Unilever, Tata, Eurozone: Business news in brief, Tuesday 25 October

Marmite sales boosted by price war with Tesco
Marmite sales boosted by price war with Tesco

Unilever Tesco Brexit price dispute boosts Marmite sales by 61%

Marmite’s advertising slogan declares that you either “love it, or hate it.” For Britons, it appears to be the former as sales surged following the brief withdrawal of the yeast-extract spread by supermarket leader Tesco.

Marmite sales in the UK rose by 61 per cent, or £335,000, in the week ending 15 October compared with the same period a year earlier, according to data gatherer IRI.

Publicity generated by a pricing dispute between Tesco and Marmite maker Unilever made the brand “top of mind for regular buyers,” IRI’s head of strategic insight Martin Wood said by e-mail.

The tussle, dubbed Marmitegate, kicked off when Unilever sought to raise prices for its products by about 10 per cent because of the fall in value of sterling against the euro and dollar. Tesco responded by removing Unilever products including Dove soap and Hellmann’s mayonnaise from its website earlier this month. The dispute was resolved after a day of blanket media coverage across the country.

“Such huge sales increases are unusual,” IRI’s Wood said. “It’s higher than we’d usually see after major TV advertising campaigns but less than we’d expect if people are panic buying.”

Around 11.6m jars of Marmite are sold in the UK annually, generating yearly sales of about £28m for the century-old brand, according to IRI.

Bloomberg

Indian business giant Tata Sons removes chairman Mistry

The Tata Steel plant in Port Talbot which may face closure if a buyer cannot be found

The board of directors of Tata Sons on Monday removed Cyrus P. Mistry as chairman, four years after he took the reins of India's largest conglomerate.

The board named former group chief Ratan Tata as interim chairman and set up a panel to choose a new chairman.

Tata Sons owns the Jaguar and Land Rover brands, as well as Tetley Tea. It is one of India's oldest industrial houses and comprises over 100 companies, including Tata Steel, Tata Motors, Tata Power and the IT giant, Tata Consultancy Services.

The company did not give any reasons for Mistry's surprise removal.

“The committee has been mandated to complete the selection process in four months,” the company said in a statement.

Tata employs almost 7,000 workers around Wales, including more than 4,000 at its plant in Port Talbot, south Wales.

Unite national officer Harish Patel said: “Steelworkers at Tata UK are world class and have been making some of the best steel in the world against a backdrop of continued uncertainty.

“Unite will be seeking guarantees about their jobs and pensions from Tata's new interim chairman who needs to act to bring certainty to the steelmaking business along with a promise that Tata will continue to act as a responsible employer.”

AP

Euro-Area Economy Gathers Momentum as Price Pressures Increase

Graffiti art displaying the European Union (EU) flag and a euro symbol

Euro-area economic momentum accelerated to the fastest pace this year, adding to evidence that growth is becoming more resilient.

A Purchasing Managers’ Index for manufacturing and services rose to 53.7 in October from 52.6 in September, IHS Markit said on Monday. This is the fastest pace since the beginning of 2016.

The currency bloc’s recovery has continued at a steady if slow pace in the face of headwinds ranging from the UK’s vote to leave the European Union, slowing global trade and political uncertainty fueled by an upsurge of populist movements. The European Central Bank is supporting the economy with unprecedented stimulus that will come under review in December, three months before quantitative easing is currently set to expire.

“The euro-zone economy showed renewed signs of life at the start of the fourth quarter, enjoying its strongest expansion so far this year with the promise of more to come,” said Chris Williamson, chief business economist at IHS Markit. “The prospect of a robust fourth quarter will fuel further speculation of a possible tapering of QE purchases by the ECB.”

Bloomberg

Shares in Italian bank Monte Paschi rally on new plan

The Monte dei Paschi bank headquarters is pictured in Siena, Italy

Shares in troubled Italian bank Monte dei Paschi di Siena have shot up 22 per cent ahead of a new plan to be presented by CEO Marco Morelli.

The plan being discussed by the board Monday is expected to pave the way for the €5bn (£4.5bn) recapitalisation announced after the bank, Italy's third-largest lender, was the worst-performer in a stress test of EU banks last summer.

Shares shot up to 33 cents (29p), the highest level since July, following a suspension for excessive gains. News agency ANSA reported that 154m shares, about 5.2 per cent of the bank's capital, exchanged hands in a two-hour period.

Morelli will hold a conference call Tuesday on the plan to help relieve the bank of some €27bn in non-performing loans.

AP

Philips holds firm on 2016 outlook after healthy quarter

A man stands in front of Philips ambient light flatscreens at the consumer electronics trade fair IFA in Berlin

Electronics giant Philips posted a jump in third-quarter net profit Monday on robust sales in its health businesses, where the Dutch company has shifted its focus.

Philips said it was maintaining its forecasts for the full year as it expected a good last quarter but warned it remained concerned about volatile markets.

Net profit surged by 18 per cent to €383m (£340m) in the third quarter, while sales inched up by one per cent to €5.9bn (£5.3bn), the company said in a statement.

Philips in 2014 announced it was selling off its lighting business - a mainstay for more than a century - to focus more on medical equipment, where margins are stronger and less vulnerable to competition from emerging markets.

Philips Lighting successfully listed on the Amsterdam stock exchange at the end of May and Philips currently holds a majority 71-per cent share.

AP

T-Mobile beats profit estimates, raises customer additions forecast

T-Mobile reported a better-than-expected quarterly profit and raised its forecast for customer additions for the year as heavy discounting helped attract subscribers.

Shares of the company, controlled by Deutsche Telekom, were up 3.5 per cent at $48.40 (£39.67) on Monday.

The company said it now expected to add 3.7m to 3.9m customers on a net basis this year, compared with its previous forecast of 3.4m to 3.8m.

The Washington-based company added 969,000 postpaid customers in the third quarter, up from 890,000 in the second quarter.

T-Mobile has been grabbing market share in the US by gaining subscribers from bigger rivals AT&T and Verizon.

Reuters

Bookmaker William Hill says chairman will not step down

Betting terminals at a branch of William Hill bookmakers

British bookmaker William Hill, which last week pulled the plug on merger talks with Canadian online gambling company Amaya, said its chairman Gareth Davis would not step down.

“There are no plans for Gareth to step down. He is leading the chief executive search process, which is well advanced, and is working with Philip Bowcock to deliver the key priorities for the business,” a company spokesman told Reuters in an email.

The Times had reported on Sunday that the bookmaker would begin searching for a new chairman next year after current chair Davis came under attack from the company's investor over failed merger talks with the Canadian company. (goo.gl/DKlZi5)

Reuters

Post-Brexit business resilience improves

The number of British businesses in financial distress has fallen in the last quarter, another sign of economic resilience following the EU referendum. According to figures from insolvency specialist Begbies Traynor, the number of firms in significant financial distress fell 6 per cent to 248,916 compared to the previous quarter. Year-on-year, the number of UK businesses suffering financial distress fell 2 per cent.

Begbies executive chairman Ric Traynor said: “While we wait to see whether the Government opts for a 'hard' or 'soft' Brexit strategy, businesses at least appear to be better placed to tackle any new challenges on the horizon ahead of the Government's imminent negotiations.”

French connection shares rise by more than a fifth after takeover interest reports

Shares in troubled fashion retailer French Connection leapt more than a fifth following reports that it is being eyed for a takeover.

The firm has come on to the radar of overseas investors and private equity firms amid speculation that its founder and chief executive Stephen Marks could be heading for the exit door, The Sunday Telegraph reported.

The clothing and homeware brand is said to have drawn interest from US firm Neuberger Berman, while the retailer has also sought advice from investment boutique Moelis.

Mr Marks, who launched the business 44 years ago and holds a 41 per cent stake in the firm, has struggled to revive French Connection's fortunes following the rise of fast-fashion brands such as ASOS and Zara.

PA

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