News Archive


Big Food hungry for meal kits, despite Blue Apron IPO flop


The downsized initial public offering of Blue Apron Holdings Inc (APRN.N), the first U.S. meal-kit company to go public, may have disappointed venture capital investors, but food companies with stakes in the sector may still see returns in the form of insight into changing eating habits.

The meal-kit investments have come as out-of-favor brands, increased competition and pricing wars among grocers weigh on sales and profitability at the biggest food companies.

The packaged food companies hope that the new and growing meal delivery industry, with its detailed consumer preferences data and feedback, will help big brands reconnect with young shoppers who have moved to new distribution channels or abandoned staple labels for fresher, healthier or specialty items.

Campbell Soup Co (CPB.N), the 148-year-old Camden, New Jersey-based packaged food manufacturer best known for its canned soups, last month invested $10 million in El Segundo, California-based Chef’d LLC, a Blue Apron competitor that allows users to personalize meal-kits with branded pairings.

Even if Blue Apron and its competitors struggle to make their model profitable and attractive to public markets, Mark Alexander, who oversees Campbell’s digital and e-commerce initiatives, expects benefits from the relatively tiny investment for $16 billion Campbell.

“Meal kits may not turn into the biggest thing, and I think even if they don’t, we would have learned a lot about consumer shopping, food preferences, what consumers like about bundled services and what they don’t like,” Alexander said in an interview earlier this week.

Campbell has struggled with weakening demand for its core products, and warned in May that its full-year sales could decline.

Blue Apron, the biggest meal-kit delivery company, was forced this week to accept a valuation and public offering that were about a third smaller than it hoped, after investors expressed concerns about its lack of profitability, marketing costs and the impact of Amazon.com Inc’s (AMZN.O) $13.7 billion deal earlier this month to buy U.S. grocer Whole Foods Market Inc (WFM.O).

Blue Apron shares last traded around $9.45 on Friday, below their $10 IPO price, giving the company a market capitalization of around $1.8 billion, less than the $2.2 billion valuation of its latest private fundraising round two years ago.

While the vast majority of investments in meal-kit companies, totaling $1.4 billion in 2016, came from venture capital firms hoping to reap big profits as these startups expand, a tiny fraction came from big food companies.

Nestle SA (NESN.S) led a $77 million investment round in Freshly in June, while Unilever Plc’s venture capital arm (ULVR.L) led a $9.2 million investment in Sun Basket in May.

Blue Apron does not have any investment from a major food company.

While Amazon’s splashy bet on Whole Foods sent jitters across the food retail sector over its potential to revolutionize the e-commerce company’s reach, the investments in meal-kit delivery companies are a way for major companies to carry out smaller-scale experiments as consumers move to buying food online.

Just 23 percent of Americans buy groceries online, but that share is expected to more than triple in under 10 years, according to data provider The Nielsen Company.

“I think Nestle and other consumer packaged good companies said we want to be part of this new industry and understand more in-depthly how it affects our business,” said Freshly Chief Executive Michael Wystrach.

DATA LABS

Meal delivery companies rely on online registration for their services. Customers can provide feedback on the meals and information on their preferences, representing a valuable data trove that can be used to develop targeting advertisement.

“We can ask people questions to help them find items and collect data that is individual and granular. That data is different than the demographic data (at supermarkets) because it can tell us more, such as a person’s lifestyle, cooking habits or allergies,” said Chef’d CEO Kyle Ransford.

To be sure, meal-kit investments by big food companies are in their infancy, and the value they can offer as consumer data labs is unproven. Supermarkets have also been tracking shopping habits for years, with varying degrees of success.

And as Blue Apron’s IPO shows, investors are concerned about how sticky the meal-kit subscription models actually are, raising the risk of consumers moving on to the next food trend before providing enough data to be meaningful.

Still, the delivery services offer a venue to quickly test new products and ideas, in contrast to lengthy and often costly focus groups usually used by big consumer companies.

“We have real-time response to the consumers; what do they like, what do they buy rapidly, and what should we make rapidly. It is a real-time test market,” said Campbell Soup’s Alexander.

(Reporting by Lauren Hirsch in New York; Additional reporting by Liana B. Baker in San Francisco; Editing by Greg Roumeliotis and Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/83_UQdp2az4/us-blueapron-ipo-competitors-idUSKBN19L2SE

Big U.S. banks pack results into one day, overwhelming analysts


For the fourth straight quarter, several of the biggest U.S. banks are reporting earnings on the same day, setting up a situation that overwhelms analysts covering the industry.

In a report on Friday, Barclays analyst Jason Goldberg noted that 10 of the 19 largest banks by market value are reporting results on just two days next month, on July 14 and 21st.

“Seems excessive,” he wrote.

Big bank earnings days can be a hectic and frazzled experience for analysts, who must interpret thick documents packed with financial arcana, juggle multiple conference calls with management teams, investor relations departments and clients, and meet hard deadlines to distribute a final take on whether stocks remain a buy, hold or sell.

They arrive at work before 7 a.m. to prepare for the news and often stay late into the evening working on their reports and financial models.

On July 14, analysts expect to pore through more than 200 pages of press releases, slide decks and financial supplements released by JPMorgan Chase Co, Citigroup Inc, Wells Fargo Co, PNC Financial Services Group and First Republic Bank before the market opens.

JPMorgan is due to start a conference call with analysts at 8:30 a.m. EDT (1330 GMT). That will be followed by PNC Financial Services Group’s call beginning at 9:30 a.m, Wells Fargo at 10 a.m. and Citigroup at 11:30 a.m. Each call typically lasts an hour or more.

“It can be maddening and frenetic, particularly when all these firms are reporting in the morning before the bell,” said Tyler Ventura, a research analyst with investment management firm Diamond Hill. “We’re going back and forth and saying, ‘What did he say on this call versus that call?'”

Until recently, it was rare to see more than two of the six biggest lenders report results on the same day. According to a Reuters analysis, that only happened twice in the 22 quarters leading up to the middle of 2016.

It is not clear what changed.

Bank representatives said earnings are determined by a combination of meeting dates for boards of directors, holidays and travel schedules of CEOs, and that banks do not coordinate with each other on scheduling.

Some banks, including JPMorgan and Wells Fargo, recently began setting earnings dates years in advance, though most still schedule the event a few months ahead of time.

Marty Mosby, a former chief financial officer of First Horizon National Corp, said chief executives he worked for were eager to report results as early as possible, to appear financially strong, even if it meant competing for attention with other banks.

But Mosby, who is now a bank stock analyst at Vining Sparks, would advocate for reporting results later so that analysts and investors could give First Horizon their full attention, rather than having to make quick decisions to buy or sell based on the headline number alone.

“If you have five banks in a day you can’t get all that done,” said Mosby. “It’s just impossible. Three is about the most that we can really handle.”

(Reporting by Olivia Oran and David Henry in New York; additional reporting by Dan Freed; editing by Lauren Tara LaCapra and Tom Brown)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/yzkBD2MPFz4/us-usa-banks-results-idUSKBN19L2LY

Nike-Amazon deal may hurt sporting goods retailers: analysts


Nike’s pilot program to sell certain products on Amazon and Instagram is a precursor to it forging a deeper relationship with online retailers, and could hit sales at sporting goods retailers such as Foot Locker Inc (FL.N).

The deal — which is expected to help Nike Inc (NKE.N) weed out counterfeit products sold through unlicensed dealers online and give it more control over its distribution — lifted the company’s shares to a more than three-month high on Friday.

Nike’s move confirmed a June 21 report from Goldman Sachs that said the company would launch its products on the world’s largest online retailer.

Since then shares of sporting goods retailer have fallen — Foot Locker Inc (FL.N) by nearly 2 percent, Hibbett Sports Inc (HIBB.O) by 6.8 percent and Big 5 Sporting Goods Inc (BGFV.O) by 5.3 percent.

“They’re all scrambling right now,” Judge Graham, chief marketing officer of market research firm Ansira told Reuters.

“The decision of Nike considering to sell directly to the consumer and that too with Amazon, they’re all getting nervous.”

Sporting goods retailers, which rely on Nike for a substantial part of their wholesale revenue, would be hit further in case Nike’s partnership with Amazon expands beyond the current pilot program.

The sporting goods market is already in deep trouble, with several retailers such as Sports Authority already filing for bankruptcy, and Nike’s deal could push existing retailers to shut more stores, analysts said.

Nike, whose products are already sold on Amazon through third-party and unlicensed dealers, could build an additional $300 million to $500 million of revenue in the United States or 1 percent of its global sales through its expansion as a dealer on Amazon, Goldman Sachs said in a client note.

But Nike still depends on the wholesale channel for two-thirds of its revenue and will be cautious about making any drastic shift to selling directly on Amazon, said John Zolidis, analyst at Quo Vadis Capital Inc.

To strike a balance, Nike may unload more of its non-premium products on Amazon, while it will still launch exclusive deals with its brick-and-mortar partners, analysts said.

“The limited-edition market is store-driven,” said Maya Mikhailov, cofounder of mobile retail app developer GPShopper.

“What makes limited edition so exciting is finding out about the deals that stores have through their apps … going to the store, and the consumer being a part of that whole in-store experience.”

(Additional reporting by Siddharth Cavale in Bengaluru; Editing by Shounak Dasgupta)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/K7pXjJ35bZs/us-nike-amazon-com-idUSKBN19L2LO

Race to buy $10 billion-valued GLP narrows down to two groups: sources


SINGAPORE/HONG KONG The race to buy Global Logistic Properties (GLPL.SI) narrowed to between a Chinese consortium backed by the company’s management and a rival group led by Warburg Pincus, sources said, as bidders submitted offers for the $10 billion-valued firm.

An acquisition offers a chance for bidders to grab control of Asia’s biggest warehouse operator, which counts Amazon (AMZN.O) among its clients and is benefiting from rising demand for modern logistics facilities, driven by a boom in e-commerce business.

Friday marked the deadline for parties to submit binding offers for GLP. Reuters was not able to confirm if more than two bids were submitted.

At current valuations, a successful transaction will rank as the largest Asian buyout by private equity groups, which are increasingly targeting bigger takeovers after raising record funds, according to Thomson Reuters data.

Singapore-listed GLP was thrust into the spotlight late last year after sovereign wealth fund GIC, which owns a 37 percent stake, nudged it to start a strategic review of its business. JPMorgan was then hired by GLP as its financial adviser.

GLP’s shares have since soared nearly 50 percent to the highest in more than three years.

After months of negotiations with a special committee of GLP’s independent directors, the race has narrowed to between a group led by Chinese private equity firms Hopu Investment Management and Hillhouse Capital Group, with the support of GLP CEO Ming Mei, and a rival consortium headed by Warburg Pincus and its logistics partner e-Shang Redwood, the sources said.

GLP, GIC, Warburg Pincus, Hopu, Hillhouse and a spokeswoman for the consortium declined to comment when contacted by Reuters. The sources declined to be identified as they were not authorized to speak about the deal.

Hopu’s founder Fang Fenglei, one of China’s best known dealmakers, is a GLP board member, and Hopu, partly owns GLP’s China business. The Chinese consortium has also brought in co-investors such as property developer China Vanke (000002.SZ) and Ping An Insurance Group of China (2318.HK) for a bid for GLP, sources have said. “The management group and Warburg Pincus are the most serious bidders. Some other parties are keen on picking up specific assets and not the entire company,” said one source. Concerns over the transparency of the sale process and business ties of the management-backed consortium have forced some potential bidders to re-evaluate their interest and sparked complaints to GIC, sources said. Last week, GLP said it was in discussions with shortlisted bidders and had taken measures to alleviate potential conflicts of interest following a Financial Times report that almost all the potential bidders were dropping out due to concerns an insider bid will make other submissions pointless. Some of the potential bidders such as Blackstone Group (BX.N) and Asian buyout firm RRJ Capital were unlikely to submit individual bids, sources said.

Blackstone declined to comment. RRJ did not respond to an emailed request for comment. GLP owns and operates a $41 billion portfolio of industrial assets spread across China, Japan, Brazil and the United States. It gets two-thirds of its revenue from China, where it has a dominant market position. Around 20 lenders are working with three consortia in the hope of securing a role on the deal, IFR, a Thomson Reuters publication, reported last week.

(Reporting by Anshuman Daga in SINGAPORE and Kane Wu and Carol Zhong in HONG KONG; Additional reporting by Julie Zhu in HONG KONG; Editing by Muralikumar Anantharaman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/JrEowXj1ZcI/us-glp-m-a-idUSKBN19L0KG

U.S. cable companies’ wireless entry paves way for ‘quad’ play


NEW YORK More U.S. consumers can buy their landline phone, Internet, television and mobile service from one company due to cable providers entering the wireless industry. But investors should not expect so-called quad-play bundles to be as popular as in some other countries anytime soon.

In a market where wireless service is typically purchased separately from the triple-play bundle offered by pay-TV companies, there are obstacles to broad adoption, investors and industry analysts said. The benefit to bundling more services together is that it makes consumers stickier, or more loyal.

“The biggest hurdle in the U.S. is footprint mismatch,” said Christopher Marangi, co-chief investment officer at GAMCO Investors Inc. “The cable companies are all regional, and the wireless business is more of a national market. In Europe, cable is more national.”

The sticker shock of having all four bills combined does not help. “Consumers don’t necessarily want to see one bill that has a massively ballooning cost to the service provider,” said Jefferson Wang, senior partner heading mobile innovation at IBB Consulting Group.

Market research firm Strategy Analytics estimates that roughly 10 percent of U.S. households use quad-play. Penetration is expected to increase to 17 percent in 2020 but is still low compared to France’s 25 percent and Spain’s 60 percent. In those countries, companies like Iliad SA (ILD.PA) and Telefonica SA (TEF.MC) have driven adoption over the past five years.

So far, U.S. companies have yet to focus on quad-play. ATT Inc (T.N) offers four-service bundles in states where it sells broadband but says it is mainly focused on combining wireless service with entertainment as it waits for regulatory approval of its $85.4 billion acquisition of Time Warner Inc (TWX.N). Comcast Corp (CMCSA.O) launched its wireless service Xfinity Mobile earlier this year but is not yet actively promoting it as a bundle with voice, Internet and television.

And Verizon Communications Inc (VZ.N), the biggest U.S. wireless carrier, offered quad-play in the past but found that it did not resonate with customers, who expected big discounts.

That could shift as cable companies expand into wireless and see an opportunity to undercut rivals on price. Comcast and Charter Communications Inc (CHTR.O) are in talks with Sprint Corp (S.N) on a wireless deal to sell mobile service on Sprint’s network. The two companies already have a similar agreement with Verizon, and Charter is expected to launch a wireless service next year.

“We’re really at an inflection point now,” said Mark Bower, a partner with Bain Co’s telecom, media and technology practice. Markets where quad-play has taken off have all had either an incumbent that was losing share or an aggressive new challenger that won customers through significant discounting. In the United States, that disruptor could soon be a cable company.

The cable industry has experimented with wireless in the past. In 2005, Sprint formed a $200 million venture with Comcast, Time Warner Cable Inc, now owned by Charter, Cox Communications Inc and Advance/Newhouse Communications to offer combined cable and wireless services. Cable companies pulled out in 2008, citing “operational complexities.”

Things could turn out differently this time, especially if cable companies eventually bought a wireless carrier, giving them ownership of a cellular network as opposed to having to rely on a third party, analysts said.

It also helps that the lines between wireless and broadband connectivity are blurring as people use more connected devices over WiFi. That may provide more of a reason for cable companies to want to control both.

While sources told Reuters it is unlikely that Comcast and Charter would make an equity investment in Sprint, John Malone, whose Liberty Broadband Corp (LBRDA.O) is Charter’s largest stakeholder, in January raised the possibility that major cable companies could get together and buy a wireless carrier.

(Reporting by Anjali Athavaley; editing by Anna Driver and Bernard Orr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/a65wqAI2rRw/us-sprint-m-a-quadplay-analysis-idUSKBN19L2HW

Nike lifts S&P, Dow; biotechs limit gains on Nasdaq


The SP and the Dow Jones Industrial Average were higher in early afternoon trading on Friday, boosted by Nike’s decision to sell on Amazon, while a fall in biotechnology stocks capped gains on the Nasdaq.

Nike shares (NKE.N) rose as much as 9.4 percent to a three-month high, after the world’s largest footwear maker said it would launch a pilot program with Amazon.com (AMZN.O) to sell a limited product assortment on its website.

The Nasdaq biotech index was down 0.71 percent, dragged lower by Regeneron (REGN.O) and Celgene (CELG.O).

The SP technology index .SPLRCT was up 0.28 percent but was still on track to post its biggest weekly loss in six months as worries about the sector’s valuation prompted investors to buy defensive stocks.

“Tech has gone too far too fast and was due for a correction,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

“The sector’s valuation is elevated but hasn’t reached a point of extreme concern because it is still a ‘buy-the-dip’ sector and is expected to grow further.”

A fall in bank shares kept the financial sector .SPNY flat with Wells Fargo (WFC.N) and Goldman Sachs (GS.N) dragging down the SP and the Dow.

All three indexes are on track to post weekly losses.

At 12:40 p.m. ET (1640 GMT), the Dow Jones Industrial Average .DJI was up 78.87 points, or 0.37 percent, at 21,365.9, the SP 500 .SPX was up 6.23 points, or 0.25 percent, at 2,425.93.

The Nasdaq Composite .IXIC was up 7.41 points, or 0.12 percent, at 6,151.76.

The consumer discretionary index .SPLRCD rose 0.72 percent and led the gainers among the major sectors.

With the Federal Reserve keen on further raising the interest rates this year despite inflation remaining below their 2 percent target, investors have been keeping an eye on economic data for clues on the state of the economy.

Earlier in the day, data showed U.S. consumer spending rose modestly in May while inflation cooled. Even so, another set of data showed the University of Michigan consumer sentiment index at its lowest since November.

“In the next four to six weeks we’ll get another set of economic data that will tell us if the Fed is justified in raising rates again this year,” said Sandven.

Toward the end of the second quarter, the market witnessed a few volatile days with the SP 500 and the Dow recording their worst daily percentage drop in about six weeks on Thursday.

Oil prices climbed for the seventh straight session on Friday in their longest bull run since April, but were still set for the worst first-half performance since 1998. [O/R]

Micron (MU.O) reversed gains to fall 4.1 percent even after the chipmaker forecast better-than-expected profit and revenue for fourth quarter

Advancing issues outnumbered decliners on the NYSE by 1,690 to 1,145. On the Nasdaq, 1,458 issues fell and 1,310 advanced.

(Reporting by Ankur Banerjee, Anya George Tharakan and Tanya Agrawal in Bengaluru; Editing by Arun Koyyur)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/E_ZPjHY48LA/us-usa-stocks-idUSKBN19L1H7

U.S. fund managers seek consumer stocks that Amazon can’t conquer


NEW YORK Amazon.com Inc’s (AMZN.O) game-changing move to upend the grocery business with a surprise deal to buy Whole Foods Market Inc (WFM.O) compounds a problem already vexing fund managers: how to play U.S. consumer spending when the Seattle-based e-commerce giant is threatening to take over retail.

Amazon’s relentless growth and destruction of value among traditional retail rivals is forcing active fund managers to look for bets in areas they think Amazon can’t or won’t reach.

Emerging options include theme restaurant chains, recreational vehicle makers and sellers of stuff that’s just too heavy to ship via Amazon’s network. Meanwhile, some fund managers are increasingly convinced the only way to play consumer spending is to move away from brands and retailers and into logistics and supply chain companies, essentially betting e-commerce will render most consumer companies obsolete.

The challenge of investing in consumer companies comes a time when the category would typically shine.

Low unemployment and a solid housing market boost consumer stocks, yet companies in the category – excluding Amazon – are up just 5.2 percent for the year, or about 3 percentage points below the broad SP 500 as a whole, according to Thomson Reuters data.

Amazon shares, by comparison, are up about 30 percent.

(For graphic on Amazon overshadows its competition, click tmsnrt.rs/2sr0mlA)

BIGGER DISRUPTION THAN WAL-MART’S

Amazon now accounts for about 34 percent of all U.S. online sales and should see that number grow to about 50 percent by 2021, according to a Needham research note.

Amazon’s growing dominance is in some ways akin to the rise of Wal-Mart Stores Inc (WMT.N) in the early 2000s, when its rapid growth and move to branch out into groceries raised concerns it would put other retailers out of business. Yet Amazon’s greater online reach and purchase of a top-shelf grocery store chain makes it far more formidable, said Barbara Miller, a portfolio manager at Federated Kaufmann funds.

“I’ve been in this industry for twenty-five years and this is the biggest transformation we’ve seen in the consumer space,” she said.

While Wal-Mart put many small mom-and-pop stores out of business, Amazon is dragging down national competitors like Target and Macy’s with its combination of low prices, broad range of inventory, and speed, she said.

At the same time, Amazon is expanding its e-commerce dominance when more shoppers are online, suggesting more pain ahead for competitors. E-commerce sales grew 14.7 percent in 2016, nearly triple the 5.1-percent growth rate of traditional retailers, according to U.S. Census Bureau data.

BUGS AND COFFEE: THE HUNT FOR SURVIVORS

Fund managers say Amazon’s growing dominance is forcing them to shift long-held strategies, by either putting less money into consumer stocks overall or by focusing on companies that can compete alongside Amazon or may be attractive buyout targets.

The company’s outsized 15.4-percent weighting, more than double the next-largest stock in the SP 500 Consumer Discretionary index, is problematic for fund managers who typically will not hold any positions greater than 5 percent of their portfolio in order to manage risk.

Josh Cummings, a portfolio manager at Janus Henderson funds, is avoiding shares of direct competitors of Amazon, such as Target Corp (TGT.N), Kroger Co (KR.N), and Wal-Mart, and instead focusing on companies with “idiosyncratic” attributes, he said.

Starbucks Corp (SBUX.O), for instance, offers an experience that Amazon would find hard to match, he said, while Servicemaster Global Holdings (SERV.N), parent company of pest control company Terminix, is largely immune from e-commerce competition.

“Could Amazon decide they want to be in the business of spraying for bugs? It doesn’t seem likely,” he said.

Miller, the portfolio manager at the Federated Kaufmann funds, said she is moving away from stores that could be found in a mall, focusing instead on companies like Dave Busters Entertainment Inc (PLAY.O) and Wingstop Inc (WING.O) that offer food-based experiences. She also owns shares of Camping World Holdings Inc (CWH.N), which sells a mix of goods and services ranging from roadside assistance to accessories to the growing recreational vehicle market.

“This is a company with a strong membership base that has the sort of scale in its niche to rival Amazon,” she said.

Jeff Rottinghaus, portfolio manager of the T. Rowe Price U.S. Large-Cap Core Equity fund, said he owns Home Depot Inc (HD.N) shares because its stores essentially function as warehouses and much of its merchandise is too heavy or bulky to profitably ship quickly online.

Gary Bradshaw, a portfolio manager at Hodges Capital in Dallas, said he expects that portfolio holding Wal-Mart will become more aggressive in acquiring small, private companies to broaden its online reach.

The company announced a deal to buy men’s wear company Bonobos for $310 million in mid-June, following purchases of outdoor gear retailer Moosejaw and online shoe store ShoeBuy. Wal-Mart acquired online retailer Jet.com in a $3.3 billion deal last August.

“They’re going to do whatever it takes to compete with Amazon. They may be losing the battle at the moment but that doesn’t mean that they will back down,” he said.

Other investors are getting their consumer exposure by focusing on behind-the-scenes companies that power the growth of e-commerce.

Laird Bieger, a portfolio manager of the Baron Discovery Fund – the top-performing small-cap growth fund year-to-date – said he is focusing on companies like CommerceHub Inc (CHUBA.O), which works with companies such as J C Penney Co (JCP.N) and Best Buy Inc (BBY.N) to allow them to sell more products online and ship directly from manufacturers.

Craig Richard, a co-portfolio manager of the Buffalo Emerging Opportunities fund, said he has been buying Kornit Digital Ltd (KRNT.O), which makes textile printers that can produce t-shirt and other apparel designs on demand, helping save inventory costs.

Amazon is Kornit’s largest customer and has warrants to buy up to 2.9 million Kornit shares, about 8 percent of the company, at $13.03 a share over the next five years. Shares of Kornit, up 57 percent this year, traded at $19.95 on Friday.

(Reporting by David Randall; Editing by Dan Burns and Nick Zieminski)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/HB0ACLwhNsg/us-usa-funds-amazon-analysis-idUSKBN19L2E9

Exclusive: Airbus CEO Enders to take control of plane sales in new shake-up


PARIS Airbus is launching a reorganization of its commercial aircraft sales operations in a move likely to focus fresh attention on a delicate balance of power at Europe’s largest aerospace company, people familiar with the situation said.

From July, the globe-trotting sales team, best known for contesting leadership of the jetliner market with Boeing, will report directly to Airbus Chief Executive Tom Enders, bypassing commercial aircraft president Fabrice Bregier, the people said.

A spokesman for Airbus declined to comment.

The surprise move, announced at a management dinner on Thursday, is part of a wider effort to streamline the company by uniting the headquarters with its dominant civil planemaking business, giving substance to a recent internal merger.

But it is likely to raise questions about the coherence of the commercial planemaking operations and could revive speculation over the future of Frenchman Bregier, who has run the world’s second-largest civil planemaker since 2012.

The issue is not one of differing strategies, but the way responsibility is divided inside a company straining to keep a lid on tensions amid recent industrial and regulatory problems.

Absorbing commercial sales, the powerful driver of Airbus’s growth in past decades, will strengthen German-born Enders’ grip on civil operations, which provide 74 percent of revenue.

Bregier and Enders have long been rivals but had reached what was widely seen as a peace deal over the internal merger.

Bregier stepped aside from his role as chief executive of the Airbus civil business as Airbus combined with Airbus Group.

But he remained in charge of the planemaking business as its president, while also becoming Enders’ official no. 2 and chief operating officer of the overall group, now renamed Airbus.

The decision to shift sales from Bregier’s direct control raises uncertainty over the stability of the management deal and steers him toward a purely industrial role, a position the 56-year-old former missiles CEO is unlikely to relish indefinitely.

Bregier could not be reached for comment.

Sources caution it is too early to talk about a repeat of Franco-German tensions that rocked the group over a decade ago.

But any instability among top management would come at a sensitive time for Airbus as the company wrestles with supplier delays, growing concerns over A350 quality problems and an aggressive new marketing stance at rival Boeing.

A senior company source said the shake-up was driven by “heavy operational challenges” and would “better balance the internal burden sharing” as Airbus becomes a normal company after ridding itself of complex internal structures this year.

INERTIA

The shake-up comes as John Leahy, who propelled Airbus to equal status with Boeing, prepares to retire after 23 years running sales. He is expected to hand over to his designated internal successor, Kiran Rao, later this year.

Whispers of a shake-up partly explain a sense of inertia as Airbus lost on orders to Boeing at last week’s Paris Airshow.

Although it won more orders than expected, many delegates said Airbus failed to display its usual self-confidence and agility as Boeing executed a polished new airplane launch.

“Everybody feels lost (at Airbus),” one delegate said.

The company has also been thrown off balance by British and French investigations into the use of middlemen in plane sales and a widening Austrian probe into a fighter sale.

The chief executive of an aircraft buyer said Airbus was slower to react than before due to new internal processes.

The challenge under the new structure will be to recapture momentum while separating sales from core industrial operations, which have emerged as a key priority to fulfill record orders.

By contrast, the sales teams for helicopters and defense will continue to report to the heads of those units.

Bregier has taken an increasingly high-profile role in sales campaigns, forging relationships in Japan and elsewhere. He has been credited with improving Airbus’s industrial performance, but has recently been distracted by delays at key suppliers.

Enders overhauled Airbus’s strategy after a failed defense merger in 2012 and has become a leading advocate for exploiting ‘Big Data’ to reshape the industry. But industry sources say he is less well known for a ‘hands-on’ approach to operations.

Speaking to media earlier this month, he praised “much flatter” management structures and said “old-style command and control” was ill-suited to the pace of change in a digital era.

(Editing by Catherine Evans)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Ra-j8yx5cLo/us-airbus-reorganisation-idUSKBN19L148

Dollar set for biggest quarterly drop in nearly seven years


NEW YORK The U.S. dollar recovered slightly on Friday but remained set for its biggest quarterly decline against a basket of rival currencies in nearly seven years after hawkish signals from foreign central banks this week pressured the greenback further.

Investors have ramped-up expectations for tighter monetary policy from the European Central Bank, Bank of England and Bank of Canada after hints from officials this week. This has made the greenback less attractive, in addition to doubts that the Federal Reserve would be able to raise interest rates again this year and that U.S. President Donald Trump could enact his pro-growth agenda.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was set to decline about 4.6 .DXY percent for the second quarter to mark its steepest quarterly percentage drop since the third quarter of 2010.

The euro was set to gain more than 7 percent against the greenback for its biggest quarterly percentage gain since the third quarter of 2010. The euro has racked up about 2 percent of its gains and the dollar index has posted 1.6 percent of its losses this week alone.

“What really gave the hawkish central banks extra punch was how it seemed to be a coordinated effort to signal a shift away from low-rate policies,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

He said improving economic growth in Europe and Canada opened the door for those comments and was “a reality check how the U.S. isn’t standing head and shoulders above everyone else.”

The dollar index was last up 0.1 percent at 95.727, while the euro was down 0.2 percent against the dollar at $1.1412. The euro touched its strongest in nearly 14 months on Thursday of $1.1445, while the dollar index touched a roughly nine-month low of 95.470 early Friday.

Analysts said Friday’s bounce for the dollar came as some traders likely took profits on gains in the euro as well as the sterling. The dollar fell against the Canadian dollar, however, and was last at C$1.2985 after touching a nearly 10-month low of C$1.2948 earlier.

“It appears as though the euro and the pound could be testing some resistance levels, and that could also contribute to…the profit-taking,” said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

(Reporting by Sam Forgione; additional reporting by Patrick Graham in London)

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