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Earnings News

PepsiCo’s Mini-Sized Sodas Improve Quarterly Output

PepsiCo quarterly income and profit beat Wall Street estimates on Tuesday, boosted by better sales of its traditional Pepsi soda in addition to snacks Lay’s and Dorito chips.

Beverage sales rose in the quarter as the corporate’s packaging approach to move away from large cans of sugary drinks to smaller ones that have higher margins helps it add customers who often prefer to ‘indulge’ even while preferring healthier choices in the long run.

Chief Financial Officer Hugh said: “Core Pepsi is what’s driving the improved efficiency in soda.”

“You have the customer switching from bigger volume packages into packages that are smaller… however, the worth realization is quite good on them,” Johnston stated.

Earlier this year, PepsiCo introduced berry, lime, and mango-flavored sodas in 12-ounce cans and launched variations of Cheetos and Doritos tortilla chips.

Competitor Coca-Cola noticed an increase in total sales in its last quarter, boosted by strong demand for its orange-vanilla cola, its first such release since 2007 when it launched vanilla Coke.

Pepsi, as well as Coca Cola, have also been selling new products to cater to consumers preferring healthier choices like sparkling waters and teas.

Chief Executive Officer Ramon Laguarta said the corporate would even launch mini and large cans of its Bubly glowing water in new fruity flavors.

Beverage quantity fell 2% at PepsiCo’s North America beverage unit, mainly because of higher sales of smaller packages of juices and sodas; however, income from the business rose 2.5%.

Income in its snacking arm, Frito-Lay North America, rose 4.5%, led by high single-digit development inconvenience and dollar stores, pushing total net income up 2.2% to $16.45 billion.

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Earnings News

Levi Strauss Faces Slower Sales Progress in Second Half, Shares Plunge

Levi Strauss & Co stated on Tuesday its sales progress would slow in the second half of the year due to weakness in its wholesale enterprise and as it wraps up its fiscal year ahead of Black Friday, leading its shares down 6% on Tuesday.

The company forecast full-year net income progress at the high end of the mid-single-digit array after posting income growth of 6% through the first half of the year.

Chief Executive Officer Chip Bergh stated: “It (the forecast) does recommend that the second half will be softer than the first half,”

The corporate expects a 100 basis point hit to its income from not being able to report the advantage of Black Friday, one of many busiest U.S. shopping days of the year, which is five days after Levi’s fiscal year ending Nov. 24.

Bergh added that an ongoing weakness within the retail trade was pressing on its U.S. wholesale sector, which reported a 2% fall in sales. Worldwide, the enterprise accounts for a third of Levi’s income.

To counter the weakness in its wholesale business, the corporate has been spending in its online enterprise and stores, while advancing its footprints in markets corresponding to China, India, and Brazil.

The efforts helped raise sales throughout segments within the second quarter, with its women’s enterprise rising 16% and tops section rising 14%. Besides, the music festival Coachella helped drive demand for its cut-off shorts, the corporate stated.

Sales at its China unit surged 3%; however, Levi’s said the enterprise was “far from its potential” and had “major untapped opportunity.”

Selling, common, and administrative expenses improved about 7% to $638 million, significantly because of higher promoting and marketing prices.

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Earnings News

Miserable China Vehicles Overview Triggers Raft of Profit Warnings

Auto provider Johnson Electric Holdings and Sensirion slashed their earnings forecasts on Thursday, citing a slowdown in car sales and pessimism in regards to the prospects of a Chinese automotive sector recovery.

The news is the most recent to signal weaker international industrial operation and ripples from a trade conflict that has already driven China’s Geely Swiss engineering company ABB Germany’s Aumann and chemical substances titan BASF, to warn of disturbance ahead.

Hong Kong-stationed Johnson Electric, which manufactures micro-motors and electric power steering devices, said it expects gain for the six months ending September 30, 2019, to be “substantially lower” due to a significant decline in light vehicle manufacturing and a “particularly depressed” marketplace in China.

Sales of automotive items in Asia plunged 15%, and sales of business products slump 19% within the quarter, the company mentioned.

Johnson further blamed the impact of higher duties and geopolitical risks weighing on demand in other customer and industrial markets.

In June, China reported the worst-ever month-to-month autos sales drop, provoking concerns over the nation’s financial slowdown as the world’s biggest automotive market noticed demand drop for the 11th consecutive month.

In an analysis note, Bank of America Merrill Lynch analysts mentioned another “powerful” second quarter was expected for auto suppliers as world production continued to be “very destructive” in the second quarter.

“Restoration not in sight,” the analysts stated.

Switzerland’s Sensirion reduction its income forecast for 2019 (to 160-170 million Swiss francs, down from 175-190 million Swiss francs earlier. The corporate already reduced its adjusted EBITDA margin to 9-12% from 15-16%.

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Earnings News

Cargill Quarterly Gain Drives 42% On Trade Conflicts, US Floods

Global commodities dealer Cargill reported a 41% plunge in adjusted quarterly gains on Thursday, citing supply interruptions stemming from the U.S.-China trade conflict and also flooding in the central United States that struck marketing and transportation of grains and livestock.

Cargill, the most prominent privately-held U.S. firm, said adjusted operating revenue dropped to $476 million in the fourth quarter ended May 31, from $809 million a year earlier, as three of its four enterprise units posted lower annual outcomes.

Trade spat between Washington and Beijing have damaged the U.S. agricultural sector as tit-for-tat tariffs have reduced commodities exports from America and redrawn international trade flows. Extreme spring flooding throughout the U.S. farm belt added to the struggles.

“It was an off quarter. It wasn’t what we wanted; however, we’re fairly optimistic about where we’re taking the corporate,” David Dines, Cargill’s chief monetary officer, stated in an interview.

“Whenever you combine the climate with the trade conflict, it’s a difficult time for the trade,” he stated.

Minnesota-stationed Cargill is the first of the principal grain merchants to report earnings since U.S.-China trade negotiations broke down and protracted rains led to the slowest U.S. spring planting season on record.

Cargill competitors Archer Daniels Midland and Bunge Ltd report quarterly outcomes at the end of the month.

Cargill’s animal vitamin and protein division posted lower annual revenue for the third time in four quarters as poor climate jeopardized U.S. Midwest cattle shipments and diminished demand for beef for outdoor grilling.

Diminished hog feed demand in China, where a lethal hog disease referred to as African swine fever has infected the trade, further dampened outcomes.

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American Airlines Boosts Unit Income Forecast, Stocks Soar

American Airlines Group on Wednesday increased its estimate for second-quarter unit income as the grounding of Boeing Co.’s MAX jets left the No. 1 U.S. carrier with a fewer plane in service, allowing it to fly fuller planes.

The corporate’s shares rose 3% in early trading and likewise lifted the stocks of different airways, offering some aid to a sector that has been battered by thousands of flight cancellations and reschedules in the wake of the grounding.

The corporate, nonetheless, stated its second-quarter pretax revenue would be diminished by about $185 million as a result of it canceled more than 7,000 flights in the quarter.

American Airlines, which has already pulled the MAX off its flying schedule via Sept. 3, had in April reduce its annual revenue forecast, blaming an estimated $350 million hit from the groundings.

The corporate, which has the second-largest fleet of MAX plane in the US with 24 jets, now expects unit income, a measure that compares sales to flight capacity, to extend between 3% and 4% in the quarter ended June, in contrast with its earlier forecast of an increase of between 1% and 3%.

The airline further raised its forecast for quarterly pre-tax margin, excluding particular objects, to a range of 8.5% to 9.5%, from 7% to 9%.

Analysts have stated non-MAX operators such as Delta Air Lines are anticipated to do significantly better this year as they’d benefit from lowered supply ranges in the type of higher load components and fares.

Last week, Delta stated it estimates its quarterly numbers to be at the high end of its earlier forecast, supported by “sturdy demand” in America.

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Earnings News

Leading Grain Merchants Face One-Two Strike from US Floods, Trade War

Severe U.S. climate likely bent earnings for large grain corporations along with Archer Daniels Midland Co. and Bunge Ltd. for Q2, adding to headwinds from a still-unresolved U.S.-China commerce war, analysts and economists stated.

ADM and Bunge, as well as peers Cargill Inc. and Louis Dreyfus Co., generally known as the ABCD quartet of world grain trading titans, confronted processing-plant downtime, rail, and barge shipping delays and other supply uncertainty this spring as historic floods devastated the central United States.

The weather distress is adding more pain on the battered U.S. farming sector already hard-hit by a years-long crop oversupply and the U.S.-China trade battle now coming into its second year. The tariffs China slapped on soybean exports from the US in punishment for U.S. duties on Chinese products curbed deliveries of the most worthwhile U.S. export crop.

The excessive rains and flooding could even have a lasting effect on the grain merchants, whose latest round of quarterly earnings will start this week. ADM and Cargill are seen as notably vulnerable as a consequence of their outsized U.S. footprints. Lowered U.S. corn and soybean plantings will seemingly cut ready crop supplies in the USA, doubtlessly driving up raw materials costs and clutching margins.

“They thrive on volumes and margins, and both of those are going to be flattened in the coming year with the bushels being smaller and the margins likely not being there,” stated Kevin McNew, a lead economist with Farmers Business Community. “Export business is simply going to jump off the cliff, particularly for corn.”

The U.S. corn crop was more affected by floods than soybeans since soy will be planted later in the season.