Transcripts For BLOOMBERG Countdown 20140213

Hello, i am mark barton. This is countdown. I am anna edwards. We are getting numbers from frances largest lender, bnp breaking earnings right now. Lets get straight to that. A surprise drop in fourthquarter profits. 1. 1 billionide tied to a review of payments to parties subject to u. S. Economic sanctions. 76 to 127falling by million euros. The lowest Quarterly Results since the Fourth Quarter of 2008. It is a mess, missing the one billion euro average estimated by analysts at bloomberg. Decision after it paid to settle u. S. Allegations carried out in proper transactions with countries such as iran. The company also announcing today that it intends to increase return on equity which is a measure of profitability to 10 or more by 2016. Return on equity stood at 7. 7 last year. It will present its threeyear of element plan to investors next month. Frances largest bank because of this legal provision in the u. S. Missing fourthquarter earnings estimates. The cfo spoke to bloomberg in paris. He said the retail bank was resilient but the risks and italy had recently increased. What we have seen this year is that the demand for credit was somewhat subdued. There was relative stabilization at the top line which has reduced cost and we are quite proud about our cost of risk. We have been able to stabilize the result at what we consider a high level. I think some people see a glimmer of hope. There are some plans that have been announced. We will watch closely how it unfolds. In italy are you worried about political instability . Are your provisions stabilizing their . There has been a continuation. In the last quarter, we have seen a slight pickup in our cost of risk. Adapt oure to configuration. It is one of the elements of our plan where we believe that we have all elements in place adapting our positioning further , the capturing of synergies by with beyond activities several activities and italy. Rio tinto, the worlds secondbiggest Mining Company just reporting results. Jonathan ferro is here to crunch of the numbers. It is a beat. Estimate was, the for 9. 6 billion. That is a healthy beat. My eye is on the dividend story. It comes in a 15 increase in the fullyear dividend. Analysts expect around 1. 70. It is going to be one of a . 92 per share. It has been no different one 1. 92. The shareholders want them to go out and stop doing that expanding on m a. That is what theyre getting this morning, a 15 increase in fullyear dividend. Theyre going to get a fullyear dividend of 1. 92. Capital investment, we have a guest later from Sanford Bernstein talking about just that. Those are the dynamics find the sector. We are still looking at emerging markets clues for where the Mining Sector is heading. We are looking towards china specifically. A big chunk of this company, 40 of revenue. If you are looking towards china, they can see 60 of global iron ore output. What we are seeing in reality is demand from china being quite resilient on the year, taking higher if anything. The cost of iron ore has started to trend lower but the concern abated by demand in china remaining strong. 2014 globalg for output as 100 million tons on a global basis. Investors are going to be quite happy with that increase in the dividend. More cash to come maybe from rio tinto as they cut back on capital expenditure. Stay with bloomberg for more on rio. The u. S. Cable giant comcast is said to have agreed to by Time Warner Cable in a deal worth 44 billion. This is according to four people familiar with the situation. Here with more is manus cranny. How does the deal stack up . Cash, all stock. It looks like comcast is going it alone. It is the end of eight months of wrangling over Time Warner Cable. It was suggested charter and comcast would get together. It looks like comcast has gone alone. This is about scale, content and pricing. You just think about where comcast is. That deal with nbc, they agree to certain terms with nbc. That is the challenge putting comcast and time warner together. This is going to be a key factor, regulation. What impact are we expecting this to have on customers . Some customer groups in the United States object to this. They may object and there is a cracking piece on bloomberg view, if the cable business had a soundtrack, that soundtrack would be jaws. Content Companies Need access to the cable. And customers. The bagel the Cable Company you are, the more control you have over the customers. Therefore you can push the pricing higher. It looks like the longerterm impact will be higher prices to the end customer. This is about people. It is about the ceo of time warner and brian at comcast. It is suggested they have a little bit of an inside track on this. Brian roberts was communicating with robert markets from sochi over the last couple of days. Ultimately Brian Roberts and Robert Marcus seem to have more in common than john malone. He has a big stake in charter. Who was also interested in buying. Three times they came knocking on the door. Hey, we really want to do it. The last time it was like they wanted 160. If we come in on this deal of 159, it is going to be just shy of what they wanted to go back to the board with. I think that john malone can still pick up customers. They might have to sell some assets. Comcast might have to sell assets to meet regulator requirements. Comcast cant have any more than 30 of the cable market so they might have to divest about 3 million customers. We will see how it all turns out. It is about scale, content and pricing. The italian Prime Minister is fighting off a challenge within his own party. Yesterday he presented a new economic plan. Today he will learn whether matteo renzi will move to replace them. For the latest, lets cross over to hans nichols live in rome. Tell us what happens today. Is Matteo Renzis move. Jawsust said that should be the soundtrack to american Cable Companies. The same holds true with italian politics. What randy has to decide is, will he challenge letta this afternoon or way to make a bid later . He is the mayor of florence, the head of the Democratic Party. There isals are pd and a play on that in one of this mornings papers which are dominated by this. It says that really gets at what is happening inside the party which could lead to the collapse of this government. Yesterday it was renzi who called the meeting with letta, fairly rare for a mayor to summon a Prime Minister. After the meeting, letta sounded like a premier who was open to the idea that he may have to leave office. I lived every day as if it was my last one, Broad Coalition change after just two or three months. I had to follow the development of the situation stepbystep. Said afterwards he still didnt know if he had the support of his own party. This would be the fourth government to fall in just two years. A propose tolett renzi . We dont know the exact details. Therwards, letta goes to cameras and gives his new economic proposal. Here is what he is talking about, a payroll tax cut, budget reductions and ways to strengthen the legal system. One final note, investors dont seem to be worried. Bond levels are at historic lows even with public debt at around 133 of gdp. Youth unemployment at 40 . What enrico lettas argument is, is that he is the best person to stay the course and get the economy back on track. Thanks, hans nichols live in rome. A bloomberg exclusive, the french finance minister is currently in the United States with president hollande. He told our chief washington correspondent peter cook that france is open for business. This country, our country, is back on track. We are in the innovative creative country and we are open to business, to foreign business. I say, welcome to american investment. Already, two companies from the u. S. Hiring about 500 people in france 500,000 people in france. We have got 60 billion euros between france and the u. S. Are reforming, leading structural reform, being more open to business, wanting to have a Simple Administration, better regulation. That is what we are doing in france. The climate of this visit i think is positive for business between the u. S. And france. Will bring you more from our exclusive interview with the french finance minister later on in the program. U. S. Treasury secretary jack lew is urging china to stop cyber theft if it wants more influence in global decisionmaking. He made those comments on the charlie rose show. Cyber security and cyber theft are somewhat different issues. The issue that we have raised with china is the protection of intellectual property. Is theft ofre there intellectual property are unacceptable for a country thats once to sit at the table. China sees itself as a country that should have a voice in making the rules for the next generation. They cant have it both ways. Be sure to watch the entire interview on charlie rose tonight. It airs on bloomberg tv at 10 00 p. M. U. K. Time. Just ahead, we dig into mining in light of rio tintos latest earnings. Our next guest says the sector breaking news from nestle, the worlds Biggest Food Company. Those numbers just coming in right now. Fullyear organic sales is is mine in line with estimates. 4. 6 growth, that is what analysts have been expecting. Ofy are proposing a dividend 2. 15 swiss francs, in line with what analysts were expecting. In terms of the look ahead, they say they see a challenging year. They see organic growth of about 5 in 2014 which will no doubt be of interest. Many structural questions surrounding this business, longerterm questions. What are they going to do with the proceeds of recent asset sales . What are they interested in expanding into . We have ryan covering the story for us later today. We will discuss that further as we go through the morning. They also say they see 2014 performance similar as 2013. Edmund. Ing in a Global Equity funds manager. Thanks for coming in. Lets talk about nestle as a whole. The numbers look to the inline with what the market was expecting. You like this company, do you . It is a very well run solid global company. It is a Swiss Company so what do you expect . There seems to be better performance than some of its counterparts Like Unilever who have struggled with emerging markets slowdown. They seem to have managed it better at nestle. That is to some extent due to the mix of different businesses. Chocolate demand is very strong in emerging markets. Coffee demand is very strong everywhere. From my point of view, they are managing that well. The real question will be held emergingmarket currency is hitting them. Secondly, what are they going to do with the money from loreal . What do you think they will do . Are they going to go out and buy more Skincare Companies . Are they going to go into chocolate more . I have seen analysts mentioning all kinds of companies as targets. You need to make a big acquisition to make a difference. Tra want to move into new nutricuticals there just arent many countries around to be bought. The worstcase scenario would be another share buyback. They are growing their dividend. That is less exciting. I prefer the Acquisition Strategy if at all possible. Another company increasing the dividend, rio tinto. It is in your top 10, earnings up by 10 . Returns toct greater shareholders in years to come . I think so. Dont forget that back in the late 90s rio tinto yielded as much as 6 . The dividend yield today is nowhere near those levels. Cost cutting has been dramatic within the industry. Rio tinto has been at the forefront of those efforts. The industrial metal prices have stabilized. I do think we should see returns on equity improving. That should allow them to continue to steadily build the dividend. Paint a picture for the entire sector. 600,year on the stoxx materials, the worst performing sector. This year, the bestperforming sector. Paint a picture for the industry in 2014. I think the picture will be very much a question of emergingmarket demand. My personal feeling is that people are perhaps a little too as a mystic on china. That growth may pick up in china. That is the key to the sector in general. In terms of demand, in terms of supply, we know they have cut a capex and i think that balance should lead to better profitability. , talk to us about commerzbank the Banking Sector very active this week. Next 10 onis in your the watchlist. What would you like about this . It is very cheap. You look at the european Banking Sector, it is that the very cheap end. There is a big restructuring story. They are selling off noncore assets. Youish real estate loans, dont want these things but they have got bucket loads of them. Even if the spanish Housing Market starts to pick up . They are commercial real estate loans. They are not in the right sector. I do not believe the residential spanish sector is picking up yet. I think the evidence is very much not proven. Commerzbank, i am looking at how quickly they can get rid of these problem asset. Shipping is picking up so the recovery rate on those loans could be better. They are cutting costs dramatically, shrinking the global footprint of their Investment Banking business back to just germany. Edmund will be back in just a second. The industries he likes, u. S. Tech, mining, edmunds thoughts next. Welcome back. This is countdown. We are back with edmund shing of bcs asset management. Lets talk to you about assets. We have seen this comcasttime warner people familiar with the story are telling us this deal will be announced today. Any thoughts on consolidation in the sector . It is a broader theme and it is something that has happened for instance, u. S. Companies have been consolidating in europe. Within the u. S. It sounds like the reinvigoration with the telecom companies. With some arbel being broken up into Component Companies and am and they brought the Companies Back together again. What is interesting about the cable sector is you are not seeing any topline probe. Topline growth. Comcast has seen a decline of subscribers over time. You merge come you cut costs, you have economies of scale. That is all this story is about. Quick comment on bnp, profit fell because of this legal provision in the u. S. When are we going to be done with litigation cost within the european Banking Industry . When the regulators give up. There is no sign that u. S. Or european banking regulators are ready to give up. It is money at the moment. The whole sector is rocking and reeling. If you look at hsbc, morgan stanley, rbs, barclays, it is a litany of banks who have had legal problems in europe or the u. S. Or most likely both. Bnp is just the latest one to have the same problem. Thank you very much for joining us. Coming up next, nestle just reporting earnings. The worlds Biggest Food Company says it sees a challenging year ahead. Nestles push into new products after the break. These are the Bloomberg Top headlines. Ecb president mario draghi says europe should have a single resolution done within five years. He says it will take an additional five years to reach his target level. He also expressed support of the european stability mechanism to safeguard the fund. We believe a Single Resolution Fund needs a solid public backstop. An ability to temporarily borrow, market backed by guarantees from participating Member States or access to a credit line potentially from the european stability mechanist. Thatere are early signs tourists are returning to egypt. The 2011 revolution caused a collapse in numbers when the government issued warnings to travelers. Since then, airlines are once again looking to reopen routes. Guy johnson spoke to the countrys tourism minister. [indiscernible] indication that they have a positive feeling about the future of egypt. More rain and dangerous wind is sleeping sweeping across britain. Many houses have already been hit by the worst floods in 250 years. The u. K. Environment agency says the risk of flooding is likely to increase in the next few days as the river thames approaches peak level. Service thatonline helps people rent out their homes is waiting phase for customers affected by the floods. This is countdown. I am mark barton. I am anna edwards. We are getting a host of earnings. I will give you publici first. Fullyear numbers. Net 2013 profit up by 11. 5 . Revenue is up by 5. 2 . These are all fullyear numbers. Earnings by share is up by 9 . In terms of breakdown, the digital account, the ceo is saying that digital accounts now account for 38. 4 of revenue. The biggest picture is all to do with its merger, its planned merger with omnicom. That has been delayed. It was expected to take place in the first quarter. That was pushed to june 30. Now people are watching to see whether this will be pushed back any further. No comment so far from publicis on that one. We heard from omnicom, saying this was delayed by waiting for competition. In china. Focusg ahead, a lot of for this kind of business. The sector as a whole is talking about organic sales growth in 2013. G 3 to 4 we will see how publicis falls into that. We will have the best insight into these results by the chief executive. Breaking earnings from ult,olds, france rena france s biggest automaker. There is an earnings beat. Pushing delivery growth, the automaker is reducing cost as well. Revenue andast that operating profit this year will rise and the Automotive Division will achieve a positive free cash flow. The company owns 43 of the japanese carmaker nissan. It is pushing into emerging markets to make up for this sixyear plunge and european demand to a two decade low. Earlier this month outlined plans to double its market share in india. Approvaled received to build its first plant in china. The Headline News is this, ult fullyear earnings up by 59 . Nestle has reported earnings. Worlds Largest Food Company turning to . Ryan chilcote has more. How is nestle diverse applying . The thing is, the most important metric is fullyear organic sales growth. That is 4. 6 which is what analysts said they were expecting. Really where nestle would like to be. They have the socalled nestle model of 5 to 6 on an annual basis. It is short of their own expectations though they have been guiding down. The way they are diversifying is getting into Companies Like one that they bought earlier this week, the 50 they didnt own. There are higher margins there and higher growth. This Company Makes products for acne and skin cancer, two things that arent going to go away. Were all spending more money on our skin. You can bet it is going to remain a growth place. They have created a subsidiary for it to fit in, that is called nestle skinhealth. It will set aside another called nestles health science. They have stuff like a Vanilla Flavored drink and depression food thanks to biotech acquisitions they had in the last year. Those businesses overall count for a couple billion dollars worth of their 100 billion of annual sales. They mirror what going on with the other Food Companies. It is an effort to get into this new space where people are spending money. A lot of people think the confluence of nutrition and health and food is where the big money is. , looking at the food business what is the trouble with that . Is it best the trouble with food and more the other of the others . I think we have two stories. In the emerging markets, packaged food appears to still be doing very well. You have limited shop space, refrigerated food is more expensive. As people get wealthier, they want more protein. They go for these packaged foods. In todays earnings, we saw a sign of that in asia with growth coming in at 7. 4 versus 5. 9 which is what analysts were expecting. In the United States, that is one quarter of nestle sales, a different picture. A general, there may be secular shift away from packaged food, towards fresh and healthy. Next time you go to a supermarket, take a look. How many are hanging out in the frozen food section . And how many are around the vegetables . This could be an issue for Food Companies going forward. Eggs, ryan. More analysis now. We are joined by a senior food analyst. Good morning. Thank you for joining us to. It does seem that whether this wdown in emerging markets organic sales up but that is ahead of analyst estimates. I think there are basically two reasons why. Beating onstrued is contributing strongly. Nestle is somehow caught in the middle. We see the premium food items doing quite well despite the recession. Other consumers are not spending they maycket items but buy Premium Foods to consume at home. Maybe nestles portfolio is not Strong Enough in that price bracket towards the premium end. That is a very interesting trend. Do you see nestle deliberately moving away from are they skincare or just going into skincare as well as food . Nothing is new under nestles roof in terms of managing those industries. In severalmber one things. Many diverse industries. It is not a new thing for nestle. Going into dermatological pharma space, i am not sure what synergy they can create with the core industry. Up until a few years ago, they owned a major stake in an eyecare company. I think skincare will remain a niche part of nestle and will contribute to a small proportion of overall sales. As i pointed out, this is a highmargin and highgrowth niche category. There is a note out from last month suggesting that what is going on in the u. S. And this isnt specific to nestle because i know in packaged food, nestle is doing ok in the u. S. , capturing some of its greatest growth but there is this secular shift going on as americans come out of the recession. Theyhave decided maybe dont want prepackaged food. They are going increasingly toward fresh and natural stuff. There is all kinds of signs of that area unilever adding butter when just three years ago it was saying butter kills you. Now they are including it because of this whole do you believe the hype . Do you believe that note that this is going on . Yeah. This is a valid point. Stilligning itself we break nestles operations into different chunks area in terms of baby food, they can align their portfolio better. About 60 of the packaged food retail sale value is coming from confectionerys, ice creams, the biggest brands for nestle. I think nestle is aiming to accommodate different wellness trends. This category will always be ,riven by more indulgence affordable luxury. If some of the wants a chocolate bar, maybe they go for a higher cocoa content one. Innovation, they improved their nutritional credentials of whatever product they trade. There is a lot of speculation that on the back of sending selling their stake in the real, they will acquire some chocolate makers. Even general mills. Are any of those possible . None of them are skincare. It is a longterm strategy for nestle to do these acquisitions. It has been doing it especially in china. Doubled its nearly food retail value there. [indiscernible] it bought another chinese company. It is a strategy nestle is doing and it is not going to surprise anyone if they take their cash and invest. They need to underpin the operations where they say growth , especially volume growth in asia. Thank you very much for joining us. Going to continue that discussion on nestles numbers later today. We will be speaking to the chief executive himself. He will be on the pulse later on bloomberg. Coming up, earnings from the Worlds Largest pc maker Beat Estimates. We will have more on how the company sidestepped the slump. Stay with us. Welcome back to countdown. I am anna edwards. I am mark barton. Earnings from lenovo Beat Estimates when it released its earnings earlier this despite a 10 drop in peace is in pc sales last year. Good morning to you, mark. We have two beats, both on the top and bottom lines. Lenovos third alert thirdquarter income surged. That is for that threemonth period that ended in december. That is on the back of sales that rose from 15 to 10. 8 billion. China accounts for 37 of total sales. These numbers dont include the recent acquisitions that were announced last month. The company agreeing to buy googles motorola phone unit for 2. 9 billion and ibms lowend server business. How do they continue to maintain their pc market share . Is throughple marketing in china. As they look to reintroduce the motorola brand their, the company is saying they expect losses to end in that company within quarters. Looking at global pc market share, lenovo is ranked number one with 16. 7 of the market share. Chinas pc marketshare hit a record 38 . It is a position they want to grow. They said that there is room for growth in the 200 billion pc industry and they are willing to invest in highgrowth areas like pcs, tablets and smartphones. Lenovo has made acquisitions that outpaced a 10 drop in worldwide pc shipments last year. Worldwide shipments dropped to levels we havent seen since 2009. We did have breaking news on chinas export growth. What are the details . Most of the while traders here were on lunch break. According to people familiar with the matter, china is targeting expert growth of about 7. 5 this year. That is lower than last years pays at 7. 9 . The goal has been distributed to government officials and ministers. It is highly unusual. China doesnt normally publish a target for export growth alone. Instead, the government provides the goal for combined exports and imports at their annual meeting. That meeting is going to take place in march. It is slightly unusual that we have not only the figures for expert growth already but that we have it so early. Thanks, mia. Mia saini live in hong kong. A bloomberg exclusive for you now. France finance minister Pierre Moscovici is currently in the United States. Cookld bloombergs peter that the French Economy is back on track. The forecast of our central bank and Public Institute is 0. 4 to 0. 5 for the first quarter. I dont know what figure it will be exactly, probably around that. , theld say that now eurozone as well as the france economy has gotten off the recession. Rate is about 400 per year. It is not enough. It is better than the recession but it is not enough. This is why the president aunched what he calls responsibility pact with the s, to reduce the cost of simplify access to regulation, to have also a more flexible labor market. This is what we are working on. Capable ofwe will be welcoming more and more american firms in france. Yesterday we met with businessman from the u. S. And the American Chamber of commerce. All of them were saying, we are there. We are happy to be there. We want to expand our business. We want new business too. I know what prevents some people to invest in france, we want that to be off. This is why i expect that if this is signed, we can have more than 1 in 2014 and much more in the years after. Are you worried about the volatility in emerging markets . Could there be a spillover into europe and the French Economy . Of course i look at it. If i wouldnt, i wouldnt be a finance minister. Moves inlly watch the those emerging countries but no, i dont see a crisis, a Global Crisis coming. I think this is controllable. E have next week ag 20 a g20. I think we must find a way to have a cooperative approach towards growth in all zones of the world including the emerging countries. I dont see a sign of a Global Crisis. That was the french finance minister, Pierre Moscovici speaking to peter cook. The list continues, neverending. Today it is the 20 best voices. Isabel in there . Le in there . Welcome back. I am anna edwards. I am mark barton. It is newspapers time. Ryan is here, hans is here. It is valentines day, they tell me, tomorrow. Ryan is ahead of the game. The wall street journal has reviewed five apps for couples for valentines day. I have not got the app yet, but anna you may like this. The best of the five is couple. These are social networking site for two. You can send photos to your significant other. Beware, that may not be a good idea. You can send chats do they sell that do they selfdestruct . This one has a self that and you can google you can doodle together. It is the opposite of a thumb war. When your fingers are in the same place on your different phones, you feel the love. Your phone turns red and vibrates. It is extraordinary. There is another app where couples can find other couples but i will not go into that. That sounds like the right place to be. Pear soelled dont get any ideas. Hans, to go somewhere else. The only thing less manly than the thumb kissing is driving a smart card to a meeting like matteo renzi did with enrico letta. You can imagine gladstone and sells very drug different vehicles. They are making a big deal that he drove this tiny compact car. What market drives to his important engagements but i imagine it isnt a smart car. I dont drive. A push bike. Anna and i are going to do 20 seconds each. Voices, we have elvis number one. The only modernday singer is mary j. Blige and adele. Where is Freddie Mercury . This lady in manchester falling over, being blown over by the wind over 100 Miles Per Hour yesterday. The rain is set to continue. That is the bad news. Countdown continues in the next hour. A bloomberg exclusive. Pierre moscovici says france is back in business. And an attempt to hold on. A 44 billion deal that will combine two u. S. Cable companies could come today. And the temperature of the u. K. Banking industry. Loids breaking down. Hello. Welcome to countdown. Im mark barton. And im anna edwards. Breaking news. Loids banking reports earnings. The profit before tax, 415 million pounds. On the next basis, analysts are forecasting a lot, which will be its fourth executive annual loss. Were expecting a net figure any minute now. Underlying profits did increase. The reason why we are expecting this net loss is because of provisions of payment protection insurance, which of course means that it is adding to the banks cost of putting aside money. They sold a type of insurance to cover them when they didnt need it. The writein cost is hampering the efforts to resume payments as well as the governments efforts to reduce its payment to the bank. The underlying performance is a profit. We do have a net loss just crossing, as i said. Actually, the loss is bigger than i anticipated. 838 million pounds. Last years loss it was 1. 47 million. To reiterate that, that is four executive annual net losses. Why . Because of this putting aside 3 billion pouppeds to compensate wrongly sold insurance. More on loids later. Lets talk about stateside. A deal worth 44 billion. Thats according to four people familiar with the matter. Manus . Well, it looks like it is the beginning of a big consolidation phase. The c. E. O. Said, when you are losing subscribers, what do you do . Grab a liferaft. Comcast seems to be going it alone. We had thought comcast might get together with charter. They werent paying enough money, were they, manus . They came to the table three times. They were rebuked. This deal, should it go through, should come in at around 159, basically the closing price. Really, what has got to be done here is for a highly unregulated business, these guys have actually got to cross over some pretty tough scrutiny. Comcast, timewarner, put together 0 so a couple Different Things here. Comcast and timewarner getting together, they may have to divest themselves of some of their subscribers, and that could be cherry picking whats oing on. And what abouted about what the customers are going to make of this . We can see some viewers objecting, saying this will put too much power in the hands of the Cable Companies, essentially . Whatever way you wrap up this story, thats fairly much a fact. If you have nearly 30 of the video market, you have a bit of control. I think there is a much bigger, as it were, disruptive issue in the terms of the landscape. When you have this scale. The Cable Company has scale. Put the two of them together, that gives them power in terms of purchasing power from the content providers. It ultimately gets to squeeze the Prices Higher over time thrfment is a wonderful line in a bloomberg piece, if a cable business had a track, that track would be jaws. Basically whats happening here is that you have the cable Companies Going to scale. Scale sweeps the providers. Squeak out a premium at the other end for you and me. When you look at a sector like this and you work out who holds what percentage of it, how do you define the sector . Im sure some of these new Cable Companies will be talking about the new Internet Companies trying to provide content that way. The at ts, the verizons. To complicate how much of the market they can have. It is a very, very hard one to break down. But i also think it is confined to people as well. You have ryan marcus and Brian Roberts at the journal. Ross was on the phone with roberts. It is about, who do you want to do business with . If you want to get in bed and sit on a board together, who do you want to sit on that board with . It seems to be marcus and roberts versus john malone. The worlds second biggest Mining Company says work is paying off. The latest on the numbers earnings rise. Pretty much the story. They have delivered underliing profits. The estimate was 9. 66. It is a healthy beat. Really whats going on at rio is no difference than whats going on at some of the other mines. Sam walton 13 months in has cut ver 202 billion in costs. Thats lifting profits. Lifting the bottom line. And dividends as well, isnt it, john . There was a big buzz about how much they would give back to Share Holders. Deutsch bank nailed it. We are expecting a 15 increase in the dividend. Thats what weve got, 1. 92. The consensus was for 1. 70. Dividend is strong. The risk, if any, is what happened. A 15 climb in the price for iron ore. That is 40 of their revenue. Iron orr 10 . And Goldman Sachs is actually pretty bearish on this. Had he you have a Company Giving back money to Share Holders and happy numbers delivered this morning. And copper and china two things to think about. The number around 40 . Thats how much the demand comes from china. A big, big number. The export story told us one thing, the p. M. I. Told us another. It depends on how much weight you want to put into it. There is still concern from a Bloomberg Survey is china and how much it plays out. It wont just impact rio, it will impact every miner under the sun. This is how things change. Surprising, yes. How things change in a number of years. It used to be all about m. N. A. And now it is all about capital preservation. It is the writedowns of 40 billion worth, the costs tumbled. And the pressure will always be on sam walton to turn that around. Nd like i say, ryo rio is not the only company to turn this around. Is ore later when betty liu up. That story here later. The worlds Biggest Food Company turning for broth. I want you to tell me how many kitkats. I wondered if you would ask me about kitkats. There are more and more kitkats per second. Hookup hundred kitkats per 400 . I have another one for you. Every five minutes, more kitkat fingers are manufactured to outstack the eiffel tower. Im glad youre happy with that. The big picture of 4. 6 of organic sales is back in estimates. And also their worst result in four years, they posted 4. 1 . So the issue is, you saw this quisition this week of galderma, which is a dermatology company. Nestle, like other food makers is going after higher growth areas to compliment their foods business. It is mostly a foods business. Galderma is a couple billion sales annually. Overall, nestle has a couple00 illion dollars worth of sales. Galderma make drugs for ack any. I think nestle is betting on them to grow. The fact of the matter is, were spending more and more money on our health. It is not just galderma that will fall into this, but nestle skin health. They have another one called Nestle Health science which they created two years ago and they told it to two biotech companies. Vanillaflavored alzheimers drink, and another that treats depression. A lot of people talking about those kinds of foods being the confluence of food, technology, and medicine, and thats where the big money is. Interesting space to watch. Nestle might decide to buy, if anything, to go after other assets. Will there be more chocolate. Yes, they got a little extra cash from this loreal deal. There may be a little more with packaged food. You have the recent numbers. The emerging market outperforming expectations because people cant get enough of this packaged food, right . It gives them the protein they are looking for. It doesnt require refrigeration. In the u. S. They missed expectations in terms of sales growth. That might be in the balance speculating. There is a shift as people bounce back from the resession. They are saying, actually, i want fresh and healthy natural food. They dont want the emerging markets to peat estimates. Well continue that discussion later in the programming. The chief executive will be on the pulse later on bloomberg. The french financier pierre peter that ld l france is open for business. You need to know that france is back on track. We are an innovative, creative country, and we are open. I say here, welcome to american business. Already about two companies from the u. S. Hiring 500 southern people in france. We want to have more. The same for frenchmen here in the u. S. Corporations. It is good politically. We have, i think, Foreign Trade represents 60 billion euros between france and the u. S. You must know that our country is reforming, leading in structural reform, more open to business, wanting to have a Simple Administration matter, regulation. Thats what we are doing today in france. I think this vision is positive for the business between the u. S. And france and also the digital economy. And we will bring you more from our exclusive interview with the french finance minister later this morning. The u. S. Treasury secretary jack lew said europe can do u. S. Can do more for growth. If you look at the World Economy, the u. S. Cannot grow at a rate fast enough to pull the whole world along. The difference between 3 and 3. 5 makes a world of difference in the United States, but it is not enough to make up for losing a percent in europe or losing a percent in china or losing a percent in japan. You have to look at these major parts of the World Economy and say, what can they do to grow more . We have been clear in europe that we think the countries that have growth could do more to stimulate demand. The world needs more demand. You can watch that full interview on charlie rose tonight. Rio tintos latest earnings and why the market may be missing the true value of mining. Hello. Welcome to countdown. Im mark barton. And im anna edwards. Earnings. A lot of earnings to get through. Here is one of the more interesting ones. Rio tinto. Thats in the mining section. Ining us now, Senior Analyst paul bernstein. Weigh in on this business. I think it is an incredibly robust business. Were talking about a business 20 billion in cash. They are doing an excellent job. The earnings up to 10. 2 billion. These guys are 20 billion. Mainly there are no operations, but the cap is coming down. We have seen a 26 reduction of the capital as they get to the end of the phase of this Significant Growth that they put in place in 2011 and 2012. Thats really whats creating, i think, the impetus here for the share. The gap between operating cash flows and the capital spend that creates an opportunity to return significant cash flow. As capital exposure is reigned in a bit, do they continue to grow . Absolutely. Price stays relatively strong. The growth volume rio tinto will generate will offset any small decline in price. Will it stay relatively strong, paul . It rose 15 . It is down 10 so far this year. It is up and down. But it is volatile, right . Were going to always see these cycles as the inventories of iron ore moves with the credit cycle, moves with the underlying season at seasonality. You have to understand, there are huge effects from the weather and the chinese holidays. These all drive the volatility. If we take the fed two years ago, we saw precipitous drops in the price of iron ore, those figures have not been realized. It has stayed at higher levels consistently. As long as it does, rio tinto will deliver. How much cash . Ive read they might have 3 billion worth of surplus cash by 2016. Look, i think we can go beyond that, right . At the moment, the gap between the growth and capital spend is about 4 billion. The capex is going to come down by another 5 billion in 2015. That gives us the kind of gap were talking about. Putting in place 15 last year, 15 this year, i think we can expect strong dividend growth. They talk about the progressive dividend policy from rio tinto. You clearly like the way they are managing their dividends, rio, but what else is to like about the management of this business . They have seen some turmoil in management teams, havent they . Absolutely. I think what we are seeing with em with samuel shall is a with sam walsh with a return to business. Sam walsh is getting back to the basics of mining which is keeping costs down and activity up. You have a deeply experienced operational manager and leader, and were seeing that not only in the capex but the cost rucks in the group. So this 2 billion savings is also helping. Remind us how good the Operational Assets are . We often talk about this, they are in copper, they are in iron ore. But give us a flavor of how their assets are . These are world class assets. There is no doubt rio tinto is one of the worlds best copper mines. It is essentially the Worlds Largest Growth Budget that ber we are faced one. They are tier one. There are operational difficulties last year. They have accelerated the turnaround on those assets, and i think thats testament to the Operational Capability of this group. How tough is the management of rio with the Chinese Government . What are you planning for the chinese economy to find out how much work they will get out of china . They were saying the chazz aeconomy consumes a large amount of copper. China is by far and away the story in iron ore. Ina is responsible for about 107 of the growth in demand. It is all of chinas story. If china pulls over, it will have a huge impact not just on rio tinto but all the industry. You have to remember, rio tinto has operations in common with chinese investors. If you look at the iron ore project in guinea, there is obviously a strong connection there. They are obviously sensitive and aware of whats going on with the chinese economy. It is all about, i think, matching the growth in the chinese demand with the growth in supply. Not having too exuberant a push in volume, but at the same time you dont worry too much if demand comes down in china . There will always be some differences in the demand, but it is matching the supply and demand and trying to keep the price accurate. We know the mess they got these miners into. Is it a nogo . Is it off the table . I think it is going to be a difficult time to convince hare holders for large scale macquisitions. Glencore has been thank you very much for joining u. S. More on rio tinto from betty liu later in the show. Well take a break. Two brave men just climbed the second tallest building in the world while it is still under construction. Welcome back to countdown. Im anna edwards. Some of the most compelling images of the day. In rome, 235 nail artists. The gold went to the creator of a harvest manicure. And two thrill seekers climbed the worlds second tallest building while it is still being built. They were waiting for the bad weather to clear so they could see their way down. Im mark barton in london. Drazi says europe should have a single currency in five years. Draghi expressed secure for the security to safeguard the fund. We believe the fund needs a salied fund. Backed by participating Member States. Access to a credit line potentially from the european stability meckmism. There are early signs that tourists are returning to egypt. 2011 saw numbers collapse. Airlines once again looking o reopen routes for touring. They are call that that there is a possibility for egypt in the future. Many of the commuter towns west of london have been hit by the worst floods in 250 years. The risk of flooding likely to increase in the next few days the river temmes approaches peak levels. Welcome to countdown. Im mark barton. And im anna edwards. We could be on the brink of another new government as the power struggle in the Democratic Party threatens to unseat nicoleta. Live from rome, hans. Good morning, anna. Joined by a london in an expert in politics. Will they let the government fall . It is my view that he really should have better patience. He has been very much like a bull in a china shop trying to force his way. Viewers must know that he was the mayor of france. He never was a senator or a parlimentarian. He will have a difficult time going into the parliament. He has opened a very hot oven head inside, his he risks burning it. The nomination of the secretary of the Democratic Party a few months ago has been clamoring for changes, which he has been doing. The problem is, he has had consensus. Linta is not going to have much much t because lorenzi is more liberal and consensus building. He is going to be premature and let is going to be Prime Minister at the end of the day . At the end of the day, i think he will still be pushing, pushing, pushing, but if he were to be wisely advised, he should wait his turn, wait for his opponent to do the dirty work, which there is a lot of dirty work to be done, and then come over. He is, in fact, the head of the Democratic Party, which is the most Important Party in italy. Markets dont seem to be reacting to this. Are they mispricing it, or do they have it right . I think the markets have it right. I dont think the markets care what is happening in the political government. The way i see it, renzi and letta are having a fight over who is going to sit at the head of the table. Everybody knows even if you are at the head of the table, the food isnt going to be any better. The bond market is pricing it right. Thank you very much for your time. We had two food metaphors there. At the end of the day, your prediction is that Prime Minister monti down in rome. I hope so. Anna and mark in london, thank you. Thank you very much. Food metaphors and we hope some nice food over there in italy. Pierre moscovici is currently in washington. Peter cook says the bureaus leaders are taking steps to make the Banking Sector more secure. What is at stake, they are giving us tools to fight the fragility of the Banking Sector. They are supervising the Banking Sector as much as possible. They are also negating the risk of the crisis. So we will have a more secure Banking Sector. It is secure now. We will fight against frag fragmentation in europe. When i look back a year ago, we first came to office 21 months ago, the question is, with will we survive . Will we stick with it . Greece is still in the eurozone, and the eurozone is stronger today with better tools and information. So it is really a secure place now. The crisis is over. Of course there is a crisis in the eurozone, but it is of another nature. How can we speed up our growth . Thats what we need to do now. Were going to need a third we are. We know the program, and we are sticking to this program. I think it is solid. You were at the state dinner last night. How was the food, how was the American Wine . The wine was great, the food, too. The toast, president obama mentioned who almost two centuries ago gave poor appreciation of the american food. Obviously the progress, it was a very good state dinner, and t was a formidible ambiance. In the end, everyone danced ith mary j. Blige. American e terms under ronald reagan, isnt it . Yes. We havent forgotten about valentines day here on countdown. British subjects not expected to spend as much on valentines as last year. Well be talking to the managing director tomorrow. Still 24 hours. Thanks for reminding me. Coming up, nestle, the worlds Biggest Food Company says it sees a challenging year ahead. Nestle to move away from Core Products like kitkats. Thats after the break. Renault says growth as the company reduced costs. Europes third biggest car maker said earnings came at 1. 42 billion euros. Declines in emerging markets like china and india canceled Advertising Campaigns because of a slowdown in sales. Publicist is merging with omnicom to form the Worlds Largest advertising company. Europes second biggest distiller said declines are hurting sales in china. Expect declines between 1 and 3 this year. Welcome to countdown. Im mark barton. Anna, what are we, 18 minutes away from todays equity session . And on the move. We can expect a definite french flavor to the earnings scene today. Pierre moscovici reporting on the situation today. When we look at the futures, insurance disappointed, thats sending futures lower by a quarter of a percent. Before we get back to earnings, the Chinese Government we understand is targeting growth. Slightly below what we had for 2013. Then talking to people familiar with the situation, we understand comcast will acquire timewarner. Well see what the share price is when it opens. We expect it to open lower. Some weakness in the chineseindian business and emerging markets going through there. Were going to be speaking to the c. E. O. Very shortly. He said it was disappointing because they have a lot of exposure to the wealthy. They have a lot of campaigns for the luxury. Because of the emerging market turmoil we saw a lot of people decided to postpone their campaign. They disappointed. We will ask them if that means targets for 2018 will be put back. He says dont change anything for his plans or acquisitions or margin targets. We will also asked about that big merger. It was meant to be sealed, but they are not getting regulation approval. Ill try to get out of him when exactly they are expecting that. Francine back at the top of the hour. Mark, back to you. 10 things you need to know about kit kat that you never knew. Some great stories. You are killing me today. You made me research this. We should make it clear to our viewers, nestle makes kit kat. There is a relevance today. Yes. 418 kit kat fingers are consumed worldwide every second. If you were to take all the kit kats manufactured every five minutes, they would outstack the eiffel tower. I want to hear about japan. In japan, they have an extra long one. Who thought they didnt do regionalization. In the middle east they do a special formula so it does better in a warmer climate. In the east they have a threefinger kit kat. And a player of rugby for england loved them so much he had a stock of kit kats floated to support the team. I could go on all day. The corporate story of the day, the worlds Biggest Food Company in the United States reporting 4. 6 sales growth. Back in line with expectations, but worst growth in four years. 5 is now the key for this year, isnt it . So they have this thing called the nestle model. They like to grow by 5 to 6 every year. Now they are saying about 5 to 6 . Enter that galderma acquisition. Food Company Getting into skin care. A little different. They want a higher margin and a higher growth. They are in all sorts of businesses. Purina. Love it. So, you know, interesting to see really macroeconomically or globally how they are doing. The u. S. Is doing worse than expectations and the emerging markets are doing better. We will explore that. Thank you. You made my morning. Interesting. Ly 10 things i didnt know about kit kat. It can be interesting. 10 things you didnt know about todays macroagenda. No. Are there 10 . That means you wont have to sit through another five hours the banking commith committee. I dont australian unemployment comes in at 6 . If you are in the eurozone, thats a healthy figure. Frustration is at a 10year igh. 50,000 aussie 3 dollars. Thats what it costs to produce the car in australia vs. Elsewhere. You have unemployment rising, but they have stepped back from the prospect of further cuts. They also have a Housing Market that is on an absolute tear. Sidney home prices up by 4 . Which is a pretty, pretty that is pretty big. What, on the chinese side of things, we have heard a lot about a slowdown. The trade data shows another. The reality for australia and australian data, is you are watching a downturn. 24 hours ago you were going to ask mark carney a question at the bank of englands yaurter quarter in quarter inflation report. I gather you got one in . He got out a shotgun and shot my question down. The question everyone wanted to know is whether they could rule out a rate hike this year. And he said, look, that would be concentric guidance and he shut it down. At the end of the day, that is getting people to speculate if there could be one this year. If there isnt going to be a rate hike, exextense down. The rate expectations for a 2016 rate increase are quote, reasonable, which i find quite strange, but carney was very reluctant yapt to give any sign of a contingent. Then they came out this morning and said it is reasonable. Post the election. Yeah. Still. A bit of a contradiction. Thank you very much. About g up, well here holidays. Welcome back to countdown. Im mark barton. And im anna edwards. Our next guest is optimistic that many of us will be taking european holidays this summer. Ryanair. Lets talk first about this trading thing are you looking at which is buying companies from people traveling over the summer. I think we have seen a little bit of interest in the bank of england. I do think they feel they are the most hawkish bank out that there at the moment. Particularly yesterday when they said they wont see Interest Rate hikes until 2016. But johnny said we might actually see them as early as 014. Then he showed strength in the pound versus the euro. It wont make everyone stay home fearing rate hikes. I think last year was the ear of the stacation because the price of things was exceptionally elevated because of the weak pound. I think it is blamed for last quarters pullback in revenue. Couple that with the fact that ryanair is focusing on the customer. That can probably not be a bad thing. As my mother is often fond of saying, good manners cost nothing. If you look ahead, they are pecting to pull away from an inelastic market. As you are depending on a bit from the hure owe zone. It is a premium, too, and i would see a bit of a pullback on that and a Good Opportunity to buy in. What do you think of the net loss . The loss is bigger than analysts estimated because they put aside money for protection insurance. Whats the takeaway beyond the number . I think generally speaking, it is quite positive. I think the bank has gone to an increased dividend payout this year. It hasnt paid a dividend for about six years. I think the investors will be on the lookout from a financial stream. Yes, there are provisions there, but i think most of the bad stuff about loids is already in the market at this point in time. I do feel we would expect another traunch to be filled . Yes. I think it would be a huge amount to anticipate over the coming months. Put getting to the 100 pence mark seems to be on pace. Gait who to paul was almost evangelical about reopening. He was. We spent a lot of time talking about how much cash this business throws off. What do you think . I think if you look at the Mining Sector as a whole, it has been doing well since early january of last year. We need to take a break. The 3350 mining index. I think the miners are making a comeback. We have seen some decent data coming out of china, whether you believe it or not. I do think they are more interested in the likes of gold. It has broken through some key resistant points over the last 100 days. I think that again, both of those have spaced out a little bit, and there does seem to be a little more emphasis on risk assets. The bank coming back from their lows of the year, brenda, is it sustainable or not . It will be interesting. I think there is anticipation that the bank of japan will i think the e. C. B. Will likely do something. More than likely doing in. Thank you, brenda. That will do it for us. Next on the move. Welcome to on the move. Im francine lacqua. Bloombergs European Headquarters here in london. Were Just Moments Away from the start of european trading. Our markets team has everything covered from companies to currencies. Manus cranny. Together dinosaurs with subscriber numbers. Still 44 billion. Comcast, Time Warner Cable getting it together. They will face regulators if they are going to get this deal done because they are going to hold more than 30 , more than 30 million of the overall viewership in the states in the cable market. It is a big one. It is a big one and one well be watching out for. Jon, you have your eyes on rio tinto. Yeah. Giving some money back to investors. Over 2 billion year to date. Some good numbers from the dividend side of things. It increased coming in around 1. 92. Expecting about 1. 70. Rio tinto just opening as we speak. Grew sales by 4. 5 last year smack in line with expectations but that is their worst growth in four years and worst for