long term – Louth Online http://louthonline.com/ Tue, 15 Mar 2022 00:59:52 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 http://louthonline.com/wp-content/uploads/2021/03/louthonline-icon-70x70.png long term – Louth Online http://louthonline.com/ 32 32 several years of history pass in just one week – Asian Chemical Connections http://louthonline.com/several-years-of-history-pass-in-just-one-week-asian-chemical-connections/ Mon, 14 Mar 2022 05:20:09 +0000 http://louthonline.com/several-years-of-history-pass-in-just-one-week-asian-chemical-connections/

LAST WEEK, I asked if the long-standing put option for petrochemical companies and investors would still apply to China 2022.

The put option is based on the well-established notion that the worse things happen in the short term, the better the immediate prospects, as Beijing always comes up to the rescue with big economic stimulus.

The challenge I posed to the put option was that China could only tinker around the edges of its common prosperity economic reforms.

The continued loss of momentum in the real estate sector – which has driven more growth in China than any other country in economic history – was my main reason for suggesting another economic slowdown in 2022, although it would be nice managed.

The boom in demand for high-density polyethylene (HDPE) in China since 2009 has been driven by real estate, the data shows. The same is true for other petrochemicals. Take away the momentum from the real estate bubble and I said we should expect lower demand growth for HDPE in the long term.

When you combined that with the restrictions on single-use plastics and China’s efforts to make its GDP growth less commodity-intensive, I struggled to understand why we hadn’t entered a period of more moderate growth in demand for petrochemicals.

Such is the speed of events that the past week feels like many years ago. History moves at a breakneck pace as it always happens during major geopolitical events. We must consider the risk of China losing control of events, regardless of the amount of economic stimulus.

China imported 70% of oil and 40% of its natural gas in 2021, reported the FinancialTimes in this article. The cost of its crude oil and natural gas imports was 2 trillion yuan (CNY) ($316 billion) and another CNY 1.2 trillion was spent on iron ore imports, it said. the newspaper.

Chinese wheat and corn futures are at record highs because of Ukraine. Heavy rains have led China’s agriculture minister to warn that this year’s national wheat harvest could be the worst in history. China’s wheat imports are expected to increase by at least 50% from their three-year average, according to the US Department of Agriculture.

You could say that because of China’s great ability to stimulate the economy, it will spend so much money on challenges that economic growth will be good. But what if China were to face a sharp drop in exports – a situation over which, of course, Beijing would have limited control?

So far, so good. China’s exports rose 16.3% in January-February 2022 on an annual basis, beating analysts’ expectations of a 15% rise, Reuters said in this article.

Even before the Ukraine crisis, however, China faced the challenge of a slowdown in its exports of finished goods as the lockdowns ended – the cycle of spending on goods and services.

With global inflation and further supply chain disruptions caused by the Russian-Ukrainian conflict, discretionary spending on durable goods looks set to take a hit. Rising food and fuel prices look set to force many people to cut back on non-essential spending.

China was also facing its worst coronavirus outbreak in two years as 3,400 new cases were announced on Sunday March 13, the Guardian in this article.

“A rise in cases nationwide has seen authorities close schools in Shanghai and lock down several cities in the northeast, as nearly 19 provinces battle clusters of the Omicron and Delta variants,” the newspaper added.

China’s strict zero CPVOD policy has reportedly been relaxed slightly. We don’t know if this is behind the latest outbreaks – although a Jilin city local government official was reported by the Guardian as saying that emergency responses were not robust enough in some areas.

China could be caught in a trap 22: if it reverts to strict zero-COVID policies, economic growth could be damaged; if it relaxes its policies, growth could still suffer.

We must consider the impact of what could be a long-term change in the global geopolitical landscape. Can China successfully balance its economic and geopolitical relations with the West and Russia? No one, of course, knows the answer to this question.

“China’s trade with Russia reached $147 billion last year, according to Chinese figures, compared to $828 billion and $756 billion, respectively, with the EU and the United States,” writes the FT in the same article already linked above.

Negative growth for all grades of polyolefins possible in 2022

Chinese demand for high-density polyethylene (HDPE) in 2021 fell by 6%, with low-density PE (LDPE) consumption also 6% lower in 2021 compared to 2020, according to my estimates. But demand for Linear Low Density PE (LLDPE) increased by 1% with polypropylene (PP) consumption 5% higher.

But what if we end up with negative growth in all grades in 2022? My downsides for Chinese polyolefin demand in 2022 assume minus 6% repeats for HDPE and LDPE. The growth of LLDPE is minus 1% and that of PP minus 2%. This leads to an average drop of 3%.

If that were to happen, it would be the first year since 2020 that demand for all grades has fallen year-over-year.

Similar pessimism was common in the first half of 2020. Demand for polyolefins rather boomed for the year as a whole due to “China inside, China outside” – soaring imports and local consumption to meet the strong increase in exports of finished products.

This time, as I said, it might be different because of the threats to China’s export trade.

However, the West could launch another wave of major economic stimulus to counter the effects of rising food and fuel prices. And, whatever the geopolitics, China remains the factory of the world.

Obviously, though, you have to be prepared for a wide range of outcomes in a world that hasn’t felt so uncertain since the end of the Cold War.

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Germans endorse government U-turn on Ukraine | Germany | In-depth news and reporting from Berlin and beyond | DW http://louthonline.com/germans-endorse-government-u-turn-on-ukraine-germany-in-depth-news-and-reporting-from-berlin-and-beyond-dw/ Fri, 04 Mar 2022 11:02:19 +0000 http://louthonline.com/germans-endorse-government-u-turn-on-ukraine-germany-in-depth-news-and-reporting-from-berlin-and-beyond-dw/

The Russian invasion of Ukraine led the German government to drastically change policy.

On Sunday February 27, Chancellor Olaf Scholz of the centre-left Social Democrats (SPD) announced the export of arms to Ukraine, a dramatic increase in defense spending and his country’s support for tough sanctions against Russia, which is Germany’s main gas supplier. and coal.

Polling firm infratest conducted a telephone and online survey of 1,320 adults eligible to vote across Germany from February 28 to March 2 and found that 53% of respondents found the government’s tough new response appropriate. German. For 27%, this does not go far enough. 14%, on the other hand, say it goes too far.

Refugees, economy and Bundeswehr

A majority – even among those who support the far-right populist anti-migration Alternative for Germany (AfD) party – say they support Germany taking in refugees from Ukraine: 91% agree that this is basically the right thing to do.

For decades, German governments have pursued a strict policy of not sending arms to crisis regions. Berlin initially refused to provide military aid to Ukraine in the current crisis – now it has given the green light. Attitudes towards arms deliveries have changed dramatically: in February, only 20% of voters polled were in favour; this figure has now risen to 61%. And 45% believe that the turnaround in Berlin came too late.

The planned financial boost for the German armed forces, the Bundeswehr, was also approved. A one-time investment of 100 billion euros (1.2 billion) and the increase in the military budget to meet NATO’s stipulation of 2% of GDP has been announced – to the satisfaction of many.

NATO itself seems to have experienced a resurgence in popularity during the current crisis: 83% of respondents stressed the importance of the transatlantic defense alliance for peace in Europe.

A majority of respondents criticized Germany’s friendly and business policies towards Russia over the past decades: 68% said they felt Berlin had been too lenient towards Russian President Vladimir Putin.

Six out of ten respondents support Ukraine’s long-term membership of the European Union. But pessimism prevails: three out of four respondents expect Ukraine to be fully occupied by Russia.

The general feeling is gloomy: nine out of ten respondents say they are very worried. In the summer of 2014, on the 100th anniversary of the outbreak of the First World War, three out of ten Germans feared another major war on the continent. Today, seven in ten fear that other countries will be attacked by Russia.

Most respondents in the monthly survey say they are aware that Germany will not emerge unscathed: 64% fear a deterioration in the German economic situation, 66% fear restrictions on gas and energy supplies. Half of all respondents doubt that the sanctions will have an impact on the current course of Russia. Nevertheless, most Germans support the punitive measures.

Infographic showing approval rates for the top five metrics

Russia is at the bottom of the list of countries respondents consider to be trustworthy partners – behind China. The United States, meanwhile, is at a ten-year high.

The new federal government coalition of SPD, Greens and neoliberal FDP – which hasn’t even been in power for 100 days – has been able to regain confidence, after losing significant support earlier this year. A month ago, only 38% said they were satisfied with the government, today this figure is 56%.

Overall, Germany’s ruling politicians have performed well: 56% say they are satisfied with the work of Chancellor Olaf Scholz, an increase of 13% from last month.

Green Party Foreign Minister Annalena Baerbock has made significant gains and now has a 50% approval rating. FDP Finance Minister Christian Lindner and Economics Minister and Green Party Vice-Chancellor Robert Habeck rose 7% and 8% to 49% and 47%, respectively.

If federal elections were to be held tomorrow, however, the centre-right opposition parties, the Christian Democratic Union (CDU) and the Christian Social Union (CSU), would likely score a victory.

Infographic showing who respondents would vote for if a snap federal election were to take place

This article was originally written in German.

While You’re Here: Every Tuesday, DW editors round up what’s happening in German politics and society. You can sign up for the weekly Berlin Briefing email newsletter here.

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Dynamic Business: Michael Barnett – Change the things you can http://louthonline.com/dynamic-business-michael-barnett-change-the-things-you-can/ Wed, 02 Mar 2022 15:59:53 +0000 http://louthonline.com/dynamic-business-michael-barnett-change-the-things-you-can/ Michael Barnett, Chief Executive of the Auckland Chamber of Commerce. Photo / Provided

The one thing I’ve noticed over the past year is that there are many who are critical of the government’s response, but not too many who are willing to offer solutions or alternatives.

The Chamber and the EMA are professional organizations which I believe have been successful. We listen to our members; we find out what they need and we provide suggestions and solutions to the government to adapt the support. We have shown that we are in touch and in tune with what is happening in the real world.

Covid gave us a shock. It showed us that there are realities that we have to face.

In our lifetime we have never had to deal with a pandemic of this magnitude, so there are no experts despite claims by some in government, bureaucrats and academics as they formulated interventions, protections and restrictions.

But have we talked enough? Probably not. Had we consulted more broadly, included a wider range of voices, and encouraged true collaboration, we could have maximized outcomes and lessened the pain inflicted on lives and livelihoods.

As we prepare to recover, we also need to make sure that Omicron and whatever its Covid cousins ​​throw at us don’t frame the future.

The government is responsible for putting in place the platform to support and drive the recovery. My plea is to do so only after genuine consultation with businesses, including the tens of thousands of small and medium-sized enterprises that form the backbone of the national economy. We can provide expertise, ideas, resources and constructive solutions.

Let’s start by changing the narrative. It was tense and stressed us out. It’s all about red lights, stop signs, checkpoints, don’t do this, creepy, fluctuating case counts, and a dim hope that Omicron’s downhill will be sooner, faster, and furious. – and rapid antigen testing and sensitive isolation rules will save the day for some, if not all, SMEs in serious conflict.

We want a new story that isn’t shot and isn’t about fear and failure, uncertainty and disruption. It must highlight the cultures of recovery, sustainability, tenacity, innovation, courage and drive to remind us what success looks like.

We need to listen to the good news and not exist in an environment shadowed by a narrow and pessimistic view of New Zealand. There are sectors and people that are working well and creating jobs, new businesses and export income for the benefit of all New Zealanders. Seek them out, find out what they did differently and better, and apply the learnings to benefit recovery.

Our primary sector has witnessed booming exports, agile workarounds from private companies keep supply chains running and commerce moving, the huge shift towards digital solutions and e-commerce are positive developments that allowed us to cross.

Our adoption of robots, robotics and automation is changing the way many industries operate to increase productivity, service experiences and efficiency. This new way and redesign of business processes will accelerate and reduce our reliance on cheap labor.

Major economic indicators remain sound by international standards despite global inflation, labor shortages and shipping disruptions.

The government came to the party for business, and we have to recognize that, but now it’s up to us to be ready for success and to write our own stories.

Soon our borders will open to skilled migrants and essential workers whose numbers are now needed to fill labor shortages. There is an opportunity to change the narrative here too. We need to identify the critical skills, capabilities and workforce needed to fuel the long-term recovery, help our sectors and industries continue to succeed, and sustain basic services. Technology, healthcare, education, agribusiness, manufacturing, communications and others all need additional skills to align with revamped and redesigned operating systems to create growth.

If businesses show how ready they are for a reimagined future, we will attract the skills, investors, entrepreneurs and innovators to support New Zealand in new sectors and create opportunities.

For too long, our immigration metrics have been skewed to support short-term solutions – the seasonal worker, the two-year work visa, or a quick rotation contract on a work permit. Only highly qualified, experienced and remunerated, or wealthy, potential investors top the list to become permanent residents or citizens. For others, even with experience working in the production, service and export sectors in New Zealand, it’s a lottery, a revolving door, and we lose their skills.

We want an immigration policy that recruits, retains and builds capacity to build the future. We are challenged to fill the jobs available now and a potential brain drain looms as our youngest and brightest head to their delayed EO. We need to rethink how we value jobs beyond an hourly rate to consider their contribution to productivity, continuous improvement, and the revolution that will take place in factories with new ways of operating.

Part of the labor and skills supply management plan should harness talent beyond school dropouts. We could, for example, offer longer-term work visas to workers with critical and in-demand skills, and be more proactive in encouraging and promoting the benefits to a company if it hires more apprentices. The government, through the Department of Social Development, could subsidize apprentices and support a framework to manage the apprenticeship program so that it is business-friendly. It would be a win for all parties – apprentice, entrepreneur and government in delivering social results.

Recovery requires real leadership, pragmatism and an unobstructed platform for businesses to take the leap and lead national and regional economic recovery.

Investments in national assets and infrastructure upgrades must be redesigned so that they are delivered faster, better and more efficiently, whether designing a port for the future, a road or rail link . We need to remove onerous, time-consuming and costly consent processes. We need water, land and other natural assets to be managed more efficiently in the age of climate change and we need to prioritize access for all to essential services in health, safety, housing and education. For businesses, more short-term solutions and stimuli will be needed to get us through the worst of our recovery.

Time matters. The fruits are not picked. Patients don’t fix themselves. Buildings must be constructed.

Trucks need drivers. IT-dependent businesses need programmers and expertise at all levels. Jobs are in demand everywhere. Apprentices are future professionals. School leavers need jobs, skills and abilities other than reading, writing and arithmetic. There are so many things we can do; the challenge is to do it better than ever.

The government wants us to be nice, and we will, but it’s time to live with Covid and live on.

Pride and prejudice eliminated with the first steps

We’re all in this together has been the Covid slogan, so be kind and take care of each other.

But as the tentacles of Covid slithered deep into the community and restrictions ranging from lockdowns to vaccination mandates took hold, tens of thousands of owner-run small and medium-sized businesses lost their lives.

Kindness would not reduce it, nor support packages to keep jobs and business going.

Another silent pandemic was indiscriminately sweeping over business owners and executives.

Pride and prejudice have kept normally capable and confident business leaders from talking about something they would normally ignore and never share – their fragile mental health and well-being. But as levels of anxiety, stress, anger, grief, fear, pessimism, depression, aggression, introspection, loss of confidence, control, motivation and abuse of alcohol increased, it became a deafening chorus, an SOS to which the Chamber and the EMA could respond. .

Supported and funded by the government, https://firststeps.nz/ was launched to provide easy access to practical self-help tools and expertise for business owners. It was a success and an example of the government’s openness to tailor-made solutions.

Since its launch at the end of December, more than 20,000 visits have been recorded on the website with more than 10,000 resources downloaded and used by entrepreneurs who are taking their first steps. They realized that they had to take care of themselves if they were to take care of their staff, their families and their communities.

As a leader, responsible for people, revenue and operations, it is up to you to have all the answers, but the reality is that Covid offers untenable uncertainty and tension.

It should be comforting to a business owner or manager in this area to know that you are not alone and that there is help at hand.

Recognizing that stress and its effects on behavior and feelings of well-being is not stigma.

Other business leaders are in the same situation, also feeling depressed, failed, overwhelmed, anxious and burnt out, drinking too much, lashing out at family with unusual outbursts and upsetting the relationships that matter.

The big problem is to fix it.

• Auckland Business Chamber is a sponsor of the Dynamic Business Report

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Technical risk sentiment signal http://louthonline.com/technical-risk-sentiment-signal/ Mon, 28 Feb 2022 13:36:09 +0000 http://louthonline.com/technical-risk-sentiment-signal/

On the sentiment front, we have noted over the past few weeks that negative sentiment among short-term traders is at levels that have coincided with major lows over the past few years. But one concern I have is that after the open buy/buy volume ratios on the SPX and Nasdaq 100 index components (NDX – 14,009.54) have peaked in late January, these indices are slightly below the levels at which they were when their respective ratios peaked. This is not normal and potentially indicates that longer-term investors are overwhelming traders who bought the dips a few weeks ago..”

– Monday Morning Outlook, February 22, 2022

Reviewing last week’s comment, the above snippet stood out. Even though short-term traders had become more bullish after hitting a bearish extreme, major equity benchmarks did not rebound as they normally do when traders moved from an extremely bearish position to a more bearish position. bullish.

Additionally, there were early indications that traders were losing confidence in a rebound and creating bearish positions again, as the S&P 500’s open buy volume ratios (SPX – 4,384, 65) and the Nasdaq-100 index (NDX – 14,189.16) components were turning higher. Indeed, this was a red flag, as the SPX and NDX both fell below their respective late January lows. Stocks headed south to start the holiday-shortened week as Russia prepared more to invade, then finally shifted to Ukraine. In an already uncertain environment, traders and investors initially sold before more clarity on the situation emerged later in the week.

Even though January’s stock market lows were breached, Thursday’s major reversal and Friday’s follow-up buying pushed benchmarks back above key levels, which was an encouraging development for bulls.

Buyers came in strong after sanctions imposed on Russia for its attack on its non-North Atlantic Treaty Organization (NATO) neighbor were not as severe as feared. Specifically, no sanctions were imposed on Russia for exporting oil and gas. Such sanctions would have only heightened rising inflation concerns and more aggressive rate hikes, prompting investors to reduce their risk ahead of Russian-Ukrainian tensions.

For what it’s worth, the buy/call volume ratios on the SPX and NDX components are clearly on their way up. They both bottomed on Feb. 11, when the SPX closed at 4,418 and the NDX at 14,474. long-term buyers to crush short-term traders – the opposite of the red flag warning mentioned last week.

The growing number of bears, whether evident in various surveys or in the options market, have dragged stocks lower as the Fed shifts from extremely dovish policy. There have been various technical breakdowns from a short to medium term perspective along the way. For a serious unwinding of this negative sentiment to occur, the broader market needs to clear key resistance levels.”

– Monday Morning Outlook, February 22, 2022

Over the past few weeks, we have observed that pessimistic traders’ sentiment is making conditions ripe for a major bottom. But we also warned that technical overhead levels need to be removed to pressure bears to hedge and/or move investors off the sidelines and into stocks at these depressed levels.

One survey that shows rising declines is Investor’s Intelligence (II) weekly survey, whose respondents are newsletter advisors. In fact, the charts below give you a glimpse of the growing pessimism in this survey, as the percentage of bears is almost higher than the percentage of bulls. This has only happened a few times over the past six years.

The first chart below calculates the percent bull minus the percent bear of respondents. As such, the blue line will cross below zero as the bears break past the bulls. Going back to 2016, when this happened, it coincided with significant buying opportunities.

SPX Investor Intelligence

Additionally, the quantified data in the chart below shows that when sentiment in this survey is at par with the levels we see now, the SPX, on average, is outperforming its historical “anytime” returns on returns at short term and intermediate. -long term delay. As the chart indicates in bold, we are currently in the 20-30 percentile of the all-time readings of “percentage bullish minus bearish,” which bulls should welcome.

The risk, of course, is that future readings will turn even more bearish, in which case the expected outperformance is reduced, as such a broad-based downtrend takes longer for the market to build a base and embolden potential buyers.

SPX Returns ii

If you are aggressive and the timeframes above match your holding periods, you can play the quantized results. But with benchmarks still trading below key technical resistance levels, a tighter than normal hedge or leash should be considered for bullish bets.

A technical risk, for example, is that the SPX has been trading in a declining channel since November. The upper rail of this channel begins this week at 4,485, just above the 4,475 level which marks double the 2020 closing low. On Friday, the trendline will come in at 4,450.

If selling resumes, the low of this rail sits at 4,033 today and ends the week at the 4,000 millennial mark. But the SPX should first break below last week’s low, which was supported by its 320-day moving average, another long-term trendline we’ve discussed in the past (in May 2019, it served as support, and in March 2020 a break of this trendline led to vicious selling).

According to the chart below, it is encouraging for bulls that the SPX closed last week above 4,300, which marked several lows since July. Moreover, it closed above its 260-day moving average, which is about a year of trading.

But technical risks remain amid the rebound, according to the discussion above and the chart below. More technical improvements need to happen before the bears finally feel like they have to give up.

Finally, it was noticed last week that after the Cboe Volatility Index (VIX – 27.59) moved closer to the January high on an intraday basis, it closed Thursday and Friday below the 33 area. .20-34.44, double the close of last year and this year. low closure. A fence over this area would wave another caution flag.

SPX 260 320

VIX Six Month Daily

Todd Salamone is Schaeffer’s senior vice president of research.

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Growth Jobs Correlations Weakening job polarization Rising-Dr. Vikas Singh http://louthonline.com/growth-jobs-correlations-weakening-job-polarization-rising-dr-vikas-singh/ Mon, 28 Feb 2022 04:15:45 +0000 http://louthonline.com/growth-jobs-correlations-weakening-job-polarization-rising-dr-vikas-singh/

Economists and pundits make compelling arguments that some level of unemployment is “natural and normal” and cannot be erased. However, India, blessed with its demography, can neither afford nor accept this “natural and normal” level.

Unemployment imposes significant, often insurmountable, costs on the individual. A high unemployment rate has a self-perpetuating and negative impact on the economy and society.

*Labour data is misleading, patchy, lazy and opaque. Mask more. reveal less

Our labor data is a mirage. He is not sturdy. Often unbelievable. The measures as well as the periodicity are poorly defined. Right high frequency data is rare. There are also quality challenges. Employment data captures underemployment and disguised figures. However, he ignores the “discouraged” who aren’t even “looking” for a job. Thus, policy-making is based on shallow data, many flawed assumptions.

Decision makers are flying blind. Practitioners drive while looking in the rearview mirror.

The Crux “Growth-Job Elasticity” study, covering 14 economically “important” states, on six key economic indicators with 30,000 households and 250 economists and political influencers, has bad news. Manufacturing employment data, discretionary spending is weak. Sales figures for automobiles, housing and household appliances are stable. Other economic indicators are also not based on confidence.

*Formalization has inadvertently discouraged hiring. Short term negative

The government solved the wrong problem. Formalization will not create well-paying jobs. It will guarantee neither employment nor social protection. It has inflicted grueling regulatory filings, taking value away from middle-income businesses and imposing costs. Formalizations devoid of the supporting ecosystem depreciate the value. It has proven to be a stumbling block for mid-sized business growth.

They are the job providers.

Decision-makers resort to the welfarism of “work”. MGNREGA is not a substitute for employment, nor a growth trigger. Unemployment requires higher social spending on the one hand, and lower tax revenues on the other. The long-term ramification of lower consumption triggers a vicious effect. It ripples and ripples through the economy. MGNREGA highlights acute unemployment, signals continuing economic distress.

The intangible cost exceeds the financial cost several times. The unemployed lose income; suffer from physical and mental health. Unemployment erodes skills, evaporates savings and lowers incomes for years. Unemployment depreciates human capital.

Unemployment paralyzes the poor. This is the only asset they have.

*Work is the “main” self-defining

The Crux study states that most middle-aged men view work as the “primary” definer of self. Unemployment lowers self-esteem. It takes away something more vital than their jobs and careers. They lose their dignity.

The societal costs of widespread unemployment are visible; the cost is equally opaque. It causes crime, incites gender inequality, stirs up social unrest and deepens marginalization. Disgruntled people lose faith in the system, manifesting as indifferent participatory democracy. Prolonged unemployment leads to deeper skepticism, broader pessimism and manifests itself in a reluctance to invest in the key multipliers of upward mobility, namely health, skills and education.

The micro-components of the economy, especially large organizations, pay the cost of unemployment. The government imposes higher taxes, counterintuitively discouraging growth, thus hiring. Industry is losing its skilled labor and confidence; reluctant to invest.

* India needs a differentiated growth framework

Manufacturing has changed and is no longer the bulwark of the job market. Jobs have halved over the past five years, even as manufacturing’s share of GDP has increased. Capital drives scale, technology drives productivity. Automation and optimization of logistics generate value. Workshop workers have become cogs. Most of the others are bolt nuts.

The “value generators and auxiliaries” of the manufacturing sector will be the job creators. India must add value by positioning itself on a “niche”, and not aspire to become the factory of the world. We must aim higher, choose our “tools” in the global trade war. We must manufacture what we can competitively, “move” and trade what we cannot.

The big ones don’t offer jobs. The jobs-capital measured in the context of the Crux study, “Jobs-Growth Elasticity”, highlights that MSMEs create 20 times more jobs than large organizations for each unit of investment. Similarly, the firm-to-job multiple is highest for medium-sized units.

*Agricultural sector overburdened, growth threatened

The agricultural sector is full of young aspirants. Policy makers have to come to terms with the fact that one sixth of GDP cannot support half the population. India needs to plan holistically, invest in the agricultural ecosystem of value migration. Similarly, India should extend the framework of the SEZs and create at least five “free” business centers on the model of Singapore and Hong Kong. It has the potential to create five million jobs a year and increase GDP growth by a few percentage points.

India’s unemployment crisis is arguably the biggest in the economy. Ideas like an urban MGNREGA can bring relief, especially for the millions affected by the pandemic, but only narrowly. It won’t solve the real problems. Not even the bangs.

Our young people will put pressure on the job market for the foreseeable future. Policy makers must prepare for the worst as more and more women seek employment. Similarly, the government must tackle the “polarization” of the labor market, ie the “disappearance” of medium-skilled jobs. The polarization is the advent of AI, cybersecurity jobs on one side and blue collar jobs on the other.

Under ideal conditions, the economy has the potential to create about one million jobs for every percentage increase in GDP. But lately that has not been the case. We have experienced jobless growth over the past decade. The low elasticity of employment to growth results from the large-scale substitution of labor by automation and capital. This accelerating trend is consistent with developing economies. However, India has been the hardest hit as we are failing to supply; and are unable to capitalize on our enabling demographics.

*Growth and jobs are decoupled

According to the Crux study, the correlations between growth and employment have weakened over the past 30 years, dropping from 0.4% to 0.25%. This effectively means that for every percentage of GDP growth, employment growth is only 0.25%. Previously, it was 0.4%. The government’s incentive structure favors capital-intensive growth at the expense of labour, which aggravates the unemployment crisis.

Policy makers need to understand that the future growth cycle will not lead to the creation of correlated jobs. India needs strong 10.5% GDP growth to start creating new jobs. Anything less, in a growing automation ecosystem, will take away jobs.

Warning: The views expressed in the article above are those of the authors and do not necessarily represent or reflect the views of this publishing house. Unless otherwise indicated, the author writes in a personal capacity. They are not intended and should not be taken to represent the official ideas, attitudes or policies of any agency or institution.


]]> Venezuela’s oil industry: challenges and illusions http://louthonline.com/venezuelas-oil-industry-challenges-and-illusions/ Fri, 25 Feb 2022 19:31:00 +0000 http://louthonline.com/venezuelas-oil-industry-challenges-and-illusions/

The oil industry continues to be by far the most important sector of the Venezuelan economy. Although it seems unlikely that the production levels achieved before 2014 can be achieved, stabilizing and increasing oil production is essential to any prospect of economic recovery in the short to medium term.

Venezuela’s oil industry rebounded in 2021 after hitting record lows in the second half of 2020. However, the path ahead is strewn with obstacles.

Unrealistic projections

Earlier this year, President Nicolás Maduro announced that the state oil company PDVSA would reach two million barrels per day (BPD) by the end of the year. While it is obvious that you need to have ambitious goals and a heroic attitude, setting unattainable production goals is counterproductive.

According to official sources, production reached one million bpd on December 24, 2021. However, data that PDVSA submitted to OPEC indicates that production in December was actually 871,000 bpd, and fell to 755,000 bpd in January. Secondary source data points to even lower production levels during this period, but this discrepancy is not the subject of this article.

This means that Venezuela’s oil production must increase by more than 2.5 times to meet Maduro’s announced target of two million BPD. Some analysts suggest that two million BPD could be reached within several years, while others believe that PDVSA will never reach these levels again. What we can be sure of is that the country’s oil production will not reach this milestone in the next 11 months.

Last year was something of a dress rehearsal: the official target was BPD 1.5 million, but in the final months of the year the government lowered its target to BPD 1 million – a target that was, at best, only briefly achieved.

Shoot a little blanket

Oil production has more than doubled since hitting decades-low levels in the second half of 2020. That rebound is largely behind Venezuela’s modest economic recovery in recent months. However, despite the optimism this growth has inspired, production simply cannot double again and again.

The Venezuelan oil industry faces serious obstacles at all levels. The biggest hurdle is US sanctions (more on that later). These unilateral coercive measures reinforce and aggravate other problems.

The oil industry is experiencing structural difficulties, including corruption and the emigration of skilled workers, but it is also worth considering the obstacles that have arisen amid the recent increase in production.

In March 2021, there was an explosion in a pipeline in the state of Monagas that affected light crude extraction, resulting from an alleged act of sabotage. This pipeline was important for processing extra-heavy crude and for obtaining blends for export.

With the pipeline problem solved, another soon appears on the horizon: the shortage of light crude oil. Light blend production levels were not high enough to meet both growing export demand and domestic refining demand. As they say: pulling a blanket on one side only exposes the other.

As happened in the recent past, Iran came to the rescue with a deal to swap Venezuelan crude for Iranian condensate (1). This international aid has made possible the increase in oil and gasoline production in recent months.

However, the fragility of this recovery became evident in January. A delayed shipment of Iranian condensate caused a further drop in production. The other major bottleneck is the lack of proper storage facilities for an increased production scenario and to handle return shipments.

In short, even if Venezuela could magically continue to increase production, it would quickly exhaust its storage capacity. Right now, because of the sanctions, there are very few potential buyers.

The straitjacket of sanctions

In January 2019, the United States imposed an oil embargo on Venezuela. Almost immediately, the 500,000 BPDs Venezuela was exporting to refineries in the Gulf of Mexico were left without a buyer. Over the next two years, the United States harassed all of PDVSA’s customers, imposed secondary sanctions on them, thereby forcing these companies to either abandon operations in Venezuela or stop buying crude directly.

This means the state-owned company is now forced to sell through middlemen, transferring ship-to-ship shipments on the high seas to hide the origin of the oil. This is how Venezuelan crude can reach its final destinations, mainly in China. This complicated juggling act means less revenue.

However, the main consequence (and purpose) of US sanctions is to close down all prospects for the country’s industry. By banning transactions with state-owned companies and those involving Venezuelan bonds, Washington has scared off potential business partners. This also had the effect of closing access to financial markets to PDVSA and the Venezuelan state.

This means that there is another reason not to foresee a full-scale resumption of oil production. At some point, the wells that can be easily and cheaply reactivated will run out and there will be no more funds to invest in the more expensive ones.

Biden’s rise to power has sparked speculation about a possible easing of sanctions against Venezuela. So far, there is no sign of this happening, quite the contrary!

Currently, Chevron is seeking a license from the Office of Foreign Assets Control (OFAC) to re-obtain crude oil as payment for its joint operations with PDVSA. Yet even if Chevron obtains this license, it will only result in marginal increases in production. Indeed, only a real easing of sanctions would allow, for example, the return of Chinese companies to Venezuela, thus solving the country’s production and export problems. Unfortunately, this is unlikely to happen.

Use of petroleum resources for national development

High oil prices on the international market are currently favoring the Venezuelan oil industry. These prices make the Venezuelan product more attractive to international buyers. However, this favorable situation also generates uncertainty: a drop in prices could once again hit the production of an already fragile industry.

The aim of our analysis is not to generate pessimism. Instead, we want to provide a realistic perspective on an industry that is crucial to the national economy.

The issue of sovereignty cuts across all of these issues. Increasing production at the cost of offering extremely favorable conditions to transnational corporations would mean that little or no funds will flow back to the nation.

The Venezuelan government has responded to the sanctions by looking for “new models” that increasingly favor private investors. While one can understand the need for such concessions, the question is whether the current conjuncture will serve as an excuse to go too far. In any case, as long as the blockade remains in place, current and future concessions will not attract significant capital investment.

The way out of the crisis is long and, at some point, it will require long-term planning. It is important to bet on national sovereignty and on the ability of workers in the oil industry to dismantle a century of dependency. Additionally, prioritizing production that is not tied to crude oil exports, such as gasoline and diesel, could have a “multiplier effect” on other sectors of the economy.

However, what is most important is the strategy. If the options before us are reduced, on the one hand, either to a recovery via massive concessions to transnational corporations, or, on the other hand, to a more diversified but also market-oriented economy, none of the two will only lead to the emancipation and well-being of the Venezuelan people. In the words of Commander Chávez paraphrasing Che Guevara, “Socialism cannot be built with the blunt weapons of capitalism. A turtle does not climb trees and an armadillo does not shave.”

To note

(1) This agreement is a clear demonstration of solidarity between the anti-imperialist countries. However, this is not ideal economically. Iran is far behind and is also a crude oil exporter, which most likely means that Venezuelan crude oil is being sold below market price.

The opinions expressed in this article are those of the author and do not necessarily reflect those of the editorial staff of Venezuelanalysis.

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Mubadala leads over $500 million seed round in Princeton Digital Group, the leading pan-Asian data center company http://louthonline.com/mubadala-leads-over-500-million-seed-round-in-princeton-digital-group-the-leading-pan-asian-data-center-company/ Tue, 22 Feb 2022 00:00:00 +0000 http://louthonline.com/mubadala-leads-over-500-million-seed-round-in-princeton-digital-group-the-leading-pan-asian-data-center-company/

Warburg Pincus and Ontario Teachers’, both current PDG shareholders, are also investing in this round

SINGAPORE, February 22, 2022 /PRNewswire/ — SingaporePrinceton Digital Group (CEO), based in Princeton, has closed an equity investment in Mubadala Investment Company (Mubadala) as lead investor for $350 million. PDG’s two existing shareholders, Warburg Pincus and the Ontario Teachers’ Pension Board, also invested in this round, totaling more than half a billion dollars.

Established in 2017, PDG is a leading Pan-Asian data center operator with an unrivaled footprint in major Asian digital economies. PDG has a portfolio of 20 data centers with over 600 MW of secure capacity spanning five countries. The company provides hyperscalers, internet and cloud enterprises and financial institutions with scalable and reliable internet infrastructure and world-class data center services to meet their growing demand in Asia.

The funds will enable PDG to consolidate its position as the leading pan-Asian data center operator, by strengthening its presence in Japan, India, Singapore, Chinaand Indonesia and accelerate its expansion plans into other markets. Asia is one of the fastest growing data center regions in the world, driven by strong market fundamentals such as large internet user base, growth in digitalization, high levels of data usage and an increasingly tech-savvy young population.

Commenting on Mubadala’s investment in PDG, Khaled Abdulla Al QubaissiManaging Director of Property and Infrastructure Investments at Mubadala, said, “We are delighted to be the lead investor in PDG’s fundraising and to partner with the company on its growth journey. leading form of data center infrastructure operating in an attractive market with strong tailwinds and meeting growing demand from the hyperscale segment and more broadly from Asia digital economies. We look forward to working with the CEO leadership team to capitalize on growth opportunities and create not only long-term sustainable value creation, but also support from Asia development of digital infrastructure as a key enabler of economic progress.”

“We are delighted to have leading sovereign wealth fund, Mubadala, as another top investor in PDG. Mubadala’s track record of long-term investments, combined with extensive know-how in the area of ​​digital infrastructure, make them a great partner as we continue to evolve our We are also encouraged by the continued confidence Warburg Pincus and Ontario Teachers’ have in CEO,” said Rangu Salgame, Co-Founder, President and Chief Executive Officer. CEO leadership.

“Since our initial investment, we have been very impressed with the management team’s ability to successfully execute a highly differentiated strategy and focus on value creation. We are pleased to make a second investment in PDG to help to accelerate their growth and we look forward to partnering with Mubadala and Warburg Pincus on this journey,” said Ben Chansenior general manager of Asia Pacific at Teachers’.

“Since supporting the Founders during the CEO training era, we have been impressed with their leadership and execution of a strong thesis. We are excited to continue to be part of the CEO journey and believe that the company is best positioned to take advantage of a truly transformative market opportunity.” noted Ellen NgManaging Director, Warburg Pincus.

About CEO

Princeton Digital Group (CEO) is a leading investor, developer and operator of Internet infrastructure. Based at Singapore with a presence and operations in China, Singapore, India, Indonesiaand Japanits data center portfolio is fueling the expansion of hyperscalers and enterprises in the fastest growing digital economies across Asia. For more information, visit www.princetondg.com or follow us on LinkedIn.

About Mubadala Investment Company

Mubadala Investment Company is a sovereign investor managing a global portfolio, aiming to generate sustainable financial returns for the Government of Abu Dhabi.

Mubadala’s $243.4 billion (AED894 billion) portfolio spans six continents with interests in multiple sectors and asset classes. We leverage our deep industry expertise and longstanding partnerships to generate sustainable growth and earnings, while supporting the continued diversification and global integration of the global economy. United Arab Emirates. Mubadala’s digital infrastructure unit invests in physical assets around the world, supporting the global trend of digitization and growing demand for connectivity, data storage and computing power.

Based at Abu DhabiMubadala has offices in London, Rio de Janeiro, Moscow, new York, San Francisco and Beijing. For more information about Mubadala Investment Company, please visit: www.mubadala.com

About Warburg Pincus

Warburg Pincus LLC is a leading global growth investor. The company has more than $73 billion in assets under management. The company’s active portfolio of over 235 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams looking to build sustainable businesses with lasting value. Founded in 1966, Warburg Pincus has raised 20 private equity funds and 2 real estate funds, which have invested more than $100 billion in more than 1,000 companies in more than 40 countries. The company is headquartered in new York with offices at amsterdam, beijing, Berlin, hong kong, Houston, London, Luxemburg, Bombay, Mauritius, San FranciscoSao Paulo, Shanghaiand Singapore. For more information, please visit www.warburgpincus.com. follow us on LinkedIn.

On Ontario teachers

The Ontario Teachers’ Pension Board is the administrator of from Canada largest uni-professional pension scheme, with C$227.7 billion net assets (all figures to June 30, 2021 unless otherwise stated). It holds a globally diversified portfolio of assets, approximately 80% of which is managed internally, and has achieved an annual total net return of 9.6% since the plan’s inception in 1990. Ontario Teachers’ is an independent organization whose the head office is located at Toronto. His Asia Pacific regional offices are located at hong kong and Singaporeand his Europe, Middle East & Africa the regional office is at London. The defined benefit plan, fully funded at January 1, 2021invests and administers the pensions of the province of from Ontario 331,000 active and retired teachers. For more information, visit otpp.com.

Media Contacts
Princeton Digital Group
Grace Chen
[email protected]

PRecious Communications for Princeton Digital Group
[email protected]

Logo- https://mma.prnewswire.com/media/1747916/CEO_primary_logo_Logo.jpg

SOURCEPrinceton Digital Group (CEO)

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[SMM Report] China Copper Market Review 2021 and Forecast_SMM http://louthonline.com/smm-report-china-copper-market-review-2021-and-forecast_smm/ Thu, 10 Feb 2022 05:47:28 +0000 http://louthonline.com/smm-report-china-copper-market-review-2021-and-forecast_smm/

SHANGHAI, Feb. 10 (SMM) — Looking back to 2021, the global economy has recovered in the post-pandemic era. Copper prices rose sharply and then moved in a range for an extended period. With the continued decline in new COVID cases and the lifting of pandemic prevention and containment measures, the market was optimistic about the economic recovery in the first half. At the same time, many countries still maintained low interest rates and soft credit.

The People’s Bank of China (PBoC) has prioritized stability with paramount importance. The United States implemented a new round of bailout bills and the $1.9 trillion fiscal stimulus bill increased market risk appetite and bolstered market confidence. The continued economic recovery against a backdrop of broad global inflation expectations provided an upward impetus to copper prices.

Copper prices rose in the first half of 2021, with LME copper prices reaching a record high of $10,747.5/mt. SHFE copper prices surged to 78,270 yuan/ton, the highest since May 2006. Domestic copper consumption was poor compared to record copper prices in the first half of 2021. And the industry chain’s “pessimism” was transmitted from upstream to downstream sectors. Business cash flow problems have intensified and terminal consumption has been eliminated. Downstream exploitation rates were well below those of the same period in previous years. Cash discounts remained for an extended period in a context of social values.

The US Federal Reserve as well as European central banks have been continuously managing market expectations since June 2021. Market expectations for less bond buying and early interest rate hikes rose after inflation and the unemployment rate met the Fed’s expectations. The US dollar entered a bullish trajectory amid a more hawkish tone from the Fed and the approach of a global liquidity pivot.

In order to control commodity price gains and mitigate the impact of high copper prices on downstream demand and end consumption, the National Food and Strategic Reserves Administration (NFSRA) began offering copper reserves since early July, and the total volume in the three offers of copper reserves amounted to 110,000 tons. In this scenario, copper prices moved to low levels. Copper prices resumed an upward trajectory in October.

The intensification of the global energy crisis has raised inflation concerns. And LME copper staged a short squeeze, with the proportion of canceled warrants reaching as high as 92.2% at one point, lowering available inventory to the lowest level since 1974. Inflation expectations and the Low inventory supported copper prices to a high of 76,330 yuan/ton. With the domestic intervention on coal prices at the end of October, prices for industrial products generally fell and copper prices also fell to the previous level.

The supply of imported cargoes on the market was tight at the end of the year and stocks remained low. In addition to this, the suspension of the issuance of value-added tax (VAT) invoices by customs has left input invoices scarce, pushing spot premiums to over 2,000 yuan/ton, the most high for a decade. Market transactions have entered a stalemate. However, the high premiums quickly dropped and the emergence of the Omicron COVID variant put the global market on edge. Risk aversion sentiment drove the US dollar index higher and copper prices fell back below 70,000 yuan/metric ton.

As the impact of COVID has waned, the market has once again focused on macroeconomic policies overseas. Expectations of early interest rate hikes amid inflation fears restrained copper prices, but current low inventories supported copper prices. Copper prices will remain range-bound as inventory has not pivoted.

China Copper Market Review 2021

The commodity bull market in 2021 has all but ended. LME copper prices peaked at $10,747.5/mt in 2021.

The Federal Reserve has been managing market expectations to scale back its bond purchases at FOMC meetings since mid-year. High inflation has shifted the Fed and European Central Bank (ECB) from dovish to hawkish, suppressing key asset prices to some extent.

In China, the NFSRA offered copper reserves in three batches to the market in mid-2021 to curb rapid gains in commodity prices, and the measures paid off, thanks to the NFSRA accumulating reserves. in large volumes in 2020.

Precise and sustainable fiscal policies, flexible and appropriate monetary policies as well as a benign regulation of real estate in the context where houses are intended for habitation and not for speculation were confirmed during the meeting of the Politburo of the CPC Central Committee by the end of 2021. This will ensure rational and sufficient domestic liquidity in 2022.

On fundamentals, inventory is expected to increase slightly in 2022 and 2023 given the release of large volumes of new and expanded smelting capacity in two to three years. The market will watch the contribution of the new energy sector to the overall marginal growth in copper consumption.

Domestic new smelting capacity will increase by 660,000 tpa in 2022, including 400,000 tpa new capacity from Daye Nonferrous (Yangxin Hongsheng) in the first quarter, 180,000 tpa new capacity from Northern Copper of Zhongtiaoshan Nonferrous Metals, which should be commissioned in the fourth quarter as well as the technologically improved capacity of 80,000 mt/y at Tongling Jinguan in the second quarter. The increase in copper cathode production in 2022 will mainly come from the 300,000 mt/y capacity at Dongying Fangyuan which resumed at the end of November 2021, which will reach full production in the first quarter of 2022.

The slight abundant supply of copper concentrate amid the concentrated release of new capacity in global mines is expected to strengthen TC/RC in 2022. This, combined with the profitable production of sulfuric acid, is expected to increase domestic cathode production by copper over 4.5. %.

On the consumption front, the overall demand for financing and the amount of financing will hardly see a significant increase in 2022 after some domestic real estate companies suffered debt problems. The market will focus on new housing completions that have been depressed in 2021, but floor areas of new housing starts are expected to remain sluggish due to demands that homes are for living in, not speculation.

Overall copper consumption by household appliances is expected to decrease slightly due to the potential decline in export orders and possible increasing substitution of copper by aluminum. The infrastructure and new energy sectors will be the main drivers of copper consumption in 2022.

It was proposed at the Central Economic Work Conference to moderately advance infrastructure investment, and the Conference set the tone for building stable infrastructure in 2022. New energy consumption will maintain a growth rate high driven by new energy vehicles (NEV), photovoltaics and wind power. Powerful.

In the long term, it will be difficult to find expansion of smelting capacity in China after 2023, while refining capacity will continue to grow. And the structure of domestic raw materials will change. The copper scrap and copper anode market will gradually become the focus of the markets. In terms of imports, Europe and Malaysia have related policies in place.

But according to market reactions, there was only a short-term impact of the policies. The resumption of work and production of recycling and dismantling systems in Europe and the United States after the abatement of the impact of COVID will result in a steady growth in the overall copper scrap supply.

The national inventory of scrap copper has declined rapidly due to rising copper prices. Without a mature recycling and dismantling system in China, the domestic supply of scrap copper can hardly see a substantial increase in the short term. And the substitution of copper cathode with scrap copper will depend on the volatility of copper prices.

In general, domestic copper consumption will grow slowly from 2022 to 2023, and there will be a slight surplus in the domestic copper cathode market. The new energy sector will drive the growth of copper consumption in 2024-2025, and the domestic raw materials side will face structural transformation.

To access the full annual report of SMM China Copper Industry Chain 2021-2025, please contact Michael Jiang at michaeljiang@smm.cn or T:+86-21-51666812 |M:+86-1522- 1415-920.

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ENERSYS MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q) http://louthonline.com/enersys-management-report-on-financial-position-and-results-of-operations-form-10-q/ Wed, 09 Feb 2022 21:17:17 +0000 http://louthonline.com/enersys-management-report-on-financial-position-and-results-of-operations-form-10-q/

CAUTION REGARDING FORWARD-LOOKING STATEMENTS


The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides
a safe harbor for forward-looking statements made by or on behalf of EnerSys.
EnerSys and its representatives may, from time to time, make written or verbal
forward-looking statements, including statements contained in EnerSys' filings
with the Securities and Exchange Commission ("SEC") and its reports to
stockholders. Generally, the inclusion of the words "anticipate," "believe,"
"expect," "future," "intend," "estimate," "will," "plans," or the negative of
such terms and similar expressions identify statements that constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are
intended to come within the safe harbor protection provided by those sections.
All statements addressing operating performance, events, or developments that
EnerSys expects or anticipates will occur in the future, including statements
relating to sales growth, earnings or earnings per share growth, and market
share, as well as statements expressing optimism or pessimism about future
operating results, are forward-looking statements within the meaning of the
Reform Act. The forward-looking statements are and will be based on management's
then-current beliefs and assumptions regarding future events and operating
performance and on information currently available to management, and are
applicable only as of the dates of such statements.

Forward-looking statements involve risks, uncertainties and assumptions.
Although we do not make forward-looking statements unless we believe we have a
reasonable basis for doing so, we cannot guarantee their accuracy. Actual
results may differ materially from those expressed in these forward-looking
statements due to a number of uncertainties and risks, including the risks
described in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2021 (our "2021 Annual Report") and other unforeseen risks. You should
not put undue reliance on any forward-looking statements. These statements speak
only as of the date of this Quarterly Report on Form 10-Q, even if subsequently
made available by us on our website or otherwise, and we undertake no obligation
to update or revise these statements to reflect events or circumstances
occurring after the date of this Quarterly Report on Form 10-Q.

Our actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons, including the following factors:


•economic, financial and other impacts of the COVID-19 pandemic, including
global supply chain disruptions;
•general cyclical patterns of the industries in which our customers operate;
•the extent to which we cannot control our fixed and variable costs;
•the raw materials in our products may experience significant fluctuations in
market price and availability;
•certain raw materials constitute hazardous materials that may give rise to
costly environmental and safety claims;
•legislation regarding the restriction of the use of energy or certain hazardous
substances in our products;
•risks involved in our operations such as supply chain issues, disruption of
markets, changes in import and export laws, environmental regulations, currency
restrictions and local currency exchange rate fluctuations;
•our ability to raise our selling prices to our customers when our product costs
increase;
•the extent to which we are able to efficiently utilize our global manufacturing
facilities and optimize our capacity;
•changes in macroeconomic and market conditions and market volatility (including
developments and volatility arising from the COVID-19 pandemic), including
inflation, interest rates, the value of securities and other financial assets,
transportation costs, costs and availability of electronic components, lead,
plastic resins, steel, copper and other commodities used by us, and the impact
of such changes and volatility on our financial position and business;
•competitiveness of the battery markets and other energy solutions for
industrial applications throughout the world;
•our timely development of competitive new products and product enhancements in
a changing environment and the acceptance of such products and product
enhancements by customers;
•our ability to adequately protect our proprietary intellectual property,
technology and brand names;
•litigation and regulatory proceedings to which we might be subject;
•our expectations concerning indemnification obligations;
•changes in our market share in the business segments where we operate;
•our ability to implement our cost reduction initiatives successfully and
improve our profitability;
•quality problems associated with our products;
•our ability to implement business strategies, including our acquisition
strategy, manufacturing expansion and restructuring plans;
•our acquisition strategy may not be successful in locating advantageous
targets;
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•our ability to successfully integrate any assets, liabilities, customers,
systems and management personnel we acquire into our operations and our ability
to realize related revenue synergies, strategic gains, and cost savings may be
significantly harder to achieve, if at all, or may take longer to achieve;
•potential goodwill impairment charges, future impairment charges and
fluctuations in the fair values of reporting units or of assets in the event
projected financial results are not achieved within expected time frames;
•our debt and debt service requirements which may restrict our operational and
financial flexibility, as well as imposing unfavorable interest and financing
costs;
•our ability to maintain our existing credit facilities or obtain satisfactory
new credit facilities;
•adverse changes in our short and long-term debt levels under our credit
facilities;
•our exposure to fluctuations in interest rates on our variable-rate debt;
•risks related to the discontinuation of the London Interbank Offered Rate and
other reference rates, including increased expenses and the effectiveness of
hedging strategies;
•our ability to attract and retain qualified management and personnel;
•our ability to maintain good relations with labor unions;
•credit risk associated with our customers, including risk of insolvency and
bankruptcy;
•our ability to successfully recover in the event of a disaster affecting our
infrastructure, supply chain, or our facilities;
•delays or cancellations in shipments;
•occurrence of natural or man-made disasters or calamities, including health
emergencies, the spread of infectious diseases, pandemics, vaccine mandates,
outbreaks of hostilities or terrorist acts, or the effects of climate change,
and our ability to deal effectively with damages or disruptions caused by the
foregoing; and
•the operation, capacity and security of our information systems and
infrastructure.

This list of factors that may affect future performance is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated taking into account their inherent uncertainty.


In the following discussion and analysis of results of operations and financial
condition, certain financial measures may be considered "non-GAAP financial
measures" under SEC rules. These rules require supplemental explanation and
reconciliation, which is provided in this Quarterly Report on Form 10-Q.
EnerSys' management uses the non-GAAP measures "primary working capital" and
"primary working capital percentage" in its evaluation of cash flow and
financial position performance. These disclosures have limitations as an
analytical tool, should not be viewed as a substitute for cash flow determined
in accordance with GAAP, and should not be considered in isolation or as a
substitute for analysis of the Company's results as reported under GAAP, nor are
they necessarily comparable to non-GAAP performance measures that may be
presented by other companies. Management believes that this non-GAAP
supplemental information is helpful in understanding the Company's ongoing
operating results.

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Overview

EnerSys (the "Company," "we," or "us") is a world leader in stored energy
solutions for industrial applications. We also manufacture and distribute energy
systems solutions and motive power batteries, specialty batteries, battery
chargers, power equipment, battery accessories and outdoor equipment enclosure
solutions to customers worldwide. Energy Systems which combine enclosures, power
conversion, power distribution and energy storage are used in the
telecommunication and broadband, utility industries, uninterruptible power
supplies, and numerous applications requiring stored energy solutions. Motive
Power batteries and chargers are utilized in electric forklift trucks and other
industrial electric powered vehicles. Specialty batteries are used in aerospace
and defense applications, large over the road trucks, premium automotive and
medical. We also provide aftermarket and customer support services to over
10,000 customers in more than 100 countries through a network of distributors,
independent representatives and our internal sales force around the world.

The three reportable segments of the Company, based on business segments, are as follows:


•Energy Systems - uninterruptible power systems, or "UPS" applications for
computer and computer-controlled systems, as well as telecommunications systems,
switchgear and electrical control systems used in industrial facilities and
electric utilities, large-scale energy storage and energy pipelines. Energy
Systems also includes highly integrated power solutions and services to
broadband, telecom, renewable and industrial customers, as well as thermally
managed cabinets and enclosures for electronic equipment and batteries.
•Motive Power - power for electric industrial forklifts used in manufacturing,
warehousing and other material handling applications as well as mining
equipment, diesel locomotive starting and other rail equipment; and
•Specialty - premium starting, lighting and ignition applications in
transportation, energy solutions for satellites, military aircraft, submarines,
ships and other tactical vehicles as well as medical and security systems.

Economic climate


The economic climate in North America and China experienced strong growth during
calendar 2021 and is expected to grow strong in calendar 2022. EMEA's economy
grew moderately faster than normal in calendar 2021 and is forecasted to do the
same in 2022. EMEA's economic growth has been more impacted by the COVID-19
pandemic during calendar 2021. Inflation has increased in all regions during
calendar 2021.

EnerSys is experiencing supply chain disruptions and cost spikes in certain
materials such as plastic resins and electronic components along with
transportation and related logistics challenges and broad-based cost increases.
In addition, some locations are experiencing difficulty meeting hiring goals.
Generally, our mitigation efforts and the recent economic recovery, have
tempered the impact of the pandemic-related challenges. The overall market
demand remains robust.

Volatility of raw materials and foreign currencies


Our most significant commodity and foreign currency exposures are related to
lead and the Euro, respectively. Historically, volatility of commodity costs and
foreign currency exchange rates have caused large swings in our production
costs. As a result of the COVID-19 pandemic, lead cost dropped into the low 70
cents per pound during our first fiscal quarter of 2021 and has currently
rallied to just below $1.10 per pound, which is above the pre-COVID-19 levels.
We are experiencing increasing costs in some of our other raw materials such as
plastic resins, steel, copper and electronics and increased freight costs.

Customer Pricing


Our selling prices fluctuated during the last several years to offset the
volatile cost of commodities. Approximately 30% of our revenue is now subject to
agreements that adjust pricing to a market-based index for lead. Customer
pricing changes generally lag movements in lead prices and other costs by
approximately six to nine months. In fiscal 2022, customer pricing has increased
due to lead prices and other costs having increased throughout the year.

Based on current commodity markets, we are likely to see year-over-year headwinds from rising commodity prices, with a related increase in our selling prices over the course of the year. coming year. As we focus more on energy systems and lead-free chemicals, the focus on lead will continue to decrease.

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Liquidity and Capital Resources

During the second quarter of fiscal 2022, we entered into a second amendment to
the Amended Credit Facility (as amended, the "Second Amended Credit Facility").
As a result, the Second Amended Credit Facility, now scheduled to mature on
September 30, 2026, consists of a $130.0 million senior secured term loan (the
"Second Amended Term Loan"), a CAD 106.4 million ($84.2 million) term loan and
an $850.0 million senior secured revolving credit facility (the "Second Amended
Revolver"). This amendment resulted in a decrease of the Amended Term Loan by
$150.0 million and an increase of the Amended Revolver by $150.0 million.

We believe that our financial position is strong, and we have substantial
liquidity to cover short-term liquidity requirements and anticipated growth in
the foreseeable future, with $397 million of available cash and cash equivalents
and available and undrawn committed credit lines of approximately $571 million
at January 2, 2022, availability subject to credit agreement financial
covenants.

A substantial majority of the Company's cash and investments are held by foreign
subsidiaries and are considered to be indefinitely reinvested and expected to be
utilized to fund local operating activities, capital expenditure requirements
and acquisitions. The Company believes that it has sufficient sources of
domestic and foreign liquidity.

During the current quarter, the Company repurchased 1,093,561 shares of common
stock for approximately $83.0 million. Between January 3, 2022 through February
9, 2022, the Company repurchased 446,969 shares for approximately $33.1 million.

We believe that our strong capital structure and liquidity affords us access to
capital for future acquisition and stock repurchase opportunities and continued
dividend payments.

Results of Operations

Net Sales

Net sales increased $92.9 million or 12.4% in the third quarter of fiscal 2022
as compared to the third quarter of fiscal 2021. This increase was the result of
a 10% increase in organic volume resulting primarily from strong demand arising
from robust markets and the easing of the pandemic and a 3% increase in pricing,
partially offset by a 1% decrease in foreign currency translation impact.

Net sales increased $285.9 million or 13.2% in the nine months of fiscal 2022 compared to the nine months of fiscal 2021. This increase is due to an 11% increase in organic volume resulting primarily from strong demand, and a increase of 1% each in the impact of currency translation and pricing.


Segment sales
                                                   Quarter ended                              Quarter ended
                                                  January 2, 2022                            January 3, 2021                                 Increase (Decrease)
                                                              Percentage                                 Percentage
                                            In                 of Total                In                 of Total                          In
                                         Millions             Net Sales             Millions             Net Sales                       Millions                        %
Energy Systems                          $  385.2                     45.7  %       $  337.2                     44.9  %       $            48.0                          14.2  %
Motive Power                               339.5                     40.2             304.4                     40.5                       35.1                          11.5
Specialty                                  119.3                     14.1             109.5                     14.6                        9.8                           9.0
Total net sales                         $  844.0                    100.0  %       $  751.1                    100.0  %       $            92.9                          12.4  %


                                                 Nine months ended                            Nine months ended
                                                  January 2, 2022                              January 3, 2021                             Increase (Decrease)
                                                               Percentage                                   Percentage
                                            In                  of Total                 In                  of Total                     In
                                         Millions              Net Sales              Millions              Net Sales                  Millions                   %
Energy Systems                         $  1,126.2                     46.0  %       $  1,031.4                     47.7  %       $             94.8                9.2  %
Motive Power                                996.3                     40.6               831.0                     38.4                       165.3               19.9
Specialty                                   327.8                     13.4               302.0                     13.9                        25.8                8.5
Total net sales                        $  2,450.3                    100.0  %       $  2,164.4                    100.0  %       $            285.9               13.2  %


                                       32

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Contents



Net sales of our Energy Systems segment in the third quarter of fiscal 2022
increased $48.0 million or 14.2% compared to the third quarter of fiscal 2021.
This increase was due to a 14% increase in organic volume and a 1% increase in
pricing / mix, partially offset by a 1% decrease in foreign currency translation
impact. Net sales of our Energy Systems segment in the nine months of fiscal
2022 increased $94.8 million or 9.2% compared to the nine months of fiscal 2021.
This increase was due to a 9% increase in organic volume and a 1% increase in
foreign currency translation impact, partially offset by a 1% decrease in
pricing / mix. Continued strong demand in telecommunications and broadband was
offset by supply chain driven constraints for our power systems products.

Net sales of our Motive Power segment in the third quarter of fiscal 2022
increased by $35.1 million or 11.5% compared to the third quarter of fiscal
2021. This increase was primarily due to a 9% increase in organic volume and a
5% increase in pricing, partially offset by a 2% decrease in foreign currency
translation impact. Net sales of our Motive Power segment in the nine months of
fiscal 2022 increased by $165.3 million or 19.9% compared to the nine months of
fiscal 2021. This increase was primarily due to a 17% increase in organic
volume, a 2% increase in pricing and a 1% increase in foreign currency
translation impact. The prior year's COVID-19 restrictions and related economic
slowdown impacted this segment more than our other lines of business in the
prior year.

Net sales of our Specialty segment in the third quarter of fiscal 2022 increased
by $9.8 million or 9.0% compared to the third quarter of fiscal 2021. The
increase was primarily due to a 6% increase in pricing and a 3% increase in
organic volume. Net sales of our Specialty segment in the nine months of fiscal
2022 increased by $25.8 million or 8.5% compared to the nine months of fiscal
2021. The increase was primarily due to a 4% increase each in organic volume and
pricing and a 1% increase in foreign currency translation impact. Continued
strong demand from transportation was joined with a resurgence in aerospace and
defense sales.

Gross Profit
                                               Quarter ended                              Quarter ended
                                              January 2, 2022                            January 3, 2021                                 Increase (Decrease)
                                                          Percentage                                 Percentage
                                        In                 of Total                In                 of Total                          In
                                     Millions             Net Sales             Millions             Net Sales                       Millions                        %
Gross Profit                        $  184.3                     21.8  %       $  189.3                     25.2  %       $            (5.0)                         (2.6) %


                                               Nine months ended                           Nine months ended
                                                January 2, 2022                             January 3, 2021                                 Increase (Decrease)
                                                            Percentage                                  Percentage
                                          In                 of Total                 In                 of Total                          In
                                       Millions             Net Sales              Millions             Net Sales                       Millions                        %
Gross Profit                         $   555.4                     22.7  %       $   541.8                     25.0  %       $            13.6                          2.5  %




Gross profit decreased $5.0 million or 2.6% in the third quarter and increased
$13.6 million or 2.5% in the nine months of fiscal 2022 compared to the
comparable periods of fiscal 2021. Gross profit, as a percentage of net sales,
decreased 340 basis points and 230 basis points in the third quarter and nine
months of fiscal 2022, respectively, compared to the third quarter and nine
months of fiscal 2021. The decrease in the gross profit margin in the current
quarter and nine month period reflects the negative impact of higher freight
costs and component shortages from our supply chain along with other
inflationary pressures in raw materials, labor, supplies and utilities, in
excess of pricing recoveries and organic volume growth. Energy Systems is most
acutely impacted by these pressures. Motive Power and Specialty have also been
impacted by higher costs but reacted more quickly in recovering price.

                                       33

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Table of Contents

Operating Items
                                                      Quarter ended                              Quarter ended
                                                     January 2, 2022                            January 3, 2021                            Increase (Decrease)
                                                                 Percentage                                 Percentage
                                               In                 of Total                In                 of Total                     In
                                            Millions             Net Sales             Millions             Net Sales                  Millions                   %
Operating expenses                         $  130.7                     15.4  %       $  118.0                     15.7  %       $             12.7               10.7  %
Restructuring and other exit charges       $    2.5                      0.3  %       $   15.2                      2.0  %       $            (12.7)             (83.7) %


                                                  Nine months ended                           Nine months ended
                                                   January 2, 2022                             January 3, 2021                                 Increase (Decrease)
                                                               Percentage                                  Percentage
                                             In                 of Total                 In                 of Total                          In
                                          Millions             Net Sales              Millions             Net Sales                       Millions                        %
Operating expenses                      $   380.5                     15.5  %       $   357.4                     16.5  %       $            23.1                           6.5  %
Restructuring and other exit
charges                                 $    13.2                      0.6  %       $    19.7                      0.9  %       $            (6.5)                        (33.2) %



Operating expenses, as a percentage of sales, decreased 30 basis points and 100
basis points in the third quarter and nine months of fiscal 2022, compared to
the comparable periods of fiscal 2021. We have benefited from limited travel and
reduced selling expenses. While some of these benefits are COVID-19 related, we
believe our operating expense levels have been reduced, the benefit of which
continues as our revenue improves.

Selling expenses, our main component of operating expenses, increased $3.1
million or 6.0% in the third quarter of fiscal 2022 compared to the third
quarter of fiscal 2021 but decreased 40 basis points. In the nine months of
fiscal 2022, selling expenses increased by $9.3 million or 6.1% compared to the
nine months of fiscal 2021 but decreased 40 basis points. The decrease in
selling expenses as a percentage of sales in both the current quarter and nine
months, demonstrates our ability to flex our selling expenses.

Restructuring costs and other exit costs

Restructuring programs


Included in our third quarter and nine months of fiscal 2022 operating results
of Energy Systems were restructuring charges of $0.7 million and $1.8 million,
respectively. Included in our third quarter and nine months of fiscal 2022
operating results of Motive Power were restructuring charges of $0.3 million and
$1.5 million, respectively.

Included in our third quarter and nine months of fiscal 2021 operating results
of Energy Systems were restructuring charges of $0.8 million and $2.6 million,
respectively, primarily relating to Alpha. Included in our third quarter and
nine months of fiscal 2021 operating results of Motive Power were restructuring
charges of $2.7 million and $3.7 million, respectively.

Exit fees

Hagen, Germany


During the third quarter of fiscal 2021, we committed to a plan to close
substantially all of our facility in Hagen, Germany, which produces flooded
motive power batteries for forklifts. Management determined that future demand
for the motive power batteries produced at this facility was not sufficient,
given the conversion from flooded to maintenance free batteries by customers,
the existing number of competitors in the market, as well as the near term
decline in demand and increased uncertainty from the pandemic. We plan to retain
the facility with limited sales, service and administrative functions along with
related personnel for the foreseeable future.

We currently estimate that the total charges for these actions will amount to
approximately $60.0 million, the majority of which has been recorded as of
January 2, 2022. Cash charges for employee severance related payments, cleanup
related to the facility, contractual releases and legal expenses are estimated
to be $40.0 million and non-cash charges from inventory and equipment write-offs
are estimated to be $20.0 million. These actions resulted in the reduction of
approximately 200 employees. During fiscal 2021, the Company recorded cash
charges relating to severance of $23.3 million and non-cash charges of $7.9
million primarily relating to fixed asset write-offs.
                                       34

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Contents


During the nine months of fiscal 2022, the Company recorded cash charges,
primarily relating to severance of $7.9 million and non-cash charges of $3.8
million primarily relating to fixed asset write-offs. The Company also recorded
a non-cash write off relating to inventories of $1.0 million, which was reported
in cost of goods sold.

Targovishte, Bulgaria

During fiscal 2019, the Company committed to a plan to close its facility in
Targovishte, Bulgaria, which produced diesel-electric submarine batteries.
Management determined that the future demand for batteries of diesel-electric
submarines was not sufficient given the number of competitors in the market.
During the nine months of fiscal 2022, the Company sold this facility for $1.5
million. A net gain of $1.2 million was recorded as a credit to exit charges in
the Consolidated Condensed Statement of Income.

Vijayawada, India

In fiscal 2021, we also embarked on a plan to close our Vijayawada plant, India to align with the strategic vision of our new business structure and footprint. We recorded exit costs of $1.5 million
primarily concerns asset write-offs.

Program for the 2022 financial year

Zamudio, Spain


During the nine months of fiscal 2022, the Company closed a minor assembling
plant in Zamudio, Spain and sold the same for $1.8 million. A net gain of $0.7
million was recorded as a credit to exit charges in the Consolidated Condensed
Statement of Income.

Richmond, Kentucky Plant Fire

During fiscal 2021, the Company settled its claims with its insurance company in relation to the fire that broke out in the battery formation area of ​​the Company’s plant. Richmond, Kentucky motive power generation facility in fiscal year 2020.


During the nine months of fiscal 2021, the Company recorded a charge of $16.6
million for cleanup and received $18.4 million from the insurance carrier. In
addition to the property damage claim, the Company also received $7.5 million in
business interruption claims that was credited to cost of goods sold.


Operating Earnings
                                                            Quarter ended                                       Quarter ended
                                                           January 2, 2022                                     January 3, 2021                                Increase (Decrease)
                                                                         Percentage                                          Percentage
                                                   In                     of Total                     In                     of Total                       In
                                                Millions                Net Sales (1)               Millions                Net Sales (1)                 Millions                   %
Energy Systems                              $          3.5                         0.9  %       $         18.5                         5.5  %       $            (15.0)             (80.8) %
Motive Power                                          39.0                        11.5                    40.2                        13.2                        (1.2)              (3.1)
Specialty                                             11.1                         9.3                    12.6                        11.5                        (1.5)             (12.1)
Subtotal                                              53.6                         6.4                    71.3                         9.5                       (17.7)             (24.7)

Restructuring and other exit charges
- Energy Systems                                      (0.7)                       (0.2)                   (0.8)                       (0.3)                        0.1              (21.4)
Restructuring and other exit charges
- Motive Power                                        (1.7)                       (0.5)                  (14.4)                       (4.7)                       12.7              (88.3)
Restructuring and other exit charges
- Specialty                                           (0.1)                       (0.1)                      -                           -                        (0.1)                   NM

Total operating earnings                    $         51.1                         6.1  %       $         56.1                         7.5  %       $             (5.0)              (8.8) %


NM = not meaningful
(1) The percentages shown for the segments are computed as a percentage of the
applicable segment's net sales.

                                       35

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Table of Contents
                                                      Nine months ended                              Nine months ended
                                                       January 2, 2022                                January 3, 2021                              Increase (Decrease)
                                                                   Percentage                                     Percentage
                                                In                  of Total                   In                  of Total                       In
                                             Millions             Net Sales (1)             Millions             Net Sales (1)                 Millions                   %
Energy Systems                             $    11.8                         1.0  %       $    63.3                         6.2  %       $            (51.5)             (81.5) %
Motive Power                                   130.6                        13.1               91.7                        11.0                        38.9               42.5
Specialty                                       33.5                        10.2               29.4                         9.7                         4.1               14.4
Subtotal                                       175.9                         7.2              184.4                         8.5                        (8.5)              (4.6)
Inventory adjustment relating to
exit activities - Motive Power                  (1.0)                       (0.1)                 -                           -                        (1.0)                   NM
Restructuring and other exit charges
- Energy Systems                                (1.4)                       (0.1)              (2.6)                       (0.3)                        1.2              (50.9)
Restructuring and other exit charges
- Motive Power                                 (12.9)                       (1.3)             (16.9)                       (2.0)                        4.0              (23.2)
Restructuring and other exit charges
- Specialty                                      1.1                         0.3               (0.2)                       (0.1)                        1.3                    NM

Total operating earnings                   $   161.7                         6.6  %       $   164.7                         7.6  %       $             (3.0)              (1.8) %


NM = not meaningful
(1) The percentages shown for the segments are computed as a percentage of the
applicable segment's net sales.

Operating earnings decreased $5.0 million or 8.8% and decreased $3.0 million or
1.8% in the third quarter and nine months of fiscal 2022, respectively, compared
to the third quarter and nine months of fiscal 2021. Operating earnings, as a
percentage of net sales, decreased 140 basis points and 100 basis points in the
third quarter and nine months of fiscal 2022, respectively, compared to the
third quarter and nine months of fiscal 2021.

The Energy Systems operating earnings, as a percentage of sales, decreased 460
basis points and 520 basis points in the third quarter and nine months of fiscal
2022, respectively, compared to the third quarter and nine months of fiscal
2021. Higher lead and freight costs along with lack of component availability
negatively impacted the performance and sales mix of this line of business.

The Motive Power operating earnings, as a percentage of sales, decreased 170
basis points but increased 210 basis points in the third quarter and nine months
of fiscal 2022, respectively, compared to the third quarter and nine months of
fiscal 2021. The strong recovery in organic growth along with price increases
improved the performance of this line of business. However, the prior year
period benefited from $6.7 million of insurance recoveries.

The Specialty operating earnings, as a percentage of sales, decreased 220 basis
points but increased 50 basis points in the third quarter and nine months of
fiscal 2022, respectively, compared to the third quarter and nine months of
fiscal 2021. Revenue growth and cost controls mitigated supply chain disruptions
in the transportation portion of the business, while defense and aerospace
margins declined mildly due to specific project performance.


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Interest Expense
                                                     Quarter ended                                   Quarter ended
                                                    January 2, 2022                                 January 3, 2021                                   Increase (Decrease)
                                                                  Percentage                                      Percentage
                                              In                   of Total                   In                   of Total                           In
                                           Millions               Net Sales                Millions               Net Sales                        Millions                        %
Interest expense                       $         9.7                      1.2  %       $         9.4                      1.3  %       $             0.3                           4.2  %


                                                     Nine months ended                            Nine months ended
                                                      January 2, 2022                              January 3, 2021                                  Increase (Decrease)
                                                                   Percentage                                   Percentage
                                                In                  of Total                 In                  of Total                          In
                                             Millions              Net Sales              Millions              Net Sales                       Millions                        %
Interest expense                           $     28.4                      1.2  %       $     29.4                      1.3  %       $            (1.0)                         (3.1) %



Interest expense of $9.7 million in the third quarter of fiscal 2022 (net of
interest income of $0.6 million) was $0.3 million higher than the interest
expense of $9.4 million in the third quarter of fiscal 2021 (net of interest
income of $0.6 million).

Interest expense of $28.4 million during the nine months of fiscal 2022 (net of interest income from $1.7 million) has been $1.0 million less than the interest expense of $29.4 million during the nine months of fiscal 2021 (net of interest income from $1.6 million).


The increase in interest expense in the third quarter of fiscal 2022 is
primarily due to higher borrowing, partially offset by lower interest rates and
the decrease in interest expense in the nine months of fiscal 2022 is primarily
due to lower interest rates and borrowing. Our average debt outstanding was
$1,184.0 million and $1,105.8 million in the third quarter and nine months of
fiscal 2022, respectively, compared to $1,086.5 million and $1,118.0 million in
the third quarter and nine months of fiscal 2021.

In connection with the Second Amended Credit Facility, we capitalized $3.0
million in debt issuance costs and wrote off
$0.1 million of unamortized debt issuance costs. Included in interest expense
are non-cash charges for deferred financing fees of $0.5 million and $1.6
million in the third quarter and nine months of fiscal 2022, respectively,
compared to $0.5 million and $1.5 million in the third quarter and nine months
of fiscal 2021.

Other (Income) Expense, Net
                                                    Quarter ended                                    Quarter ended
                                                   January 2, 2022                                  January 3, 2021                               Increase (Decrease)
                                                                  Percentage                                      Percentage
                                             In                    of Total                   In                   of Total                      In
                                          Millions                Net Sales                Millions               Net Sales                   Millions                    %
Other (income) expense, net           $         (1.4)                    (0.2) %       $         2.9                      0.4  %       $               (4.3)                  NM


NM = not meaningful

                                             Nine months ended                            Nine months ended
                                              January 2, 2022                              January 3, 2021                             Increase (Decrease)
                                                           Percentage                                  Percentage
                                        In                  of Total                 In                 of Total                      In
                                     Millions              Net Sales              Millions             Net Sales                   Millions                    %
Other (income) expense, net        $     (1.7)                    (0.1) %       $     8.4                      0.4  %       $              (10.1)                  NM


NM = not meaningful

Other (income) expense, net in the third quarter of fiscal 2022 was income of
$1.4 million compared to expense of $2.9 million in the third quarter of fiscal
2021. Other (income) expense, net in the nine months of fiscal 2022 was income
of $1.7 million compared to expense of $8.4 million in the nine months of fiscal
2021. Foreign currency impact resulted in a gain of $2.2 million and a gain of
$3.1 million in the third quarter and nine months of fiscal 2022, respectively,
compared to a foreign currency loss of $2.4 million and $7.2 million in the
third quarter and nine months of fiscal 2021, respectively.


                                       37
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Earnings Before Income Taxes
                                                     Quarter ended                                    Quarter ended
                                                    January 2, 2022                                  January 3, 2021                                    Increase (Decrease)
                                                                   Percentage                                       Percentage
                                              In                    of Total                   In                    of Total                          In
                                           Millions                Net Sales                Millions                Net Sales                       Millions                        %
Earnings before income taxes           $         42.8                      5.1  %       $         43.8                      5.8  %       $            (1.0)                         (2.3) %


                                             Nine months ended                           Nine months ended
                                              January 2, 2022                             January 3, 2021                                 Increase (Decrease)
                                                          Percentage                                  Percentage
                                        In                 of Total                 In                 of Total                           In
                                     Millions             Net Sales        
     Millions             Net Sales                        Millions                        %
Earnings before income taxes       $   135.0                      5.5  %       $   126.9                      5.9  %       $             8.1                           6.4  %




As a result of the above, earnings before income taxes in the third quarter of
fiscal 2022 decreased $1.0 million, or 2.3%, compared to the third quarter of
fiscal 2021 and increased $8.1 million, or 6.4% in the nine months of fiscal
2022 compared to the nine months of fiscal 2021.
Income Tax Expense
                                                       Quarter ended                                   Quarter ended
                                                      January 2, 2022                                 January 3, 2021                                    Increase (Decrease)
                                                                    Percentage                                      Percentage
                                                In                   of Total                   In                   of Total                           In
                                             Millions               Net Sales                Millions               Net Sales                        Millions                        %
Income tax expense                       $         6.5                      0.8  %       $         5.2                      0.7  %       $             1.3                           25.5  %
Effective tax rate                                         15.3%                                           11.9%                                                3.4%


                                                     Nine months ended                            Nine Months Ended
                                                      January 2, 2022                              January 3, 2021                                   Increase (Decrease)
                                                                   Percentage                                   Percentage
                                                In                  of Total                 In                  of Total                           In
                                             Millions              Net Sales              Millions              Net Sales                        Millions                        %
Income tax expense                         $     19.2                      0.8  %       $     17.4                      0.8  %       $             1.8
                          10.6  %
Effective tax rate                                         14.2%                                        13.7%                                               0.5%



The Company's income tax provision consists of federal, state and foreign income
taxes. The tax provision for the third quarter of fiscal 2022 and 2021 was based
on the estimated effective tax rates applicable for the full years ending
March 31, 2022 and March 31, 2021, respectively, after giving effect to items
specifically related to the interim periods. Our effective income tax rate with
respect to any period may be volatile based on the mix of income in the tax
jurisdictions, in which we operate, change in tax laws and the amount of our
consolidated earnings before taxes.

On May 19, 2019, a public referendum held in Switzerland approved the Federal
Act on Tax Reform and AHV (Old-Age and Survivors Insurance) Financing (TRAF) as
adopted by the Swiss Federal Parliament on September 28, 2018. The Swiss tax
reform measures were effective January 1, 2020. The Company recorded an income
tax benefit of $1.9 million during the nine months of fiscal 2021.

The consolidated effective income tax rates for the third quarter of fiscal 2022
and 2021 were 15.3% and 11.9%, respectively and were 14.2% and 13.7% for the
nine months of fiscal 2022 and 2021, respectively. The rate increase in the
third quarter compared to the prior quarter is primarily due to Hagen, Germany
exit charges and changes in the mix of earnings among tax jurisdictions. The
rate increase in the nine months of fiscal 2022 compared to the prior year
period is primarily due to changes in mix of earnings among tax jurisdictions.

Foreign income as a percentage of worldwide income is estimated to be 79% for
fiscal 2022 compared to 67% for fiscal 2021. The foreign effective income tax
rate for the nine months of fiscal 2022 and 2021 were 10.2% and 5.0%,
respectively. Income from the Company's Swiss subsidiary comprised a substantial
portion of our overall foreign mix of income for both fiscal 2022 and fiscal
2021 and were taxed at an effective income tax rate of approximately 8% in both
periods.
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Significant Accounting Policies and Estimates


There have been no material changes to our critical accounting policies from
those discussed under the caption "Critical Accounting Policies and Estimates"
in Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations in our 2021 Annual Report.

Cash and capital resources

Cash flow and financing activities


Operating activities used cash of $78.0 million in the nine months of fiscal
2022 compared to $272.1 million of cash generated in the nine months of fiscal
2021, with the decrease in operating cash resulting mainly due to changes in our
primary working capital, details of which can be found below. In the nine months
of fiscal 2022, primary working capital, net of currency translation changes,
resulted in an outflow of funds of $213.1 million. In the nine months of fiscal
2022, net earnings were $115.8 million, depreciation and amortization $72.3
million, stock-based compensation $15.8 million, non-cash charges relating to
exit charges $3.9 million, primarily relating to the Hagen, Germany plant
closure, allowance for doubtful debts of $1.9 million and non-cash interest of
$1.6 million. Prepaid and other current assets were a use of funds of $18.3
million, primarily from an increase of $14.4 million in other prepaid expenses,
such as taxes, insurance and other advances, as well as an increase of $3.9
million of contract assets. Accrued expenses were a use of funds of $58.2
million primarily from payroll related payments of $23.1 million, income tax
payments of $20.4 million, Hagen severance payments of $19.6 million and
interest payments net of accrual of $7.0 million, partially offset by customer
advances of $11.7 million.
In the nine months of fiscal 2021, operating activities provided cash of $272.1
million and primary working capital, net of currency translation changes,
resulted in a source of funds of $58.2 million. In the nine months of fiscal
2021, net earnings were $109.5 million, depreciation and amortization $70.2
million, stock-based compensation $17.0 million, non-cash charges relating to
exit charges $7.3 million, primarily relating to the Hagen, Germany plant
closure, net gain from the disposal of assets of $4.0 million ($4.4 million from
the insurance settlement relating to the Richmond fire claim), deferred tax
benefit of $1.8 million and non-cash interest of $1.5 million. Prepaid and other
current assets provided a source of funds of $15.0 million, primarily from the
receipt of $23.4 million towards the insurance receivable relating to the
Richmond plant claim in fiscal 2020 and the receipt of a working capital
adjustment claim of $2.0 million, relating to an acquisition made several years
ago, partially offset by an increase of $10.4 million in other prepaid expenses.
Other assets decreased by $3.0 million. Accrued expenses provided a source of
funds of $9.8 million primarily from payroll related accruals of $14.5 million
and selling and other expenses of $7.4 million, partially offset by payments
relating to interest of $7.5 million and warranty of $4.5 million. Other
liabilities decreased by $14.2 million primarily relating to income taxes.

As explained in the discussion of our use of "non-GAAP financial measures," we
monitor the level and percentage of primary working capital to sales. Primary
working capital for this purpose is trade accounts receivable, plus inventories,
minus trade accounts payable. The resulting net amount is divided by the
trailing three month net sales (annualized) to derive a primary working capital
percentage. Primary working capital was $989.9 million (yielding a primary
working capital percentage of
29.3%) at January 2, 2022, $797.9 million (yielding a primary working capital
percentage of 24.5%) at March 31, 2021 and $793.9 million at January 3, 2021
(yielding a primary working capital percentage of 26.4%). The primary working
capital percentage of 29.3% at January 2, 2022 is 480 basis points higher than
that for March 31, 2021 and 290 basis points higher than that for January 3,
2021. The large increase in primary working capital dollars, compared to the
nine months of fiscal 2021 reflects the increase in all components of inventory
due to supply chain delays, new products and higher inventory costs from higher
raw material costs, manufacturing and freight costs and to address the high
backlog of customer orders. In addition, trade receivables increased due to
higher revenue during the current nine months of fiscal 2022, as compared to a
COVID-19 restricted revenue in the prior year. The increase in primary working
capital dollars compared to March 31, 2021 is primarily due to increased
inventory levels for similar reasons as stated above, as well as trade
receivable increase due to higher seasonal days sales outstanding at the current
fiscal quarter end.

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Primary working capital and primary working capital percentages at January 2,
2022, March 31, 2021 and January 3, 2021 are computed as follows:
                                               ($ in Millions)
                                                                                    Quarter         Primary
                         Trade                          Accounts                    Revenue         Working
Balance At            Receivables       Inventory       Payable       
Total       Annualized      Capital %
January 2, 2022      $      636.0      $    671.4      $ (317.5)     $ 989.9      $  3,376.0          29.3  %
March 31, 2021              603.6           518.2        (323.9)       797.9         3,254.2          24.5
January 3, 2021             547.5           515.4        (269.0)       793.9         3,004.3          26.4




Investing activities used cash of $47.7 million in the nine months of fiscal
2022 which primarily consisted of capital expenditures of $52.4 million relating
to plant improvements. We also received $3.3 million from the sale of two of our
facilities in Europe.

Investing activities used cash of $48.8 million in the nine months of fiscal
2021 which primarily consisted of capital expenditures of $53.7 million relating
to plant improvements. We also received $4.8 million from the insurance
settlement relating to the Richmond plant fire claim for the replacement of
property, plant and equipment.

During the second quarter of fiscal 2022, we entered into the Second Amended
Credit Facility. As a result, financing activities provided cash of $76.4
million in the nine months of fiscal 2022. During the nine months of fiscal
2022, we borrowed $424.8 million under the Second Amended Revolver and repaid
$39.8 million of the Second Amended Revolver. Repayment on the Second Amended
Term Loan was $161.4 million and net repayments on short-term debt were $0.3
million. Treasury stock open market purchases were $114.5 million, payment of
cash dividends to our stockholders were $22.2 million and payment of taxes
related to net share settlement of equity awards were $9.1 million. Debt
issuance costs relating to the refinancing of the Credit Facility was $3.0
million. Proceeds from stock options were $1.3 million.

Financing activities used cash of $92.6 million in the nine months of fiscal
2021. During the nine months of fiscal 2021, we borrowed $90.0 million under the
Amended 2017 Revolver and repaid $123.0 million of the Amended 2017 Revolver.
Repayment on the Amended 2017 Term Loan was $28.2 million and net payments on
short-term debt were $9.4 million. Proceeds from stock options during the nine
months of fiscal 2021 were $4.8 million. Payment of cash dividends to our
stockholders were $22.3 million, payment of taxes related to net share
settlement of equity awards were $5.0 million.
Currency translation had a negative impact of $5.4 million on our cash balance
in the nine months of fiscal 2022 compared to the positive impact of $30.9
million in the nine months of fiscal 2021. In the nine months of fiscal 2022,
principal currencies in which we do business such as the Euro, Polish zloty and
British pound generally weakened versus the U.S. dollar while the Swiss franc
was stronger.

As a result of the above, total cash and cash equivalents decreased by $54.7 million at $397.1 millionin the nine months of fiscal 2022 compared to an increase of $161.7 million at $488.7 millionduring the nine months of fiscal year 2021.

Compliance with covenants


On July 15, 2021, we entered into a second amendment to our Amended Credit
Facility that resulted in the extension of the maturity date for the Second
Amended Credit Facility to September 30, 2026, resetting of the principal
amortization with respect to the Amended Term Loan, refinancing and reducing the
existing Amended Term Loan, increasing the revolving line of credit limit, and
certain other modifications.

All obligations under our Second Amended Credit Facility are secured by, among
other things, substantially all of our U.S. assets. The Second Amended Credit
Facility contains various covenants which, absent prepayment in full of the
indebtedness and other obligations, or the receipt of waivers, limit our ability
to conduct certain specified business transactions, buy or sell assets out of
the ordinary course of business, engage in sale and leaseback transactions, pay
dividends and take certain other actions. There are no prepayment penalties on
loans under this credit facility.

We are in compliance with all covenants and conditions under our Second Amended
Credit Facility and Senior Notes. We believe that we will continue to comply
with these covenants and conditions, and that we have the financial resources
and the capital available to fund the foreseeable organic growth in our business
and to remain active in pursuing further acquisition opportunities. See Note 10
to the Consolidated Financial Statements included in our 2021 Annual Report and
Note 12 to the Consolidated Condensed Financial Statements included in this
Quarterly Report on Form 10-Q for a detailed description of our debt.
                                       40

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Contents

Contractual obligations and commercial commitments


A table of our obligations is contained in Part II, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Contractual Obligations of our 2021 Annual Report. On July 15, 2021, the Company
entered into a second amendment to its existing Amended Credit Facility. The
Second Amended Credit Facility, scheduled to mature on September 30, 2026,
consists of a $130.0 million senior secured term loan, a CAD 106.4 million
($84.2 million) senior secured term loan and an $850.0 million senior secured
revolving credit facility. The second amendment resulted in a decrease of the
Amended Term Loan by $150.0 million and an increase of the Amended Revolver by
$150.0 million. As of January 2, 2022, the principal and interest payments due
under the Second Amended Credit Facility are as follows: $3.3 million in fiscal
2022, $11.9 million in fiscal 2023, $17.1 million in fiscal 2024, $19.6 million
in fiscal 2025, $24.7 million in fiscal 2026 and $438.9 in fiscal 2027.

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