18. Eu Farm Agreement Reached, But Budget Questions Linger

The European Union on March 11 broke a deadlock over agricultural reform policy, a key component of a wider EU budget “shake-up”. The agreement, which is less radical than originally conceived, will open the way for a wider reform of the bloc’s funding.

But some farm ministers wondered whether the finan­cial aspects of the deal would produce further investigation when EU leaders meet in Berlin on March 24-25 to approve the agreement and consider an overall package on EU finances designed to allow the eventual admission of new members from Ea­stern Europe. "For me the work remains unfinished. There is a risk that the accord will founder on the financial aspects," French Farm Minister Jean Glavany told reporters after the meeting. "It risks being rejected at the (Berlin) summit because it exceeds budgetary stabilisa­tion limits," he added.

But European Farm Commissioner Franz Fischler said the deal, which was reached after three weeks of hard negotiations and durable ministerial talks, was the biggest "revamp" of the Common Agricultural Policy in its near 40-year history.

Member states were in a very difficult position because of the financial constraints and a failure to reach an accord on a slow cut-back of direct grants to farmers.

This meant ministers had to settle for a diluted version of the Commission's propos­als. The Berlin summit had also increased the pressure for an agreement on agricul­ture, which absorbs almost half of EU spending.

The accord, which was accomplished without the support of Portugal, will lead the EU's farm budget towards reduction, setting the subsidy bill at around 40 billion euros (USD 44 billion) a year. German Farm Minister Karl-Heinz Funke told a press con­ference the deal was around, two percent above the budget limits, but "we have nonethe­less hit the nail on the head."

The final compromise included a 20 percent cut in the EU's guaranteed grain price, reviewed over two years. Dairy support prices would be cut by 15 percent, yet the start date for the reform was postponed for three years. In the beef sec­tor, prices would be trimmed by 20 percent in three equal steps, instead of an original Commission plan for a 30 per­cent price reduction.

The Commission has argued that the farm and spending reforms are necessary in order for the EU to reach its planned expansion eastward, but also a position it can sup­port in new world trade talks due to start later this year. “The reform sends a clear sig­nal to our trading part­ners—which will be defended with vigour in the forthcom­ing round of WTO negotia­tions," Fischler said.

But some ministers be­lieve the compromise did not go far enough to satisfy the EU's trading partners, who are set to attack export subsi­dies in the talks.

"I suspect this will be chal­lenged in the next round (of talks). It's possible we'll have to return to these issues," Britain's Farm Minister Nick Brown said.

Vocabulary:

overall package – общий пакет мер

grants – выплаты (субсидии)

subsidy - субсидия

TRANSLATION NOTES:

… finan­cial aspects of the deal would produce further investigation.. – финансовые аспекты этого соглашения потребуют дальнейшего рассмотрения

В данном предложении слово investigation утратило свое основное значение и переводится в зависимости от контекста. (См. часть Ш, раздел 1, § 3)

it exceeds budgetary stabilisa­tion limits – превышает допустимый уровень расходов из бюджета ЕС

В данном предложении следует прибегнуть к приему смыслового логического развития, чтобы обеспечить адекватность перевода. (См. часть Ш, раздел 2, § 4, п.4.3)

European Farm Commissioner – Комиссар ЕС по вопросам сельского хозяйства

accord – согласие, единство, гармония, соглашение.

Слово имеет множество значений, перевод которых зависит от широкого или узкого контекста. Например: accord payment – сдельная или аккордная оплата

economic (trade) accord – экономическое (торговое) соглашение

to do smth of your own accord – сделать что-либо самостоятельно, добровольно

to reach an accord – прийти к соглашению (См. часть Ш, раздел 1, § 3)

CAP – the Common Agricultural Policy – Единая аграрная политика ЕС

VOCABULARY CHECK

1. Постоянные затраты – это затраты предприятия, не зависящие от объема производства. К ним относятся затраты на содержание зданий, на содержание административного аппарата и т.д.

2. Переменные издержки – это затраты, которые меняют свою величину в связи с изменением объема производства и продаж. Если объем уменьшается - переменные издержки снижаются и наоборот. К переменным издержкам относятся затраты на сырье и материалы, комплектующие, заработную плату, транспортировку и страхование продукции.

3. Накладные расходы – расходы, сопутствующие основному производству. Эти затраты не связаны напрямую с производством отдельного изделия или вида работы. К ним относятся, например, затраты на аренду помещений, электроэнергию, административные накладные расходы, накладные расходы по сбыту, накладные расходы на исследования и разработки.

4. Экономия за счет масштаба позволяет компании снижать себестоимость единицы продукции при увеличении объемов производства.

5. Если при увеличении объемов производства средние издержки производства растут, это явление называется отрицательным экономическим эффектом от масштаба производства.

SECTION 3 SALES. THE BOTTOM LINE ON MARGINS

LEAD-IN

The most important goal of a company is to make money and keep it, which depends on liquidity and efficiency. Because these characteristics determine a company's ability to pay investors a dividend, profitability is reflected in share price. As such, investors should know how to analyze various facets of profitability, including how efficiently a company uses its resources and how much income it generates from operations. Calculating a company's profit margin is a great way to gain insight into these and other aspects of how well a company generates and retains money.

The bottom line is the first thing many investors look at to gauge a company's profitability. It's awfully tempting to rely on net earnings alone to gauge profitability, but it doesn't always provide a clear picture of the company.

Profit-margin ratios, on the other hand, can give investors deeper insight into management efficiency. But instead of measuring how much managers earn from assets, equity or invested capital, these ratios measure how much money a company squeezes from its total revenue or total sales.

Sales figures show unit sales (the number of goods sold) and sales revenue (sales revenues), or sales turnover (the money resulting from these sales). Sales volume, confusingly, can mean either unit sales (the number of goods sold), or sales revenues.

Margins, quite simply, are earnings expressed as a ratio - a percentage of sales. A percentage allows investors to compare the profitability of different companies.

There are three key profit-margin ratios: gross profit margins, operating profit margins and net profit margins.

The gross profit margin - or gross margin for short -is often the difference between the selling price of goods and their production cost, without taking into account other costs such as marketing and general overheads.

Let's say a company has $1 million in sales and the cost of its labor and materials amounts to $600,000. Its gross margin rate would be 40%.

It's important to remember that gross profit margins can vary drastically from business to business and from industry to industry. For instance, the airline industry has a gross margin of about 5%, while the software industry has a gross margin of about 90%.

By comparing earnings before interest and taxes to sales, operating profit margins show how successful a company's management has been in generating income from the operation of the business. If earnings before interest and taxes amounted to $200,000 and sales equaled $1 million, the operating profit margin would be 20%.

High operating profits can mean the company has effective control of costs, or that sales are increasing faster than operating costs. Naturally, because the operating profit margin accounts for not only costs of materials and labor, but also administration and selling costs, it should be a much smaller figure than the gross margin.

Net profit margins are those generated from all phases of a business, including taxes. In other words, this ratio compares net income with sales. It comes as close as possible to summing-up in a single figure how effectively managers run the business.

If a company generates after-tax earnings of $100,000 on its $1 million of sales, then its net margin amounts to 10%.

When sales reach level where revenues match costs, a company or product breaks even. This is break even or the break-even point, a crucial figure when calculating the return on investment or ROI for a given business or product.

The contribution generated by each product in a product line or by each business in a group is the amount it represents in terms of overall profit.

VOCABULARY

liquidity	- ликвидность: легкость реализации, продажи, превращения материальных или иных ценностей в денежные средства для покрытия текущих финансовых обязательств
profitability	-рентабельность, прибыльность, доходность
income	- доход, поступления; прибыль; заработок
profit margin margin of profit profit margin on sales return on sales	- рентабельность (прибыльность, доходность) продаж; рентабельность реализованной продукции (выраженное в процентах отношение прибыли к выручке от реализации)
bottom line	- 1)итог, баланс доходов и расходов [прибылей и убытков] (итоговая строка в финансовой отчетности, показывающая чистые прибыли и убытки); 2) чистая прибыль (размер прибыли после налогообложения); 3) окончательный результат; 4) важный, решающий фактор [момент]
net earnings	- чистая прибыль
equity	- собственный [акционерный] капитал
sales figures sales data sales information	- данные о товарообороте, об объёме продаж; информация о сбыте, данные о сбыте, торговая статистика
unit sales	- количество проданных единиц продукции
sales sales revenue sales revenues sales turnover	- товарооборот, объем продаж [сбыта], объем сбыта, продажи (реализованные товары в денежном выражении; рассчитывается путем умножения количества проданных за определенный период товаров на цену товара)
sales volume volume of sales	- объём продаж: может выражать количество проданных единиц, либо объём товарооборота в денежном выражении
turnover	- выручка, товарооборот: стоимость товаров и услуг, реализованных как за наличный расчет, так и в кредит
annual sales turnover	- годовой товарооборот
gross profit margin	- рентабельность продаж по валовой прибыли, коэффициент валовой прибыли (выраженное в процентах отношение валовой прибыли к выручке от продаж)
gross margin	- валовая прибыль
earnings before interest and taxes	- прибыль до уплаты процентов и налогов (прибыль компании от основной деятельности до вычета налоговых выплат и процентов по кредитам и облигационным займам)
operating profit margin	- коэффициент рентабельности операционной прибыли, операционная рентабельность продаж (отношение операционной прибыли компании к объему продаж)
operating profit	- прибыль от обычной деятельности; прибыль от продаж; операционная прибыль
net profit margin net margin	- чистая рентабельность продаж, рентабельность продаж по чистой прибыли (выраженное в процентах отношение чистой прибыли к выручке от продаж)
break even	- становиться безубыточным, достигать уровня безубыточности
break-even point BEP	- точка безубыточности, самоокупаемости: уровень производства, при котором величина издержек равна выручке
return on investment ROI	- прибыль на инвестированный капитал; рентабельность инвестиций (капиталовложений)
contribution	- вклад, доля отдельного продукта в общем объёме прибыли компании

COMPREHENSION QUESTIONS:

1. What is the first thing investors look at to gauge a company’s profitability?

2. What do profit margin ratios measure?

3. What are the three key profit margin ratios?

4. How is gross margin calculated?

5. What does operating profit margin show?

6. What do we call a situation when revenues match costs?

VOCABULARY PRACTICE

Gross margin is a good indication of how profitable a company is at the most fundamental level. Companies with higher gross margins will have more money left over to spend on other business operations, such as research and development or marketing.

Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to the competitors in the industry. Profit margin is displayed as a percentage; a 20% profit margin, for example, which means that the company has a net income of $0.20 for each dollar of sales.

Despite higher unit sales, revenues from IBM’s PC business fell too, thanks to a fierce price war.

The company’s annual sales turnover is around $300 million.

He expects his division to break even in the coming year

With the British, Italian and Spanish aerospace companies keeping the costs down, and with 450 aircraft shared between the three partner air forces, the cost per aircraft could still come out at $21 million. Financial break-even point for the project is 400 aircraft.

All three divisions within the group increased their contribution to profits, including the main packaging business, still responsible for about 70 per cent of the whole.

TEXTS TO TRANSLATE: