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GM bucks gloomy earnings forecast trend, shares jump

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(Reuters) – General Motors Co (GM.N) executives on Friday bucked gloomy forecasts for growth and sent the automaker’s shares soaring, promising investors stronger 2019 earnings and outlining ambitious plans for its Cadillac brand to challenge Tesla Inc (TSLA.O) in the growing electric vehicle market.

FILE PHOTO: A General Motors sign is seen during the China International Import Expo (CIIE), at the National Exhibition and Convention Center in Shanghai, China November 6, 2018. REUTERS/Aly Song

GM said that despite forecasts of decline in U.S. and China passenger car sales, the company expects 2018 profit to exceed Wall Street expectations, and promised higher earnings per share in 2019. Chief Executive Mary Barra, in her presentation to investors on Friday, stood her ground on cost-cutting actions that have provoked threats of retribution from U.S. President Donald Trump and outrage from unions and elected officials in the affected states.

“Because of the actions we have been taking for several years, General Motors enters 2019 leaner, more agile and positioned to win,” Barra told investors at the New York presentation.

The market cheered GM’s forecast, sending the company’s stock up nearly 9 percent even as Tesla shares slipped.

“We’re very much looking forward to the execution of what they’ve announced,” Tim Piechowski, portfolio manager with ACR Alpine Capital Research, which owns GM shares. Piechowski said GM’s core business, its stake in ride services company Lyft and its Cruise self-driving car unit are together worth more than the company’s recent share price indicates.

Barra also said proposals from Ohio officials that GM sell its Lordstown, Ohio, small car factory to Tesla are “moot” because Tesla is “not interested in our GM workforce represented by the UAW,” the United Auto Workers union.

GM’s bullish outlook coincided with new cost-slashing actions by rival Ford Motor Co (F.N), which on Thursday outlined plans to cut thousands of jobs in its European operations and kill an experiment in providing van rides. Ford executives are scheduled to meet with investors next at a conference on the sidelines of the Detroit auto show.

Barra and her lieutenants have spent the last two years pushing a strategy to exit unprofitable markets in Europe and developing markets, restructuring money-losing operations in South Korea, and killing unprofitable car lines in North America. In November it put five North American factories, including four in the United States, on notice for closure, and cut almost 15,000 jobs.

“We are no longer investing in things that don’t make money,” GM President Mark Reuss told investors on Friday. “The future is coming fast. We are doing everything we need to do as fast as we can.”

ELECTRIFYING CADILLACS

That includes making the Cadillac brand “the tip of the corporate spear” on electrification, Reuss said. He outlined plans to launch a new generation of electric vehicles that would be “profitable … and attainable.”

The automaker said Cadillac will become GM’s lead electric vehicle brand as the largest U.S. automaker gears up to introduce a new model under that luxury brand to challenge Tesla, a development first reported by Reuters on Thursday.

Tesla’s market capitalization is higher than GM’s, even though the electric carmaker has never posted a full-year profit.

GM is relying on profits from sales of large pickup trucks and sport utility vehicles in North America to fund its electrification push. The battle for sales in that lucrative market is intensifying among the Detroit Three automakers as sales of small cars in the United States shrivel. Both GM and Fiat Chrysler Automobiles NV (FCHA.MI) (FCAU.N) have launched revamped pickup trucks in a bid to take more share in the U.S. auto industry’s most profitable segment.

Still, GM Chief Financial Officer Dhivya Suryadevara emphasized to investors on Friday that the large pickup market is a three-company oligopoly protected by “competitive moats.” Those include a 25 percent U.S. tariff on imported trucks that predates the Trump administration’s trade actions.

GM’s biggest market by vehicle sales volume is China, and the slowdown in the economy of the world’s largest auto market has rattled investors across industries. Apple Inc (AAPL.O), for instance, last week took the rare step of cutting its quarterly sales forecast, blaming slowing iPhone sales in China.

GM’s China president, Matt Tsien, told investors on Friday that industry-wide auto sales in that country should stay roughly flat in 2019 after the 2018 decline. GM is taking actions to cut costs, including increasing automation in its Chinese plants and pushing down purchasing costs, he said. Cost-cutting coupled with 20 new or redesigned vehicles that will launch in China this year will sustain the company’s profit, he said.

“Overall, GM is in a good position to mitigate the headwinds” in China, Tsien said.

GM, with its Chinese partners, sells more vehicles in China than in the United States. The automaker builds locally most of the vehicles it sells in China.

BULLISH EARNINGS OUTLOOK

GM said it expects 2019 adjusted earnings per share in the range of $6.50 to $7.00, above the $5.86 expected by analysts according to IBES data from Refinitiv.

“Bottom line, we believe management just reset the bar higher for earnings and cash flow despite increased macro concerns among investors,” Buckingham Research Group analyst Joseph Amaturo wrote in a client note.

The company said it expects adjusted automotive free cash flow in 2019 to come in between $4.5 billion and $6 billion.

“We are focused on strengthening our cash generation and creating efficiencies that will position us to take advantage of opportunities through the cycle,” GM’s CFO, Suryadevara, said in a statement.

GM said it also expects 2018 earnings per share to come in above its previous forecast. The carmaker said in October it expected adjusted 2018 earnings of $5.80-$6.20 per share.

The company also expects adjusted free cash flow for 2018 to be above its previous guidance of $4 billion.

The automaker lowered that 2018 cash flow figure, which excludes the impact of $600 million in pension contributions, last year due to the impact of tariffs imposed by Trump.

Still, CEO Barra faces pressure to lift GM’s share price, which has lagged broader market performance. The company has confronted challenges from activist shareholders twice during the past four years.

GM shares were up 8.5 percent at $37.69 at midday on Friday. Ford Motor Co (F.N) shares were up 1.7 percent at $8.82 and Fiat Chrysler shares were up 1.9 percent at $16.32 on the New York Stock Exchange. Tesla shares were down 0.6 percent at $342.85 on the Nasdaq.

Reporting by Nick Carey and Joe White in Detroit and Ankit Ajmera in Bengaluru; Editing by Susan Thomas and Matthew Lewis

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Future of Ottawa: Coffee with Francis Bueckert

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Francis Bueckert: When it comes to the current landscape of coffee-roasting companies and independent cafes in Ottawa, I think we are at a really interesting moment in time. There are more local roasters that are doing artisanal small-batch production—with more attention to the quality and origin of the beans.

With larger corporations such as Starbucks closing locations, it has opened a bit of space for local players to grow. We have been lucky to work with many folks in the coffee-roasting community, and we have found that there is a willingness to collaborate among different coffee roasters. For example, when Cloudforest started back in 2014, we were roasting our coffee at Happy Goat and it was the expertise of their head roaster Hans that helped me learn how to roast. Other companies such as Brown Bag Coffee have also lent a hand when we needed extra roasting capacity. There are others, such as Lulo, Mighty Valley Coffee, Bluebarn, The Artery, and Little Victories that are also part of the growing local coffee community. It’s small roasters like these who have shown me what a coffee community can look like, and that we can help to elevate each other, rather than being locked in competition.

If you care to make a prediction… What’s happening to the local café industry in 2021?

We believe that there is hope and that 2021 can be a big pivot year for small roasters and cafes.

This year will not be ideal from a business point of view. However, it could create a shift in people’s attitude toward where they get their coffee. We are holding out hope that people will support the roasters and cafes that are local to help them economically survive what is in all reality a very difficult time.

It all depends on where consumers decide to go this year. People are starting to recognize that supporting large corporations at this moment will be at the cost of the local roasters and cafes. There is the growing realization that a future where there is only Amazon, Walmart, and Starbucks would be pretty bleak. So we have an opportunity this year to support the kind of local businesses that we want to see thrive.

In your wildest dreams, what will the landscape for local coffee roasters and cafés look like in your lifetime?

In my wildest dreams, all of the coffee roasters and cafés would be locally owned and independent. They would all be focused on direct trade and artisanal coffee. Each different coffee roaster and café would know exactly where their coffee came from. Ideally, each company would be a partnership between the farmers who grow the beans and the people here selling them. There would be a focus on how to cooperate and collaborate with the farmers in the countries of origin to share the benefits around. We would all work together and share orders of cups, lids, and other packaging so that we could get better bulk pricing. In this way, we would make our local coffee community so efficient that the large corporate coffee companies wouldn’t even be able to compete.

We would also like to see people use coffee as a way to create social good. For example, we started Cloudforest as a way of helping support farmers in Ecuador who were taking a stand against large mining companies. This remote community stood up to protect their environment, so that they could have clean drinking water and soil for the next generation. They started an organic coffee cooperative to help show that there are other models of development, and we are doing our part year after year to help support their vision. They have a vision of development that does not include mass deforestation and contamination, and organic coffee is a key (among others) to show that another way forward is possible.

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Special events in the Ottawa Valley dominate annual OVTA tourism awards

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The Ottawa Valley Tourist Association hopes that its annual tourism awards will provide a little sunshine during what is a dark time for local tourism operators because of the pandemic.

The Ottawa Valley Tourism Awards are presented annually by the Ottawa Valley Tourist Association (OVTA) to individuals, businesses, and events that recognize the importance of working together for the growth of the local tourism industry, as well as offering exceptional visitor experiences.

“After a year that saw a lot of businesses in the hospitality and tourism industry being challenged like never before, the annual Ottawa Valley Tourism Awards represent a bit of light on the horizon” said Chris Hinsperger, co-owner of the Bonnechere Caves.

The Ottawa Valley Tourist Association’s (OVTA) Awards Committee co-chairpersons, Meghan James and Chris Hinsperger, said they were very pleased with the recent nominations received, especially in the Special Events category. Submissions were received for The Farm to Fork Dinner Series at the Whitewater Inn; Light up the Valley; The Eganville Curling Clubs’ Rock the Rings; The Ontario Festival of Small Halls ; The Bonnechere Caves On-line Underground Concert Series; The Opeongo Nordic Ski Clubs’ Ski Loppet; The Tour de Bonnechere — Ghost de Tour 2020; and The Bonnechere Caves Rock ‘n Roll Parking Lot Picnic.

“During a time when communities were challenged, it is nice to see that people still made an effort to get together and celebrate, albeit under certain conditions. It just shows the creativity and resiliency of our tourism Community here in the valley” said Meghan James, director of sales at the Pembroke Best Western.

There are three Award categories: The Marilyn Alexander Tourism Champion Award, The Business of Distinction and The Special Event of the Year.

Hinsperger, is excited about this year’s awards.

“During this pandemic the hospitality and tourism industry was the first to be hit, was the hardest hit and will be the last of our industries to fully recover. As Valley entrepreneurs we owe it to ourselves, to our businesses and to our communities to be an active part of that recovery. Our livelihood and economic recovery depends on our efforts. And we will get back to welcoming people from all over the world to share a little bit of the place we are privileged to call home. This awards process leaves myself and others fully optimistic about our positive outcomes.”

Award winners will be announced at the Ottawa Valley Tourist Association’s virtual annual general meeting on Monday, May 31.

The OVTA is the destination marketing organization for the Upper Ottawa Valley and proudly represents more than 200 tourism businesses, comprised of attractions and outfitters, accommodation, food, beverage and retail establishments, artists and galleries, municipalities, as well as media and industry suppliers. The OVTA is supported by the County of Renfrew, Renfrew County municipalities and the City of Pembroke.

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Future of Ottawa: Farming with Jeremy Colbeck

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Jeremy Colbeck: Well first, let’s talk about what we mean by farming. Although farms, and farming as an occupation, are in decline across Canada, they are still a major part of our rural landscape. That’s even more true for a strange city like Ottawa which includes a LOT of rural areas and whose urban boundary takes, what, three hours to cross? About 40 per cent of the rural land in Ottawa is farmland. Most of that farming is corn and soybean cash-crop, as well as some dairy and livestock farming. That’s mostly conventional farming (the kind that is profitable but not exactly where you take your kids on a Saturday).

There are also a lot of agri-tourism businesses in Ottawa, which give you that oh-so-good Saturday spot for family donkey-petting and apple-picking. And it’s totally understandable from a business perspective, but sometimes surprising to find out, that even though they grow some of the Christmas trees they sell, they might also be reselling some that come from much larger farms far away. The farmland around Ottawa is also inflated in price because of its proximity to the city, where it is in demand by would-be hobby farmers—folks who want to do some farming on their property in their spare time but make their money (to subsidize their small-scale farming habit) elsewhere. Unfortunately, many of these properties will have large mansions built on them, which will then make them completely unaffordable for the average farmer

There’s also a segment of small-to-medium-sized Ottawa farms that grow “premium” (artisanal, unique, extra-fresh, ecologically- or organically-grown etc…) products that they sell directly to local eaters via farmers’ markets or other direct marketing channels, including on-farm stores and farm stands. That’s where BeetBox fits in.

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