiddling its tests, Mitsubishi


officers raided by authorities after admitted falsifying data. Their


shares were not traded at all, they fell so much yesterday. Their shares


have slumped more than 30% since the story first broke. And the science


behind making milk taste better, one firm says it is all about the type


of protein, and with shares up nearly 200%, visit the cat who got


the cream? It is certainly milking the market in China. We will speak


to the boss. And are you fed up with upgrading your phone, tablet or


computer - there is a growing movement of people pitching new


technology and making the old trusty device last longer. Are you an


upgrade junkie or rely on traditional technology? Get in


touch. Volkswagen is trying to draw a line


under the torrid affair that saw it rig emissions tests


around the world, by fitting 11 million diesel cars


with cheat devices. Last year, apologies came thick and


fast after it used a cheat device to flatter test results. The dealers


said to cost the car-maker over $1 billion, although how much each


owner would get is still to be finalised. Volkswagen is expected to


give more details of the deal to a federal judge later today. In March,


the judge gave VW until today to announce concrete proposals for


getting the polluting vehicles off the roads. Sally.


With me is Catherine Hutt, from the automotive and transport


Nice to see you, Catherine Ben outlining the options open, with


regards to VW fixing this situation, reports say they are going for


buying back cars, what's the make of that? I think it is a really


important step for VW to give the consumer choice. Consumers are


really wanting that choice, and it is important for the industry as a


whole that VW reaches an agreement, and we can move on and show a line


under this. We also saw that the markets responded positively in the


US, with the US base to VW shares up 6% on the announcement that they


would reach a settlement, rather than going to a lawsuit. I think it


is a positive step forward. What is also really important is, from an


investor's point of view, uncertainty is the enemy, so it is


not just the figure that is important of how much it will really


cost, but also the time involved, because the longer this drags on,


the more damage and is going to do. I think it is really positive news


that we are hearing, that they will reach a settlement and we will get


some clarity. I know you and said the big number is not necessarily


the issue, we are weighing it up, some are saying it could be about


$30 billion in terms of cost to VW, but overall how costly is this for


Europe's biggest car-maker? A very strong brand in the car industry,


everything, reputation, financials everything, reputation, financials


et cetera? I think the figure we do not know yet, and time will tell, so


we will have to wait and see on that front. In terms of how damaging it


has been, I think that varies across the globe. You can see in the states


that sales have dropped 10% in the last month, in one report, versus


Europe where sales have dropped just 2% in the last month. Compare that


to China, where sales have increased to 3.6% in the last month. And the


impact on Volkswagen is really influenced by those figures, but it


is not a one-to-one correlation, because Asia-Pacific and


particularly China represents about 40% of Volkswagen sales globally, so


that really helps them out and help them weather the storm, which is the


production of sales in Europe, which accounts for about 35% of Volkswagen


sales globally, talking about the Volkswagen Group. Although the 10%


reduction in the US is painful to Volkswagen, actually the US only


accounts for 10% of their global sales. So you can see how, yes, they


are worse off in terms of the reduction in sales, but that growth


in China is really helping them. Catherine, we appreciate your time.


It would seem that VW could be weathering the storm, that is for


sure. Staying with car emissions, Mitsubishi Motors is also in the


spotlight after admitting improper testing of fuel efficiency. Its


shares did not traded a in Japan because so many people wanted to


upload the Mitsubishi Motors Stark, trading did not take place at all.


It is quite complicated, in fact. Karishma Vaswani can explain, the


stairs did not trade but still managed to fall? -- shares. It is


quite a complex mechanism on the Tokyo stock exchange, but as we


understand it, after having spoken to officials, there were so many


sellers for the shares of Mitsubishi Motors, and buyers as well, but the


price did not match up, Ben. Basically, the amount that the


sellers wanted for their shares and the amount that the buyers were


offering, there was no actual deal that was executed, so no shares


traded in Mitsubishi Motors on the Tokyo stock exchange, but they still


fell by 20%. That is as a result of a mechanism within the Tokyo stock


exchange that, every three minutes, when there are no trade is being


executed for this particular stock today, the shares are known to


which is why you have ended up which is why you have ended up


seeing 20% taken of Mitsubishi Motors shares. In total, that is


about $2.5 billion of value from the company's share price, so quite a


dramatic fall as a result of the announcement that we saw yesterday.


Also, we have been hearing about raids at some of its plants, some of


its officers, what is going on? Yes, well, the government has weighed in,


as you would expect, it is the country's sixth largest auto-maker,


so earlier today the transport ministry sent in a team of


investigators to Mitsubishi Motors' plant, research centre in Nagoya to


find out how the employees of the company went about falsifying this


tyre pressure data, which then resulted in its ability to make some


of its models, the mini car models, at the more fuel efficient than they


actually are. The investigation is expected to last a week or so, and


the government says it is a serious breach of trust between Mitsubishi


Motors and consumers, and it is taking it extremely seriously. Watch


this space, lots more comments to come from the government on this in


the next couple of days. Karishma, as always, thank you for explaining


that. Shares in Yum brands -


the firm behind KFC and Pizza Hut - have jumped nearly 4%,


after the company reported better than expected earnings


for the first quarter. Its profits rose 8% in the three


months to March, to $391m. Microsoft has said it is to stop


manufacturing the Xbox 360 games In a blog post, Xbox boss


Phil Spencer said gamers had completed more than 78 billion hours


of play on the devices. Last year the firm enabled Xbox 360


games to work on its successor, Mining firm Newmont


has reported lower earnings blamed on weaker gold


and copper prices. The US-based Newmont is the world's


second-biggest gold miner, but says profit came


in at $182 million, down from a year ago but still


well ahead of expectations. The results were helped by higher


production along with lower costs. Tokyo shares rose yesterday for the


third successive session, but the rise in oil prices was helping.


Mitsubishi fell 20% after admitting falsifying those fuel efficiency


tests. It is Brent crude that is back up, in the early part of the


day, trading down slightly, but nonetheless up on what we saw


earlier in the week. A quick look at how Europe is looking, because in


the UK some disappointment that jobless claims rose in March, but


wage growth came in lower than expected too, but still ahead of


inflation. That is the picture for the UK market, we will talk about


that in more detail in a moment. Michelle Fleury has the details from


Wall Street. The earnings release from General


Motors may be overshadowed by other news in the automobile world,


because this is the deadline for VW and US officials to reach a deal to


get diesel cars that used software to evade US emissions laws off the


road. Reuters is reporting that VW will offer to buy back almost


500,000 diesel cars, while the German newspaper de Buit says that


VW may be ready to pay each affected customer $5,000 each. -- Die Welt.


Two big names in technology turned in their report card, Alphabet, the


parent company of Google, reported its first numbers after the market


close. And investors will want to hear from Microsoft about how its


cloud computing business is doing and whether its third-quarter


results were impacted by a stronger dollar.


Jeremy Cooke is the chief economist at World First,


what is grabbing your attention this morning, oil going up? Yes, whisper


it, but we may be seeing a rise in prices, the meeting in Doha did not


produce much, but we have come back from the lows in short order, and a


lot of people are saying we may have put the bottom in oil prices as


well. The key question is whether the rancour that we saw between


Iran, Saudi Arabia and Russia spills over into supply, if tensions rise


and supply contracts. Let's talk about the data we had in the UK,


jobs and earnings, a surprise rise in an appointment, the first time in


a long time, but earnings versus inflation, still above inflation,


but not hugely. Not hugely impressive, and we talk about


corporate reports, we said that revenue is vanity, profit is


reality. If low unemployment for the UK is vanity, the reality is higher


wages, and we're not seeing that at the moment. It is a seasonal thing,


in February businesses do not pay large bonuses, banks for instance,


so that may have taken the number lower, but it is something the Bank


of England will be worried about if they are talking about high


inflation. The ECB meeting, a nonevent this time? A little bit,


after what Mario Draghi said last month, saying the policy was maybe


at its lowest, the last time he said that, someone stormed the


through glitter at him. Promises, promises! I will tune in, just in


case. We're going to be talking


about a company that's been moooving in on its milk


producing rivals. A2 make a type of milk which thay


say is better for us, and it's been We're going to be joined


by their CEO after the break. You're with Business


Live from BBC News. Heathrow Airport has just announced


a boost in its first-quarter results thanks, it says Komla Dumor


passengers and lower costs. Revenues were up by 3.2%, ?642 million. The


chief executive of Heathrow Airport joins us now, good morning, another


good year, another set of good figures, but still falling down the


international league tables in terms of capacity and passenger numbers.


It is frustrating, to say the least, is it not? We need to make a


decision as quickly as possible about the future of this country. We


are the fifth largest economy in the world, and we're not going to be for


much longer unless we invest in our biggest port, and Heathrow is our


biggest port, we handle over a quarter of UK exports. We are the


only airport that gets business to all the growing airport in the


world, but we are at capacity, and it is frustrating to DD French


moving head, Paris has more long haul destinations than we have, and


we need to make the right decision to secure the long-term future of


this country. And we talked in our release about the capacity issues we


have, it is not just about not enough roots, it is about trading


capacity. Some of our key routes, like Tokyo, Shanghai, Beijing, are


close to capacity, we cannot get more exports on those planes, and


unless we expand Heathrow, that is not going to change. Now is the time


for the Prime Minister to make the right decision to secure the future


of Britain by expanding Heathrow. If they decide not to, what is your


plan for the airport? We will keep on doing what we have been doing the


last few years. We are currently rated the eighth best airport in the


world. I want us to be the best airport in the world, giving


passengers the best airport service. We are going to keep on working on


that, serving Britain well. We will keep doing it at a lower cost as


well, giving better value to passengers. Our job is to serve


Britain. We can serve Britain better if we are a larger Heathrow, getting


more of the cities and the regions of the UK with direct links into


Heathrow, and onto 120 long haul destinations. That keeps Britain on


the map. Thank you. in court in the US later today -


it's thought they'll promise to buy back some of the 600,000


diesel cars which had the emissions-cheating


software installed. Some reports suggest


they could spend over $1 billion Details coming into us about how


that deal may work but no specific detail. How much individual


consumers will get or when it will be paid. We will keep your cross


that. Sure we pause for a little drink of milk?


And now let's get the inside track on milk.


The long held belief that people from Asia are intolerant to milk,


is being slowly eroded as sales of dairy products across the area


New Zealand has been cashing in on the change in tastes and now


ranks as the world's largest dairy producer -


One of the companies involved in the uplift is dairy company


They believe that mass produced milk has, over time,


lost what scientists call the A2 protein.


They say that the milk we get now has got A1 protein, but that it's


the A2 protein that they claim is better for us all.


Demands for the company's infant formula has been particularly strong


in China, where consumers have switched to products made


in Australia or New Zealand after locally produced milk led


the company's shares to rise by 189% since they began trading in Sydney


He's the UK and China Chief Executive for A2 Milk Company,


Good morning. We sort of explained what you would argue is your unique


selling point, the fact that A2 Milk is full of protein? Yes, it is the


only milk available that has the aid to protein. The difference that


makes is that it does not have the A1 protein. That is associated with


issues of digestion, making it difficult to digests. That can


affect as many as 90% of the population in China. A recent trial


announced yesterday has shown that the 90% lactose intolerant people of


China are able to drink A2 Milk. It is the A1 protein causing the issue.


Explain the process? It is the same cows eating the same staff. It is


different what is coming out of their orders? Are you going to a


herd of existing cows and DNA them. We farm the A2 Milk cows. It is


genetics. Forgive my ignorance, but will this taste Andy different? We


are going to try some now. People will not notice any difference. Talk


smack through the change people may see in terms of cost? If your


children have an issue with milk they could try this and they would


not know they are trying a different man. It is fresh cow's milk. In


terms of pricing, this is about ?1 39. -- 1.3 nine. About twice the


price of normal milk. But we argue that milk is on the priced and


undervalued. I am a family of five. We consume a lot of milk. One of my


children had trouble with milk. I looked into other milks. I have


never seen A2 Milk. I do not feel the strength of your presence in the


UK and yet you are taking China by storm. That is presumably pushing up


your profits and share price? We have only been in the UK a couple of


years. We are relatively new. People struggle to find us sometimes. We


are there. In Australia we have got a big share, growing significantly.


The strength of that has gone into China. Chinese consumers have


realised from talking to a friends that there is something out of there


for them. They are buying it and taking from Australia. We have set


up in China and are growing a strong business. Let's talk about the


industry for milk. Here in the UK and many parts of Europe, we see


supermarkets selling milk as a loss leader. Farmers are not getting what


they should. We are also seeing a decline because there is a


health-conscious move away from dairy towards different diets. You


are seeing that correlated upswing in Asia. Does that compensate for a


slowdown in Europe? The growth opportunities in Asia are enormous.


China will overtake Europe next year as the biggest milk exporter. In


Europe, we think a lot of the decline in Derry is due to


misunderstanding. A lot of rumour and non-fact about milk is spread.


-- dairy. People believing they are lactose intolerant means they do not


go for milk in a way they could do. Something like this could enable


them to drink milk again. Thank you for coming in, sharing the milk. I


am treating this like a fine wine! Have you smelted? Yes, it smells


good. There is some going in my coffee.


In a moment, some of the other stories out of there. First, a quick


reminder of how to be across it all. The businesslike pages where you can


stay ahead with the breaking business news. We will keep you


up-to-date with the latest details, with insight and analysis from the


team of editors across the world. And we want to hear from you. Get


involved on the BBC Business Live web page. You can find us on Twitter


and on Facebook. Business Live on TV and online


whenever you need to know. Jeremy has returned. Let's have a


look at some of the stories. Starting with the international New


York Times, which says choosing to skip the upgrade and care for the


graduate -- gadget you have got. It is a PalmPilot he has got in his


hand. Old technology. This is a story about people who, after a


couple of years when their phone plan has, Kraupp renewal, holding


onto what have got. -- coming up for renewal. Clearly this is not


widespread but the problem is that many people now have a phone they


are happy with. They will not upgrade between a five, six or


seven. We are getting past the stage where you can open up a phone --


draw in the kitchen and cross old phones. We have a picture of an old


Bakelite telephone. He says if only my mobile had the stability of this.


Matt says upgrading software can be tiring, especially if it happens


every couple of days. It is sort of a work in progress all the time. You


are constantly having to update and upgrade, rather than trust your


reliable phone. Exactly. You have to be worried about the data charges as


well. Briefly, the Daily Telegraph talking about Tata possibly going


for a crowdfunding to rescue Port Talbot? Crowdfunding may be a


difficult way. It is a management buyout and it is raising money from


employees. Of the ?10,000 each. That seems steep. Whether you would want


to split the ownership that wide within a steel plant among the


employees remains to be seen. But certainly it is a new idea which can


hopefully raise money for an ailing industry. Thank you for coming in.


Some milk for you later. Thank you. We will see you soon. By bye-bye.


Good morning. Some sunshine on offer today. But not for everybody. The


skies are going to turn cloudy in the next 24 hours. We have already


had some rain in south-western


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