Toyota braced for historic loss – BBC

Japan’s biggest carmaker Toyota has forecast its first annual loss in 71 years due to plummeting sales and a surge in the value of the yen.

The firm said it expected a loss of 150bn yen (£1.1bn) in yearly operating profits – from its core operations.

Japan also posted a trade deficit of $2.5bn (£1.7bn) in November as exports fell at a record rate.

The rising yen saw export levels down 26.7% from a year earlier, the ministry of finance said.

The carmaker recorded an operating profit of 2.27 trillion yen last year.

Toyota said it still expected to make a profit on a net level for the year ended March but has cut its forecast sharply to 50bn yen, down from a previous estimate of 550bn yen.

It is the second profit warning by Toyota in less than seven weeks.

The latest estimate is far lower than its net profit of 1.7 trillion yen earned the previous year.

Falling sales

Toyota’s president Katsuaki Watanabe said that the company now expected to sell 8.96 million vehicles around the world this year, down 4% from the previous year.

Unlike previous years, he gave no goal for 2009.

Toyota said in a statement it was cutting its profits forecast because of the soaring yen “as well as a review of sales plans following a faster than expected contraction of the auto market”.

Japanese carmakers have all been hurt by plummeting car sales in their key overseas markets, including the US.

The surging yen has eroded their overseas earnings and also hit their profits – the dollar has fallen to 13-year lows against the Japanese currency.

Honda last week cut its annual profit forecast by 67%, and outlined a list of counter-measures such as putting off non-urgent investments to prop up its profitability.

Deteriorating sector

In the United States, President Bush threw the struggling carmakers General Motors and Chrysler a lifeline of up to $17.4bn to stave off bankruptcy as they reel under slumping demand.

Commenting on Toyota’s latest announcement, analysts said it underlined the problems now facing Japan’s car exporters.

“This is very, very, very bad. There’s a chance that they could fall into the red in the next business year as well,” said Koichi Ogawa of Daiwa SB Investments.

“This is also not just a problem for Toyota. What is good for Toyota is good for the Japanese economy.”

Fujio Ando of Chibagin Asset Management added: “This shows how rapidly and badly the auto sector has deteriorated.”

“Toyota will likely revise down its earnings numbers or sales forecast again in late January or February as I don’t think the business environment will become any better,” he said.

Output slashed

Japan typically runs a trade surplus due to strong demand for its products – but the surging yen has hit demand for its goods.

Japanese exports fell sharply to all areas but those to the US were worst-hit, plunging 33.8% – also a record drop.

Shipments to the European Union were down 30.8% while those to China fell 24.5%, the biggest fall since 1995, said Reuters news agency.

Exports to the rest of Asia declined 26.7%.

Imports were also down – 14.4% overall – due in part to lower oil prices.

Japan’s economy – the world’s second-largest after the US – has slipped into its first recession in seven years after two quarters of negative growth in a row.

The government has forecast zero growth in the year ending March 2010.

Meeting Cuba’s youngest politician – BBC

As Cuba prepares to celebrate the 50th anniversary of Fidel Castro’s revolution on 1 January, most of those in power are the same people who fought alongside him half a century ago.

Fidel’s brother Raul Castro, 77, is now president and he chose 78-year-old Machado Ventura as his number two.

But there is a new generation of communists waiting in the wings.

The majority of deputies elected to the national assembly, or parliament, earlier this year were born after the revolution.

The youngest, Liaena Hernandez, is just 18 years old. A petite young woman with long black hair and an engaging smile, she has been a political activist since her early teens.

We first met during a coffee break at the last national assembly meeting.

“Having young Cubans in parliament shows that the revolution continues. It isn’t just something from our history,” she told me. Ms Hernandez comes from Guantanamo province at the eastern end of the island.

Her father is in the army and she has just completed her voluntary military service as a border guard in an all-female unit along the controversial US naval base at Guantanamo Bay.

She was born just as Cuba’s main benefactor, the Soviet Union, collapsed.

What followed was called the special period, a time of hunger and hardship. The United States also tightened the trade embargo believing it would hasten the collapse of communism.

This is the Cuba that Ms Hernandez grew up in.

Kissing babies

“I was born with the revolution. I’ve never known capitalism,” she said. “My earliest memories are of socialism, the special period and the US blockade.

“As a family we couldn’t have all the things we would have liked. For years I had to wear the same pair of shoes to school, we just had to keep mending them.

“But at least I had free health care and education. And as a nation, everyone was willing to work together to get by and move forward.”

Ms Hernandez invited the BBC to visit her on a constituency visit.

She represents Manuel Tames, a small rural community nestled in the foothills of the Guantanamo’s Sierra Cristal mountains.

There is little traffic on its dusty streets apart from horses and the occasional tractor.

At the heart of the town is an ageing sugar mill with its giant smokestack chimney. There is also a recently renovated health centre with nurses and beds to spare.

But solving constituency needs is not the primary role of Cuban deputies.

“Our most important mission is to explain to the people the politics of the state so that they understand what going on,” she explained as we arrived.

History has taught us that the Communist Party is the road that Cuba needs to follow Liaena Hernandez

Some two dozen constituents had gathered to greet us outside of the municipal offices.

Like all good politicians, Ms Hernandez moved comfortably amongst them, kissing babies, joking and chatting with young and old.

Better roads and housing are amongst their concerns, but food appears the number one priority.

Raul Castro has started to hand over unproductive state owned land to private farmers and co-operatives in a bid to boost production and cut food imports.

Farmers in Tames are waiting expectantly for the scheme to take off.

“Today is a different period from that of the revolution. There were some things which were needed then which are not so good now, because the context has changes,” she said.

“We need to keep perfecting our economic system, that’s where the country is going.”

‘Perfeccionamento’

The government’s priority is to try and make the state-run system work more efficiently, rather than opening up to a free market, like the Chinese have done.

You hear the word “perfeccionamento” – perfecting the system – used a lot by officials.

There are also no signs of any political reforms. Opposition parties are not allowed.

The national assembly only meets twice a year, a few days of committee sessions followed by a single day’s sitting. Critics call it a rubber stamp parliament. The next session is scheduled for 27 December.

Candidates are also selected in advance. In the elections in January there were 614 people standing for the same number of seats.

You do not have to be a member of the Communist Party to stand, but it does help.

Ms Hernandez, though, believes that the system has served Cuba well.

“History has taught us that the Communist Party is the road that Cuba needs to follow.

“We don’t need to copy other countries’ systems. We are satisfied with our own and we are going to keep perfecting it.”

Sanctions imposed on Somalia head – BBC

The East African regional grouping Igad has decided to impose sanctions on Somali President Abdullahi Yusuf Ahmed and his associates.

In a communique after a meeting of foreign ministers in Ethiopia it backed Prime Minister Nur Hassan Hussein, whom the president tried to dismiss.

The grouping also discussed ways to replace Ethiopian troops when they pull out of Somalia in the next few weeks.

African Union commission head Jean Ping said Nigeria was ready to send troops.

Torn by internal conflict, Somalia has been without an effective central government for more than 15 years.

Infighting

The BBC’s Elizabeth Blunt in Addis Ababa says there was no doubt whose side this meeting of the Inter-governmental Authority on Development (Igad) was on.

In a place of honour on the platform was Ahmed Mohammed Goala, the Somali prime minister’s newly appointed foreign minister, not his predecessor, who had been associated with President Abdullahi, our correspondent says.

At the end of the meeting, the foreign ministers of the six member states expressed their support for Mr Nur and his newly appointed cabinet, and said they regretted the attempt by the president to replace him last Sunday.

Mr Abdullahi said the government had been “paralysed by corruption, inefficiency and treason” and failed to bring peace.

However, Somalia’s parliament declared the sacking illegal and passed a vote of confidence in Mr Nur by a huge majority on Monday.

In the communique issued at the end of the meeting, Igad gave its strong backing to Mr Nur and his government.

“[Igad] regrets the attempts by President Abdullahi Yusuf to unconstitutionally appoint a new prime minister that Igad does not recognise, and decides to impose sanctions on him and his associates immediately,” it said.

It also called on other countries to take similar measures.

Our correspondent says that in addition to the infighting in the Somali government, the imminent departure of Ethiopian troops from the country overshadowed the meeting.

Ethiopian Foreign Minister Seyoum Mesfin said his country’s decision to pull out over the coming weeks was “irrevocable”.

Igad formally thanked the Ethiopians for the sacrifices they had made to advance the cause of peace in Somalia, but made no appeal to them to change their mind and stay.

The issue of peacekeeping will be considered further at a meeting of the African Union’s Peace and Security Council on Monday.

Ministers now have the task of trying to beef up the AU’s mission in Somalia, which will no longer have the comfort of knowing it can call for Ethiopian back-up when needed, our correspondent adds.

At the Igad meeting, the president of the African Union Commission said Nigeria had promised to send a battalion of about 850 soldiers to Somalia next month, and that Burundi and Uganda would each send an additional battalion.

IMF urges spending to spur growth – BBC

More spending by governments will be needed to stimulate worldwide economic growth, the head of the International Monetary Fund (IMF) has told the BBC.

Dominique Strauss-Kahn said he feared measures announced by the Group of 20 nations last month would not be enough.

The IMF has already cut its forecast for global growth next year, and he said the next projection, due in January, would be even worse.

Mr Strauss-Kahn spoke of “2009 as really being a bad year”.

“I’m specially concerned by the fact that our forecast, already very dark… will be even darker if not enough fiscal stimulus is implemented,” he said in an interview with BBC Radio 4.

‘Less bad solution’

He said it would take a spending stimulus equivalent to about 2% of global Gross Domestic Product, or about $1.2 trillion (£800bn), to make a real difference.

He added that given the choice between increasing the deficit and not fighting the recession, he favoured the “less bad solution”.

He described European Central Bank chief Jean-Claude Trichet’s warning that eurozone governments must keep a lid on borrowing as “noble”.

“He’s the head of the central bank – it’s his job to say things like that,” Mr Strauss Kahn said.

“We are in the biggest crisis we have experienced for 60 or 70 years and we have to take that into account,” he added.

In November, the IMF lowered its global economic growth forecast to 2.2% from 3%.

In the BBC interview, Mr Strauss-Kahn was asked about the level of debt in the UK – 44.2% of GDP.

Shaun Ley, of BBC Radio 4’s The World This Weekend, asked Mr Strauss-Kahn: “Markets seem to have made their own judgements about this: it is cheaper to get insurance against big multinationals like BP and McDonald’s defaulting than it is to get insurance against UK government bonds going under. That is quite disturbing, isn’t it, when a country is viewed in that way?”

“Yes, it is,” Mr Strauss-Kahn said. “That is a good example of the fact that we are facing something which is almost unknown.”

Last week, Mr Strauss-Kahn said the IMF could cut its 2009 forecast for China to around 5% amid an “unprecedented” global slowdown.

IVF weight limit ‘not justified’

Overweight and obese women have as much chance of having a baby through fertility treatment as normal weight women, a Scottish study suggests.

IVF treatment is no more expensive for most obese women, the report in the journal Human Reproduction added.

But women should be advised to lose weight because of the high risk of complications, the researchers said.

Most primary care trusts limit IVF to women with a body mass index under 30, which excludes women classed as obese.

The research, on 1,700 women who underwent their first cycle of IVF between 1997 and 2006 in Aberdeen, found 28% were overweight, 8% were obese and 5% had a BMI over 35 – classed as heavily obese.

No significant difference was found between groups in the proportion of women having a positive pregnancy test, ongoing pregnancy, and live birth.

And there was no difference in the cost of a live birth between normal weight women and women with a BMI up to 35.

But a higher proportion of women in the overweight or obese groups had a miscarriage.

And they needed higher doses of drugs used to stimulate the ovaries.

Age ‘more important’

Study leader Dr Abha Maheshwari, clinical lecturer in reproductive medicine at the University of Aberdeen, said they had expected costs to be higher in overweight and obese women.

But the study showed patients should not be discriminated against because of their size, she said.

“It shows that age is a more important factor than weight.

“Everybody should be encouraged to lose weight, but treatment shouldn’t be declined on weight alone.”

She said women with a BMI over 35 should not be offered IVF until they had lost weight because of the particularly high risk of complications.

The British Fertility Society agrees that no one with a BMI over 35 should get IVF, but says that for those with a BMI over 30, fertility treatment should be delayed until they have lost weight unless their age is against them.

Professor Adam Balen, an expert in reproductive medicine at Leeds Teaching Hospitals and author of the British Fertility Society guidelines, said these were put together on clinical grounds, not cost grounds.

“If you look at all the data, there is no doubt that obesity has a powerful effect on fertility but you can overcome it with fertility drugs.

“However, you still have a high risk of miscarriage and it is associated with maternal and foetal deaths.”

Dr Virginia Beckett, a spokeswoman for the Royal College of Obstetricians and Gynaecologists, said the study would get people talking but she would want to see bigger trials done before practice was changed.

“There is well-established data that over a BMI of 30 you have a much higher risk of complications.”

BBC iPlayer now available on Mac – BBC

The BBC has created a version of the iPlayer that works with both Mac and Linux computers.

The two systems, which have been able to stream BBC programmes via the iPlayer for a year, will now be able to handle downloads.

The BBC, working with Adobe, has developed the new version, known as BBC iPlayer Desktop.

The Corporation also ran tests of a system to help ISPs cope with increase in traffic generated by the iPlayer.

Lab edition

The iPlayer is the BBC’s online media player that lets viewers stream programmes for up to seven days after broadcast or download and watch them for up to 30 days.

When the iPlayer first launched the BBC was criticised for producing versions that only worked with Microsoft’s Windows XP and which used Microsoft’s digital rights management (DRM) system to enforce viewing restrictions.

The BBC’s head of digital media technology, Anthony Rose, who is responsible for delivering the next generation of BBC iPlayer, said the structures put in place by the BBC Trust on how the iPlayer can operate meant DRM was a necessity.

“The BBC Trust said we could make content available for seven or 30 days after broadcast,” he said. “The ability to take things away after some time requires DRM.”

The new version of the iPlayer has been written with Adobe’s AIR technology which aims to make it possible to create applications that can be downloaded to your computer, rather than just embedded in browser web pages as is possible with the widely used Flash software.

Those who want to try the new player must first install Adobe AIR and then get the trial version by signing up to be an iPlayer Labs tester via the iPlayer site.

A beta version of the BBC iPlayer Desktop that uses the Adobe AIR technology was made available on 18 December with a finished version likely to be released in February 2009.

The cross-platform nature of Adobe AIR means the iPlayer will work with Open Source and Apple Mac computers “out of the box” on 18 December, said Mr Rose. It fulfilled the Trust’s demand that the iPlayer be “platform neutral”, he said.

Mr Rose said the iPlayer now supported three separate DRM technologies: Microsoft, Adobe, and the OMA standards for mobiles.

“We may embrace other DRMs as needed,” said Mr Rose, adding that putting the iPlayer on phones, game consoles and many more computers was helping to drive the success of the application.

Traffic congestion

At the same time, said Mr Rose, the BBC has carried out tests to help ISPs mitigate the bandwidth demands of iPlayer users.

In early 2008 ISPs complained that the popularity of the iPlayer was putting a strain on their networks and forcing up their costs.

Net provider Plusnet published figures which suggested the cost of carrying streaming traffic increased from £17,233 to £51,700 per month largely because of the iPlayer.

The BBC has worked with British company Velocix to test a system which puts servers in ISPs that store, or cache, the most popular iPlayer programmes.

Mr Rose said smart software in the iPlayer would check these caches to see if the programme a user wants is loaded locally on a caching device near the user. Streaming from within an ISP’s network cuts the cost of transporting that traffic for both the BBC and the net supplier.

It was up to ISPs now to get hold of the caching boxes and install them, said Mr Rose.

“The BBC is not building its own content delivery network,” he said. “But we can help move the market in this area.”

Mr Rose said it would establish commercial relationships with ISPs that use the caching technology in the same way it did with other firms that carry or broadcast BBC content.

Small firms ‘take long Christmas’ – BBC

More small firms are planning to take an extended Christmas break than at any time in 16 years, the Federation of Small Businesses (FSB) has said.

From a survey of its members, the FSB estimates that 10% or 500,000 are planning to close for two weeks over the festive period.

The FSB says the main motivation for the move is to save money.

FSB official Stephen Alambritis said the firms were following the decisions of carmakers such as Land Rover.

‘Reduced bills’

“By closing down for the full two weeks, small firms are looking to save a bit of cash though reduced electricity and fuel bills,” he said.

“Obviously small retailers won’t be closing, but small manufacturers and self-employed workers such as electricians and plumbers, will be downing tools.”

The banking industry recently revised its guidelines for dealing with small firms to try to help them through the economic downturn.

Under the changes, banks will have to be more proactive in contacting firms they think might be in trouble.

The government also announced new measures to help small firms in the pre-Budget report, including the ability to spread tax bills, and increased access to loans.

Public sector borrowing hits high – BBC

The UK’s public sector finances deteriorated sharply in November, with the level of borrowing soaring to a fresh all-time monthly high.

Net borrowing totalled £16bn last month, said the Office for National Statistics, much higher than the £13.7bn predicted by analysts.

Borrowing for the first eight months of the financial year now totals £56.1bn, nearly double the figure one year ago.

The chancellor has already warned net borrowing could hit £118bn next year.

The figures suggest that the government’s is already falling behind its target of borrowing £77bn in this financial year.

“The public finances look pretty awful,” said Vicky Redwood of Capital Economics.

“It’s just worrying that they are that bad this early on in the recession.”

Tax impact

The total government net debt was £650bn, or 44.2% of GDP, compared to £615bn one year ago.

The debt figures have been swollen by the growing cost of the government’s bail-out of the banking sector, including taking major stakes in the Royal Bank of Scotland and Lloyds TSB.

The growing budget deficit is likely to get worse in December, when the government will receive reduced VAT receipts after its cut in the rate to 15%.

“The deepening economic downturn is taking an increasing toll on tax receipts (VAT, corporation tax, income and capital gains tax) while extremely low housing market activity and markedly falling house prices is hitting stamp duty receipts,” said Howard Archer of IHS Global Insight.

Many economists argue that the slowdown is likely to be longer and deeper than the government predicts, which could make the budget deficit even larger than forecast.

Gemma Tetlow of the Institute for Fiscal Studies says that the figures show that tax receipts were down 5.2% on the same month one year ago, while spending was up by 6%. She added that the government’s own projections suggested that tax revenues would continue to fall.

Surprise rise in UK retail sales – BBC

UK retail sales rose unexpectedly last month, official figures have shown.

Total sales volumes climbed 0.3% in November from the previous month, the Office for National Statistics said. Sales were up 1.5% from a year ago.

Analysts had been expecting sales to fall in November, and recent surveys have suggested trading has been weak.

The rise in monthly sales was led by household goods, which were up 3.9% in November – their biggest monthly increase since July 2007.

Food sales were up 0.2% for the month, while those of clothing and footwear were down 0.1%.

The level of overall retail sales made via the internet was 3.8%, up from 3.2% in October.

‘Doesn’t tally’

Analysts had been expecting retail sales to fall 0.6% in November.

“Early Christmas shopping could explain part of the strength, but it doesn’t really tally with the weakness in consumer confidence nor the data seen in the CBI and British Retail Consortium (BRC) surveys,” said James Knightley, an economist at ING.

BRC director general Stephen Robertson said the rise in the official figure for November was “hard to explain”.

However, he put the increase down to high profile price cuts and promotions, combined with the recent falls in interest rates and VAT.

“Some retailers will now dare to breathe a sigh of relief that customers are simply deferring their Christmas spending rather than cancelling it entirely,” he said.

The BRC said last week that total UK retail sales had fallen in consecutive months for the first time in at least 13 years.

It found that sales were November were down 0.4% from a year earlier, following a 0.1% dip in October.

And more timely figures from Experian, which track “footfalls” or the number of people out on the High Street, suggest that the number of shoppers has dropped by 11.5% in the first three days of this week compared to the same period last year.

Meanwhile, official data on Wednesday showed that the number of people out of work in the UK rose by 137,000 to 1.86 million in the three months to October – the highest level since 1997.

Inflation heads south – BBC

Hard to believe though it may seem, inflation is set to tumble below 1% in the second half of next year.

That’s official. We have it from the Bank of England governor himself in his open letter to the chancellor today.

Strangely enough, Mervyn King’s comments came in an explanation of why inflation is so far above the official target of 2%.

With the Consumer Prices Index measure now at 4.1%, inflation in November came in a little higher than analysts had expected.

But the inflation story of this year has been very strange.

As recently as early September, households struggling with soaring food and fuel bills were advised that inflation was public enemy number one.

But by mid-October, the Bank of England’s position had shifted dramatically. Recession was the major threat and inflation was deemed likely to melt away.

That’s not easy for consumers to get their heads around.

Heading too low?

Tumbling commodity prices, not least oil, have pulled down the rate of inflation.

The governor says that almost all the fall in the inflation rate from 5.2% in September to 4.1% in November is accounted for by petrol and food prices and utility bills.

The rapid decline in economic activity since the collapse of Lehman Brothers in September has played a big part too.

There’s nothing like an impending recession to curb price rises on the High Street.

So although inflation is more than double the target rate, the governor shows no sign of concern about it.

On the contrary, he is clearly more worried about inflation falling too low.

He says it’s likely that inflation will return to its 2% target in the first half of next year and then move “materially below it later in the year”.

He added there was a “risk that below-target inflation could persist for a while”.

Crucially Mervyn King acknowledged it was very possible he would be writing a letter explaining why inflation was too low, in other words below 1%.

Worsening outlook

All this helps explain the dramatic cuts in interest rates, from 5% in early October down to 2% now, the lowest level since 1951.

The biggest single cut, of one and half percentage points, came at the November meeting.

This followed the Monetary Policy Committee’s (MPC) reading of the latest Inflation Report which painted a bleak picture for 2009.

Worryingly, Mr King said the economic outlook had deteriorated since then “driven by the continuing difficult conditions in global money and credit markets”.

The governor makes it crystal clear he and fellow MPC members are ready to cut rates again.

The recession and deflation threats seem as vivid as ever. The high inflation story of 2008 now seems consigned to the history books.