Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the
Speaker 2: top stories in the coming week from our Daybreak anchors
Speaker 2: all around the world. Straight ahead on the program, and
Speaker 2: look at how streaming can impact earnings at the media
Speaker 2: and entertainment giant Walt Disney.
Speaker 3: I'm Tom Busby in New York.
Speaker 4: I'm collying Hetkit in London, where we're asking what's on
Speaker 4: the cards for BP's earnings.
Speaker 5: I'm Dog Krisner looking at how a production shift by
Speaker 5: Apple has made India the number one exporter of smartphones
Speaker 5: to the US.
Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
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Speaker 3: Good day to you. I'm Tom Buzzby.
Speaker 2: We begin today's program with a look at a fresh
Speaker 2: round of corporate earning, starting with the world's biggest entertainment giant, Disney.
Speaker 2: For more, We're joined by Githa raganathin Bloomberg Intelligence analyst
Speaker 2: on US media. Well, Geetha, thank you so much for
Speaker 2: being with us once again, booming theme parks, Blockbuster Movies,
Speaker 2: ESP and other networks, cruises, merchandising and with all that
Speaker 2: besides Netflix, no one has proven how important streaming is
Speaker 2: like Disney. So what do you expect this week from
Speaker 2: Disney's results?
Speaker 1: Yeah?
Speaker 6: Thanks Tom, So. The sentiment actually has been really positive
Speaker 6: for Disney, and it's really important that you bring up
Speaker 6: the streaming segment because I think investors are now laser
Speaker 6: focused on the rising profitability of the streaming business, and
Speaker 6: we've seen Disney kind of completely turn that business around.
Speaker 6: I mean, just a few years ago, they were losing
Speaker 6: something like about four billion dollars a year. This year
Speaker 6: they're going to a probably post almost one point two
Speaker 6: to one point three billion dollars in profits, So definitely
Speaker 6: a lot of good stuff going on there. They've increased prices,
Speaker 6: so we're seeing great pricing power. They're really kind of
Speaker 6: doubling down on their advertising business. And the one big
Speaker 6: thing that happened during the quarter, and I think we're
Speaker 6: going to want to hear a lot more about this
Speaker 6: during the call is you know, everybody kind of knows
Speaker 6: about this big Hulu custody battle that Disney was fighting
Speaker 6: with Comcast that has finally concluded. So with full ownership
Speaker 6: of Hulu now under their belt, we think it will
Speaker 6: pave the way for much greater and deeper integration with
Speaker 6: Disney Plus and that should really drive I think, overall
Speaker 6: profitability as well as their advertising business.
Speaker 2: And they've got now three properties that are streaming right
Speaker 2: Disney Plus, Hulu and ESPN Plus.
Speaker 3: Are they all?
Speaker 2: I know, the crown jewel in that is Disney Plus,
Speaker 2: But how are the other two doing?
Speaker 6: They're doing very well And again very glad that you
Speaker 6: bring that up, because yes, they do have ESPN Plus
Speaker 6: right now. But the really big debut that we're all
Speaker 6: waiting for is the what we call the flagship ESPN products.
Speaker 6: So what you see right now on ESPN Plus is
Speaker 6: more like the second tier sports. What we're going to
Speaker 6: see with the flagship ESPN product, which launches in a
Speaker 6: few weeks, is that everything that you get on their
Speaker 6: ESPN linear TV network is now going to be available
Speaker 6: on their streaming on the streaming platform for thirty dollars
Speaker 6: a month. And again What is going to be really
Speaker 6: interesting here, and you know investors are going to focus
Speaker 6: a lot of their attention on, is the bundling strategy
Speaker 6: that Disney is going to adopt. So we think when
Speaker 6: they have these three great marquee products, you know, the
Speaker 6: flagship ESPN streaming they have obviously Disney Plus as you mentioned,
Speaker 6: and Hulu and kind of the bundle there, it is
Speaker 6: really going to drive streaming profitability pretty significantly going forward.
Speaker 2: Well, let's talk about subscribers, because Disney Plus now profitable
Speaker 2: has what one hundred twenty five million or.
Speaker 6: More, Yeah, somewhere in that region. Yeah, about one hundred
Speaker 6: and thirty million subscribers and.
Speaker 2: A lot of buzzworthy shows, not just and Or, but
Speaker 2: a whole bunch of Star Wars shows, lucasfilms as well
Speaker 2: as Marvel comic spinoffs. I mean, their content has really,
Speaker 2: you know, really grown and matured.
Speaker 6: You're absolutely right. So, you know, this was something that
Speaker 6: they were struggling with just a few years ago. You know,
Speaker 6: there was a lot of content, but people were kind
Speaker 6: of complaining that maybe you know, it was more of
Speaker 6: a focus of quantity rather than quality. They have definitely
Speaker 6: kind of completely rejiggered their content engine, and we've seen
Speaker 6: that kind of play out very very well, Tom on
Speaker 6: the on the studio side of the business. So we've
Speaker 6: seen you know, a lot more of their films kind
Speaker 6: of perform pretty well. Just recently, you know, we had Thunderbolts,
Speaker 6: we had of course, Fantastic Four, you know, so a
Speaker 6: whole reboot of the of the Marvel franchise entering a
Speaker 6: new phase. And you speak about content and how it's
Speaker 6: going to be such a great differentiator. I mean, just
Speaker 6: look at the next year. So just look at fiscal
Speaker 6: twenty twenty six for Disney. This is going to be
Speaker 6: an absolute bumper year for this company at the box office.
Speaker 6: We're looking at the release of Zootopia two. You're going
Speaker 6: to have Avatar, Avengers, Mandalorian, Toy Story, so all their
Speaker 6: biggest franchises. And then remember all of that is going
Speaker 6: to come to the Disney Plus platform as well, So
Speaker 6: we're going to you know, definitely see content keep driving
Speaker 6: that flywheel for Disney at least when it comes to
Speaker 6: subscriber momentum.
Speaker 2: Well, and it's not only the movies that you talked
Speaker 2: about next year, Avatar, Star Wars, Avengers, all coming back.
Speaker 2: I mean, that could be a blowout year at the
Speaker 2: box office.
Speaker 6: It absolutely is going to be because you know, all
Speaker 6: these movies, each of these properties, Tom, I mean, they
Speaker 6: generate easily. We're talking like, you know, one and a
Speaker 6: half to two billion dollars in you know, in global
Speaker 6: box office ticket sales, so you have multiples of those
Speaker 6: kind of coming out. You think of just even Zouotopia two,
Speaker 6: that's a huge, huge franchise when it comes to the
Speaker 6: Chinese market. So you know, they have all of these different, uh,
Speaker 6: you know, titles that are coming out on on the
Speaker 6: on the on the movie side, and then of course
Speaker 6: you have a whole bunch of a different series that
Speaker 6: they have for Disney Plus. So it looks really really strong.
Speaker 6: I mean, the setup looks extremely strong for both this
Speaker 6: year as well as fiscal twenty twenty six.
Speaker 3: Well, a lot to look forward to.
Speaker 2: Disney Q three earnings out on Wednesday, that's ahead of
Speaker 2: Wall Street's opening bell Our thanks to GEETHA. Raganaffin, Bloomberg
Speaker 2: Intelligence analyst on US Media. We move next to earnings
Speaker 2: from the nation's biggest ride hailing giant, Uber, which, like
Speaker 2: rival Lift, is now offering a lot more than just
Speaker 2: rides and for more. We're joined by Mandeep Singh, Bloomberg
Speaker 2: Intelligence Senior tech industry analyst Mandeep There is ride hailing,
Speaker 2: Uber won subscriptions, Uber eats, partnerships with Instacart, Home Depot,
Speaker 2: Delta Airlines, and a burgeoning robotaxi business, including a deal
Speaker 2: with Lucid to make the next generation high end cars.
Speaker 2: That's a lot going on. So what do you expect
Speaker 2: to see from Uber's latest earnings.
Speaker 7: I mean, look, when it comes to this quarter, you know,
Speaker 7: the futuristic stuff like the robotaxis don't really matter as much.
Speaker 7: At the same time, you know, everyone cares about the
Speaker 7: ramp up of Wemo, so you want to see you know,
Speaker 7: them expanding that partnership that they have in two cities,
Speaker 7: Austin and Atlanta. Wemo has talked about using you know,
Speaker 7: different partners like they've recently announced a partnership with Avis.
Speaker 7: So it sort of puts Uber in a tough spot
Speaker 7: that they don't want to rely just on Wemo. At
Speaker 7: the same time, they've been doing their own stuff. You know,
Speaker 7: you mentioned neuro I think that probably will help them
Speaker 7: and lose it, you know, So to my mind, robotaxis
Speaker 7: is an important aspect of how investors look at Uber,
Speaker 7: you know, for the next five to ten years. BET,
Speaker 7: but there's no doubt that Uber still has the scale
Speaker 7: with one hundred and seventy five million monthly active users.
Speaker 7: They've aggregated their demand when it comes to both delivery
Speaker 7: as well as ride sharing, and that is what has
Speaker 7: worked to their advantage. So being the scale player, being
Speaker 7: able to grow ebit faster than the top line growth,
Speaker 7: that is what has driven that shift in sentiment for
Speaker 7: the stock over the last three four quarters. And I
Speaker 7: expect them to execute on that. Where top line will
Speaker 7: grow around sixteen seventeen percent, the ebitdel line would probably
Speaker 7: grow over thirty percent, and they continue to show a
Speaker 7: steady operating leverage.
Speaker 2: The one hundred and seventy five million active monthly users. Yeah,
Speaker 2: with all the economic uncertainty, it's really an astounding figure
Speaker 2: that they're still adding customers.
Speaker 7: When it comes to ride sharing and delivery. I mean,
Speaker 7: these are integral part of our day to day lives.
Speaker 7: You know, everyone has to eat three meals a day. Now,
Speaker 7: you're not going to order it on Uber or door
Speaker 7: dash every meal, but there are always times when you
Speaker 7: like to use these type of services, and that's what's
Speaker 7: drive the frequency for both door Dash and Uber. The
Speaker 7: field has consolidated now to these two players. I think
Speaker 7: Uber's partnership with instacart has also helped them sort of
Speaker 7: connect with more users. That's why that MAU number has
Speaker 7: grown faster over the last few quarters because of that
Speaker 7: cross sell. But with that being said, look they've ramped
Speaker 7: up ads now. The reason why operating leverage has been
Speaker 7: better over the past few quarters is because ads is
Speaker 7: a one point five billion dollar business for Uber. That
Speaker 7: wasn't the case. And the reason why ads are working
Speaker 7: is because they have the scale, they aggregate demand, they
Speaker 7: have the supply on the platform, and once you have that,
Speaker 7: ads become obvious choice for monetization, and that's what they've
Speaker 7: been successfully able to do. Door Dashes doing the same.
Speaker 7: Lift's problem is because of the smaller size, their ads
Speaker 7: are just not as useful to the advertisers as they
Speaker 7: are on just.
Speaker 3: Out ranging that volume of people.
Speaker 2: That's right, Yeah, Well, I want to go back to
Speaker 2: the robotaxi wars because that's what it really is. And
Speaker 2: you're right, a lot of this is futuristic, a lot
Speaker 2: of it is five ten years, but there are more
Speaker 2: players than ever.
Speaker 6: Now.
Speaker 2: We know that Tesla just in June finally came out
Speaker 2: with its cybercab in Austin. Very small, very limited, but
Speaker 2: lift we talked about their self driving shuttles. Uber, you know,
Speaker 2: the partnerships and expanding more. However, way Mo looks like
Speaker 2: it has another partner in Dallas next year with Avas.
Speaker 2: I mean, is it are they just hedging their bets
Speaker 2: or is there enough out there, enough business, enough partners,
Speaker 2: enough autos that we're going to see this everywhere or
Speaker 2: try to see it everywhere? And is it really going
Speaker 2: to be a game changer?
Speaker 7: I mean, just to give you a sense of Uber scale,
Speaker 7: they do almost nine billion ride sharing trips every year
Speaker 7: globally and out of that US is close to four billion.
Speaker 7: So when you compare that to Wemo's current volume, Vemo
Speaker 7: is at a run rate of maybe thirteen to fifteen
Speaker 7: million rides annually. Uber does that in one day exactly.
Speaker 7: And Uber has that scale that no one else has.
Speaker 7: And that's where Wemo, even though they're hedging their bets,
Speaker 7: I think partnering with Uber does give them that, you know,
Speaker 7: demand in terms of the user base and the volume
Speaker 7: of trips that they can do with Uber that they
Speaker 7: can't do elsewhere on their own. At the same time,
Speaker 7: You're right, I think Wevemo's approach right now is to
Speaker 7: hedge their bets and partner with as many people because
Speaker 7: they don't want to be overly ligned on Uber because
Speaker 7: it hurts the take rates. You know, in the end,
Speaker 7: it's all about how much is Uber gonna keep, how
Speaker 7: much is WIMO gonna keep, how much is fleet operator
Speaker 7: gonna get because there is some cleaning and maintenance involved
Speaker 7: with these autonomous rights, and you know, there are different
Speaker 7: parts of the ecosystem. So I think luring your reliance
Speaker 7: on one player does serve Waymo well in the long term.
Speaker 3: Well.
Speaker 2: Uber Q two earnings out this Wednesday, just ahead of
Speaker 2: the opening. Bell Lift is out that same day after
Speaker 2: the close. Our thanks to man Deep Sing, Bloomberg Intelligence
Speaker 2: senior tech industry analyst, and coming up on Bloomberg Day
Speaker 2: Break weekend, we'll look ahead to earnings from the British
Speaker 2: Oil on the Gas Giant BP. I'm Tom Busby and
Speaker 2: this is Bloomberg. This is Bloomberg Day Break weekend, our
Speaker 2: global look ahead at the top stories for investors in
Speaker 2: the coming week.
Speaker 3: I'm Tom Busby in New York.
Speaker 2: Up later in our program we'll look at how a
Speaker 2: production shift by Apple is impacting smartphone production elsewhere in Asia.
Speaker 2: But first, following a deluge of European results, oil giant
Speaker 2: BP reports its earnings this week. The London based energy
Speaker 2: firm recently replaced its chairman amid pressure for a new direction,
Speaker 2: but has that change paid off for more Let's get
Speaker 2: to London and bring in Bloomberg Daybreak Europe anchor Caroline
Speaker 2: hepgar Tom.
Speaker 4: BP is one of the big names of the oil industry,
Speaker 4: but it's lagged behind fellow oil and gas majors in
Speaker 4: recent years, with lackluster returns, a mountain of debt, and
Speaker 4: an aborted attempt to transition to renewables. Activist shareholder Elliott
Speaker 4: Investment Management has criticized the company for lacking urgency and ambition,
Speaker 4: appealing to new chairman Albert Manifold to focus on improving
Speaker 4: the firm's cost base and capital allocation. This is in
Speaker 4: contrast rival Shell, which has focused its business on oil
Speaker 4: and gas and denied reports in June that it was
Speaker 4: in talks to acquire BP. Also to contend with are
Speaker 4: the sector headwinds a trading environment beset by geopolitical uncertainty,
Speaker 4: conflict in the Middle East and between Russia and Ukraine.
Speaker 4: The plight of oil markets and energy providers is such
Speaker 4: a precarious environment. It's something that Bloomberg's Asia Energy editor
Speaker 4: Stephen Sapcinski expanded on recently, discussing the risks posed by
Speaker 4: current White House policy.
Speaker 8: While oil prices did rise and there is a fear
Speaker 8: that Trump will do something that could restrict Russian oil
Speaker 8: on the market, there is also the view that this
Speaker 8: could be a taco sort of situation. Trump always chickens out.
Speaker 8: So how exactly will this play out? It's unclear, But
Speaker 8: because there are so few details, it's hard for people
Speaker 8: in the market to take a really bullish position on
Speaker 8: this at the moment.
Speaker 4: That was Bloomberg Energy reporter stephen's Chinsky. So can BP
Speaker 4: put its best foot forward against a difficult backdrop. I'm
Speaker 4: joined Boblinberg's team leader for oil trading in Europe, Alic Nightingale,
Speaker 4: and our markets report to sam Un said, welcome to
Speaker 4: both of you. How can I start with you? Just
Speaker 4: give us the context ahead of BP's earnings. What is
Speaker 4: your impression of the first half of the year for BP.
Speaker 4: Do they have a turnaround plan.
Speaker 9: Yeah, they've got a turnaround plan. They haven't got into
Speaker 9: the real meat of the turnaround yet. They need to
Speaker 9: kind of start looking at att disposals and you know,
Speaker 9: a lot of the big work is still to come.
Speaker 9: They have got a new chairman, which was an important
Speaker 9: part part of, you know, their strategy and just getting
Speaker 9: things on the right footing. They've made changes to the board,
Speaker 9: so things are starting to come into place, and now
Speaker 9: they're under pressure to deliver on the big kind of
Speaker 9: strategic reset that they've they promised investors.
Speaker 4: Has uncertainty from tariffs and geopolitical instability affected the market
Speaker 4: around BP, the oil markets, that's a great question.
Speaker 9: And what we're seeing time and time again so far
Speaker 9: this quarter is that the oil majors and oil companies
Speaker 9: are saying that they've had the wrong kind of volatility.
Speaker 9: These guys are really good at trading, you know, supply
Speaker 9: and demand. They've got better visibility than anybody else on
Speaker 9: where things are tight, when there's not enough supply, or
Speaker 9: then when there's too much supply. But when you move
Speaker 9: into kind of tweets and geopolitical things and things that
Speaker 9: you know, we have as good an idea as anybody
Speaker 9: else of whether the US is going to bomb Iran
Speaker 9: or something like that. You know, it becomes a bit
Speaker 9: more of a guessing game. So what they do. They
Speaker 9: retreat from risk. It doesn't mean that they become worse traders.
Speaker 9: It just means that they retreat from risk and risk
Speaker 9: and trading is a big part of kind of profit
Speaker 9: boosting for the European all majors like BP and Shell.
Speaker 9: So I think he's probably been a tougher environment on
Speaker 9: the trading side for the whole space were yet to see.
Speaker 9: BP didn't warn about that in their updates, so maybe
Speaker 9: they did, Okay, but I think there is you know,
Speaker 9: Total said they have to be careful about trading. Shell
Speaker 9: said that there's a risk of environment equanor similar stuff.
Speaker 9: So yeah, there are issues around just trying to be
Speaker 9: more risk averse when you've got these geopolitical headlines and
Speaker 9: headlines that are not about supply demand fundamentals.
Speaker 4: Sam, how are BP's results likely to compare with other
Speaker 4: energy companies in the market in the middle of results season.
Speaker 10: Yeah, And I think actually what I was just talking
Speaker 10: about there is really the interesting part of it, because
Speaker 10: BP didn't have such a weak trading update, you know,
Speaker 10: in terms of how their all training is doing and
Speaker 10: that kind of thing. But that has been what we've
Speaker 10: heard from everyone else across the sector, and what you're
Speaker 10: also hearing as well is that investors are trying to
Speaker 10: sort of look through this a little bit. You know
Speaker 10: that hopefully with tariff deals getting done, with a little
Speaker 10: bit of that those trade tensions coming down, the old
Speaker 10: traders can get back to focusing on the supply demand
Speaker 10: fundamentals and get away from the kind of as I
Speaker 10: was saying, the kind of wrong kind of volatility. However,
Speaker 10: you know, I think, as we've seen with the copper market,
Speaker 10: for example, the potential that these unpredictable events can keep
Speaker 10: happening is very much still in play. So I think
Speaker 10: that will be a key part for BP, and then
Speaker 10: across the rest of their results it will be the
Speaker 10: same things as a lot of the other companies with
Speaker 10: the trading, with the trading almost put aside, if you like,
Speaker 10: because they release a little bit earlier on that, how
Speaker 10: are the actual operations doing, how are they performing within
Speaker 10: the company, And then for BP, specifically buybacks. You know,
Speaker 10: are they going to keep up the pace of bibacs
Speaker 10: cut it and the restructuring? You know, how have they
Speaker 10: made any kind of extra progress on this very big,
Speaker 10: very significantly structuring.
Speaker 1: They have to do well in.
Speaker 4: Terms of the buyback, paying out dividends. That is always
Speaker 4: a very important component in the London market, isn't it.
Speaker 4: What are we expecting around that?
Speaker 9: We saw declining profits for the other oil companies and
Speaker 9: BP's training update wasn't too bad, So I would have
Speaker 9: thought that they'll keep it, keep the buybacks and there
Speaker 9: won't be too much alarm on that front. So yeah,
Speaker 9: I wouldn't be you know, I think that the expectation
Speaker 9: is that that won't be.
Speaker 4: Changing in terms of also the sustainability issues for BP.
Speaker 4: So they're in the middle of reversing what was a
Speaker 4: pivot to sustainability. How does that compare to what other
Speaker 4: oil companies are doing and fossil fuel production now, I
Speaker 4: think I.
Speaker 9: Think there's a general is not singular, there's not one theme,
Speaker 9: but I think there is a move to kind of
Speaker 9: be less engaged with renewables and things like that, and
Speaker 9: an emphasis on hydrocarbons. If you look at how the
Speaker 9: US oil companies that have never been quite so kind
Speaker 9: of wedded to kind of environmental sustainability type of stuff.
Speaker 9: You know, they've done better and they've been more focused
Speaker 9: on what they always were and I think you've seen
Speaker 9: a pivot back towards that. But it's not universal. You know,
Speaker 9: there are oil companies that have kind of stuck stuck
Speaker 9: to it more. But you know, we've seen moves out
Speaker 9: of green hydrogen. BP is a big Australia project, so
Speaker 9: you know there's a lot going on in terms of
Speaker 9: moving away from it and moving back to a focus
Speaker 9: on oil and gas.
Speaker 4: In terms of activist management, Sam BP shareholder's Elliott Investment Management,
Speaker 4: they are so called activists investors, aren't they And they
Speaker 4: certainly have made a number umber of statements around BP
Speaker 4: and what they'd like the business to look like. How
Speaker 4: do you think that relationship is and how does it
Speaker 4: fit into kind of US activist investment in the UK
Speaker 4: and Europe.
Speaker 10: Well, I think with the BP in particular. So you know,
Speaker 10: as I was just talking about, you know a lot
Speaker 10: of companies are still staying in that renewable space and
Speaker 10: one of the big things that was pushed for for
Speaker 10: at BP and by Elliott in particular, is moving back
Speaker 10: over to these the hydrocarbs, the fossil fuels, because in
Speaker 10: part of the valuation on the stock, you know, BP's
Speaker 10: evaluation and their shares have done extremely poorly, you know,
Speaker 10: against a lot of the other majors over the last
Speaker 10: couple of years. I think that's a major part of it.
Speaker 10: But what they need to be able to do over
Speaker 10: the course of you know, the whole restructuring process that
Speaker 10: they're going through, is balance that with decent operations and
Speaker 10: then with you know, pulling away from the new renewable
Speaker 10: side of things, but balancing those two things out. Other
Speaker 10: companies have just done that a little bit better than
Speaker 10: BP have, I think for the results, I think what
Speaker 10: you're likely to see is if there's an in honesty,
Speaker 10: there's not probably going to be an enormous amount of
Speaker 10: extra progress made, you know what we'll see. But what
Speaker 10: Elliott and what certainly investors seem to think when the
Speaker 10: restructuring was first announced is that it needed to go
Speaker 10: a little bit further. So maybe they will be looking
Speaker 10: for that kind of thing. I don't think that's the
Speaker 10: kind of thing you'll get with the results, But that's
Speaker 10: going to be the focus going forward for Eliot in particular.
Speaker 4: Al can you just give us a view on the
Speaker 4: second half of this year and into next year what
Speaker 4: BP will be thinking about. As you say, it's a
Speaker 4: much more unstable, uncertain world, maybe risk is coming off
Speaker 4: the table. I mean, OPEK and its allies continue to
Speaker 4: add barrels to the market. There's a very uncertain white
Speaker 4: house when it comes to energy policy. What are you
Speaker 4: thinking about? What are all the market's thinking about when
Speaker 4: it comes to BP and the market for the rest
Speaker 4: of this year.
Speaker 9: I think BP everybody else is easy to forget that
Speaker 9: the oil price is really important and the gas price
Speaker 9: is really important. You know, a few bucks of move
Speaker 9: in the oil price can affect their revenues very significantly,
Speaker 9: and so that's important. Now what's going on with the
Speaker 9: oil price. The widespread expectation is that as we move
Speaker 9: into the second half of this year into early twenty
Speaker 9: twenty six, we're going to see a surplus building up.
Speaker 9: OPIC keeps on adding barrels, you know, I think I
Speaker 9: think that the Trump terrris haven't really crushed demand like
Speaker 9: people kind of maybe predicted it they would, But there's
Speaker 9: still are kind of an uncertainty economically that probably hasn't
Speaker 9: been helpful. So you've lost a bit of demand, you're
Speaker 9: certainly adding some supply. There's non opic supply coming in.
Speaker 9: So the expectation among the big forecasting agencies like the
Speaker 9: International Energy Agency and the EIA is that they're going
Speaker 9: to see a surplus moving into next year. Surplus isn't
Speaker 9: usually very good for oil prices, and therefore, you know,
Speaker 9: it's not great for BP or anybody else if that
Speaker 9: starts to be the case. If you start to see
Speaker 9: a glove building up, then oil price is bad and
Speaker 9: that's that isn't good for the stock prices of these
Speaker 9: oil companies.
Speaker 4: And Europe of course has recently committed SAM to buying
Speaker 4: much more energy and energy products from the US, for example.
Speaker 4: So we have geopolitics, we have conflicts, we have uncertainty.
Speaker 4: How are you thinking about the rest of the year
Speaker 4: for BP and in context for the earning picture?
Speaker 10: Yeah, I actually what Ilse said there is is a
Speaker 10: really important point which you know, we should always keep
Speaker 10: in mind what the oil price is doing and what
Speaker 10: the outlook is for the ol press over the course
Speaker 10: of the rest of the year. But when you have
Speaker 10: a market that is under pressure like that, you know,
Speaker 10: either it coming from the oil price or from the
Speaker 10: kind of broader uncertainties in the market. Demand. Uncertainty is
Speaker 10: going into the rest of the year. I don't think
Speaker 10: we can sit here and say that uncertainty is over
Speaker 10: in any way. So over the course of rest of
Speaker 10: the year for BP, because they are coming at it
Speaker 10: from a slightly weaker position, I think that they will
Speaker 10: they will have to deliver, you know, well, they have
Speaker 10: to show their investors that they are delivering on the
Speaker 10: plan that they have managed to put together, and so
Speaker 10: there will be a bar for them to get over
Speaker 10: I think for the earning and then for the rest
Speaker 10: of the year to show that progress.
Speaker 4: Okay, many thanks to both of you. To Bloomberg, Sam
Speaker 4: Onsteed and Alec Nightingale, thank you so much for your time.
Speaker 4: Really good to speak to you ahead of BP's earnings
Speaker 4: in the next few days. I'm Caroline Hepge here in London.
Speaker 4: You can catch us every weekday morning for Bloomberg Daybreak
Speaker 4: you at beginning at six am in London. That's one
Speaker 4: I am on Wall Street.
Speaker 7: Tom.
Speaker 2: Thanks Caroline and coming up on Bloomberg Daybreak Weekend how
Speaker 2: a shift by Apple has turned India into the world's
Speaker 2: top maker of smartphones ship to the US. I'm Tom Busby,
Speaker 2: and this is Bloomberg. This is Bloomberg day Break Weekend,
Speaker 2: our global look ahead at the top stories for investors
Speaker 2: in the coming week.
Speaker 3: I'm Tom Busby in New York.
Speaker 2: Global supply chains began to shift during the pandemic, and
Speaker 2: that shifting became more dramatic with the rollout of President
Speaker 2: Trump's tariffs as high as one hundred and fifty percent
Speaker 2: for Chinese exports to the US, and that caused Apple
Speaker 2: to reimagine its production network. For more on those results,
Speaker 2: let's get to the host of the Daybreak Asia podcast,
Speaker 2: Doug Krisner.
Speaker 5: Tom As Apple began to diversify its supply chain further,
Speaker 5: the company doubled down on India, and that got a
Speaker 5: reaction from President Trump. Back in May, he threatened CEO
Speaker 5: Tim Cook with a twenty five percent tariff on Apple
Speaker 5: products unless the company shifted production to the US.
Speaker 11: I had an understanding with him that he wouldn't be
Speaker 11: doing this.
Speaker 12: He said, he's going to India to bill plants.
Speaker 11: I said, that's okay, to go to India, but you're
Speaker 11: not going to sell them to here without tariffs.
Speaker 5: But Apple followed through and deepened its ties in India,
Speaker 5: and in the quarter through June, India became the largest
Speaker 5: manufacturer of smartphone shipped to the US for the very
Speaker 5: first time. According to data from Canalis, Indian produced handhelds
Speaker 5: accounted for forty four percent of the American market. Vietnam,
Speaker 5: home to much of Samsung's production, came in second. China
Speaker 5: dropped to just twenty five percent. That's down from more
Speaker 5: than sixty percent a year ago. Let's take a closer
Speaker 5: look now. Joining me is Sun Culp Fartial. He is
Speaker 5: India technology reporter for Bloomberg News, joining us from our
Speaker 5: bureau in New Delhi. Sun Culp, thank you so much
Speaker 5: for making time to chat with me. Can I begin
Speaker 5: by asking for some perspective on Apple's relationship with India.
Speaker 5: When did it actually begin?
Speaker 12: I mean, Apple sol iPhones it India forever, but the
Speaker 12: relationship has especially become better and more meaningful and more
Speaker 12: important in the last four years. Twenty seventeen was the
Speaker 12: first time Tim Cook visited India as Apple CEO. At
Speaker 12: that time, he met with the Prime Minister and Ardiamodi.
Speaker 12: Both of them had a chat and there was requests
Speaker 12: from India that Apple should manufacture in India. And then
Speaker 12: we saw that in twenty seventeen, Apple actually started assembling
Speaker 12: a few test units of what was back then called
Speaker 12: the iPhone SE but that was sort of a test run.
Speaker 12: This assembly was done in Bangalore in south of India,
Speaker 12: so the relationship started there. But in twenty twenty one,
Speaker 12: Apple actually won financial incentives or what I should actually
Speaker 12: call state subsidies to manufacture in India, and that's when
Speaker 12: they really scaled up production. And you know, today more
Speaker 12: than a fifth of iPhones are assembled in India. More
Speaker 12: than a fifth of the global iPhone output is being
Speaker 12: done out of India. So that's a quick recap of
Speaker 12: the history.
Speaker 5: So we know that Apple has been diversifying its supply
Speaker 5: chain away from China. I'm curious about the technology that
Speaker 5: Apple is using in India to produce these devices. Hanhaigh
Speaker 5: Precision is the world's largest maker of iPhones. How does
Speaker 5: a company like Hanhai fit into the picture of Apple
Speaker 5: in India.
Speaker 12: Yes, they have been key in Apple's manufacturing success or
Speaker 12: assembly in India. I just want our listeners to know
Speaker 12: that there's very little difference between manufacturing and assembly now,
Speaker 12: and India does quite a bit of assembly now, but
Speaker 12: a lot of components is yet are sourced from China.
Speaker 12: Fox Corn, as Hanahai is more widely known. They made
Speaker 12: the first iPhone in India sometime in late twenty twenty
Speaker 12: or twenty one, and they made iPhone ten in India
Speaker 12: for the first time, and from then on, you know,
Speaker 12: they've been ramping up production. Last year they produced iPhone
Speaker 12: sixteen at the same time as the global launch from India.
Speaker 12: So a lot of components still come from China, but
Speaker 12: Apple is very actively scouting for partners here. Fox Corn
Speaker 12: has one factory in the south of India and they're
Speaker 12: building another one, which is their second largest plant in
Speaker 12: the world.
Speaker 5: To what extent has the workforce in India been an
Speaker 5: attraction for a company like Apple, a workforce that may
Speaker 5: be technologically sophisticated.
Speaker 12: So the workforce is quite a big advantage for Apple
Speaker 12: in India. First of all, when fox Conn began assembling
Speaker 12: iPhones in India, another unit of fox Corn was already
Speaker 12: active in India making Shaomi phones and you know, some
Speaker 12: other phones. They had devised the model where they brought
Speaker 12: in a lot of women workers in India, especially women
Speaker 12: workers as seen as more hard working, more reliable. They
Speaker 12: stick to the job. Sometimes they're the only breadwinners in
Speaker 12: the family, so Apple stuck to that model. About seventy
Speaker 12: percent of their workforce in the factories is comprised of women.
Speaker 12: It's an advantage because these workers otherwise have not gotten jobs.
Speaker 12: Probably some of them would have been married really early,
Speaker 12: so it's a good thing for their families. And this
Speaker 12: workforce has proven very reliable for Apple and from scratched
Speaker 12: to making one fifth of the iPhones. That says something.
Speaker 5: I'm wondering whether other technology firms beyond Apple are looking
Speaker 5: at India on the production side and seeing all of
Speaker 5: the points of attraction that you've just kind of laid
Speaker 5: out and thinking about maybe investing resources putting more production
Speaker 5: lines in place in India.
Speaker 12: Is that happening, Yes, to some extent, it is happening,
Speaker 12: to be sure, China still is a huge manufacturing superpower,
Speaker 12: and we're very small compared to China, but it's also
Speaker 12: early days for India. Some other firms that are now
Speaker 12: making their products in India include Google, Bloomberg broke the
Speaker 12: story last year about Google making its Pixel phones in India. Now,
Speaker 12: the volumes of Pixel phones or the sales are much
Speaker 12: smaller compared to Apple. Samsung has a huge factory on
Speaker 12: the outskirts of Delhi. It's a little bit smaller than
Speaker 12: their plant in Vietnam, but they make phones in India
Speaker 12: and they export them as well. In fact, when that
Speaker 12: factory was inaugurated a few years ago, I remember Samsung
Speaker 12: said that we're now going to make in India for
Speaker 12: the world. There are companies here that assemble laptops for
Speaker 12: ACER and HP and Dell. So yes, I mean India's
Speaker 12: stature as a manufacturing hub is definitely growing. Is it
Speaker 12: right to compare it to China? No, We're still very early.
Speaker 5: But I'm curious whether or not it's beginning to move
Speaker 5: beyond some of these devices like handheld or smartphones and
Speaker 5: into things like semiconductors, whether we're talking about microprocessors or
Speaker 5: sophisticated computer memory. Is that happening at all.
Speaker 12: Yes, that's beginning to happen. I think it's a very
Speaker 12: big push by Prime Minister and Arrange Room, these government
Speaker 12: to make India reliant electronically in electronic products and the
Speaker 12: chip shortage kind of showed nations that they needed to
Speaker 12: be reliant, self reliant. So what we've seen is that Micron,
Speaker 12: the US company, has entered India. They're building a plant
Speaker 12: in the western state of Gujarat, which also happens to
Speaker 12: be the home state of the Prime Minister of India.
Speaker 12: Then we see Tata Conglomerate, which is one of the
Speaker 12: biggest Indian conglomerates. They are building a factory again in Gujarat.
Speaker 12: They're going to be making legacy semiconductors. So India is
Speaker 12: not making the kind of cutting edge semiconductors that are
Speaker 12: TSMC makes. TSMC has not even come to India and
Speaker 12: may not for some time, but India started its journey
Speaker 12: towards manufacturing chips.
Speaker 5: So it seems like there's a fair amount of foreign
Speaker 5: direct investment that's been moving into the Indian market.
Speaker 12: Yes, definitely. So you know, India announced billions of dollars
Speaker 12: worth of state subsidies to encourage the assembly and the
Speaker 12: manufacturing of smartphones. Then it has announced another scheme with
Speaker 12: some early billions to push the manufacturing of servers and
Speaker 12: laptops and tablets. It has a ten billion dollar fund
Speaker 12: to encourage chip making in the country. So it has
Speaker 12: spent some amount of government money, some substantial amount of
Speaker 12: government money to attract assembly and manufacturing to India.
Speaker 5: That was send culled Farti al There, India Tech reporter
Speaker 5: for Bloomberg News. Let's move next to the property sector.
Speaker 5: For both Hong Kong and mainland China, new property sales
Speaker 5: across forty seven Chinese cities fell nineteen percent between July
Speaker 5: first and the twenty third, and Bloomberg Intelligence says this
Speaker 5: could portend a deepening sales downturn in the second half
Speaker 5: of the year. Buyer sentiment has weakened since April's US
Speaker 5: tariff announcements, and it's threatening to undermine previous stimulus efforts.
Speaker 5: For some insight, let's bring in Adrill Chan. He is
Speaker 5: chair of Hong Long Properties. Adrill joins us from our
Speaker 5: studios in Hong Kong. Good of you to make time
Speaker 5: to chat with me. I want to bring up a
Speaker 5: sore subject right out of the gate. I'm sorry because
Speaker 5: I noted that net income for your company was down
Speaker 5: fourteen percent year over year in the latest period. Can
Speaker 5: you give me a sense of what's happening, what you're
Speaker 5: struggling with right.
Speaker 11: Now, Thanks Doug. The decrease in net income really is
Speaker 11: as a result of a lower number of sales of departments,
Speaker 11: and that is something that fluctuates for us. The primary
Speaker 11: sector of our business is retail leasing and office leasing,
Speaker 11: so commercial leasing is actually down low single digits, which
Speaker 11: is a lot less bad than being down fourteen percent,
Speaker 11: but that's the explanation for that. If you look into
Speaker 11: retail and offices, retail has been actually surprisingly resilient in
Speaker 11: the Mainland. I think our share price has reacted relatively
Speaker 11: well since the announcement of our results, and that's a
Speaker 11: little bit of a surprise to me, honestly, but I
Speaker 11: think that the market was perhaps expecting worse. So we're
Speaker 11: down retail sales low single digits, but I think people
Speaker 11: were probably expecting worse than that.
Speaker 5: So give me a sense of what your portfolio looks like.
Speaker 5: When you talk about retail spaces, I think shopping malls.
Speaker 5: Are you catering to retailers that perhaps service the higher
Speaker 5: end of the market. Are these luxury type retailers primarily?
Speaker 11: Absolutely so. Our biggest exposure is to the luxury brands,
Speaker 11: and as we've been seeing over the past couple of days,
Speaker 11: the luxury brands have been posting let's say, mixed results.
Speaker 11: Asia extrapan is sort of broadly flat ish, while Japan
Speaker 11: is down significantly, and that kind of I think is
Speaker 11: what explains our reasonable performance. A lot less Chinese outbound
Speaker 11: tourism to Japan for shopping and staying on shore to
Speaker 11: do that shopping. So that's one of the macro trends
Speaker 11: that we've seen. I don't know if that's because of
Speaker 11: all this rumors about earthquakes and this and that, but
Speaker 11: for various reasons, the Chinese consumers seem to be staying
Speaker 11: put on shore.
Speaker 5: So when you cater to that segment of the real
Speaker 5: estate market, those higher end retailers, do they have expectations
Speaker 5: about certain upgrades or modifications that the landlord in your
Speaker 5: case has to provide them, And does that kind of
Speaker 5: draw down or maybe force you to do a little
Speaker 5: bit of cap.
Speaker 11: X Oh, it certainly does. So, you know, in terms
Speaker 11: of luxury moles, this sector in the mainland of China
Speaker 11: has only been around for maybe twenty years or so,
Speaker 11: twenty twenty five years, and so if you think about
Speaker 11: the lifetime of a mall, that's kind of the time
Speaker 11: that you need to definitely start looking into CAPEX upgrades.
Speaker 11: We've done quite a few. We've done three upgrades in
Speaker 11: three of our separate males across the mainland.
Speaker 5: They've been well received.
Speaker 11: I think now in terms of the market cycles, it's
Speaker 11: a relative down it's probably a good time to be
Speaker 11: investing in oneself. That being said, because we're in a
Speaker 11: down market, the tenants have pricing power. It's a buyer's
Speaker 11: market for our tenants, and so we have to make
Speaker 11: sure that we're on the ball in terms of how
Speaker 11: those capecks upgrades go and our ability to deliver on
Speaker 11: an operations and service that is.
Speaker 5: A drill chan share of Hong Long Properties. And I'm
Speaker 5: Doug Krisner. You can catch us weekdays for the Daybreak
Speaker 5: Asia podcast. It's available wherever you get your podcast.
Speaker 2: Tom, Thanks Doug, and that does it for this edition
Speaker 2: of Bloomberg day Break Weekend. Join us again Monday morning
Speaker 2: at five am Wall Street Time for the latest on
Speaker 2: markets overseas and the news you need to start your day.
Speaker 2: I'm Tom Busby. Stay with us. Top stories and global
Speaker 2: business headlines are coming up right now.