Part 1 Unit 1 Section 1BUSINESS AND BUSINESSES

The Telegraph

August 2011

Glaxo profits jump as sales decline slows

Pharmaceutical giant Glaxosmithkline's chief executive has stressed the importance of striking a balance between competitive drug prices and promoting innovation, saying he hoped there would be no further drug price cuts in the UK.

Price pressure across Europe has been weighing on drug makers. Andrew Witty said price cuts in the region were currently in the range of 5pc to 6pc, mostly driven by countries like Spain, Italy and Germany.

He added the UK had seen some price reduction through the renegotiation of the pricing regime three years ago and prices were now in "the bottom quartile".

"The UK gets a phenomenally good deal," he said. "I'd be very hopeful we wouldn't have to have further price cuts here in the UK because there's a real balance to be struck between having competitive prices for the medicines and ensuring there is an underpinning of the innovation industry and all the research which goes on in this particular sector."

His comments came as Glaxo unveiled a 4pc fall insecond-quarter sales to £6.7bn, marking a slower decline than in previous quarters.

A 13pc rise in emerging markets sales helped offset a 7pc fall in European sales. Mr Witty said underlying revenue - stripping out factors such as the absence of product sales - in Europe was down 1pc and if there had been no price cuts, sales would have risen 5pc.

Glaxo reported pre-tax profits of £1.6bn compared to a £97m loss last time when earnings were hit by a £1.57bn legal charge. Glaxo is also set to deliver¹⁾additional savings of about £300m by 2012, and cut tax and interest charges.

But, Glaxo reiterated its commitment to increasing its presence in Britain, with Mr Witty saying the company is likely to be²⁾ a "a job creator in the UK overall" over the next few years.

Notes:

1) /2) См. Раздел “Грамматические трансформации в переводе” п 4.2 стр.408 “Инфинитивные конструкции”

Part 1 Unit 1 Section 2 INDUSTRIES AND SECTORS

The International Herald Tribune

July 2011

The Auto Industry, Stuck in the Slow Lane

By MOTOKO RICH

Many of those grasping for a sign of economic optimism these days have pointed to the auto industry. The argument is that as supply chains come back on line following the Japanese earthquake and tsunami, more automobiles will be available for sale to consumers who have been waiting for cars to arrive.

But don’t expect a roaring comeback yet. A report released on Wednesday by AlixPartners, a business consulting firm, projects modest sales growth for the foreseeable future. The report forecasts that United States auto sales will reach 12.7 million units this year, up from the 11.5 million of 2010, but still far below the 16-million-plus that the industry regularly posted in the mid-2000s. AlixPartners forecasts 13.6 million sales in 2013, and does not project that the industry will get back to its peak before the recession “in this current cycle.”

According to the report, several factors are restraining growth in car sales. Unemployment remains high and housing values are depressed, making¹⁾ it difficult for families to tap housing wealth for car purchases. Historically, the report found, one in five vehicles sold²⁾has been financed by an appreciation ina car buyer’s home value.

And in a survey of 1,000 Americans by AlixPartners, 83 percent said they had delayed the purchase of a vehicle or planned to wait another year before buying a car.

John Hoffecker, managing director at AlixPartners, said the level of sales before the recession was unsustainable.

“Many people were thinking that was the norm,” Mr. Hoffecker said. “And our view was that it was not actual demand.”

Instead, he said, sales were buoyed by easy financing by carmakers and rapidly appreciating home and stock values.³⁾ What is more, he said, automakers did not pay enough attention to their cost structures⁴⁾ when selling cars, sometimes at a loss.

On the positive side, said Mr. Hoffecker, American automakers have already regained their profits. And future sales will be fueled by population growth in the United States as well as growing demand in developing markets.

The bad news is that the depressed level of auto sales will not help all the laid-off autoworkers get back to work. While engineers and sales representative shave been rehired to levels before the recession, Mr. Hoffecker said, production labor “is not going to come back any time soon.”

Notes:

1)/2) См. Раздел “Грамматические трансформации в переводе” п.6.1 стр.417 “Причастие в различных функциях”

3)/4) См. Раздел “Грамматические трансформации в переводе” стр. 390 “Аттрибутивные фразы”

Part 1 Unit 1 Section 3 RESTRUCTURING

The International Herald Tribune

G.M. Says Opel Unit Not for Sale

By NICK BUNKLEY

Published: July 27, 2011

DETROIT — General Motors is not interested in selling its European unit, Adam Opel, the carmaker’schief executive said Wednesday, countering widespread speculation.

“I will say this: Opel is not for sale,” the executive, Daniel F. Akerson, said.

Two weeks ago, G.M. lashed out at the chief executive of Volkswagen, Martin Winterkorn, accusing him of fanning rumors about an Opel sale. A German newspaper quoted Mr. Winterkorn as saying a Chinese carmaker, rather than the Hyundai Motor Company, would probably be interested in buying Opel. Two German magazines also published reports in June that G.M. might be looking to sell Opel, possibly to Volkswagen.

“Opel has been part of the G.M. family since 1928 and remains important to the company,” G.M. said in the statement July 13 that criticized Volkswagen. “G.M. is pleased with Opel’s solid progress over the last year in turning around its business, and the company continues to invest in outstanding products for the European market.”

But the statement stopped short of saying that Opel, which has struggled during the downturn in Europe’s economy, was not on the market, allowing talk of a potential sale to linger.

G.M. made a deal in 2009 to sell Opel to a consortium headed by the Canadian parts supplier Magna, but the board, installed after it emerged from bankruptcy protection, canceled the sale, which had been backed by the German government and labor unions. The deal to sell Opel was reached at a time when G.M. was streamlining its operations and selling or shutting divisions that were losing money or not critical to its core business.

Since then, G.M. has been following an ambitious overhaul at Opel, aimed at making the division profitable in 2012 through a 20 percent reduction in capacity and the elimination of 8,300 jobs.

G.M. is introducing an Opel version of the Chevrolet Volt plug-in hybrid car¹⁾, called the Ampera, in Europe this summer as part of its effort to rejuvenate the division.

Note:

1) A plug-in hybrid electric vehicle (PHEV), plug-in hybrid vehicle (PHV), or plug-in hybrid is a hybrid vehicle which utilizes rechargeable batteries, or another energy storage device, that can be restored to full charge by connecting a plug to an external electric power source (usually a normal electric wall socket). A PHEV shares the characteristics of both a conventional hybrid electric vehicle, having an electric motor and an internal combustion engine (ICE); and of an all-electric vehicle, having a plug to connect to the electrical grid. Most PHEVs on the road today are passenger cars, but there are also PHEV versions of commercial vehicles and vans, utility trucks, buses, trains, motorcycles, scooters, and military vehicles

Part 1 Unit 1 Section 4 MERGERS AND ACQUISITIONS

The International Herald Tribune

July 2011

Li Ka-shing Wins British Utility for $3.9 Billion

By CHRIS V. NICHOLSON

Li Ka-shing, the Hong Kong billionaire, has won the backing of the board of the Northumbrian WaterGroup¹⁾ for an acquisition that values the British utility at £2.4 billion ($3.9 billion).

Mr. Li’s company, Cheung Kong Infrastructure Holdings, has bid 465 pence for each Northumbrian share, in what would be the largest takeover of a listed British company this year.

The bid is 9.1 percent above Northumbrian’s closing price before the approach was announced last month and 26.4 percent above where it was trading before rumors of the deal commenced in June. Including the assumption of debt, the deal is worth $7.6 billion.

Cheung Kong sold Cambridge Water to HSBC in order to appease competition regulators. Still, the Northumbrian acquisition will extend Mr. Li’s reach in Britain, where he led a group to purchase EDF’s²⁾ British energy arm for £5.8 billion last year.

Mr. Li, Hong Kong’s richest man, has accumulated utilities, energy and infrastructure assets throughout the developed world, with assets in Commonwealth countries like Australia, Canada and New Zealand, as well as mainland China.

For the year ended March 31, Northumbrian reported profit of £178.4 million, up 45 percent from the previous year. Its shareholders will receive a final dividend³⁾of 9.57 pence in addition to the 465 pence a share from Cheung Kong.

Ontario Teachers’ Pension Plan Board, the Canadian pension fund that owns 26.8 percent of Northumbrian, has committed to voting for the offer and abstaining from any rival bid. The minority shareholders J.P. Morgan Asset Management and Artemis Investment Management, which own 3.8 percent and 2.9 percent respectively, have sent nonbinding letters of support as well, Northumbrian said.

The Hong Kong company said it would retain the utility’s present management, led by the chief executive, Heidi Mottram.

Northumbrian will be subsumed under a new entity owned by Cheung Kong called U.K. Water.

Cheung Kong hired Royal Bank of Canada and HSBC as its financial advisers, while Northumbrian hired Deutsche Bank.

Notes:

1)Northumbrian Water Group plc (NWG) is the holding company for several companies in the water supply, sewerage and waste water industries. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. NWG's largest subsidiary is Northumbrian Water Limited (NWL), which is one of ten companies in England and Wales that are regulated water supply and sewerage utilities. NWL is the principal water supplier in the north-east of England, where it trades as Northumbrian Water, and also supplies water to part of eastern England, as Essex & Suffolk Water.

2)EDF Group's activities include generation, trading, transmission, distribution, supply and other energy services

3) Final Dividend is the end of year dividend. In the UK, companies normally pay dividends twice per year, an interim and a final dividend, the latter normally being the larger of the two. The final dividend is announced by the company with the full-year results after the directors are aware of the company’s profitability and its financial health. At the annual general meeting, shareholders have the option of voting to accept the dividend or to reduce it, but they cannot increase it.

Part 1 Unit 2 Section 1 PRODUCING THE GOODS

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