Finance & Business World

Revamped pizza and a frank advertising campaign helped Domino’s Pizza Inc. more than double its fourth-quarter profit as curious customers tried out its new recipe, the chain said Tuesday.

Executives have said the chain decided to start overhauling its recipes more than 18 months ago after mounting criticism from focus groups and on social media sites.

And it boldly admitted in a series of documentary-style spots that under its old recipe, customers complained its crust tasted like cardboard and its sauce was reminiscent of ketchup.

The company began promoting its new pizza in December. That helped profit climb to $23.6 million, or 41 cents per share, compared with $11 million, or 19 cents, a year earlier.

Removing one-time items, the company’s profit was 30 cents per share — well ahead of forecasts.

Sales improved to $462.9 million from $428.2 million. Analysts expected a profit of 25 cents per share with sales of $437.5 million.

In the U.S., sales at stores open at least a year grew 1.4 percent, while overseas — which comprises nearly half of global retail sales — climbed 3.9 percent. This figure is a key measure of a retailer’s performance since it measures results at existing stores rather than newly opened ones free credit score online.

Meanwhile, Chairman and Chief Executive David Brandon said traffic increased all of last year and has continued to grow in 2010.

The question remains, though, whether Domino’s can keep the momentum going, or whether the novelty of the new recipe will wane.

"When a restaurant company radically changes their menu, usually there’s a curiosity bump involved in the results," said Morningstar analyst R.J. Hottovy.

"But it’s too early to tell if that’s going to be sustainable for a long time."

Full-year profit surged 48 percent to $79.7 million, or $1.38 per share, from $54 million, or 93 cents, a year ago. Adjusted earnings were 87 cents per share. Annual revenue fell 2 percent to $1.4 billion from $1.43 billion.

Domino’s does not give quarterly or full-year profit outlooks, but did provide some long-term same-store sales forecasts. The pizza chain predicts domestic sales at stores open at least a year will rise 1 percent to 3 percent, with international sales at stores open at least a year up 3 percent to 5 percent.

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The Translational Genomics Research Institute and Scottsdale Healthcare are testing an Italian pharmaceutical firm’s new drug for thymic cancer.

Scottsdale Healthcare is the world’s first site for the Phase I trial of a new oral drug, being called NMS-1286937. The hospital had conducted a Phase II trial for another of the Italian company’s drugs, called PHA-848125ac for advanced thymic cancer. This new research is based on the earlier promising results of PHA.

The thymus is a small organ near the lungs and heart that is a key part to the body’s immune system during fetal and childhood development.

The Italian company, called Nerviano Medical Sciences, is working in conjunction with TGen and SHC on both the thymic cancer drugs. The goal is to quickly turn these discoveries into targeted therapies at SHC’s Virginia G paydayloans. Piper Cancer Center in Scottsdale.

Mark Slater, senior vice president of research at Scottsdale Healthcare, said while SHC is the only U.S. site for the study, France and Italy also are conducting studies.

“Our partnership with TGen has allowed us to bring in novel therapies, really cutting-edge treatments that have addressed new mechanisms for rare cancers and cancers that have not responded well to standard therapy,” Slater said. “Our approach is to target our therapies using advanced molecular diagnostics.”

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The United Arab Emirates’ central bank set up an emergency facility on Sunday to support bank liquidity in the first policy response to Dubai’s debt woes that threatened to paralyze lending and derail economic recovery.

Dubai rocked the financial world on November 25 when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to a standstill on billions of dollars of debt as a first step to restructuring.

As a result, banks face heavy losses and the risk that fearful depositors could rush to remove cash from the system, and threatening interbank lending with the second largest Arab economy still facing a downturn this year.

“It might support the market a little bit but I don’t think it is enough,” said Shawkut Raslan, head of brokerage at Prime Emirates brokerage.

“I think some foreigners will take their money of the country and others will be afraid to put their money into these markets.” The central bank policy move came late on Sunday as Dubai’s Supreme Fiscal Committee gathered to prepare a statement before market open on Monday in an attempt to reassure investors.

The central bank said the banking system was more sound and liquid than a year ago, when the global crisis ended the oil and real estate fueled boom in Arab Gulf, the world’s top oil producing region.

The monetary authority said on Saturday it was closely watching events stemming from the Dubai debt crisis to ensure there is no negative impact on the UAE economy.

Before the Dubai debt crisis, the UAE economy was seen falling by 1.1 percent this year before returning to a 2.9 percent growth in 2010, a Reuters poll of analysts showed earlier this month.

PREVENTIVE MOVE

Analysts said the central bank’s move was a preventive measure to avoid a possible capital flight and a run on deposits when markets reopen on Monday after a four-day holiday break.

“It is important because the main concern is that there might be some panic behavior by depositors in Dubai and by bankers who want to take deposits out of the banking system,” said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.

Senior bankers in Abu Dhabi, Dubai’s oil-rich cousin in the UAE federation, told Reuters on Friday Abu Dhabi banks have built up an exposure to Dubai-based companies worth at least 30 percent of their loan books.

In reaction to Dubai’s debt problems, Fitch Ratings has said it downgraded Dubai Bank, Tamweel and Bahrain’s TAIB Bank.

“It (the facility) would cover the immediate concerns related to deposits in the UAE banks,” said Ghanem Nuseibeh, senior analyst at Political Capital consultancy.

“It doesn’t mean that lending would necessarily ease. It is no guarantee for depositors. We still don’t know the extent of the UAE banks’ exposure to Dubai’s problems,” he said. 

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Asia-Pacific leaders will pledge on Sunday to keep stimulus policies in place to stop the world from sliding back into recession, wrapping up a summit that has been dogged by accusations of U.S. trade protectionism.

President Barack Obama arrived in Singapore late on Saturday, missing most of the day’s formal talks and speeches where several leaders suggested the world’s largest economy was hampering free trade through policies such as “Buy America” campaigns.

Speaking in Tokyo before he arrived, Obama called for a new strategy to rebalance global growth, referring to the excessive consumption in the United States and the over-reliance on exports from some countries that many blame for the economic crisis.

Leaders from the Asia Pacific Economic Cooperation (APEC) forum will vow to “maintain our stimulus policies until a durable economic recovery has taken hold,” according to a draft of their final statement, to be issued later on Sunday.

APEC is the last major gathering of global decision-makers before a U.N. climate summit in Copenhagen in three weeks meant to ramp up efforts to fight climate change.

Those negotiations have largely stalled, but a U.S. official said Obama had backed a two-step plan by the Danish prime minister to aim for an operational agreement and to leave legally binding details until later.

The APEC draft earlier dropped a reference to emissions reductions of 50 percent by 2050, and pledged instead to “substantially” cut carbon pollution by 2050.

The statement said job creation would be at the heart of economic policy, a hot topic as unemployment has risen across the industrialized world and put pressure on governments to act.

“Looking beyond supporting the recovery, we recognize the necessity to develop a new growth paradigm for the changed post-crisis landscape, and an expanded trade agenda for enhanced regional economic integration,” the draft APEC statement says.

DOHA RHETORIC

The leaders of APEC, a 21-member grouping accounting for more than half of all global output and 40 percent of world trade, will also resolve to exert more political will to jump-start the Doha Round of global trade talks, stalled for eight years.

Beyond the rhetoric of trying to conclude the Doha Round, APEC officials have sought to instead talk up a so-called Transpacific Partnership aimed at forging a regional trade deal.

Obama said Washington would work with the partnership countries, but stopped short of saying Washington would join the pact. The former U.S. administration said last year it would launch talks to join the partnership with Singapore, Chile, Brunei and New Zealand, countries that together comprise a minor component of trade within APEC.

It is the first free trade agreement that spans both side of the Pacific and supporters are touting it as a precursor to a possible APEC-wide pact in the future.

Washington has been criticized on several fronts for its trade policies, especially toward China, which will be the most closely watched of Obama’s four stops on his first Asia tour as president. He leaves for Shanghai later on Sunday. 

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Nobel laureate Paul Krugman said China is devaluing its currency and undermining the global economic recovery by “stealing” jobs that otherwise would have gone to nations that aren’t growing as quickly.

By pursuing a weak-currency policy, China is siphoning demand away from other nations including poor countries, Krugman wrote in an article titled “The Chinese Disconnect” in the New York Times.

“In normal times, I’d be among the first to reject claims that China is stealing other peoples’ jobs, but right now it’s the simple truth,” the Princeton University professor said.

U.S. officials have been “extremely cautious” about confronting China on the issue, an approach that “makes little sense,” he said.

While the dollar has fallen 14 percent against the euro and 7 percent versus the yen since mid-March, China’s authorities have kept their currency little changed.

The U.S. economy would benefit if China began selling its “dollar hoard,” which Krugman says is currently worth about $2.1 trillion, because it would make American exports more competitive.

“With the world economy still in a precarious state, beggar-thy-neighbor policies by major players can’t be tolerated,” Krugman said. “Something must be done about China’s currency.”

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New Zealand’s central bank will need to respond to increasing inflation pressure and raise interest rates in March, according to the nation’s biggest non-government fund manager.

“The odds are building for an earlier tightening,” Jason Wong, head of investment strategy at AMP Capital Investors Ltd., told reporters in Wellington today. “Come March, when you’ve had another 8 percent increase in house prices and some positive GDP and retail sales data, we can’t see the Reserve Bank sitting on their hands at that point.”

Reserve Bank Governor Alan Bollard has held the official cash rate unchanged at a record-low 2.5 percent since April and said on Sept. 10 he didn’t expect to raise the benchmark until “the latter part” of 2010. Two of 11 economists surveyed by Bloomberg News expect he will increase the rate in March and nine say it will be higher by June 30.

House prices have gained 7.9 percent since a low point in January, according to Real Estate Institute figures.

Consumer prices rose more than expected in the third quarter while non-tradable inflation, a core measure of prices that are not influenced by currency fluctuations and fuel, gained 1 percent, according to the report published on Oct. 15.

“If I was Bollard I’d be starting to nudge rates higher even though the inflation outlook for the next 12 months is okay,” said Wong, who helps manage NZ$10.8 billion ($8 billion) of stocks, bonds and property. “You want to start to take away that upward pressure on the housing market.”

Currency Gains

Wong says it wouldn’t be appropriate to raise rates this year because the New Zealand dollar’s 37 percent gain against the U.S. dollar in the past six months will curb inflation over the next year. Bollard’s focus is on inflation in a two-to-three year period, he said.

Bollard should also remove indications that borrowing costs could be lower at the next review on Oct. 29.

“Indicating rates could fall is not credible so they need to change the tone a little bit,” Wong said.

New Zealand’s strengthening currency is affecting some exporters, while other companies are able to benefit because the cost of imported goods is reduced, Wong said. The currency rose to 75.76 U.S. cents today, nearing a 15-month high.

There is nothing to suggest the currency is going to suddenly reverse its gains, and it could move higher, he said. It reached a 23-year high of 81.3 cents in February 2008.

Commodity prices are supporting the New Zealand dollar while the U.S. dollar “has got a lot going against it,” Wong said. “Were the Australian dollar to go to parity, then clearly we are going to go above 80 cents.” The Australian dollar was trading at 92.95 U.S. cents at 1:40 p.m. in Sydney.

New Zealand companies, who for years were used to the local currency fluctuating above and below 60 U.S. cents, may have to get used to something higher, Wong said. “Seventy may be the new 60.”

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Latvia’s Cabinet will seek to persuade European Union Monetary Affairs Commissioner Joaquin Almunia it can adhere to the fiscal terms of its bailout after lenders criticized the government for dragging its feet.

Almunia met with Prime Minister Valdis Dombrovskis at 9:30 a.m. in the capital Riga, a day after the ruling coalition said it will try to find 320 million lati ($668 million) in spending cuts and 180 million lati in tax increases in a bid to meet the demands the International Monetary Fund, the EU and Sweden attached to a 7.5 billion-euro ($11.1 billion) loan.

Yesterday’s Cabinet talks followed criticism from lenders that the Baltic state hasn’t shown enough commitment to its loan terms, which call for budget cuts of 500 million lati a year until 2012. Latvia tried to persuade donors to sign off on 325 million lati in budget cuts, prompting Swedish Premier Fredrik Reinfeldt to tell Latvia it “must correct” its deficit. The EU has called for better coordination in the country’s talks.

“Since the start of the crisis last year, communication about Latvia has often unsettled the markets,” said Kenneth Orchard, a senior analyst at Moody’s Investors Service in London. “There has been a constant effort by the European Commission and the IMF to coordinate communication. It’s going to be an ongoing saga at least until after” general elections a year from now.

Euro Peg

Latvia, which like neighboring Lithuania and Estonia pegs its currency to the euro as part of the exchange-rate mechanism 2, is suffering the EU’s second-deepest recession behind Lithuania after a lending boom spurred a property bubble that burst when the credit crisis descended on the region.

“As long as the economy remains weak, I can’t see this getting any easier,” Orchard said.

Gross domestic product contracted 18.7 percent in the second quarter, compared with a 20.2 percent slump in Lithuania and a 16.1 percent decline in Estonia.

Riga’s OMX Index was little changed at 313.09 today at 2:18 p.m. Riga time. The yield on Latvia’s 5.5 percent government bond due March 2018 rose 6 basis points today to 7.299 percent. The lats was little changed at 0.7095 per euro.

Almunia said that now is a “critical moment” in Latvia’s program since there are some signs of economic stabilization, according to a press release from the Latvian Commercial Bank Association which met with him today. Almunia said it is necessary for Latvia to be timely in adopting its 2010 budget, according to the press release. Almunia will hold a press conference today at 3:30 p.m. Riga time.

Drag On

Coalition talks may drag on even after Almunia’s visit quick pay day loan. The country’s biggest coalition party, the People’s Party, has said it may not support the Finance Ministry’s proposed cuts.

“Almunia is not the god, the lord,” Vents Krauklis, the party’s deputy faction leader said, according to the Leta newswire. The party last night said its chairman, Mareks Seglins will step down on Nov. 21, and may be replaced by Andris Skele, a three-time former premier. Skele said the party should support Dombrovskis’ government as long as it has the confidence of the president and the Parliament, according to the statement.

Danske Bank A/S said Skele’s previous support for a lats devaluation “could unnerve markets yet again,” in a client note today. Skele in August suggested widening the trading corridor of the lats band. He also called for a budget deficit of 3 percent of gross domestic product in 2010, and to quickly sell Parex Banka, the lender the state took over in November.

Hurting Sweden

Dombrovskis and Finance Minister Einars Repse are members of the New Era Party. Repse is due to present the proposed budget to Parliament on Oct. 23. Lawmakers will vote on the budget a month later.

The region’s economic decline is hurting Swedish lenders with Stockholm-based Swedbank AB and SEB AB the biggest banks in the Baltics. Dombrovskis has tried to contain the domestic fallout of the stipulated austerity measures, also needed to maintain the euro peg, and last week proposed capping mortgage holders’ liability.

That led to speculation, which the government has sought to quell, that the country may be preparing the ground for a lats devaluation by limiting the domestic losses such a move would incur.

Sweden’s krona slipped as much as 0.6 percent against the euro today to trade at 10.3633 at 1:20 p.m. in Stockholm. Swedbank lost 2.3 percent to 64.75 kronor and was down 0.2 percent at 46 kronor.

Austerity Measures

Even as austerity measures exacerbate the nation’s recession, Latvia has no choice but to push through the IMF and EU-ordered budget cuts or risk spiraling debt levels that would undermine its chances of adopting the euro, Orchard said.

“If they start slipping, then the debt-to-GDP ratio could go to 80 percent or 90 percent and that may not be sustainable,” Orchard said.

The country targets euro adoption, which requires member states to have budget deficits no wider than 3 percent of GDP and debt levels within 60 percent of GDP, in 2014. The government estimates that the country’s budget shortfall next year will be equivalent to 8.5 percent of GDP.

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Peru’s central bank will probably keep its benchmark lending rate at a record low as policy makers evaluate signs that an economic recovery has taken hold.

The seven-member board, led by bank President Julio Velarde, will keep its reference rate at 1.25 percent, according to 11 of 12 economists surveyed by Bloomberg. The bank is scheduled to announce its decision after 7 p.m. New York time.

Velarde will pause for a second month, after seven straight cuts earlier this year, to measure the effect of lower borrowing costs on the country’s economy, said Pablo Secada, an economist at the Peruvian Economy Institute. Growth is showing signs of rebounding after the economy stalled in the first half of the year on falling export demand and weaker domestic spending.

“The central bank is aware that the economic recovery has begun, even if it’s moderate,” Secada said in an interview from Lima. “We’re seeing growth in consumer demand, so they have cause not to be pessimistic.”

Brazil, Mexico and Chile have all held their benchmark rates unchanged since August, citing improving economic growth. Peru cut the overnight rate by 5.25 points this year to spur consumer spending after six increases in 2008 pushed borrowing costs up to the highest since 2001.

Peru’s metals output, agriculture and cement sales all increased in August, and unemployment was 8.3 percent that month, down from an almost two-year high of 9.3 percent in March. The improved numbers came after the economy shrank for the first time in eight years in the second quarter.

Metals Pricing

Prices of copper, zinc, lead, tin and silver, which account for 60 percent of Peru’s export revenue, have all gained at least 35 percent this year as increases in U.S. and Chinese manufacturing signal rising demand for industrial materials.

“The market is very promising for business in general,” said Norberto Lassner, president of Neogas Peru, a compressed natural gas distributor that inaugurated a $5 million filling station outside Lima last week. “There’s a great deal of repressed demand.”

Bank loans grew 15 percent this year through September from a year earlier spurred by mortgages and car loans, according to Peru’s banking regulator. Corporate debt offerings totaled 400 million soles ($140 million) in September, the highest monthly figure in two years, securities regulator Conasev said.

Peru’s foreign debt rating was put on review for an increase to investment grade by Moody’s Investors Service last week, citing the country’s “stable” economic policies.

Slowing inflation

The bank may cut the rate by 0.25 point as inflation hovers at a two-year low and Peru’s currency strengthens, said Kathryn Rooney, an emerging-market analyst at Bulltick Securities Corp. The Peruvian sol has advanced 9.5 percent this year, the seventh-best performance against the dollar among 26 emerging- market currencies tracked by Bloomberg.

The country’s annual inflation rate fell in September to 1.2 percent from 1.87 percent through August as food and transport costs declined.

The inflation rate will be lower than policy makers’ target of 1 percent to 3 percent this year on declining consumer demand, Velarde said last month.

Still, after expanding 9.8 percent in 2008, the fastest pace in 14 years, Peru’s economic growth may slow to 1.8 percent in 2009, the slowest pace since 2001, Velarde told reporters in Lima on Sept. 18.

“Domestic demand is taking longer to pick up than expected,” Rooney said in a telephone interview from Miami. “Data shows growth woefully below potential.”

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New Zealand’s manufacturing industry contracted at a faster pace in August as new orders and production slowed, adding to signs of a weaker recovery from the nation’s worst recession in three decades.

The manufacturing index was 48.7 from 49.6 in July, Bank of New Zealand Ltd. and Business New Zealand, a Wellington-based employer group, said on the group’s web site. An index below 50 indicates that manufacturing is contracting.

Companies have reined in production since April last year amid a global recession that curbed export demand and consumer spending. The Reserve Bank last week said the economy may grow just 0.1 percent in the third quarter, the first expansion in seven quarters.

“We don’t believe it spoils the recovery theme,” said Craig Ebert, senior economist at Bank of New Zealand in Wellington absolutely free credit report. “The PMI does sound a cautionary note not to get overly excited about a strong or sustained recovery just yet.”

The index is based on gauges of production, employment, new orders, finished stocks and deliveries.

The recovery in July’s index to a 16-month high had stoked expectations manufacturing was close to expanding again. Instead, the index for new orders fell to 50.3 in August from 55.4 and the production gauge dropped below 50.

Ebert said the slump in demand was exacerbated by a drop in aluminum production from Rio Tinto Group’s Tiwai smelter. Dairy and meat processing increased in the second quarter, suggesting other areas of manufacturing remain weak, he said.

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U.S. Treasury Secretary Timothy Geithner said the Group of 20 nations has been “very successful” in helping to end the global recession and cautioned that it’s too early to remove policies aimed at boosting growth.

“You’re seeing the first signs of positive growth now in this country and countries around the world,” Geithner told reporters in Washington yesterday. “We’ve come a very long way but I think we have to be realistic, we’ve got a long way to go still.”

Geithner spoke as he prepared to leave for a meeting of Group of 20 finance ministers and central bankers Sept. 4-5 in London. The officials are laying the groundwork for a summit meeting later this month in Pittsburgh, where leaders will discuss measures to overhaul supervision of the financial system.

Geithner said talks in London will include the start of a discussion on bank capital standards as well as a “framework” for how the world’s largest industrial and developing economies can cooperate to remove policies to stimulate growth. While it’s “too early” to implement exit strategies, it’s not too soon to talk about them, he said.

The U.S. also wants to discuss how to build a new “international capital accord” to rein in the amount of leverage that financial firms take on, Geithner said. Such an arrangement would set standards for how much capital that financial firms would need to hold in reserve to cushion against potential losses.

‘Timetables’

“We’re going to talk about a framework of design principles, and I think we’re going to start to talk about timetables for what we try to get the world to commit to do in that context,” he said.

International cooperation is needed for any new standards to be effective, Geithner said. He said emerging market nations, many of which already have “pretty conservative” bank supervision in place, will play a bigger role than they have in the past.

“This is not something we can take a long time to do,” he said. “It took the world a very long time to reform the previous system, and that was a consequential and costly failure of cooperation, and we’re not going to repeat that mistake.”

Geithner declined to comment on the recent elections in Japan and said he’s looking forward to working with the new members of the Japanese government.

European finance ministers lined up this week behind proposals to limit bank bonuses as governments sought to forge a common stance on overhauling the financial system before the summit of the Group of 20 nations.

‘Bonus Culture’

“The bonus culture must come to an end,” Swedish Finance Minister Anders Borg, whose nation currently holds the rotating European Union presidency, told reporters yesterday as he arrived for a meeting of EU finance chiefs in Brussels. “The bankers are acting like it’s 1999 and it’s in fact 2009.”

French Finance Minister Christine Lagarde said in Brussels before the meeting that she has “firm proposals to put some order into the system of bonuses.” France will suggest curbing bonus pools as a percentage of a bank’s revenue, imposing a ceiling on payments or taxing them, a Finance Ministry official told reporters earlier this week.

In yesterday’s briefing, Geithner said curtailing executive-compensation is “a critical part of our broader reform agenda.” He said the U.S. has proposed “pretty comprehensive reforms” to give shareholders more control over pay policies and also give managers better incentives to act in the best long-term interests of their banks.

‘Common’ Interests

“If you look at what’s happening across Europe, like in many of these areas, there’s a lot in common in terms of basic strategy,” Geithner said. He declined to comment on specific changes sought by his counterparts, saying he had not yet had detailed discussions on the policy proposals.

Geithner, 48, will be in London the same day the U.S. Labor Department releases its report on the job market in August. A Bloomberg survey of economists shows expectations the unemployment rate rose to 9.5 percent in August from 9.4 percent a month earlier.

A private survey released yesterday showed that companies eliminated more jobs last month than expected, signaling employers have yet to gain confidence a recovery from the deepest recession since the 1930s is taking place. The drop of 298,000 workers followed a revised 360,000 decline in the previous month, according to figures from ADP Employer Services.

It is “very important” to the U.S. to “reinforce the progress we are seeing,” Geithner said.

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