Uber rides take COVID-19 hit but food-delivery business doubles

By Tina Bellon and Akanksha Rana

(Reuters) – Home-bound customers of Uber Technologies Inc. more than doubled their orders from the company’s food-delivery service in the second quarter but demand for ride-hailing trips only marginally recovered from pandemic rock-bottom.

The company said that despite those larger challenges it is sticking to its goal of being profitable on an adjusted basis before the end of 2021 thanks to stringent cost-cutting measures and a strong balance sheet. Uber recorded an adjusted loss in earnings before interest, taxes, depreciation and amortization of $837 million in the second quarter.

Shares were down 2.9% at $33.72 in after-hours trading.

Ride-hailing trips, in the past responsible for nearly two-thirds of Uber’s revenue, increased 5 percentage points from their low in April, but gross bookings remained down 75% from last year.

Uber’s chief executive officer, Dara Khosrowshahi, told analysts on a conference call on Thursday that rides recovery depended on the ability of different countries to contain the virus, with the recovery so far led by Asia, excluding India.

In Hong Kong and New Zealand, ride bookings at times exceeded pre-COVID-19 levels, while trip requests in Germany, France and Spain have improved to just a 35% decline from a year ago.

“Our global geographic footprint remains a huge advantage,” Khosrowshahi said.

The company on Thursday posted a $1.8 billion net loss from April through June, including charges related to laying off 23% of its global workforce during a period when infections of the novel coronavirus continued to spread in the United States, Uber’s largest market.

The number of active platform users across the 69 countries in which Uber operates nearly halved year-over-year, from 99 million to 55 million.

Uber’s second-quarter revenue fell 29% to $2.24 billion from the year prior, beating analysts’ average estimate of $2.18 billion, according to IBES data from Refinitiv.

Revenue at Uber Eats doubled to $1.2 billion, boosted by greater demand for delivery as Americans largely continue to stay home. Uber last month expanded its delivery reach by announcing the acquisition of Postmates Inc for $2.65 billion to expand the business of supplying everyday goods.

Uber’s ride-hailing segment remained battered by the coronavirus crisis, with revenue from the United States and Canada, its largest combined market, declining to $1.25 billion. Nevertheless, ride-hailing was the only segment generating an adjusted EBITDA profit, of $50 million.

Uber said fewer U.S. ride-hail drivers were returning to the platform compared with other countries. Uber faces several legal challenges over the status of its drivers in the United States, with California and Massachusetts suing the company over the alleged mis-classification of drivers as independent contractors.

Uber Eats, whose gross bookings more than doubled, narrowed losses, recording a $232 million adjusted EBITDA loss in the second quarter. Uber’s CFO, Nelson Chai, said the company expects third-quarter losses to be roughly the same.

He also told analysts that Uber’s food-delivery business would be profitable in the vast majority of countries in which it operates within a couple years.

Uber in recent months has closed Eats operations in eight smaller markets, including in Eastern Europe and the Middle East. It also cut losses from its Eats business in India, where it sold its food-ordering business to a local competitor in exchange for a stake in the company.

Uber Eats was also gaining traction in the suburbs, including the outer boroughs of New York City, where the food delivery service is now the market leader, the company said.

Uber executives said cost-cutting was helping to improve margins, along with better route planning and more restaurants relying on its delivery couriers.

(Reporting by Tina Bellon in New York and Akanksha Rana in Bangalore; Editing by Peter Henderson and Matthew Lewis)

U.S. seeks to cut off revenues for Venezuela’s Maduro, aid opposition

People look at damage at a metro station after a protest in Caracas, Venezuela January 24, 2019. REUTERS/Carlos Garcia Rawlins

By Steve Holland and Brian Ellsworth

WASHINGTON/CARACAS (Reuters) – The United States is seeking to ensure that Venezuelan oil revenue goes to opposition leader Juan Guaido, who swore himself in as interim president, and to cut off money from the increasingly isolated President Nicolas Maduro, a top U.S. official said on Thursday.

Although short on details, the announcement signals that Washington is willing to go beyond traditional diplomatic measures and will seek to drain cash from Maduro’s government which is already struggling under an unprecedented economic meltdown.

Such a move would significantly strengthen the hand of Guaido, an opposition leader and head of congress who swore himself in as interim head of state on Wednesday with the support of Washington and nations around the region.

“What we’re focusing on today is disconnecting the illegitimate Maduro regime from the sources of his revenues,” national security advisor John Bolton told reporters at the White House.

“We think consistent with our recognition of Juan Guaido as the constitutional interim president of Venezuela that those revenues should go to the legitimate government.”

Bolton added that the process was “very complicated” and that officials were still studying how this would function.

Venezuela’s information ministry did not immediately reply to a request for comment on the issue. Guaido did not respond to a message seeking comment.

People walk close to a destroyed car in a street, after a protest in Caracas, Venezuela January 24, 2019. REUTERS/Carlos Garcia Rawlins

People walk close to a destroyed car in a street, after a protest in Caracas, Venezuela January 24, 2019. REUTERS/Carlos Garcia Rawlins

BOLD CHALLENGE

Guaido declared himself interim president on Wednesday with the blessing of the Trump administration and conservative governments in Latin America. That prompted Maduro, Venezuela’s leader since 2013, to break relations with the United States.

Guaido’s swearing-in was the opposition’s boldest challenge yet to the long-ruling Socialist Party and has given Maduro’s adversaries an unprecedented diplomatic platform to press for change in a nation dogged by hyperinflation, rising malnutrition and political conflict.

But Guaido now leads what amounts to a shadow government disavowed by the armed forces and with no influence over day-to-day administration such as importing and distributing food and medicine to a crisis-stricken population.

The 35-year-old industrial engineer who has been catapulted almost overnight to national leader spoke on Thursday by telephone with supportive heads of state from around the world.

“I just received a phone call from (Spain’s Prime Minister) Pedro Sanchez and was able to describe the struggle we are leading together with all of Venezuela, to achieve a transition government and hold free elections,” Guaido wrote via Twitter.

His ascent was greeted with excitement by investors holding Venezuela and state oil company PDVSA bonds, which hit their highest level since 2017 despite being almost entirely in default amid the country’s ongoing economic crisis.

Concerns about potential disruption of Venezuelan crude supplies gave support to global oil prices.

Oil revenues are crucial to the already crumbling Venezuelan economy and routing that money away from Maduro as the United State seeks to do would be a serious blow.

Venezuela on average, exported about 500,000 barrels of crude a day to the United States in 2018, according to U.S. Energy Department data.

Shipments to the United States account for about 75 percent of the cash Venezuela gets for crude shipments, according to a Barclays research note published last week.

WHO IS LEGITIMATE PRESIDENT?

Guaido took the helm of the National Assembly on Jan. 5 with a call for the armed forces to recognize Maduro as a “usurper” after his May 2018 re-election, widely viewed as fraudulent.

Backing for him has come principally from the Western hemisphere. Venezuelan allies including Russia and Turkey – both important commercial partners – criticized Guaido’s rise as a sign of U.S. interference.

“The Russian president has expressed support to the legal Venezuela’s authorities amid a flareup in the internal political crisis, provoked from the outside,” the Kremlin said in statement.

The European Union, which has imposed sanctions on Maduro’s government, noted that Venezuelans had “massively called for democracy and the possibility to freely determine their own destiny,” but stopped short of recognizing Guaido.

Maduro, in a rambling speech, dismissed Guaido’s inauguration and said he himself remained the country’s legitimate leader.

He has relied extensively on the military to maintain power amid annual inflation of nearly 2 million percent and an exodus of Venezuelan refugees into neighboring countries.

Guaido has said Maduro’s Jan. 10 inauguration to a second six-year term amounted to a usurpation of power, as the domestic opposition and numerous foreign governments regard his 2018 re-election as illegitimate. He cruised to victory over a lesser-known opponent amid low turnout and claims of fraud.

The vote was boycotted by Venezuela’s main opposition parties. They pointed out that Maduro’s two most popular rivals were banned from running, that the elections authority heavily favored him, and that the Socialist Party’s aggressive campaigning often bordered on vote-buying.

Guaido and allies argue that the presidency is vacant as a result, and note that the constitution calls for the head of congress to assume the interim presidency in such a situation.

That still leaves Guaido struggling against a state unwilling to recognize him and security forces that could jail him, as they did his mentor Leopoldo Lopez – who is under house arrest for leading anti-Maduro protests in 2014.

“While it’s true that Guaido has been recognized internationally, the real power of the state is still in the hands of Nicolas Maduro,” said Ronal Rodriguez, a political science and Venezuela expert at Rosario University in Bogota.

Protesters clashed with security forces on Wednesday night around the country and in both affluent and working class areas of Caracas, with some demonstrations spilling over into looting of nearby liquor stores and fast-food restaurants.

A total of 14 people have been killed in violence linked to this week’s protests, according to local rights groups Provea and the Venezuelan Observatory of Social Conflict.

U.S. Secretary of State Mike Pompeo, in remarks to the Washington-based Organization of American States, on Thursday urged Latin American governments to recognize Guaido.

While the majority of OAS member countries – including Canada, Brazil, Peru, Chile, Colombia and Argentina – have recognized Guaido, others including Mexico, El Salvador and Nicaragua have said they will stay neutral or continue to support Maduro.

Pompeo also wants to brief the U.N. Security Council on Venezuela on Saturday, South Africa’s U.N. envoy Jerry Matjila told reporters.

(Additional reporting by Robert Rampton in Washington, Vivian Sequera in Caracas, Luc Cohen in Bogota, Robin Emmott in Brussels, Vladimir Soldatkin in Moscow, Karin Strohecker in London and Maria Kiselyova in Moscow; Editing by Bill Trott and Alistair Bell)

U.S. states stung by tumble in April of Income tax revenue

A car passes a sign advertising tax return services in Falls Church, Virginia

By Karen Pierog

CHICAGO (Reuters) – U.S. state personal income taxes tumbled in the key revenue month of April due to lower investment returns from weaker equities and energy prices in 2015, a Reuters analysis of state data found.

This April, personal income tax (PIT) revenue fell by an average of 9.88 percent compared to the same month last year in the 32 U.S. states and Puerto Rico for which Reuters has data.

Taxes on wages and investment income are a top revenue source for the 43 states that collect it. April is the most important revenue month because it contains the tax filing deadline and the tendency of taxpayers who owe money to wait until the last minute to pay.

Personal income taxes make up slightly more than a third of states’ total general fund revenue, and sales taxes comprise roughly another third.

Collections have been volatile in recent years, including 2013’s “April Surprise,” which delivered unexpectedly high revenues to states as taxpayers sold investments to dodge an increase in federal taxes.

Collections plunged in April 2014 then rebounded last year with the help of a robust stock market.

In 2015, the U.S. benchmark S&P 500 stock index lost 0.7 percent compared with a 11.4 percent gain in 2014.

“The kinds of income that are kind of driving this are particularly capital gains related to the stock market. If you had to find a No. 1 culprit, that’s it,” said Don Boyd, Director of Fiscal Studies at the Rockefeller Institute of Government in Albany, New York.

News of falling revenue comes as most states are nearing the end of fiscal 2016 and the beginning of fiscal 2017, leading some to turn to temporary measures to plug budget holes, Boyd said.

John Hicks, executive director of the National Association of State Budget Officers in Washington, said the 20 percent growth rate in the tax in April 2015 from a year earlier set “an extremely high bar.”

He said that PIT withholding has been more stable for states than capital gains-related tax revenue.

“The underlying personal income information – even while we’ve been bouncing for the last few years – has still been on a slow, but increasing trend,” Hicks added.

MOST STATES SEE COLLECTIONS DECREASE

Louisiana had the most dramatic drop at 81.5 percent. The plunge was due to a change in the way Louisiana issues refunds as well as a fall in withholding collections because the last day of April fell on a Saturday.

This resulted in some revenue payments being deposited in May, according to Kizzy Payton, press secretary for the Louisiana Department of Revenue.

Louisiana – like North Dakota, where PIT collections fell 34.7 percent – is also feeling the sting from the struggling energy sector. Oklahoma, another key energy producing state, experienced an 18 percent drop in revenue in April.

New Jersey’s PIT revenue was down 14.8 percent, largely due to a decline in taxpayers’ investment income and the state’s tax structure, which relies on wealthy residents.

Oregon’s receipts came in a third lower than last year, mainly because excess state revenue during the previous year led to a surplus income tax credit on 2015 returns, said Bob Estabrook, spokesperson for the Oregon Department of Revenue.

Lower income tax rates led to revenue drops in Illinois, down 28.8 percent, and in Ohio, down 41.3 percent. But in Kansas, which slashed rates in 2013, revenue was up 23 percent.

Seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – collect no income tax, and two – New Hampshire and Tennessee – only levy taxes on dividend and interest income, but not wages.

(Reporting by Karen Pierog; additional reporting by Hilary Russ, Robin Respaut, Rory Carroll and Edward Krudy; editing by Daniel Bases and G Crosse)