Press digest australian business news feb 20

← Homepage

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)Locomotives and wagons made by engineering and construction company UGL will be built in India, chief executive Richard Leupen has announced. "You can't compete [with overseas] when the labour costs in the workshop are a tenth of yours  the reality is that in certain sectors it's very hard for the domestic market to compete and so, yes, we're off in India with a manufacturing facility," Mr Leupen said yesterday. Page 1.-- Hedge fund Apollo Global Management has continued to back the plans of the management of media company Nine Entertainment Co to restructure A$2.7 billion of its senior debt into equity. Owned by private equity group CVC Asia Pacific, Nine has around A$3.7 billion of debt but generates over A$350 million of free cash flow a year and has a strong asset base. Page 14.-- Chief executive of Billabong International, Derek O'Neill, said yesterday that there are no plans to sell further assets as the troubled surfwear retailer struggles under the weak trading conditions. However major shareholder Perennial Value Management has urged the company to hold talks with private equity group TPG, who lodged a A$3 a share takeover bid, and to also make changes to the board of Billabong. Page 15.-- A lack of technology investment across its Trans-Tasman operations has cost facility services business Spotless dearly, its chief executive Jo Farnik acknowledged. "The lack of standardisation has cost this company. Look at the level of overheads and look at comparison to international peers," Mr Farnik said yesterday. Spotless is currently weighing up a takeover offer from private equity group Pacific Equity Partners. Page 17.-- THE AUSTRALIAN (this site)Fund manager Challenger has revealed it may exceed its growth forecast of 25 percent for retail annuity sales this year as retirees move away from buying shares and into guaranteed income streams. "Sitting here today, we have a boutique funds management business that has a lot of equity managers in it. What we propose to people is that annuities is only a product they should use in the overall retirement solution," new chief executive Brian Benari said yesterday. Page 23.--

Provisions in the Fair Work Act that make small businesses use default superannuation funds need to be changed, according to the Financial Services Council (FSC). "This unnecessary restrictive regulatory framework has a negative impact on the ability of employers to administer their compulsory superannuation obligations," an FSC submission to the federal government's review of the Fair Work Act stated. Page 23.-- The Australian government needs strong fiscal integrity and an emergency stimulus fund to stop the budget from going into the red, the Business Council of Australia (BCA) said. A fund of around A$40 billion would allow stimulus payments in the event of another financial crisis. Equal to 3 percent of Australia's gross domestic product, the BCA said payments could be made once every thirteen years. "We want the federal government to put aside money for a rainy day once public debt has been paid down," BCA president Tony Shepherd said yesterday. Page 23.-- The Australian Securities and Investments Commission (ASIC) will be forced to cut back on investigations into suspicious behaviour and litigation because its resources are being monopolised by an increasingly more complex financial services sector. ASIC policing methodology has adopted similar programs to those the Australian Taxation Office uses to achieve higher levels of compliance with the law. Page 23.--

THE SYDNEY MORNING HERALD (this site)A further A$140 million investment will be made by United States discount supermarket group Costco as it looks to expand its Australian operations. In a move that will add pressure to its supermarket rivals Coles and Woolworths , Costco will look to open a further three warehouses in the country. "We would like to do two in calendar 2013 ideally  we could do three but are likely to do two for sure," Costco Australia managing director Patrick Noone said. Page B1.-- The Australian Taxation Office (ATO) has cautioned small businesses over falling behind with employee superannuation payments, with proposed new laws designed to tackle wayward employers. Despite the difficult market conditions and tight cash flows, the small to medium business sector has been told not to defer super payments as large penalties could result. The ATO said businesses that do not pay employees super within 28 days of the due date face fines and interest on the missed payments. Page B1.-- Australian Securities Exchange chief executive, Elmer Funke Kupper, has given ground to large stockbrokers by signalling his intent to loosen restrictions contained in proposals for dark pool exchange limits. Although indicating he may be flexible on the current A$50,000 minimum trade proposal, Mr Funke Kupper said a minimum amount was required to avoid unregulated exchanges from arising. Page B3.--

A A$438 million dollar plan by Rio Tinto to use driverless trains in its Pilbara iron ore operations has the mining giant on a likely collision course with unions with about 500 people employed to drive trains. "We've got 10,500 employees [in the Pilbara] today and over the coming years that number will grow  some of the jobs will change," Rio Pilbara operations president Greg Lilleyman said. "People talk about re-skilling but you don't need a team of truck drivers to operate one computer," Construction, Forestry, Mining and Energy Union representative Gary Wood said. Page B3.-- THE AGE (this site)Data from market research company DBM Consultants shows the overall business satisfaction rating of banking giant Australia and New Zealand Banking Group (ANZ) dropping from 7.1 percent in November to 6.9 percent for January. "ANZ is now 0.5 points behind Westpac and National Australia Bank in the large segment, and trails Commonwealth Bank of Australia by 0.8 point," DBM Consultants revealed. Page B3.-- Telecommunications giant Telstra has taken a step to catch up to its rivals in providing online customer self-service with initial take-up of 28 percent exceeding expectations. "At some point we are probably going to reach that [35 percent target]  once we have got well-performing channels and customers get used to using them it is unlikely that we are going to go back to the old way," executive director of Telstra digital Gerd Schenkel said. Page B3.-- Chief executive of the Commonwealth Bank of Australia , Ian Narev, has defended the latest increase in its standard variable interest rate, saying it was now just breaking even on new home loans. "At the moment on the current cost of funds, new loans have just crossed the profitability line again but  10 basis points doesn't exactly make a huge difference," Mr Narev said. Page B4.-- United States paint company Valspar lost its account with Wesfarmers-owned hardware chain Bunnings but is optimistic that the new Masters hardware joint-venture with supermarket giant Woolworths will make up for the US$30 million of lost turnover. In 2010, Valspar acquired Australian paint brand Wattyl. "We want most of the shelf space in those stores with our Lowe's brands and most stores are doing very well  we have a number of growth initiatives occurring in Wattyl  and break even  is probably  the end of this year," Valspar president Gary Hendrickson said. Page B5.