Finance and Economic

General Mills Inc.’s fiscal fourth-quarter net income rose 51 percent on stronger sales but was hampered by higher ingredient costs.

The Minneapolis-based maker of Cheerios, Lucky Charms and other foods also gave a 2012 earnings outlook below analysts’ expectations.

General Mills earned $320.2 million, or 48 cents per share, for the period ended May 29. That’s up from $211.9 million, or 31 cents per share, a year ago.

Adjusted earnings increased to 52 cents per share from 41 cents per share, meeting analysts’ forecasts.

Revenue climbed 3 percent to $3.63 billion from $3.53 billion, but missed Wall Street’s estimate of $3.66 billion.

The company saw its biggest sales gain in its Small Planet Foods organic and natural foods division, with its snacks and Yoplait divisions also reporting increased sales.

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French Finance Minister Christine Lagarde is expected to be chosen as early as Tuesday to be the new leader of the International Monetary Fund.

Lagarde would be the first woman to lead the lending organization. She would replace Dominique Strauss-Kahn, who resigned last month after being charged with sexually assaulting a New York City hotel housekeeper. Lagarde was opposed by Agustin Carstens, a Mexican central banker whose candidacy never caught fire, even among developing countries.

Lagarde has broad support in Europe payday loans guaranteed no fax. And a high-ranking Chinese official said Monday that Beijing supports Lagarde, according to several reports.

U.S. officials haven’t publicly backed any candidate. But most analysts expect the Obama administration to support Lagarde. Combined, the United States, Europe and China hold a majority of votes on the IMF’s board.

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In a rare move, the proposed back-to-work legislation to end the postal dispute sets out a wage settlement that is actually lower than Canada Post’s last offer.

“We’re really disappointed in the Conservative government’s position,” said Gayle Bossenberry, first national vice-president for the Canadian Union of Postal Workers. “The legislation is very restrictive.”

Labour Minister Lisa Raitt introduced the legislation on Tuesday, which outlines a wage settlement of 1.75 per cent in the first year, 1.5 per cent in the second year, and 2 per cent each in the final two years.

At the bargaining table, Canada Post has offered 1.9 per cent in each of the first three years, followed by 2 per cent in the final year.

The union, which represents 48,000 members, estimates the difference works out to about $875 for a full-time employee over the course of the four-year agreement.

While it may be rare to impose a wage deal, it’s not unheard of. In 1997, when the Liberal government ordered postal workers back to work after a two-week strike, it imposed a settlement that was less than Canada Post’s last offer, 5.15 per cent over three years instead of 5.25 per cent.

During question period, NDP Leader Jack Layton questioned the decision to impose wages, but Prime Minister Stephen Harper defended the move.

“The wage rates laid out in the legislation are the rates that this government agreed to with its other public service workers, and that is a fair settlement for Canada Post workers as well,” Harper said.

While the NDP has vowed to delay the legislation, Government House Leader Peter Van Loan told reporters that he expects the legislation will pass on Thursday or Friday, and then would go to the Senate. Mail service likely won’t resume until next week.

The government had threatened back to work legislation in the case of striking Air Canada workers, who reached a tentative deal with the airline last week.

In addition to the unusual step of setting wages, Bossenberry said it also uses the final offer selection process, where each side presents its final offer, and the arbitrator, who is appointed by Raitt, chooses a winner and a loser.

Unlike mediation-arbitration, there is no back and forth or attempt to find a middle ground.

The legislation also sets out penalties if the union or Canada Post defies the legislation, including up to $50,000 a day for union or company official, and up to $100,000 a day for the company or union. Individuals would face up to $1,000 a day.

“I think workers right across the country should be aware if this is the respect that the working class gets in Canada, I’m concerned,” Bossenberry said.

Even though both sides insist they want to hammer out their own agreement, they seem entrenched in their own positions. Talks are continuing, but there is little progress.

When mail volumes began to plummet, Canada Post announced plans to move to home delivery only three days a week. It then locked the workers out last week.

Ontario Federation of Labour president Sid Ryan said introducing back-to-work legislation is one thing, but “to start to prescribe what wage settlements should be is Draconian.

“It’s usually left to an arbitrator to decide. It’s unheard of,” said Ryan, noting that even in Wisconsin, where Governor Scott Walker has been taking on public sector workers, he did not set out wage settlements.

Carla Lipsig-Mummé, a York University professor who specializes in work and labour relations, called it highly unusual to put in a wage settlement as well as bring in back-to-work legislation in a lockout situation.

She believes this legislation could be subject to a court challenge on the grounds of contravenes charter protections, including the right to collective bargaining.

The legislation also states the arbitrator should be guided by the terms and conditions of what workers in other comparable postal industries face as well as flexibility to ensure the short-term and long-term viability of Canada Post.

It also says “the solvency ratio of the pension plan must not decline as a direct result of the new collective agreement.”

For organized labour, the Harper government’s swift action to bring in back-to-work legislation, in the Canada Post and Air Canada disputes sends a strong message.

“They have placed the labour movement on notice that the right to strike doesn’t really exist in Canada, even in the private sector,” said Ontario Federation of Labour president Sid Ryan. “(Harper) has thrown down the gauntlet, and said your move is next.

“We’ve got to respond,” said Ryan, adding there were no specific plans in the works though he mused about the one-day general strike launched in the 1970s in opposition to wage and price controls.

“We stand on the shoulders of labour leaders who came before us and fought for these rights. We have an obligation to fight for them.”

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Days before Canadian superstar Georges St-Pierre won his bout at UFC 129 at the Rogers Centre last April, a unanimous decision was already in among Toronto business owners like Carlos Gavilanes about the true victor of the bloody cage match: the cash register.

The Ultimate Fighting Championship went the distance for Toronto tourism and for local businesses, which took in an estimated $40 million from the most successful fight night in UFC history.

ATHENS, GREECE

With rotating strikes at Canada Post now in its second week and delivery service slated to be cut back, Labour Minister Lisa Raitt met with the two sides Friday, urging them to break the impasse.

Wal-Mart Stores Inc. unveiled a $15 billion share buyback program Friday as it sought to reassure shareholders at its annual meeting that the world’s largest retailer is still growing.

The buyback will replace a previous $15 billion repurchase plan begun a year ago. The company bought back 244 million shares worth $12.9 billion under that program.

“This reflects the strong financial performance of your corporation,” said Charles Holley, Wal-Mart’s executive vice prsident and chief financial officer in an address to shareholders and associates packed in a University of Arkansa arena about 30 miles from its Bentonville headquarters.

The news comes after the company increased in March its dividend in its current 2012 fiscal year from $1.21 to $1.46 per share, an increase of 21 percent that returned $1.3 billion to shareholders.

The shareholders’ meeting maintained the tradition of being part pep rally, part business, with actor Will Smith serving as master of ceremonies. The 2011 “American Idol” winner, Scotty McCreary, also appeared.

About 16,000 people packed the arena, including Wal-Mart employees from 15 countries.

“You are legendary for your rowdiness,” Smith bellowed in warming up the crowd.

In Wal-Mart’s business, international sales are sizzling, but the company is still trying to reverse a two-year sales slump at home, with no clear sign of when that will happen.

“We made a lot of progress over the last 11 months,” said Bill Simon, president and CEO of Wal-Mart’s U.S. business in an address to shareholders. “We have the right plan.”

He noted that two-thirds of the business has seen gains in a key measure of sales, most of which is coming from groceries.

But he cautioned, “You certainly can’t predict the weather and the economy.”

Wal-Mart’s flagship business is hurting because it’s still smarting from the mistakes it made on pricing and selection more than two years ago. The company has been racing to restock thousands of items it culled as part of its overzealous bid to clean up its stores two years ago. It’s also gone back to its “Everyday Low Price” roots.

Wal-Mart is also battling increasing threats from competitors, particularly online rivals like Amazon.com and dollar chains, which have expanded their assortments and become more competitive on price.

Wal-Mart’s low-income shoppers have also seen their financial problems shift. A year ago, they were worried about losing their jobs. Now, rising gas prices and other household costs are squeezing their budgets and making it tough to stretch their remaining dollars to the next payday.

Thursday’s reports on May sales from major retailers, including rival Target Corp., provided more evidence that inflationary pressures are causing shoppers to pull back on discretionary items like clothing and home goods.

On Thursday, Simon told a media gathering that low-income shoppers are going through a “prolonged malaise.” Such financial woes could stall Wal-Mart’s campaign to turn its U.S. business around.

Wal-Mart’s fears have deep repercussions, because it’s a bellwether of consumer spending and accounts for nearly 10 percent of all nonautomotive retail dollars spent in the U.S.

Shares of Wal-Mart have tracked closer to its profits than its domestic sales this past year, and its robust international business, fueled by Mexico, China and Chile, has propped up revenue and profits. Wal-Mart shares are up almost 4 percent over the past 12 months. But they peaked in late January and have lost almost 7 percent since the company said it would not predict when U.S. revenue at stores open at least a year will begin growing, after setting a target date for last holiday season and missing it. That revenue measure has had eight straight quarters of declines.

Walmart stores account for 62 percent of the company’s revenue, which reached $418 billion in its latest fiscal year ended Jan. 31; international makes up 26 percent.

Walmart’s CEO of the company’s international division attributes its success to focusing on what shoppers want.

“It’s about finding the right item,” said Doug McMillon.

McMillon noted that the company’s fastest-growing division is working to expand its international Internet shopping business and is also growing through acquisitions.

The company is preparing to close on a $2.4 billion purchase of a majority interest in South African retailer Massmart, which operates in 14 countries.

The company’s overall revenue is also getting a lift from its improving Sam’s Club division, which has enjoyed five straight quarters of improving gains in stores open at least a year. Sam’s Club has benefited from better quality merchandise, from higher grade sirloin steak to trendier fashion labels.

To address the increasing threat of dollar stores, Wal-Mart is also opening its first of up to 20 Walmart Express stores planned for this year. These stores are about the size of a typical drugstore.

Many analysts are eager for Wal-Mart to ramp up the expansion of these small stores. Rivals like Dollar General and others have been blanketing areas around the country with their own stores.

Simon told shareholders he’s confident about Wal-Mart’s comeback.

“You better get ready, because we’re coming,” he added.

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A top U.S. commander Wednesday said piracy in Somalia can only be defeated if the international community helps restore governance in the poor, lawless African country.

Adm. Robert Willard, chief of the U.S. Pacific Command, said navy patrols alone cannot stop the hijacking of ships if pirates’ bases onshore are allowed to operate without interference. The international community is spending millions of dollars a day maintaining a flotilla of warships to protect key shipping lanes off East Africa.

“The organizers, the funders are the central problem … but the international community has been unable to determine how to tackle the problem onshore,” Willard told a regional forum in Malaysia.

“Clearly, one thing is to help Somalia recover from being the ungoverned state that it is,” he said.

“Unless the international community goes to the root, and not the far end of the problem, it won’t be solved.”

Somalia has not had an effective government since 1991, when warlords overthrew a longtime dictator and then turned on each other, plunging the country into chaos and anarchy. A transitional government, established in 2004 and backed by about 9,000 African Union troops, has been fighting Islamist insurgents paydayloans.

Last year, pirates seized 53 vessels and captured a record 1,181 hostages, almost all of them off the Somali coast. Some 30 ships and more than 600 hostages are still in pirates’ hands.

Pirates are becoming increasingly violent in retaliation to navy interference in their multimillion dollar trade. Earlier this year pirates killed four American hostages while U.S. Navy warships were shadowing the hijacked yacht, the first time pirates had done that.

The U.N. Security Council last month demanded that Somalia’s feuding president and parliament reach agreement quickly on holding elections by August when the mandate for the country’s transitional government ends.

Somali lawmakers _ who in February unilaterally extended their own mandate by three years _ have been vowing for months to hold a presidential vote despite the president’s objections. The president wants to extend his term for a year without a vote.

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The Obama administration declined to brand China a currency manipulator while saying the world’s fastest-growing economy is making “insufficient” progress on letting the yuan rise.

The U.S. “believes that progress thus far is insufficient and that more rapid progress is needed,” the Treasury Department said yesterday in a report to Congress on foreign- exchange markets. The yuan’s real exchange rate remains “substantially undervalued” and the department “will continue to closely monitor the pace” of appreciation.

The report, originally due in April, follows Treasury Secretary Timothy F. Geithner’s push for a stronger yuan. Lawmakers including Senator Charles Schumer, a New York Democrat, say the exchange rate gives China an unfair advantage in the global marketplace. In talks this month between the world’s two largest economies, China agreed on the upward direction of the currency, while differing with the U.S. on the pace.

“We have differences on the degree of appreciation,” Deputy Finance Minister Zhu Guangyao said May 10 in Washington. China’s economy will expand 9.6 percent in 2011 and 9.5 percent next year, according to International Monetary Fund projections released last month.

The Treasury Department backed away from the “nuclear option” of calling China a currency manipulator, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. The Group of 20 nations are “going to have something to say on the global imbalances later this year, so it is better to decide these matters in a world forum rather than for the U.S. to take unilateral action.”

Congressional Criticism

Rupkey said in e-mailed comments that the “late afternoon release before Memorial Day weekend appears well-timed in order to miss congressional criticism. Nice timing, as a war of words helps no one.” The report was released at 4 p.m. yesterday.

The Treasury said “no major trading partner” of the U.S. met the legal standard of improperly manipulating its currency. “Exchange-rate flexibility must play an important role in rebalancing China’s economy towards domestic demand-led growth,” the department said.

China has allowed the yuan to appreciate by 5.1 percent against the dollar from June 2010 through the end of April 2011, or at a rate of about 6 percent per year in nominal terms, the Treasury said. Since inflation in China is higher than it is in the U.S., the yuan has been rising against the dollar at an annual rate of about 9 percent on a real, inflation-adjusted basis.

Yuan’s Increase

By acknowledging the yuan’s increase since last year while criticizing the “limited progress,” the U.S. “once again takes a calibrated approach to Chinese currency policy,” Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a former IMF official, said in an e-mail.

The yuan completed its second consecutive weekly gain on speculation that policy makers will tolerate appreciation to tame inflation. The People’s Bank of China set the currency’s reference rate 0.04 percent stronger at 6.4898 per dollar yesterday, the highest level since July 2005.

The yuan strengthened 0.02 percent this week to 6.4917 per dollar as of the 4:30 p.m. close in Shanghai, according to the China Foreign Exchange Trade System. It was little changed yesterday and touched 6.4858 on May 26, the strongest level since 1993. The yuan isn’t allowed to move more than 0.5 percent either side of the central bank’s daily fixing.

Hampers Progress

“China’s consistent, large reserve accumulation prolongs a substantial undervaluation and hampers progress toward global rebalancing,” the Treasury said. “It is in China’s interest to allow the nominal exchange rate to appreciate more rapidly, both against the dollar and against the currencies of its other major trading partners.”

China purchases foreign currencies to suppress the value of the yuan. It accumulated $3.04 trillion of foreign-currency reserves as of March, an increase of 24 percent over a year earlier. Its reserves are the world’s largest, accounting for 31 percent of the total.

The Treasury “continues to make the right call on China’s currency policy,” Erin Ennis, vice president of the U.S.-China Business Council, said in a statement yesterday. The council thinks the Obama administration “approach of employing multilateral and bilateral engagement with China is the most useful way to make progress on the exchange-rate issue.”

Stronger Yuan

The council’s members as of April 21 included Apple Inc. (AAPL); Chevron Corp. (CVX); Citigroup Inc. (C); JPMorgan Chase & Co. (JPM); and Bloomberg LP, the parent of Bloomberg News, according to the group’s website.

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Singapore raised its growth forecast for 2011 after the island’s economy expanded the most in Southeast Asia last quarter, sustaining pressure on the central bank to allow the currency to appreciate.

Gross domestic product will increase 5 percent to 7 percent this year, from an earlier forecast of 4 percent to 6 percent, the trade ministry said today. The economy expanded 22.5 percent in the three months through March from the previous quarter, compared with a preliminary estimate of 23.5 percent.

Singapore’s expansion has fueled a surge in the cost of living that helped propel opposition parties to a record share of the vote in this month’s election. The report spurred a third straight day of gains in the local dollar, bringing the advance against its U.S. counterpart to 13 percent over the past year as policy makers use currency appreciation to temper inflation.

“Domestic and external demand remains strong and we’ll probably continue to see more gains in the Singapore dollar this year,” said Kit Wei Zheng, a Singapore-based economist at Citigroup Inc. “Consumer price inflation may have peaked but pressures in the pipeline will remain elevated.”

The Monetary Authority of Singapore said last month it would allow further gains in the currency in the third tightening of monetary policy in a year. Global central banks are raising interest rates, removing excess cash from their financial systems or allowing their currencies to appreciate as rising oil and commodity prices fuel inflation.

Best Performer

The Singapore dollar is the best performer in Asia outside Japan in the past 12 months. The currency rose 0.5 percent to S$1.2377 against its U.S. counterpart as of 9:49 a.m. local time.

The island’s expansion came even as the GDP of Japan, the island’s seventh-biggest trading partner, shrank at a more-than- estimated 3.7 percent pace in the first quarter, according to a government report today.

Singapore’s government has boosted financial services and tourism to reduce its reliance on exports. Companies from Singapore Airlines Ltd. (SIA) to hotel operator Shangri-La Asia Ltd. have benefited from record tourist arrivals. Genting Singapore Plc (GENS), one of the two casino operators in the city, turned to a first-quarter profit of S$305.4 million ($247 million) in the three months ended March 31 as sales almost tripled to S$922.6 million.

“The global recovery story remains largely intact and Singapore is a beneficiary of that expansion,” Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. in Singapore, said before the report. “While inflation has probably peaked, the economic environment may get a bit more challenging in coming quarters payday advance.”

Singapore, located at the southern end of the 600-mile (965-kilometer) Malacca Strait, benefited from improving overseas demand for manufactured goods as the global economy recovered from the 2009 slump.

The Southeast Asian nation’s economy grew a record 14.5 percent in 2010. Singapore’s economic performance will probably stay at “high levels” for the rest of 2011, spurring inflationary pressures even as the island tightens monetary policy, the central bank said last month.

Labor Market

A “tight” labor market will add to business costs, the trade ministry said today. Cost pressures may build up further and impact business activity, Kwek Mean Luck, a deputy secretary at the Ministry of Trade and Industry, said in Singapore today.

Prime Minister Lee Hsien Loong’s government is distributing cash to its citizens and giving out utility rebates to limit the effect of price increases. The country held elections this month, and the ruling People’s Action Party was returned to power with the smallest percentage of popular votes since independence in 1965 as citizens complained about the rising cost of living.

Inflation may have peaked and a stronger currency has helped damp price gains, central bank Managing Director Ravi Menon said yesterday. Singapore’s monetary policy remains appropriate and the central bank still expects inflation to average 3 percent to 4 percent this year, Ong Chong Tee, deputy managing director at the Monetary Authority of Singapore, said at a press briefing today.

Property Curbs

Central banks in Vietnam, India and Malaysia raised borrowing costs this month to curb price increases. Malaysia reported yesterday that inflation accelerated to a two-year high.

In Singapore, where demand for private homes and mortgages has boosted earnings for companies including lender DBS Group Holdings Ltd. and real-estate developer City Developments Ltd., policy makers have introduced measures to curb property speculation.

The revised economic expansion in the first quarter compares with the 22 percent median forecast of nine economists in a Bloomberg News survey. Compared with a year earlier, the economy grew 8.3 percent last quarter, the ministry said. That’s higher than the growth rates of Malaysia, Indonesia, Vietnam and the Philippines, and exceeds the 2.7 percent pace estimated for Thailand in a Bloomberg News survey.

Singapore’s manufacturing will be bolstered by new plants in the chemicals industries and higher production by biomedical companies, while economic growth will spur lending and insurance, the trade ministry said in a statement today.

Growth Risks

Risks to growth include “continued concerns of sovereign debt sustainability in Europe, further increases in global oil prices arising from the political turmoil in the Middle East and North Africa region, and a prolonged disruption of industrial activities in Japan,” it said.

Neighboring Malaysia, Singapore’s biggest trade partner, reported yesterday growth slowed to 4.6 percent last quarter as manufacturing and services moderated.

“Local manufacturers could be affected should the disruption supply from Japan persist into the second half of 2011,” the Singapore trade ministry’s Kwek said.

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