FTSE 100 Live 27 April: Tech stocks slide on growth outlook, Lloyds and Glaxo post updates

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Kraft Heinz income jumps thanks to price rises

Kraft Heinz, manufacturers of Heinz tomato ketchup and Cadbury brands, has boosted sales predictions for the year afer a leap in prices for its food products led to bumper first-quarter sales.

The company said that organic sales, which strips out currency impacts, acquisitions and divestitures, rose 6.8% in the latest period, helped by a 9% increase in prices.

The company’s earnings were $776 million during the first quarter of the year, or $0.63 per share. That compares to $563 million, or $0.46 per share, this time last year.

Like other multi-national consumer goods companies, Kraft Heinz has been raising prices to offset rising costs in raw materials, energy and logistics.

Kraft Heinz indicated that it continues to face higher commodity costs, especially in dairy, packaging and meat, as well as wider costs to procure ingredients for its products.

“Our first quarter was a strong start to the year and yet another period where our team rose to mitigate new and different macro environment challenges,” said Kraft Heinz CEO Miguel Patricio.

“We continue to build critical capabilities, greater corporate agility, and additional financial flexibility to address short-term turmoil while building our long-term advantage.”

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Boeing loses $1.2 billion in the first quarter

The world’s largest aircraft manufacturer Boeing has suffered a first quarter loss of $1.24 billion (£987 million) due to issues with its jetliner and military programs, along with Russian sanctions and supply chain issues.

Revenues of $14 billion were also down 8% from the first quarter of last year.

Boeing has been beset by delivery problems, pushing back the expected delivery of its 777X twin-aisle carrier until 2025 — a delay of five years. However, the company said it had moved nearer to delivering its 787 Dreamliner after suspension of its development.

Dave Calhoun, Boeing president and chief executive officer, remained bullish about the future of the company.

“Despite the pressures on our defence and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as we work through certification requirements and mature several key programs to production,” he said.

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Will Russia cut off gas to other European countries?

Russia’s gas embargo on Poland and Bulgaria has raised the prospect that other nations could soon be shut off.

Ole R. Hvalbye, a commodities analyst at SEB, said: “As most other European nations have already said they will not pay for gas in rubles, this supply halt could result in physical and psychological repercussions leading the continent to brace itself for further Russian curtailments.”

The EU imports 41% of its natural gas supplies from Russia. Germany received around a fifth of all Russian gas coming into the EU, with Italy, Turkey, France and Poland making up the rest of the top five destinations for Russian gas in Europe.

Smaller nations such as Malta, Luxembourg and Cyprus are the most dependant on oil and gas imports for their energy security.

The UK imports less than 5% of its gas from Russia but shortages elsewhere are likely to drive up wholesale price on the international market, inadvertedly driving up UK energy bills.

Walid Koudmani, chief market analyst at XTB, said: “So far, Russia has halted supplies to relatively small European countries, probably with the intention of sending a message to bigger countries, like Germany and France.”

Read more.

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Spotify shrugs off tech downturn to post uptick in subscribers

Spotify has added more users in the most recent quarter and saw revenue grow, despite closing operations in Russia.

The music streaming service suspended its service in the country in response to its invasion of Ukraine, costing it 1.5 million users.

But during the quarter ending 31 March, Spotify said its premium subscribers jumped 15% year-on-year to 182 million, up from 180 million the previous quarter.

The platform posted first quarter revenue of €2.66 billion, up 24% year-on-year. Revenues from its premium service expanded by 23% year-on-year to €2.38 billion. Ad-supported revenue was boosted 31% to €282 million.

Monthly active users rose 19% from the same period the previous year to 422 million, up from 406 million at the end of last year.

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European gas prices rise as Russia cuts of supplies to Poland and Bulgaria

European natural gas prices have spiked after Russian gas giant Gazprom announced it was cutting off supplied to Poland and Bulgaria in a significant escalation of economic hostilities from Russia.

The Russian state-owned energy giant said today it had “fully halted” supplies due to the two country’s “failure to pay in roubles.” Russian President Putin declared last month that buyers of gas must pay in roubles or face being cut off.

European natural gas prices jumped by as much as a fifth on the news before settling back to a gain of around 8% on the day. UK gas prices were relatively unaffected.

European Commission President Ursula von der Leyen said the move by Gazprom was “another attempt by Russia to blackmail us with gas.”

“We are prepared for this scenario,” she wrote on Twitter. “We are mapping out our coordinated EU response.”

Kremlin spokesman Dmitry Peskov told reporters: “Russia was and remains a reliable supplier of energy resources to its consumers and remains committed to its contractual obligations.

“When the payment deadlines approach, if some consumers decline to pay under the new system, then the president’s decree of course will be applied,” Peskov said, per Reuters.

Walid Koudmani, chief market analyst at XTB, said: “So far, Russia has halted supplies to relatively small European countries, probably with the intention of sending a message to bigger countries, like Germany and France.”

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Addison Lee on the road to recovery

Addison Lee has trimmed its losses as demand for taxis in London picks up after a turbulent two years.

The cab company returned to an underlying profit of £7.9 million in the 12 months to August 2021, recovering from a £9.4 million underlying loss in 2020.

On a pre-tax basis, losses reduced from £39.8 million in 2020 to £23.1 million last year. Turnover rose from £52 million to £164 million.

The taxi firm was hit badly by the impact of lockdowns in London, which resulted in a dramatic drop in demand.

But Addison Lee said business was beginning to recover as London gets back to normal.

Read more.

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The boss of London-based meal kit subscription business Gousto believes his business can keep growing rapidly despite the soaring inflation that is squeezing customer budgets and putting up his costs.

Timo Boldt, the founder and chief executive of Shepherd’s Bush-based Gousto, said he was confident of another year of strong growth after his business posted its ninth year of double digit growth.

Revenues at Gousto rose 67% to £315 million last year. The company made an underlying profit before exceptional costs, interest, depreciation and tax of £20 million, up 10% on 2020.

Read the full story.

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Russia exit to cost London Stock Exchange £60 million

Turning its back on Russia will cost the London Stock Exchange Group an estimated £60 million this year, the company admitted today.

LSEG said pulling out of Russia and dumping Russian businesses from the market would knock revenues by an estimated £60 million in 2022.

The biggest impact comes from suspending its data and analytics services but the company has also suspended over 40 Russian businesses with listings in London since the invasion of Ukraine. Its FTSE Russell business has dumped Russian stocks from its indices and branded Russian government debt unclassifiable.

Read more.

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London Metal Exchange boss reverses decision to leave

The boss of the London Metal Exchange has reversed an earlier decision to leave, pledging to help fix the market instead following the controversial suspension of nickel trading last month.

The LME said in January that CEO Matthew Chamberlain would be leaving at the end of April “to pursue career interests outside of the Group.” But LME-owner HKXE said today Chamberlain would now stay on as boss indefinitely.

Chamberlain said he wanted to “continue to work with the team on supporting the long-term health and efficiency of the market.”

The change of heart comes amid intense scrutiny of the historic trading venue following a controversial decision to suspend the nickel market last month.

Read the full story.

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