Sinai Disaster And Disney Earnings — 5 Things To Know Today
Here’s what you need to know to start the day.
Hello friends and Fortune readers.
Wall Street stock futures are higher despite Federal Reserve board chairwoman Janet Yellen signalling late Wednesday that an interest rate hike in December is on the cards. The dollar touched a three-month high against the euro earlier as the markets digested the news, while crude oil futures have sagged since a report showing U.S. oil stocks rose again last week.
Today’s must-read story is from Fortune‘s Clifton Leaf and it looks at how institutional investors are becoming more and more likely to listen to activist investors like Bill Ackman, Carl Icahn, and Nelson Peltz in order to get a better idea of how they think a company can improve.
Here’s what else you need to know to start the day.
1. Ripple effects from Metrojet bomb
U.S. and U.K. officials now suspect that a terrorist bomb was responsible for the crash of a Russian airliner in Egypt at the weekend. The U.K., the Netherlands and others have banned all arrivals from the resort of Sharm-el-Sheikh, where the bomb is suspeted to have been brought on board. The news is a body blow to the tourist industry that is vital to Egypt’s economy. It’s also a setback for President Vladimir Putin, whose intervention in the Syrian appears to have been the trigger for the attack.
2. Disney earnings
The “Mouse House” will report its fourth-quarter and full-year results this afternoon and Walt Disney DIS is expected to fall short of analysts’ revenue estimates after declining subscriber totals forced the media giant to lower its cable networks’ profit forecast over the summer. Much like some of its rivals, Disney will likely need to rely on especially strong results in other business sectors — such as movies and theme parks — to help balance out its struggling cable business.
3. Kraft Heinz reports
Investors will be interested to hear about the progress of the high-profile merger of two companies which, together, own so many iconic brands — from Heinz ketchup and Kraft macaroni to Oscar Mayer and Philadelphia cream cheese. The Kraft Heinz KHC merger completed over the summer and the company then moved forward with plans to cut costs and jobs in order to save at least $1.5 billion annually by 2017, so investors will want to hear about how effective cost-cutting measures have been so far. Sales at both the Kraft and Heinz divisions dipped in the second quarter and there is some concern that the company could be hurt by the strong U.S. dollar in emerging markets.
4. Weekly jobless claims
The Labor Department is expected to report that the number of Americans who filed applications for unemployment benefits last week increased by 2,000 claims, to 262,000. The total number of weekly claims has remained relatively low for several months and has stayed below the benchmark level of 300,000 for much of the year.
5. Adidas turns a corner
German sportswear company Adidas seems to be waking up from its long U.S. nightmare. The company raised its profit and revenue outlook for the year Thursday after announcing better-than-expected results for the third quarter which drove its shares up 5.5% to a new 18-month high.
— Reuters contributed to this post.
Nestlé Is Bringing Its Maggi Noodles Back To Indian Stores
An unfounded safety scare had ravaged the company’s sales in one of its most important markets.
After a torrid five months, Nestlé SA NSRGY is putting a damaging, but ultimately unfounded, food safety scare in India behind it.
The Swiss-based company, which is the world’s largest food producer by sales, said late Wednesday it will likely bring its popular brand of instant noodles back to Indian shelveswithin the next three weeks following a five-month ban.
Maggi, which makes up 80% of India’s instant-noodles market and is practically a staple among the South Asian nation’s younger population, was banned in June for allegedly containing dangerously high amounts of lead. Subsequent laboratory tests showed this wasn’t the case, and the confusion was an acute embarrassment for the country’s health regulators and the politicians behind them.
The ban had led to sales at Nestlé’s Indian unit slumping by 60% falling by 20% in the third quarter, causing its first quarterly loss in 17 years–a bitter blow in one of the few big markets across the world that is still growing fast.
Nestlé India said in its statement that all samples of Maggi Noodles tested by three government-approved laboratories have been cleared and approved for consumption.
“We will make our best endeavor to commence the sale of Maggi Noodles within this month,” the company said.
However, all samples have now reportedly “been cleared with lead much below permissible levels.”
Time.com’s Rishi Iyengar contributed to this report.
Is Adidas Waking Up From Its Long U.S. Nightmare?
German company posts a big rise in sales and profits as even TaylorMade shows signs of life.
German sportswear company Adidas ADDYY seems to be waking up from its long U.S. nightmare.
The company raised its profit and revenue outlook for the year Thursday after announcing better-than-expected results for the third quarter which drove its shares up 5.5% to a new 18-month high.
A strong performance in North America and China was responsible for much of the improvement. After stripping out the effect of the euro’s fall against the dollar this year, sales in North America rose 6% in the quarter after a flat first half (for more about Adidas’ efforts to revive its U.S. business with the help of Kanye West and others, read this by Fortune‘s Dan Roberts).
Even Adidas’ chronically under-achieving TaylorMade golf unit finally posted a rise in sales. It still intends to cut the unit’s staff by around 14%, and it admits that this will hit profits this year, but says it will boost them from next year onwards.
In China, sales were up 15% in currency-neutral terms, in another indication of how the country’s consumer sector is holding up despite the well-documented problems at its industrial and real estate companies. In Latin America, sales were up 12% adjusted for foreign exchange. Russia, stuck in recession, was the only outlier, where sales fell 9%.
The German company had expected sales growth of around 5% this year, but now expects it to be a little under 10%. Underlying earnings will rise around 10% from last year’s €642 million.
“The investments into our brands and a leaner golf organization will directly fuel next year’s top- and bottom-line performance and set us up for sustainable profitability improvements from 2016 onwards,” chief executive Herbert Hainer said in a statement.
Adidas also said it will extend to 2019 the contract of global sales director Roland Auschel, tipped by many to take over when Hainer steps down in 2017.
GM Is Killing It In China After Tax Boost For Smaller Cars
Sales in October surged 15% to a record high.
General Motors Co GM said vehicle sales in China rose 15% to a record monthly high in October, after the Chinese government cut taxes for smaller cars as part of its efforts to revive a flagging economy.
The company said retail sales in the first 10 months of 2015 climbed 2.9% from a year earlier to 2.8 million units, also a record.
The result provides a bright spot for China’s auto market which has struggled due to an economic slowdown in the world’s second largest economy. According to the China Passenger Car Association, car sales over the first nine months of the year grew at only 5.8% on the year, their slowest pace since 2012.
“The recently announced government incentive for vehicle purchases helped boost buying sentiment starting in October,” Matt Tsien, GM’s China President said in a press release published by the company on its website on Thursday.
China has introduced a slew of supportive policies, including halving the sales tax to 5% on cars with 1.6-litre engines or smaller, to boost auto sales. The changes came into effect from Oct 1. Automobiles in the 1.6 liter and under category account for around two-thirds of total sales in the country.
Other major global automakers, including Japanese automotive manufacturer Honda also posted double-digit sales last month. However, other carmakers have suggested that the boost to sales is no cure-all. Toyota Motor Co. TOYOF , the world’s largest automaker, said Thursday it expected its profitability in the Chinese market to fall, even though it expects to meet its target of 1.1 million unit sales there this year.
Toyota also said that the slowdown in other emerging economies had led it to shave this year’s revenue forecast by the equivalent of $2.5 billion, to 27.5 trillion yen from 27.8 trillion yen.
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