06/01/2017 World Business Report


06/01/2017

The latest business news with informed analysis from the world's financial centres.


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Samsung's on track for its best profit in years and pledges to put

:00:14.:00:20.

The boss of Sony tells us why goods and information must

:00:21.:00:29.

Also coming up, Mr Trump locks horns with Toyota over plans to build

:00:30.:00:42.

In the last few hours South Korean tech giant has said it's on track

:00:43.:01:06.

for the best quarterly profits in more than three years.

:01:07.:01:10.

It's a major boost for the company after the exploding smartphone

:01:11.:01:16.

scandal that put a serious dent in its reputation.

:01:17.:01:19.

In the three months to the end of December, Samsung is forecasting

:01:20.:01:26.

That's up by half on the same period last year, much better than expected

:01:27.:01:37.

That might come as a surprise as we know Samsung was forced

:01:38.:01:44.

to scrap its top of the range phone, the Galaxy Note 7, after a spate

:01:45.:01:50.

Hugely embarrassing, and hugely expensive.

:01:51.:01:52.

It has warned the scandal sent more than $5 billion of profit

:01:53.:01:56.

Samsung makes chips and screens for the whole tech industry.

:01:57.:02:11.

Samsung hasn't revealed the details but it's thought to have been

:02:12.:02:14.

the best quarter ever for its semiconductor division.

:02:15.:02:16.

It makes the complex chips that are more and more in demand

:02:17.:02:21.

as phones get smarter, and the prices of those have jumped.

:02:22.:02:24.

So despite the exploding phone scandal, Samsung's investors have

:02:25.:02:27.

had a pretty good year, shares up by almost 50% over

:02:28.:02:30.

We'll be hearing from an expert on all this in 20 minutes' time.

:02:31.:02:49.

Tim Baxter said at the consumer Electronics expo in Las Vegas said

:02:50.:02:56.

they would find out what happened and put it behind them.

:02:57.:02:57.

As you know, this year was a challenging year for Samsung.

:02:58.:03:00.

Some of you were directly impacted and certainly many saw the media

:03:01.:03:04.

coverage, especially about the Note 7.

:03:05.:03:05.

We continue our intensive efforts, internally and with third party

:03:06.:03:08.

experts to understand what happened and to make sure it does

:03:09.:03:11.

And very soon we will be sharing the root cause report

:03:12.:03:15.

of Pelham Smithers Associates is here.

:03:16.:03:27.

Great to have you here, thanks for coming in at this horrible hour.

:03:28.:03:33.

This is an interesting company, I think of it like Amazon, when we

:03:34.:03:37.

think Amazon most think online retail and when we think of Samsung

:03:38.:03:42.

weakening of phones and TVs but both companies make big chunks of money

:03:43.:03:48.

from other areas. Amazon with cloud computing and these guys make it

:03:49.:03:52.

from chips. Chips, screens, yes, stuff like that. In a good year if

:03:53.:03:56.

everything was perfect they would make most money from phones. That

:03:57.:04:04.

and the semiconductors. Semiconductors is the perfect high

:04:05.:04:07.

pressure, everything is going right, they are getting their processing

:04:08.:04:11.

chips into phones from companies like Apple, they are getting their

:04:12.:04:17.

the UNs into their laptops and their flash memory into handsets -- the

:04:18.:04:31.

UNs. Are the UNs chips... For the flash memory they have not gone down

:04:32.:04:34.

anything like as much as they normally would, some chips you

:04:35.:04:39.

expect to fall 30 or 40% a year because you are making so many more

:04:40.:04:46.

and you are making more... If the prices don't come down and you make

:04:47.:04:51.

40% more from the same wafer as you made before, that is glory days.

:04:52.:04:55.

That adds to the profits. You mentioned Apple, I don't know if

:04:56.:05:01.

many people know but they are just huge competitors and all they do is

:05:02.:05:06.

this but if you open an Apple iPhone, Samsung chips are inside.

:05:07.:05:09.

It's amazing that they have to work together and compete. A new phone

:05:10.:05:15.

for Samsung, a big deal next month? That is what is planned, it is a

:05:16.:05:20.

moving feast right now because there is the world Mobile Congress in

:05:21.:05:24.

Barcelona and normally they make it available for that and that's what

:05:25.:05:28.

they are trying to do this year but because of the adverse publicity of

:05:29.:05:33.

the Samsung Note 7 they have to get this right but fortunately for them

:05:34.:05:39.

this is different from the Note. In the UK you don't see the Note ari

:05:40.:05:44.

much because it is more like a PDA with a pen, it is much more popular

:05:45.:05:50.

in Asia, the Galaxy -esque is much more popular in the UK and Europe.

:05:51.:05:59.

-- Galaxy S. They are hoping the audience for the Galaxy S won't be

:06:00.:06:03.

au fait with what happened in the Note and they will be happy with

:06:04.:06:07.

their previous Galaxy Less, as long as they get the publicity right it

:06:08.:06:12.

should be successful. We will wrap up there -- Galaxy S. Thanks for

:06:13.:06:19.

joining us. We are also at the Consumer

:06:20.:06:21.

Electronics Show in Las Vegas where the world's top technology

:06:22.:06:24.

bosses are showing off the latest This week the show's organisers have

:06:25.:06:27.

warned that sales of technology They think political uncertainty

:06:28.:06:31.

might weigh on peoples willingness Our correspondent Rory Cellan Jones

:06:32.:06:35.

spoke to the boss of Sony, Kazuo Hirai, and asked him

:06:36.:06:47.

how concerned he is, particularly about the policies

:06:48.:06:50.

we may get from a Trump presidency. I think that the best course of

:06:51.:07:03.

action at this point is really to see what presidential elect Trump

:07:04.:07:07.

and what his policies will actually be after he's inaugurated and how

:07:08.:07:12.

that's going to impact things like the TPP for example or the

:07:13.:07:16.

continuation of NAFTA. And we'll have to deal with the policies he

:07:17.:07:23.

comes up with at that point and it's difficult for us to second-guess

:07:24.:07:26.

what he's going to be doing. He's appointed a lot of Hawks when it

:07:27.:07:30.

comes to trade, does that worry you, would it be bad for Sony and the

:07:31.:07:35.

rest of the global economy if things like the TPP and other big trade

:07:36.:07:41.

treaties basically were stalled? We are a global company and we

:07:42.:07:45.

manufacture globally as well. So obviously it's very important that

:07:46.:07:52.

free trade is something that we keep an eye on and also the other

:07:53.:07:56.

important thing for us is really to make sure that currency fluctuations

:07:57.:08:04.

are kept to a minimum so that all the currencies are stable and we are

:08:05.:08:08.

able to plan ahead and make the investments were appropriate. We're

:08:09.:08:11.

about to see a new president, Donald Trump, do you have concerns about

:08:12.:08:16.

what that means for trade in particular? I think it's not just

:08:17.:08:20.

President elect Trump but all world leaders, including obviously the

:08:21.:08:25.

leaders of Japan as well, this is a global economy and the free flow of

:08:26.:08:29.

goods, information, is something that is part of our lives today and

:08:30.:08:34.

to try to overregulate that I think it is not good for business.

:08:35.:08:36.

There you go, the big boss of Sony. I am plugged back in and I can hear

:08:37.:08:41.

the voice of God! Let's stay with President-elect

:08:42.:08:46.

Trump, because he has been whipping up a storm

:08:47.:08:48.

on Twitter once again. I will quote, "Toyota Motor said

:08:49.:08:53.

will build a new plant in Baja, Mexico, to build

:08:54.:08:59.

Corolla cars for US. Build plant in US or

:09:00.:09:03.

pay big border tax." American car companies have faced

:09:04.:09:12.

harsh criticism from Mr Trump for building cars more

:09:13.:09:15.

cheaply outside the US. So how is this latest episode

:09:16.:09:17.

going down in Asia? Sharanjit Leyl is following

:09:18.:09:19.

the story for us in our Asia It's having quite a big impact on

:09:20.:09:27.

its shares, in the Asian trade the Nikkei, we saw Tiote shares falling

:09:28.:09:32.

3% when the market opened this morning but it has since recovered

:09:33.:09:39.

-- Toyota. It shows the influence president Dole might be

:09:40.:09:42.

President-elect has in terms of his tweets and when he first tweeted

:09:43.:09:48.

this in the US, the American depository fell, wiping $1.2 billion

:09:49.:09:53.

in value in just five minutes after he tweeted that. -- it shows the

:09:54.:10:01.

influence the President-elect has. The chief of Toyota said they had no

:10:02.:10:07.

plans to curb manufacturing in Mexico and he said that employment

:10:08.:10:17.

numbers would not decrease, he said Toyota was the smallest importer of

:10:18.:10:22.

vehicles from Mexico to the US in 2016. We know the company has plants

:10:23.:10:35.

in the US and they continue to target US carmakers, his tweets, and

:10:36.:10:40.

we saw Ford's decision to cancel plans for a $1.6 billion plant in

:10:41.:10:45.

Mexico. The first time I have seen you this week, Sharanjit, so happy

:10:46.:10:47.

New Year! Don't forget you can get in touch

:10:48.:10:48.

with me and some of the team I will be back in a few minutes to

:10:49.:10:57.

look at some of the papers from around the world. Bye-bye.

:10:58.:10:59.

Bed blocking in the NHS in England has become significantly worse

:11:00.:11:04.

in mental health trusts than in acute hospitals,

:11:05.:11:07.