Room: ANDROID - Business News

German prosecutors raided several Audi offices on Wednesday as part of a criminal investigation into cheating software installed in diesel cars sold in the US, overshadowing the carmaker’s efforts to banish the scandal by announcing electric and driverless car projects at its annual investor conference.

The 7am raids were part of a probe into 80,000 3-litre diesel engine cars sold by the marque in the US between 2009 and 2015. “There is a suspicion that these vehicles were fitted with technical devices to manipulate emissions, in order to comply with the US emission limits,” a statement from the German prosecutor’s office said. Volkswagen, which owns Audi, has admitted to fitting cheating software in 11m cars worldwide that concealed diesel emissions when in official laboratory tests. The German carmaker has since set aside $24bn to cover the costs of the scandal and pled guilty to criminal charges in the US. Audi has set aside $1.7bn to cover the costs of the scandal. This provision was part of the reason that Audi’s annual pre-tax profits fell 37 per cent last year to €3bn, the company said on Wednesday, although it added underlying profits had also fallen. Revenues rose 1.5 per cent to €59.3bn on car sales that were up 3.6 per cent at 1.87m. The raids on Audi’s sites in Germany took place hours before the marque’s management held an annual media and investor day in Ingolstadt, Germany. The company had hoped to use the event to talk about the future, rather than the revelations that came to light in late 2015.

During the meeting, Audi unveiled a new self-driving car division and outlined plans to offer more electric vehicles, with three battery-driven models on sale by 2020 and every product line offering hybrid as an option by 2025. A day earlier, parent company VW had sought to draw a line under the scandal, saying it was “back on track” and promising more electric cars and a greater diversity in its management team. But the raids on Wednesday morning threw the spotlight firmly back on to the scandal that has dogged the company for the past 18 months. A statement from the German prosecutor’s office said prosecutors and police officers executed search warrants at Audi sites as well as seven other locations. The searches were designed to clarify which individuals had been involved in the technology and “had provided incorrect statements to third parties”. When asked on Wednesday at the media day if his home had been searched as part of the investigations, Audi chief executive Rupert Stadler said he did not know as he had been at the venue since early morning. He said the company was co-operating with authorities. Additional reporting by Claire Jones in Frankfurt

A tight grip on costs has helped Lufthansa beat analysts’ expectations with better than forecast earnings for 2016.

Net profits at Europe’s biggest legacy airline group by revenues rose 4.6 per cent to €1.78bn despite a 1.3 per cent decline in revenues to €31.7bn. The group, which includes Austrian Airlines, Swiss, Brussels Airlines and Eurowings as well as the core German flag-carrier, recorded the improved results despite a Europe-wide glut in airline capacity that drove a key revenue measure down 6 per cent. Lufthansa shares rose almost 5 per cent after the news on Thursday morning. The figures were published a day after Lufthansa announced a settlement with its pilots of a long-running pay dispute that cost the group €100m during 2016. However, it warned that adjusted earnings before interest and tax (ebit) — a measure that excludes the effect of some changes in pension accounting — for 2017 would be “slightly below” the €1.75bn figure for 2016. Carsten Spohr, chief executive, said the group was in a stronger position than a year ago. “In a very demanding market environment, we successfully kept the Lufthansa group’s margins at their record prior-year levels, through consistent capacity and steering measures and, above all, through our effective cost reductions,” Mr Spohr said. Like other European airline groups, Lufthansa is grappling with the effects of continued, industry-wide growth in capacity that is outstripping demand. The phenomenon is pushing down fares — Lufthansa’s revenue per available seat kilometre, a key metric, declined to 7.8 euro cents, from 8.3 in 2015. The year’s performance was driven by the core passenger airline group, where adjusted ebit grew 1.5 per cent to €1.53bn, on revenue down 2.5 per cent to €23.9bn. But the group recorded an adjusted ebit loss of €50m on revenue down 11 per cent to €2.08bn in logistics, where the group continues to suffer from a glut in air cargo capacity and lacklustre traffic growth. The group said it expected to cut costs excluding fuel during 2017 at the same rate as during 2016 but that it expected rising oil costs to push up its annual fuel bill by €350m. It forecast organic capacity growth of 4.5 per cent and that the airline would benefit from the integration of Brussels Airlines from the start of this year. Lufthansa also expects a net benefit from a deal arranged during 2016 to lease many of the aircraft of struggling German airline Air Berlin.

Oracle’s headlong rush to remake itself as a cloud software company slowed last quarter after steady acceleration throughout 2016, according to the latest earnings released on Monday.

Revenues for the quarter came in at $2.9bn, 2 per cent up from a year before but below forecasts of $2.95bn. However, shares in the US database software company still rose 3 per cent in after-market trading after it increased its dividend by 27 per cent and beat expectations for pro-forma earnings thanks to a jump in non-operating income. Wall Street has been warming to the idea this year that Oracle may soon get past a transition in which the profit decline in its traditional on-premise software licensing business has out-weighed the impact of cloud growth. The company’s shares were already up 12 per cent since the start of the year, nearly double the broader market. Revenue from its fastest-growing cloud activities, in platform-as-a-service and software-as-a-service, rose by 73 per cent in the latest quarter, to $1bn. That was a slight slowdown from the 81 per cent of the preceding three months, though it still reflected a big pick-up in cloud growth that has been apparent in recent quarters. Meanwhile, Oracle’s traditional software licensing business fell a further 16 per cent, to $1.4bn. Though less severe than the 20 per cent fall that worried investors in the previous quarter, it still highlighted a faster decline that set in last year. Investors are hoping for greater resilience from software licensing in coming quarters with the launch of a new version of Oracle’s database. Thanks partly to $189m in non-operating income, up from $65m the year before, Oracle was able to report a 5 per cent increase in net income for the three months to the end of February, to $2.2bn. Earnings per share rose by four cents, to 55 cents. On the pro-forma basis that Wall Street judges the company on, earnings per share rose by 7 per cent to 69 cents, compared to expectations of 62 cents.

The UN has warned that the world is facing its largest humanitarian crisis since the organisation was founded in 1945. It says that 20m people face “devastating levels of food insecurity” in Yemen, South Sudan, Somalia and north-east Nigeria.

“Without collective and co-ordinated global efforts, people will simply starve to death,” Stephen O’Brien, the UN’s humanitarian chief, told the Security Council on Friday. “Many more will suffer and die from disease.” Aid agencies have been warning for months and, in the case of Somalia, for years of an impending catastrophe. But the situation has deteriorated rapidly in the past 12 months. Last month, the UN and the South Sudanese government declared a famine in parts of the country. The UN says it needs $5.4bn to tackle the crisis but has only a tiny fraction of that amount ready to be deployed. Here is a look at the causes of food shortages and what is being done. Are these crises man-made? The short answer is yes, although to varying degrees. Somalia is the exception. Ever since South Sudan, the world’s youngest nation, became independent in 2011, it has been plagued by internecine fighting. The government of President Salva Kiir and his main rival and former deputy, Riek Machar, failed to resolve deep-rooted ethnic differences and power struggles as the country spiralled into civil war. Aid agencies say that, in some of the worst-affected regions, multiple armed militias are fighting for territory. Civilians have fled their land, exacerbating an acute food crisis. Some 100,000 face famine and the UN has warned that 5.5m people, or 40 per cent of the population, are at risk.

North-east Nigeria has been a centre of Boko Haram militancy. In the past 12 months the government has made military inroads, but hundreds of thousands of people have been forced from their homes or trapped in Boko Haram areas. The UN’s World Food Programme says individual families face starvation, but the situation is not yet widespread enough for a famine to be officially declared. The two-year conflict in Yemen has pushed the poorest Arab state into a humanitarian crisis and driven millions of people to the brink of starvation. The war has been exacerbated by a struggle between Saudi Arabia and Iran, rival regional powers. Riyadh launched a Sunni-led military coalition two years ago to fight against Iranian-backed Houthi rebels, who had ousted the government. More than 10,000 civilians have died. Some 7m people face severe food shortages. The Saudis are blocking ports, ostensibly to stop the flow of weapons but also affecting food imports. And Somalia? Somalia is different because the main reason for hunger is a drought, described by pastoralists as the worst in living memory. Temperatures have been rising in the Horn of Africa and weather patterns have become more unpredictable, a phenomenon some blame on global warming. The lack of effective government and an insurgency by al-Shabaab, an al-Qaeda linked jihadi group, have not helped but are not the main cause of rising hunger. Kevin Watkins, chief executive of Save the Children, recently visited Puntland, in north-east Somalia, where he described the situation as “on the precipice”. The carcases of dead livestock littered the landscape. In 2011, it is estimated that up to 260,000 people died because of famine, according to a report by the UN and Fews Net, a famine early warning group, in which the international community was blamed for acting too late. Mr Watkins said 2017 need not be a repeat of that. But it could be.

What is the definition of a famine? UN agencies and aid groups adhere to a strict definition of famine laid out in an internationally recognised scale that goes from one, normal, to five, famine. Famine is declared when at least 20 per cent of households face the complete lack of food, levels of acute malnutrition exceed 30 per cent and more than two people per 10,000 die each day. Is there donor fatigue? The refugee crisis triggered by the war in Syria has sucked up a lot of international attention and funding. In western countries, the appetite for foreign aid is lower among parts of the population. But Challiss McDonough, regional spokeswoman for the World Food Programme, said “fatigue is not the right word”. Speaking from Juba, capital of South Sudan, she added: “It is more like an overwhelming of the humanitarian system: 20m people are facing potential famine. A year ago I would have said that was unimaginable.”

Are countries condemned to repeat these catastrophes year after year? No. Ethiopia is often associated with starvation because of the 1983-85 famine in which at least 400,000 people died, with some estimates suggesting as many as 1m. Since then, however, a new government — authoritarian and repressive but with a strong developmental agenda — has taken big steps to prevent a recurrence. Last year, Ethiopia suffered the worst drought in at least three decades. People certainly went hungry, but Addis Ababa was able to mount a concerted response that was made easier by much-improved infrastructure, years of fast economic growth and prudent planning. A study by the World Peace Foundation shows that 115m people died of starvation between 1870 and 1980 — 90 per cent the result of wars, conquest and repression. Since then the numbers have declined. But if states collapse and if governments or militants put their own objectives above people’s food security, famine can still strike.

Theresa May has dramatically faced down Nicola Sturgeon over a new Scottish independence referendum, declaring that “now is not the time” and effectively pushing any second vote beyond the completion of Brexit in 2019.

The UK prime minister risks inflaming Scottish nationalist sentiment by refusing to grant Ms Sturgeon’s demands, made earlier this week, for a second poll in late 2018 or the spring of 2019, but has decided to tough it out. In an interview with ITV News, Mrs May said: “We should be putting all of our energy into getting the right deal for the UK and Scotland in these negotiations with the EU. We should be working together, not pulling apart.”

Mrs May refused to say what she meant with her repeated assertion that “now is not the time”, but her allies have made it clear she will not permit a second independence vote until Brexit is complete. Ms Sturgeon responded on Twitter, saying that Downing Street’s refusal to agree to another referendum would be “undemocratic” and “proof positive that the Tories fear the verdict of the Scottish people”. The prime minister’s surprise intervention was intended to pre-empt Ms Sturgeon’s SNP party conference in Aberdeen, starting on Friday, and to assert her control over the process. Westminster has to sanction a second Scottish vote on separation.

Mrs May said that Scots would not have “crucial information” about the UK’s future relationship with the EU while Brexit talks were continuing, but did not rule out permitting a Scottish vote while she was prime minister. The prime minister’s team concede that it is politically dangerous to resist the Scottish first minister’s call for a second referendum over many years, but believe they can hold the line for now. The last Scottish referendum was in 2014 and Mrs May argues that there is scant evidence that Scots want a second vote now.

Meanwhile the leader of the Scottish Conservatives has declared that Scotland cannot hold an independence referendum at least until the UK’s post-Brexit relationship “is working”.  Speaking in the Scottish parliament, Ruth Davidson signalled a tough line on Ms Sturgeon’s call for a fresh referendum on leaving the UK to be held the by spring 2019 at the latest.  “The Scottish Conservatives reject the proposals set out by the first minister on Monday,” Ms Davidson said.  “A referendum cannot happen when the people of Scotland have not been given the opportunity to see how our new relationship with the European Union is working and it should not take place when there is no clear political or public consent for it to happen,” she said.

Ms Sturgeon responded by pointing out that the SNP won the 2016 Scottish parliament election with a much greater share of the vote than the Conservatives managed across the UK in 2015.  The SNP 2016 manifesto included a demand for the right to hold a second referendum if Scotland was to be forced out of the EU against its will, the first minister said, adding that there was a majority for independence in the Scottish parliament.  “Let me issue this direct challenge to Ruth Davidson and to the Conservative party,” Ms Sturgeon said. “If on Wednesday next week this parliament votes for an independence referendum to give the people of Scotland a choice over their own future, will the Conservatives respect the will of this parliament?” she said.

Spotify is closing in on licensing deals with the world’s largest record labels, hoping to clear a hurdle in the streaming music company’s path towards an initial public offering after months of tough negotiations.   As part of the proposed deals, the music companies have agreed to trim the royalty fees that Spotify pays for their songs, according to people familiar with the discussions. In exchange, Spotify would restrict the biggest album releases to its paid tier for a period of time — a substantial concession after years of friction with pop stars including Taylor Swift, who pulled her music from the platform in 2014. Recorded music companies, and the likes of Ms Swift, want to limit Spotify’s free service, which generates far less revenues than paid subscriptions. People close to the matter say licensing talks have picked up considerably and deals could be inked within weeks after months of gridlock, with the caveat that nothing has been signed and talks could again stall. The long-term licensing deals would boost Spotify’s appeal before an IPO, as it looks to convince investors it can translate its fast customer growth into a solid business. Spotify, valued at $8.5bn in a recent funding round, made a net loss of €173m in 2015, despite revenues surging to €1.95bn, as royalty and distribution fees jumped to €1.63bn. 50m Number of paying customers using Spotify Spotify’s contracts have been up for negotiation with Universal, Sony and Warner, the label owners on whom it depends for most of its 30m songs. It has not had a long-term contract with Vivendi-owned Universal, the world’s biggest record company, in nearly two years. The “big three”, which together control the vast majority of the world’s popular music, also hold minority stakes in Spotify and have an interest in a public offering succeeding, label executives say.  The Big Read How streaming saved the music industry Spotify and Apple are making money for the big labels but technology is likely to change the equation again This month Spotify said it had reached a milestone of 50m paying customers, underscoring the music industry’s dependence on the streaming pioneer as it navigates a digital future. Spotify enjoyed a growth spurt in the past year, adding 20m paying subscribers, while its main rival, Apple Music, has so far signed up only 20m paying customers. Spotify’s growth has helped revive the music industry, as streaming last year powered the fastest revenue growth for recorded music since the file-sharing days of Napster.  The music industry has for years been pushing for “windowing”, or making some music available only to paying customers for a set period of time, likening the strategy to releasing movies in theatres before allowing them to be streamed online.  However Daniel Ek, Spotify’s founder, has steadily defended his “freemium” streaming model as the path forward for music in the digital era, even in the face of a high-profile critique from Ms Swift, who said she was “not willing to contribute my life’s work to an experiment”. Mr Ek has argued that offering music for free lures in new listeners who later sign up to pay.  Spotify declined to comment.