AstraZeneca quarterly net profit jumps on record US growth
Profit after tax rose to US$2.45 billion in the three months to the end of June, the company said in an earnings statement, following its recently announced multi-billion-dollar investment in the United States.
Total revenue climbed 12 per cent to a quarterly record of US$14.5 billion, driven by strong cancer drug sales.
Amid the threat of President Donald Trump's possible tariffs on pharmaceutical imports, AstraZeneca has unveiled plans to invest US$50 billion in the US by 2030 and has already began moving some of its European production to the US.
Chief executive Pascal Soriot said the 'landmark investment reflects not only America's importance but also our confidence in our innovative medicines.'
The United States, a critical market for the pharmaceutical industry, accounted for 44 per cent of AstraZeneca's total revenue in the second quarter, with US revenue jumping a record 13 per cent.
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The company expects half of its revenue to come from the US by 2030.
Trump has ordered an investigation into potential tariffs on pharmaceutical imports, which had so far benefited from exemptions to his sweeping levies on imports from trading partners.
He suggested that levies on the sector could reach up to 200 per cent.
Washington and Brussels announced a trade agreement on Sunday that places 15 per cent tariffs on pharmaceutical imports from the European Union to the US.
Other major pharmaceutical companies – including Swiss giants Roche and Novartis, and France's Sanofi – have also begun shifting investment and production to the United States in recent months. AFP
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Business Times
8 minutes ago
- Business Times
Most Asean nations get softer US tariffs to cushion growth risks ahead of Aug 7 hikes
MOST Asean countries have secured reductions of the US reciprocal tariffs ahead of the Aug 1 deadline for negotiations, following months of intense negotiations and significant market access, trade and investment concessions. According to US President Donald Trump's executive order unveiled on Thursday (Jul 31), Singapore remains subject to a baseline rate of 10 per cent; the majority of South-east Asian economies face duties of between 19 and 20 per cent, starting on Aug 7. Rahul Bajoria, Asean and India economist at BofA Securities, told The Business Times: 'This is a better outcome than what was anticipated, but the rate of tariff is still much higher than what the status quo was. 'The Asean region saw a lot of front-loading of exports, so some payback is unavoidable, but with a better growth outcome, we see a respectable scope for GDP growth in the region.' Laos and Myanmar bear the heaviest burden in the region. Despite reduced tariffs of 40 per cent each, they still face one of the highest rates the US has imposed on its global trading partners. Dozens of other countries have been hit with tariffs ranging from 10 to 41 per cent, and goods from nations not specifically listed will be levied a universal US import tax of 10 per cent. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The 40 per cent tariff on transshipped goods now applies not only to Vietnam, but also to other countries – a move analysts largely see as aimed at China. However, uncertainties remain surrounding the rules of origin used to identify targeted shipments, as well as upcoming sector-specific tariffs. Maybank senior economist Chua Hak Bin said: ''China + 1' is not dead, as all Asean countries will face lower effective tariff rates than China. China's multinational corporations (MNCs) will likely consider having an alternative base, given China's high effective tariff rates of over 35 per cent.' The Trump administration also signalled that 'meaningful' agreements with certain nations are forthcoming, potentially leading to revised duties, as the US seeks to bring more trading partners in line with its economic and national security priorities. 'Don't assume this is the end of the story. Trump regards this as an ongoing reality show,' noted Stephen Olson, former US trade negotiator and visiting senior fellow at ISEAS-Yusof Ishak Institute. 'Developing countries, especially those in South-east Asia hoping to pursue export-led development models, will be especially hard hit,' he added. Radhika Rao, senior economist at DBS, echoed this viewpoint, emphasising that despite better clarity on the country-specific tariffs, the new rates are two to six times higher than the average implied most-favoured-nation rates in 2024, suggesting significant economic impact for both the region and the US. However, China's stronger-than-expected economic performance and its potential rapprochement with the US could mitigate the risk of a negative growth shock for the Asean region, added Bajoria of BofA Securities. The Business Times has compiled key developments from the following Asean nations to examine the implications of the latest tariff landscape: Singapore: 'Sweet spot' with lowest rate Singapore will continue to be subject to a 10 per cent baseline tariff on exports to the US, the Ministry of Trade and Industry (MTI) said on Friday (Aug 1). 'MTI has confirmed this understanding with the Office of the US Trade Representative,' a ministry spokesperson said, referringn to the US' Executive Order released on Jul 31 (eastern time). 'We are closely monitoring developments and will seek clarification from our US counterparts as necessary,' the spokesperson added. The relatively low baseline tariff rate of 10 per cent should bring some relief to exporters in Singapore, economists said. 'Singapore is in a sweet spot and 'can live with it', as her reciprocal tariff is the lowest in Asia,' said Dr Chua, echoing similar remarks by the Republic's Prime Minister Lawrence Wong earlier this week. But companies looking to launch investments are likely still 'in a holding pattern' as they assess the frequent changes in tariff policies, said Denise Cheok, head of South-east Asia economics at Moody's Analytics. Trump's tariff letters state that the levies may change 'depending on our relationship with your country', noted Bernard Aw, the Asia-Pacific chief economist at credit insurer Coface. 'The certainty is that uncertainty will remain,' he said. With the fluid situation, he said companies likely have two plans ongoing – a short-term one to mitigate uncertainties, and a long-term plan to adjust to the new economic realities. The long-term one would entail reorganising logistics and shifting production, among other things. Even so, MNCs already in the city-state would likely maintain their presence, said Dr Chua. MNCs caught in a higher-tariff country may consider Singapore as a part of their supply chain. Still, Cheok estimates the baseline tariff could shave about 0.5 percentage points off Singapore's gross domestic product. 'With close trade partners attracting much higher tariffs, the hit to GDP from direct tariff-related disruptions would come in closer to about 1 percentage point,' she said. She added that beyond the headline 10 per cent, a key concern for Singapore is sectoral tariffs, especially on pharmaceuticals, which dominate Singapore's exports to the US. Since the Singapore economy is highly dependent on trade, the indirect effects of tariffs on global export demand remain a key factor to the outlook, said Cheok. Dr Chua said he expects Singapore's export and GDP growth to slow in H2, but not contract, given the reciprocal tariff deals, the low baseline tariff and a likely extension of the US-China trade truce. Reported by Sharon See from Singapore Vietnam: First, but not best While Vietnam was the first Asean country to strike a trade deal with the US by granting 'total access' to its market, its tariff outcome is no more favourable than that of most regional peers. Washington set a 20 per cent levy on goods imported from the South-east Asian country, with which the US ran a trade deficit of US$123.5 billion last year – the highest in Asean and third-highest globally. While this was a significant reduction from the previously announced 46 per cent, it remains slightly higher than the 19 per cent imposed on Malaysia, Indonesia, Thailand, Cambodia and the Philippines. According to S&P Global's latest purchasing managers' survey released on Aug 1, new export orders for Vietnam's manufactured goods contracted for the ninth consecutive month in July. While manufacturers remained optimistic about output growth over the coming year, sentiment fell to a three-month low – well below the series average – because of concerns over how the US tariffs weighed on the outlook. Still, the manufacturing sector returned to expansion in July after three months of decline, with firms securing enough domestic business to lift total new orders back into growth. Maybank analysts wrote in a recent note that Vietnam's steady rollout of private-sector reforms would cushion the impact of of the tariffs on external trade by promoting domestic investment and boosting the country's competitiveness as a destination for foreign direct investment. An improved business environment – characterised by reduced red tape, a more predictable legal framework, better education system and stronger local firms – is expected to broaden Vietnam's value proposition beyond being merely a low-cost destination, they added. Reported by Jamille Tran from Ho Chi Minh City Malaysia: Levelled playing field Just before the Aug 1 deadline kicked in, the US reduced the reciprocal tariff imposed on Malaysian imports to 19 per cent, down from the earlier 25 per cent rate, bringing the South-east Asian country in line with its regional peers. It also removes a key overhang for exporters, particularly in the electrical and electronics, as well as glove sectors. Hong Leong Investment Bank wrote in a note that from a trade standpoint, the harmonised US tariff rates across Asean ensure that Malaysia is not at a relative disadvantage. Ken Low, head of dealing at Moomoo Malaysia, noted that the tariff reduction offers short-term optimism. While the new rate is less damaging than the previous one, it remains on par with that of its regional peers, and continues to pose a hurdle to the competitiveness of Malaysian exports. In a statement on Friday, Malaysia's Ministry of Investment, Trade and Industry (Miti) stressed that the US-Malaysia tariff agreement was reached without compromising on the key 'red-line' issues protecting the country's sovereign economic policies. While negotiation details remain undisclosed – rare earths and halal standards were reportedly discussed – no specific concessions have been confirmed by the government. Miti said the government worked with Bank Negara Malaysia to model tariff scenarios and would implement targeted measures to support affected exporters and small and medium-sized enterprises. The tariff breakthrough coincides with the launch of a RM611 billion five-year development plan, which targets economic growth of 4.5 to 5.5 per cent, RM1.82 trillion in national revenue, and a fiscal deficit below 3 per cent by 2030. CIMB Treasury and Market Research said the combination of the lower tariff and strong fiscal planning should support investor sentiment and export resilience amid global trade uncertainties. Reported by Tan Ai Leng from Kuala Lumpur Indonesia: Room to breathe Indonesia, which is grappling with domestic economic pressures , has secured a final US tariff rate of 19 per cent on its exports, easing fears of the fallout from President Trump's Apr 2 rate of 32 per cent. While still nearly double the 10 per cent baseline applied during the reprieve, the revised rate offers some relief as the country grapples with domestic economic pressures. Indonesia's tariff rate remains lower than Vietnam's, a key regional rival in labour-intensive sectors like textiles and footwear. As the US ranks as Indonesia's second-largest export market, analysts believe the reduced tariffs could boost trade and protect labour-intensive industries from economic challenges. The deal was reached following an agreement between President Prabowo Subianto and Trump to open Indonesia's vast market of 280 million consumers to US goods. Indonesia, which runs a US$17 billion trade surplus with the US, will eliminate tariff barriers on more than 99 per cent of goods coming in from the US, and commit to purchasing US$2.5 billion in agricultural products and US$15 billion in energy supplies. Citi's research team sees the agreement as having a net dovish impact on the Indonesian economy. While the shift in import sources may slightly weigh on the trade balance, the broader macroeconomic effects are expected to be manageable. Risks to the rupiah remain, but are likely to stay contained as long as Indonesia's commodity export prices remain stable. Reported by Elisa Valenta from Jakarta Cambodia: Double cuts to match peers Cambodia cheered the 'great news' of a 19-per-cent tariff on its US exports – a cut from the earlier 36 per cent and a significant drop from the original 49 per cent, which would have devastated its manufacturing sector and jarred its economy. The kingdom's Prime Minister Hun Manet took to Facebook on Friday morning to praise the 'excellent outcome', but analysts BT spoke with cautioned that Cambodia is not yet out of the woods. Adam Ahmad Samdin, an economist at research firm Oxford Economics, said that transshipments, the definition of which is left to the discretion of the US authorities, remain a bugbear for Cambodia, because its production is heavily reliant on Chinese inputs. The nation's post-pandemic economic expansion has been picking up speed, and annual growth has surpassed 5 per cent, but the double whammy of US tariffs and recent border disputes with neighbouring Thailand has clouded its outlook. Adam acknowledged that the reduced levy mitigates a substantial amount of downside risk to Cambodia's growth, noting that there remains scope for more immediate near-term support, as the kingdom improves its public debt ratio and rebuilds its fiscal space. Maybank economist Brian Lee added that border tensions will weigh on tourism, particularly in border areas, such as Poipet. Thailand is Cambodia's top source of international tourists. Nevertheless, the revised tariff brings Cambodia in line with its Asean neighbours and is lower than the rate imposed on its regional competitors (such as India) in the garment space, said Lee. He added that the risk of a sharp pullback in foreign direct investment is now reduced. The house expects Cambodia's growth to slow from 6 per cent in 2024 to 5 per cent this year and 4.6 per cent next year. Reported by Goh Ruoxue from Singapore
Straits Times
32 minutes ago
- Straits Times
Relief in South-east Asia as Trump's tariffs level playing field
Sign up now: Get ST's newsletters delivered to your inbox South-east Asia had raced to secure deals with the US, the top export market for much of the region. BANGKOK – South-east Asian countries breathed a sigh of relief on Aug 1 after the United States announced tariffs on their exports that were far lower than threatened and levelled the playing field with a rate of about 19 per cent across the region's biggest economies. US President Donald Trump's global tariffs offensive has shaken South-east Asia, a region heavily reliant on exports and manufacturing and in many areas boosted by supply chain shifts from China. Thailand, Malaysia and Cambodia joined Indonesia and the Philippines with a 19 per cent US tariff, a month after Washington imposed a 20 per cent levy on regional manufacturing powerhouse Vietnam, South-east Asia – with economies collectively worth more than US$3.8 trillion (S$4.9 trillion) – had raced to offer concessions and secure deals with the US, the top export market for much of the region. Its countries, many of them key players in the global supply chain, vied to stave off the prospect of losing market share to each other and of multinational firms shifting operations and orders elsewhere. Malaysia's Trade Ministry said its rate, down from a threatened 25 per cent, was a positive outcome without compromising on what it called 'red line' items. Thailand's finance minister said the reduction from 36 per cent to 19 per cent would help his country's struggling economy face global challenges ahead. 'It helps maintain Thailand's competitiveness on the global stage, boosts investor confidence and opens the door to economic growth, increased income and new opportunities,' Mr Pichai Chunhavajira said. The extent of progress on bilateral trade deals with the US was not immediately clear, with Washington so far reaching broad 'framework agreements' with Indonesia and Vietnam, with scope to negotiate further. Mr Pichai said Thailand was about a third of the way there. The US on Aug 1 slashed the tariff rate for Cambodia to 19 per cent from earlier levies of 36 per cent and 49 per cent, a major boost for its crucial garments sector, its biggest economic driver and source of about a million manufacturing jobs. 'If the US maintained 49 per cent or 36 per cent, that industry would collapse in my opinion,' Cambodia's Deputy Prime Minister and top trade negotiator Sun Chanthol told Reuters in an interview. Status quo In Thailand and Malaysia, business groups cheered a tariff rate that could signal a maintenance of the status quo between rival markets, among them beneficiaries of so-called China plus one trade. 'It's very good. We're on par with Indonesia and the Philippines and lower than Vietnam… We're happy,' said Mr Werachai Lertluckpreecha, of semiconductor manufacturer Star Microelectronics. Mr Chookiat Ophaswongse, of the Thai rice exporters association, said the similar rate to Vietnam would maintain its share of the US market, while Mr Wong Siew Hai, president of Malaysia's semiconductor industry association, said the latest tariffs would level the competition. 'I don't see the companies doing anything special. It will be business as usual for now, until they figure out what is the next best move,' Mr Wong said. Much remains to be worked out by the Trump administration, including non-tariff barriers, rules of origin and what constitutes transshipment for the purposes of evading duties, a measure targeting goods originating from China with no or limited value added, where a 40 per cent tariff would apply. Vietnam has one of the world's largest trade surpluses with the US, worth more than US$120 billion in 2024, and has been often singled out as a hub for the illegal re-routing of Chinese goods to America. It was a first-mover in trade talks and reached an agreement in July that slashed a levy from a threatened 46 per cent to 20 per cent, but concerns remain among some businesses that its heavy reliance on raw materials and components imported from China could lead to a wider application of the 40 per cent rate. 'That is the real issue,' said one businessman in Vietnam, who asked not to be named to allow him to speak more freely. Mr Andrew Sheng, of the University of Hong Kong's Asia Global Institute, said the similar tariffs mean South-east Asian countries should be relieved that policy uncertainty was over for now. 'The tariff announcement looks like a classic Trump Art of the Deal deal: lots of hype and threats, and with one flourish, the other side feels that it has a reasonable deal,' he said. REUTERS
Business Times
39 minutes ago
- Business Times
BOJ warns US tariffs could hit firms' profits, delay capex plans
[TOKYO] Profits of Japanese firms are likely to fall this year because of US tariffs, leading them to downgrade capital expenditure plans, the central bank said on Friday (Aug 1), signalling caution over an expected hit to the export-dependent economy. Automakers have swallowed the rising costs from the tariffs instead of passing them on to US consumers, as seen in a fall of roughly 20 per cent in export prices since April, the Bank of Japan said in a full version of its quarterly outlook report. 'This suggests Japanese automakers are averting price hikes that may lead to falling sales volume, at the cost of seeing profitability worsen,' the BOJ added. The hit to Japanese exports from US tariffs will become clearer once global trade volume, now inflated by companies front-loading shipments to avert higher US levies, turns down, the bank said. 'Due to such direct and indirect effect of higher US tariffs, Japanese companies face an increasing chance of profit declines in the current fiscal year,' it added. There was a need to scrutinise how falling profits could affect firms' willingness to keep hiking pay, it said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The BOJ said US tariffs have yet to cause any major change in Japanese companies' plans for capital expenditure. But past shocks of such scale have caused firms, many of which set spending at the start of Japan's fiscal year in April, to downgrade plans toward the latter half of the year, it said. 'Uncertainty surrounding trade policy could affect capital expenditure plans with a lag,' it said. In a summary of the outlook released on Thursday, the BOJ projected the economy to expand 0.6 per cent in the current fiscal year, before growing 0.7 per cent in 2026 and 1.0 per cent in 2027. US President Donald Trump struck a trade deal with Japan last month that lowers tariffs on auto imports and spares Tokyo from punishing new levies on other goods. Japan's auto sector, which accounts for more than a quarter of its US exports, would see tariffs cut to 15 per cent from 25 per cent now, at an unspecified date. Duties set to take effect on other Japanese goods from August 1 were also cut to 15 per cent from 25 per cent. REUTERS
