Terrific news, Volkswagen says it is making good progress with its investigation into how it cheated nitrogen oxides (NOx) emissions tests. Approximately 450 experts have been working flat out for three months to sift through 100 terabytes of data, which the German carmaker helpfully tells us equates to 50m books. So, tell us: who authorised the scam, whose heads will roll, and whose bonuses will be retrieved?
Surprise, surprise, the word from Wolfsburg is that it’s not that simple. The “interaction” of three factors was to blame, apparently. There were indeed “misconduct and shortcomings” on the part of individuals, but none were named in the report and Volkswagen offered no clues as to their seniority. There were also “weaknesses in some processes”, a wonderfully vague phrase. Finally, a “mindset” in some quarters of the company tolerated breaches of the rules.
Processes and mindsets? This is feeble. Volkswagen seems to be taking its cue from the bankers’ book of excuses. “The main problem was that responsibilities were not sufficiently clear,” say the report. We’ve heard that plea many times – the notion that job descriptions were somehow so loose that nobody knew precisely what they were supposed to be doing.
The emissions scandal “proves not to have been a one-time error, but rather a chain of errors that were allowed to happen”, continues the report. That’s an old favourite too: one thing led to another so it’s impossible to apportion blame.
Being scrupulously generous, it is (just about) possible to believe that the final report will be less wishy-washy than this interim effort. Criminal charges remain a possibility and nine managers have been suspended from duties, so the report’s authors had to tread carefully.
In reality, Volkswagen’s every step since the scandal broke has suggested the company would prefer its inquiry to end in the deep fog of shared responsibility and broad institutional failure. Long-serving chief executive Martin Winterkorn was paid €16m last year, a reward for running a supposedly successful and upright company. Yet, even after the scandal broke and Winterkorn departed, he was applauded for his “invaluable” and “towering” contribution; his willingness to resign was called “illustrious”.
Meanwhile, the individual leading the inquiry – Hans Dieter Pötsch, chairman of the supervisory board – is the former finance director. A company truly committed to restoring the trust of customers and shareholders would have addressed accusations of boardroom cronyism by commissioning a fully independent inquiry. Instead, on the evidence of this interim report, Volkswagen won’t even bother to ask whether cosy governance played a role in the emissions scandal. It would be shocking if wasn’t also entirely predictable.
Is Glencore now de-risked? Not quite
Not so long ago, Ivan Glasenberg at Glencore was dishing out share buy-backs and dividends as if debt-reduction was for wimps, or at least for those less skilled than him in reading commodities markets. Now, with the zeal of a recent convert, he can’t get enough of the new religion in mining-land. In September Glencore pledged $10.2bn of debt-reduction and capital-preservation measures, including no dividends for a year. With a flourish, Glasenberg said on Thursday he would beat that target by almost $3bn.
Smart move – but probably also necessary to calm shareholders’ nerves after a fresh bout of weakness in commodity prices, notably copper, the most important metal in Glencore’s portfolio. No great finesse will be required to achieve the new $13bn target. For the most part, it’s a matter of making deeper cuts in the capital expenditure budget. Still, a willingness to swing the axe is what matters these days. The shares rose 6% to 89p.
Is Glencore now de-risked? Hardly. Even with the new debt-reduction targets, borrowings are still predicted to be $18bn-$19bn at the end of next year. That’s probably tolerable if Glencore achieves the $7.7bn of top-line earnings it expects to make at current spot prices. But, after this year’s battering for commodities, few are confident to call the bottom.
That is why Glencore’s share price is still well below the 125p at which the company raised $2.5bn in September. If $7.7bn of projected profit slips to, say, $6bn, the market will want to see another display of debt-reduction faithfulness.
Trouble brewing at Costa Coffee?
Most high street shops would kill for like-for-like sales growth of 2.5%. For Costa Coffee, however, it represents the slowest quarterly increase for five years. A mere blip, suggested parent company Whitbread. September and October were strong, only November bucked the trend, and little can be read into a single month’s figures.
Whitbread’s version of events is probably correct: retailing data suggests the warm November was dreadful for shopkeepers, as opposed to internet merchants. All the same, you have to wonder whether the UK will soon be saturated with coffee shops. Independents suddenly seem to be everywhere. The trend can’t last for much longer, can it?
