2024-02-20 12:25

Feb 20 (Reuters) - Walmart (WMT.N) , opens new tab kicked off U.S. retailers' reporting season on Tuesday with robust fourth quarter results after inflation-squeezed shoppers flocked to its stores, and said it would buy smart-TV maker Vizio (VZIO.N) , opens new tab for $2.3 billion. Shares of the retail giant rose as much as 6.5% to an all-time high of $181.35 after it also gave an upbeat annual sales forecast and announced a 9% rise in its dividend, the biggest increase in more than a decade. Walmart's bigger focus on groceries than rivals such as Target (TGT.N) , opens new tab has provided a bulwark against the broad slowdown in discretionary spending. It is attracting more customers, even from higher-income households, by keeping grocery prices low as its size gives it negotiating power over suppliers, analysts say. The company said it offered significantly more price cuts on food products at its U.S. stores during the fourth quarter, even after big cuts in the third quarter. In some categories like apparel and hard goods, prices are lower than a year ago and even two years ago, the company said on a conference call. In addition, its efforts to spruce up its massive stores, expand its selection of online merchandise and offer more pickup and delivery options, helped it drive more transactions in stores and volumes and pass $100 billion in global e-commerce sales in 2023 for the first time, Walmart CEO Doug McMillon said on a conference call. "Across countries, we continue to see a customer that's resilient but looking for value," McMillon said. Home Depot (HD.N) , opens new tab said on Tuesday that shoppers are limiting spending on large-scale projects amid higher food prices and mortgage rates. It reported a bigger-than-expected drop in holiday quarter sales and forecast a 1% dip in 2024 sales. Walmart reported a 4% rise in total U.S. comparable sales, excluding fuel, for its fourth quarter ended Jan. 31, compared to LSEG estimates of 2.91%. Adjusted profit came in at $1.80 per share, compared to expectations of $1.65 per share. For its fiscal year ending Jan. 31, 2025, Walmart said it expects consolidated net sales to grow between 3% and 4%, largely above analysts' expectations of a 3.4% rise. A Walmart investor said he found the forecast "conservative" but said it was prudent given that the economy is in a transitory phase, where inflationary trends are not stable and fluctuating up and down on an item-by-item basis. "The street is recognizing that today by pushing the shares up," said Christian Greiner, senior portfolio manager at ZCM, which holds Walmart shares. FUTURE-PROOF Walmart's proposed offer to buy Vizio for $11.50 per share in cash, is another bet on the retailer's fast-growing U.S. advertising business, Walmart Connect, which already rakes in $3 billion in annual advertising revenue and saw ad sales rise 22% in the quarter ended Jan. 31. The deal future-proofs this business at a time several U.S. retailers are entering the ad business to take advantage of a crackdown on the amount of third-party data Apple (AAPL.O) , opens new tab and Google (GOOGL.O) , opens new tab are sharing with advertisers, analysts said. "The Vizio deal essentially takes Walmart Connect from being an advertising provider through stores and websites, to one that can penetrate consumers' homes via television," GlobalData's Managing Director Neil Saunders said. "This multichannel approach gives Walmart a lot more power and reach in the world of advertising and puts it on a more level playing field with the likes of Amazon," he added. Owning Vizio not only gives Walmart viewership data from thousands of smart-TVs but also access to Vizio's SmartCast operating system, which streams ad-supported content on its devices, Sensor Tower said. That business generated about $600 million in revenue in 2023, Stephens analysts said. The deal also aligns with Walmart's efforts to change the composition of its profit streams over the next five years, planning for more of its future earnings to come from businesses like ads and third-party sellers on its online marketplace. The offer price is a premium of 47% to Vizio's closing price of $7.82 as of Feb. 12, the day before reports about deal talks emerged. Vizio shares were up about 14.8% at $10.92 on Tuesday. The deal is expected to be mildly dilutive to Walmart's earnings in fiscal 2025, Walmart said. https://www.reuters.com/business/retail-consumer/walmart-expects-annual-sales-above-estimates-acquire-vizio-23-billion-2024-02-20/

2024-02-20 12:24

Feb 20 (Reuters) - Canadian pot firm Aurora Cannabis (ACB.TO) , opens new tab said on Tuesday it has appointed Simona King, a former executive of Bristol Myers-Squibb, as its Chief Financial Officer. King will succeed Glen Ibbott, who is stepping down immediately to pursue other opportunities, the company said. Ibbott, who joined Aurora in 2017, will remain with the company in an advisory role over the next few months to ensure a smooth transition. https://www.reuters.com/business/aurora-cannabis-announces-simona-king-cfo-2024-02-20/

2024-02-20 12:13

Feb 20 (Reuters) - Medtronic (MDT.N) , opens new tab on Tuesday raised its annual profit forecast for the third time this fiscal, banking on higher demand for its medical devices, sending the company's shares up 6% in premarket trading. The company also said it has decided to exit its unprofitable ventilator product line but would continue to honor existing ventilator contracts. Medtronic expects adjusted profit for the fiscal 2024 to be between $5.19 and $5.21 per share, compared with its previous forecast range of $5.13 and $5.19 per share. The company posted an adjusted profit of $1.30 per share for the quarter, compared with analysts' estimates of $1.26 per share, according to LSEG data. https://www.reuters.com/business/healthcare-pharmaceuticals/medtronic-beats-profit-estimates-strong-demand-heart-devices-2024-02-20/

2024-02-20 12:07

Feb 20 (Reuters) - The White House will approve a request from a group of Midwest governors to allow year-round sales of gasoline with higher blends of ethanol, but will push the start date into next year, two sources familiar with discussions said. The decision will likely be bittersweet for the biofuel industry, which wants to expand sales of corn-based ethanol but might be frustrated by the 2025 start date. The one-year delay could put off any potential localized price spikes and supply issues that the oil industry says could arise from the decision until after the U.S. election, the sources said. Under the plan, the administration would grant a 2022 request from the governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin to allow year-round sales of E15, or gasoline with 15% ethanol, starting next year, the sources said. In the meantime, the EPA could issue a temporary waiver enabling such sales as needed. Wisconsin and Minnesota are battleground states in this year's presidential contest in November. Inflation and the economy are key vulnerabilities for President Joe Biden's re-election campaign. The U.S. government restricts sales of E15 gasoline in summer months due to environmental concerns over smog. The administration is expected to issue a decision by late March, the sources said. The EPA declined to comment for this article, as the rule is still in an interagency review process. U.S. Agriculture Secretary Tom Vilsack said at a conference on Tuesday he was confident that expanded sales of E15 would be available across the country in 2025 and that, until then, the administration would likely issue temporary waivers this summer to enable sales. The EPA had sent a final rule on the proposal to the White House in December with an effective date of April 28, 2024. The new timeline would push the effective date to 2025, the sources said. For years the ethanol industry has pushed to lift the restrictions on E15 sales nationwide, arguing the environmental impacts have been overstated. The request from the Midwestern states has been controversial, however, as oil refiners including HF Sinclair Corp (DINO.N) , opens new tab and Phillips 66 (PSX.N) , opens new tab, have warned that a patchwork approach to approving E15 sales would complicate fuel supply logistics and raise the risk of spot shortages. Ethanol groups say they would prefer a nationwide legislative fix to allow for expanded E15 sales, versus the regional approach. https://www.reuters.com/world/us/biden-administration-approve-e15-gasoline-expansion-starting-2025-sources-say-2024-02-20/

2024-02-20 12:02

RIO DE JANEIRO, Feb 20 (Reuters) - Mining giant Vale (VALE3.SA) , opens new tab is looking at expanding the use of industrial batteries to power ports and mining sites, said the firm's Energy and Decarbonization director Ludmila Nascimento, in a move that would boost an industry still in early stages in Brazil. Since last year the firm has used a battery system installed at its Ilha Guaiba Terminal (TIG) port, in Rio de Janeiro state, as a cost-cutting measure. "We can replicate it to other Vale operations, not just at ports," Nascimento told Reuters on Friday, adding the company could eventually use that technology at mining sites. While the TIG project took around four years, the system could be replicated to three other ports the firm operates more quickly, said Nascimento. She said that once the batteries are acquired, installing them in a port could be done in a matter of months. At TIG, Vale uses batteries with a combined capacity of 10 megawatt-hours to store energy during the day and use it during hours of peak demand, when power is more expensive. Other ports would use batteries with the same or slightly higher capacity, said Nascimento. The fact that Vale, one of Brazil's biggest firms used the system for seven months without fail could allay fears in the country that the technology is unreliable, said Chief Executive Sergio Jacobsen, of Micropower Energy, which supplied it. The system led to a 40% cut on what TIG pays for energy distribution, said Vale in a statement, which will add up to around 3 million reais ($605,000) in savings per year. The upfront investment, undisclosed by Vale, was made by Micropower Energy, which will be paid back with money from the energy savings. The large-scale battery business in Brazil is still in its early stages, but in other countries the technology is more widely used, said Jacobsen. The storage system at TIG is the second largest in Brazil, said Jacobsen, with the first being a 60-MWh one inaugurated by energy distributor Isa Cteep last year. As Brazil becomes more reliant on wind and solar power, it will need to store energy that would otherwise go to waste during hours when supply outpaces demand, he said. ($1 = 4.9614 reais) https://www.reuters.com/markets/commodities/brazil-miner-vale-eyes-more-battery-systems-its-operations-2024-02-20/

2024-02-20 11:56

Feb 20 (Reuters) - Capital One Financial's (COF.N) , opens new tab $35.3 billion deal for Discover Financial (DFS.N) , opens new tab would create new competition for payments behemoths Visa (V.N) , opens new tab and Mastercard (MA.N) , opens new tab, potentially helping smoothen the path for regulatory approval, analysts said. The all-stock deal announced on Monday would create the biggest U.S. credit card issuer, but it would also give Capital One access to Discover's payment network, allowing it to rely less on payments giants Visa and Mastercard. With some lawmakers having accused Visa and Mastercard of a "duopoly , opens new tab," Capital One's promise to boost payment competition will be key as it begins to navigate political and regulatory hurdles in coming months, including from bank agencies and potentially the Justice Department, analysts said. "This potential deal could ultimately secure regulatory approval, but it would face galeforce headwinds from a Washington that is deeply skeptical of consolidation," Isaac Boltansky, director of policy research for brokerage BTIG, wrote in a note. However, he added: "There are some in Washington who are wary of Visa and Mastercard’s duopoly, which suggests that bolstering a competitor ... could be viewed positively." Capital One CEO Richard Fairbank said on Tuesday the deal - the biggest in the global credit card industry, according to Dealogic - was "well-positioned for approval" and the lenders had kept regulators informed, although he did not provide details on the discussions. They will file formal paperwork with regulators in the next couple of months, he said. Visa shares closed down 1.2% on Tuesday, while shares of Mastercard, which has a bigger exposure to Capital One, ended down 3.5%. Still, Democratic U.S. Senator Elizabeth Warren, a big bank critic, said in a social media post that the deal would harm financial stability and reduce competition. "Regulators must block it immediately," she wrote on X, formerly known as Twitter. Some community groups, who have the power to slow bank deals by lodging formal objections, also criticized the merger. Jesse Van Tol, CEO of the National Community Reinvestment Coalition, said Capital One's plan to integrate its card lending with Discover's network "poses massive anti-trust concerns." Investors hedged their bets on the deal's completion. Discover shares traded at around $125 on Tuesday afternoon, a steep discount to the $140-per-share valuation the all-stock deal implies. Using Discover's $110.49 Friday closing price as a yardstick, the spread shows investors are assigning only a 50% chance to the deal being completed. William Nygren, U.S. chief investment officer at Harris Associates, one of Capital One's biggest investors, said the firm liked the deal and believed it would go through. "It forces Visa and Mastercard to operate in a more competitive environment," he said. The new company would be more similar to American Express (AXP.N) , opens new tab, which is both a credit card lender and a network company, and trades at a higher multiple, Nygren added. The Federal Reserve and Office of the Comptroller of the Currency, which must approve the deal, did not provide comment. The Consumer Financial Protection Bureau, which last week flagged concerns over competition in the credit card market, declined to comment. NO. 1 PLAYER The combination of Capital One and Discover would create the biggest U.S. credit card issuer with around $250 billion in card balance and a market share of 22%, according to TD Cowen analysts. Capital One, the third-largest issuer of Visa and MasterCard credit cards in the United States, said shifting its card portfolio from those two payment giants to Discover's network would help it generate $1.2 billion in 2027. Any transition, however, would likely be slow since both Visa and Mastercard renewed their partnerships with the company recently, said J.P. Morgan analyst Tien-tsin Huang. A Mastercard spokesperson said Capital One's partnership with Mastercard "will continue for the long-term." Visa did not immediately respond to requests for comment. Shares of Discover ended up 12.6% at $124.42 on Tuesday, inching closer to the offer price of $139.86 after opening at their highest level in nearly two years. Capital One started the day down roughly 5%, but closed almost flat. "Given the vast savings in operational costs expected ... Capital One believes complex regulatory hurdles are worth being navigated to deliver significant returns," said Susannah Streeter, head of money and markets at Hargreaves Lansdown. https://www.reuters.com/markets/deals/discover-financial-stock-surges-after-capital-one-strikes-353-bln-buyout-deal-2024-02-20/