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Auto & Transport Roundup: Market Talk

3 Feb 2018 9:20 am

The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2158 GMT - Justice Department is seeking "substantial" penalties in a civil case against Fiat Chrysler accusing it of using illegal software to dupe emissions tests on 104,000 diesel-powered vehicles, per a recent letter from government to company, says a person familiar with the matter. But no specific financial figure was raised during recent negotiations, this person says. Bloomberg News earlier reported on negotiations. The lawsuit accused Fiat Chrysler of using defeat devices to allow 2014-2016 Ram pickup trucks and Jeep Grand Cherokees with diesel engines to pass emissions tests and then pollute far beyond legal limits. FCA denies using defeat devices and has said it has a fix forthcoming that will avoid the need to repurchase vehicles, a departure from the Volkswagen crisis. DOJ didn't immediately respond to a request for comment and FCA declined to comment. (mike.spector@wsj.com ; @MikeSpectorWSJ)

2038 GMT - Office owner and developer Mack-Cali Realty is offering free Uber rides up to $15 for tenants in some of its office projects in New Jersey, as competition heats up among landlords to attract and retain tenants. The three-month pilot program, which covers four office complexes in Metropark, NJ, will make it more convenient for tenants to get to nearby transit stations. "We realize our tenants work long, sometimes unpredictable hours. We hope that, by providing them with subsidized Uber rides, we can help simplify this aspect of their lives," said Michael DeMarco, chief executive officer of Mack-Cali. Uber says this encourages people to use a combination of ridesharing and public transit for their daily commute. (esther.fung@wsj.com; @estherfung)

1633 GMT - Morgan Stanley sharply raised its earnings forecast for Fiat Chrysler Automobiles NV, predicting margin improvement "in all global regions." The investment bank hiked its full year adjusted EBIT estimate by 32% to EUR8.8B ($10.9B), slightly above Fiat Chrysler's own 2018 guidance for adjusted EBIT of at least EUR8.7B. Profit margin in North America, the auto maker's largest market, is projected to hit 9% this year, which Morgan Stanley said will likely be "above Ford and just below GM." The estimate reflects an improvement in the brokerage's valuation of Fiat Chrysler's weakest brands such as Chrysler and Dodge, which are shrinking as it prioritizes growth of stronger brands like Jeep and Ram. (chester.dawson@wsj.com; @DecodeTheFirm)

1543 GMT - USA Truck shares soar on a swing to profit in 4Q and big gain in freight shipping prices. Net profit at the truck operator and freight broker hit $2.8M before a $12M gain from the new tax law after a $3.8M loss in the 2016's 4Q. Operating revenue in the core trucking unit jumped 19.8% to $83.8M, boosted by a 20.1 gain in revenue per loaded mile--a key measure of pricing. The company says it had more drivers in trucks in 4Q but that the markets for hiring drivers and finding independent contractors "continue to be challenging." USA Truck up 19% at $23.98.(paul.page@wsj.com)

1444 GMT - Shares of German auto parts supplier Schaeffler AG continued to fall Friday a day after it unveiled a lower-than-expected profit margin outlook. Schaeffler's stock price declined 2.48% to EUR13.78 ($17.12) in late afternoon trading on the Deutsche Börse Xetra market, after a 12% drop on Thursday. That followed the company's release of projected EBIT margins for the full year between 10.5-11.5%, which was 5-10% below the consensus forecast of financial analysts, according to Evercore. Calling Schaeffler the "third earnings season victim" after Adient Plc and Ford Motor, Evercore warned investors "to be weary of legacy auto companies trying to 'pivot' or 'transform' into new companies at this point of the cycle." (chester.dawson@wsj.com; @DecodeTheFirm)

1329 GMT - Airbus shares are lower amid talk budget long-haul carrier AirAsia X may be interested in buying 787 Dreamliner planes from rival Boeing. AirAsia X is a big customer for the rival Airbus A330neo widebody, which has struggled to win new orders of late. Airbus shares 2.7% lower. (robert.wall@wsj.com)

1317 GMT - European shares fall following worse-than-expected losses by Germany's Deutsche Bank and a downbeat profit outlook from car-maker Daimler. The Stoxx Europe 600 drops 1%, or 3.92 points to 389.49 after Deutsche reported a $2.75 billion fourth-quarter net loss, hitting its shares by 5%. Daimler said investment in electric cars was among factors likely to keep a lid on profits in 2018. Rising bond yields are also weighing on equities. "This may well be contributing to the declines we've seen recently across Europe - along with the corresponding appreciation of the euro and pound - and could be taking its toll on U.S. stocks," says Craig Erlam at foreign exchange trader Oanda. (philip.waller@wsj.com)

1119 GMT - The Port of Corpus Christi says it will be ready to receive very large crude carriers (VLCCs) by 2021 if the federal government approves a $60M funding request to dredge the port's channel. The Texas port handles 60% of US crude exports and six energy CEOs wrote a letter to President Donald Trump asking for the funding. Some $50B of energy projects are currently underway in South Texas that "rely on the Corpus Christi ship channel to move our products," the CEOs said. VLCCs are the industry's largest crude carriers and a must for major oil terminals looking to grow their business. (costas.paris@wsj.com)

1038 GMT - Initial pricing talk, or IPT, on the June 2022-dated sterling bonds that VW Financial Services offers Friday looks fair, but tighter final pricing could make them look expensive compared to existing 2022-dated debt, CreditSights says. IPT on the new bond stands at 80-85 basis points above gilts, implying a yield of around 1.7-1.8%. VW Financial Services' 1.75% Sep 2022 sterling bond currently trades at a mid-yield of 1.76%, according to Tradeweb. (tasos.vossos@wsj.com; @tasosvos)

0938 GMT - After logging its highest earnings since early 2016 last quarter, the worst could be over for Singapore Post, says OCBC. It sees more growth after years of restructuring to transform into an ecommerce-focused logistics-service provider. The company is "turning the corner," and "considering the risks and rewards at current levels, we see upside for the stock," the bank adds. Its stock target rises 19% to S$1.50. Shares rose 6.2% today to S$1.38. (saurabh.chaturvedi@wsj.com; @journosaurabh)

(END) Dow Jones Newswires

February 03, 2018 04:20 ET (09:20 GMT)

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