Persson defends H&M’s business model

Weak sales in March and swelling stocks took the edge off a result that for H&M was surprisingly positive. One of the pieces of news in H&M’s quarterly report was that the company is adding another concept to its portfolio when it opens the first store under the brand Arket in London, along with online stores in 18 European countries.

CEO Karl-Johan Persson explains that when something new is developed, as with COS and & Other Stories, there are initial high costs but, for example, COS now has a turnover of over 10 billion kronor. “The prices in Arket are around the same level as COS and Stories, with a major focus on quality. We have a great team here in Stockholm and have worked on this for a year and a half. It is not like any of our other concepts,” says Persson.

H&M has had a tough start to the year, 4% growth in local currency during the first quarter and 7% in March. However Persson says the company is still aiming for its goal of 10-15% growth per year. He says it has become more difficult but the operating margins could still increase. Addressing online issues, Karl-Johan Persson says, “I think that it is a misunderstanding that we are falling behind online… The model is working, even if we could develop it further.”

Andersson: “Jobs and growth at risk”

There are no winners in the UK’s exit from the EU, according to Finance Minister Magdalena Andersson who wants British guarantees before negotiations can begin on a trade deal.

She also warns for emotional turmoil during the negotiations. “There will need to be adults in the room,” she says pointing out that both jobs and growth are at risk. The UK wants to negotiate a free trade deal alongside the exit negotiations but Magdalena Andersson is sceptical about how realistic this is.

“It is important that the UK meets its financial obligations towards the rest of the EU,” says Andersson, as the UK has obligations of between 50 and 60 billion euro to the EU (between 475 and 570 billion kronor).

The National Board of Trade in Sweden (Kommerskollegium) has calculated that Swedish companies are going to have to pay 2.1 billion kronor in duties when the Brits leave the EU if no new trade deal is in place.

Pressure mounting on Ericsson’s new boss

Börje Ekholm’s honeymoon is over. Ericsson’s new CEO has remained tight-lipped about his plans for the company, something that has surprised analysts. Several are now hoping that Börje Ekholm will present a concrete decision about the future direction of the company at Wednesday’s AGM.

The telecoms giant is facing several challenges. Ericsson is losing market share, mainly to the Chinese company Huawei, and an expensive race is underway between the world’s telecoms giants over new 5G technology. Furthermore there are unanswered questions about whether parts or the whole of Ericsson are up for sale. At the turn of the year Ericsson restructured its business areas and now consists of Networks, IT & Cloud and Media. There has been speculation that the latter two will be sold or hived off.

SvD writes that its sources have had no signals from Ericsson, which most likely means that no decisions have yet been made about the future. Daniel Djurberg, telecoms analyst from Handelsbanken, says, “My guess is that it will come before midsummer. This uncertainty is not great with as strong a competitor as Huawei. I think it has already affected the stock price.”

Ukraine attracting Swedes

Trade Minister for Ukraine Nataliya Mykolska is in Stockholm to attract Swedish companies to Ukraine. The selling points are low wages, speedy reforms and an EU agreement.

She says areas of priority are food, light industry, timber, furniture and IT. She also sees potential in tourism. She says the government has also worked hard to counter corruption, saying that more has been done in the past three years than in the preceding 25 years.

Government announces tax cut for pensioners

The government has announced plans to cut taxes for pensioners. The proposal means that seniors over 65 with a pension of SKr 14,000 per month will receive an estimated tax cut of SKr 200 each month. Those with a pension of SKr 19,000 per month will receive a cut of SKr 160. Around 1.4 million pensioners, corresponding to 70% of those aged 65 and over, will benefit from the change.

In the run up to the 2014 general election the Social Democrats promised to close the gap between pensioners and those in gainful employment. Announcing the news on Wednesday, Finance Minister Magdalena Andersson said the cut was a step in the right direction.

The measure, which will be presented in the autumn budget, is expected to cost the Treasury SKr 2.1 billion.

No winners in event of trade war

Two months into protectionist Donald Trump’s presidency, WTO Director General Roberto Azevêdo warns of the risks of a global trade war.

Speaking to Svenska Dagbladet ahead of his visit to Stockholm today, Thursday, the WTO head says he hopes a trade war can be avoided. “There are no winners in a trade war, only losers,” he remarks.

He does not believe there will be a return to the global trade growth of 8 to 9% seen in the years prior to the financial crisis, but there is no reason why it should not pick up to 5%, although this is unlikely to happen any time soon.

Roberto Azevêdo is cautious about drawing any swift conclusions over US-China relations, convinced the two nations will reach agreement despite difficulties.

Diplomats in Washington are unsure about the direction the US may take on trade policy and the WTO head is in a similar situation. “I don’t actually know if Trump is for or against trade. What I am hearing, however, is that the Americans consider the WTO an important organisation and that they are for free trade but against unfair trade,” he says.

Swedish banks and firms drawn into Russian Laundromat

In 2014 a group of journalists working with the Organised Crime and Corruption Reporting Project (OCCRP) broke the story of the “Global Laundromat” – an operation whereby money was moved out of Russia between January 2011 and October 2014. Much of the money was moved out of the country via Trasta Kommercbanka in Latvia and Moldindconbank in Moldova, and investigations were subsequently launched in Latvia, Moldova, the UK and Russia.

OCCRP journalists have since gained access to information allowing investigators to track how USD 20.8 billion was moved from Russia. Detectives believe the true figure could be as much as USD 80 billion, or SKr 700 billion, according to The Guardian. As a comparison, Swedish government expenditure in 2017 is expected to be in the region of SKr 970 billion.

According to OCCRP, Sweden’s big four banks as well as Danske Bank and Norwegian DNB, are among the hundreds of banks that have processed the money. OCCRP also says that Ericsson and fastening tool company Isaberg Rapid have received money transfers of USD 1.3 billion and USD 153,000 respectively.

Ericsson says it does not normally comment individual transactions, but this was a single payment for one of its customer contracts. “We don’t know today why the payment was made by a company other than the customer, but in light of the information that has now emerged, we will take a closer look at this payment and see if we have adequate procedures and control mechanisms,” states the company.

Minister on warpath

Financial Markets Minister Per Bolund (Green) tells Svenska Dagbladet that the Swedish Financial Supervisory Authority (Finansinspektionen) will be given greater powers to stop those fund companies that charge high commissions for poorly performing funds. “They have no place on the Swedish market,” he says.

Stockholm attracting cruise lines

At least 270 cruise ships carrying a total of 650,000 passengers will call in at Stockholm this year, generating revenues of SKr 600 million. This is a significant increase on last year, and there are a number of reasons why, according to Henrik Widerståhl, deputy MD at Ports of Stockholm. The Swedish capital has become an attractive destination at the same time as cruise tourism is taking market share. In addition, the Mediterranean security environment has led some shipping lines to reroute to the Baltic instead.

Rollén keeps working

Hexagon is not wavering an inch in its support for CEO Ola Rollén, accused of insider trading. Hexagon’s incoming chair Gun Nilsson says, “There is strong evidence that demonstrates Ola Rollén’s innocence. His handling of this frustrating situation has demonstrated that he is an exceptional leader.”

On the other hand Økokrim, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime, is unwavering in its belief Rollén is guilty. Marianne Bender, prosecutor at the agency, says that they are convinced they can demonstrate he has committed punishable offences. However the conviction the prosecutor is seeking remains confidential until the trial.

The measuring technology company Hexagon has appointed lawyer Hans Strandberg and his law firm Nordia for an independent inquiry alongside Ola Rollén’s defence. Ola Rollén remains as CEO just now.