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Walmart logs its best Q1 in 9 years, meets estimates; stock up over 3%

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Walmart advanced after reporting sales growth that met analysts’ expectations and reassuring investors it should be able to pass some tariff-related price hikes onto consumers, rather than single-handedly swallowing the expected increases itself.


Comparable sales for Walmart stores in the US climbed 3.4 per cent in the first quarter, its best for the period in nine years. Sales of groceries —Walmart’s biggest business —fueled the increase, and a later-than-usual US flu season boosted health and wellness products. The shares rose as much as 3.7 per cent in intraday trade on Thursday in New York, the biggest intraday gain in almost three months.



“This is a very good set of results,” Neil Saunders, an analyst at Global Data Retail, said in a note. “The US operation remains the star of the show.”


Web sales in the US increased 37 per cent, slightly ahead of the company’s expected growth rate for the full year. Walmart and rival Amazon are locked in a fierce battle for internet shoppers, and both have recently pledged to speed up delivery times. While Amazon has the overall lead in e-commerce, raking in about 50 cents of every dollar spent, Walmart has the best-developed web grocery business with 2,450 stores offering curbside order pickup.


Walmart’s online growth has come at a cost to profitability, though. Gross margins of 24.3 per cent were in line with analysts’ estimates but did mark a slight year-on-year contraction. That can be attributed to higher labor costs, plus online sales that typically deliver lower margins than in-store sales. Transportation expenses, meanwhile, have eased somewhat this year, the company said.


On the down side, Sam’s Club’s same-store sales fell short of estimates, dragged down by reduced tobacco sales.


Tariff concerns


Walmart’s response to potential higher levies will likely set the tone for other discount retailers, and its decisions on whether to pass along or absorb the additional costs will have ripple effects on American consumers. In its favor, Walmart’s clout with suppliers gives it more room to maneuver, and much of its food comes from US sources, easing the impact.


“We will do everything we can to keep prices low but increased tariffs lead to increased prices,” Chief Financial Officer Brett Biggs said in a Thursday morning interview. “It’s very item- and category-specific. There are some places where as we get tariffs, we will take prices up.” Shifting its sourcing, or finding more manufacturers outside of China, “is one of a number of actions that our merchants are considering.”Bloomberg


Tariffs, according to Evercore ISI analyst Greg Melich, are “the next key swing factor,” as they could “wipe out” earnings growth across the sector this year.


It’s not a Walmart-specific issue: Macy’s Inc. said Wednesday that the latest tariffs, if implemented, would likely be reflected in its prices. Ralph Lauren Corp. also said after reporting results this week that consumer price-hikes could be an end result, though it’s first trying to work with Chinese suppliers to drive down costs and further diversify its supply chain out of China.


“It is hard to do the math to find a path that gets you to a place where you don’t have a customer impact,” Macy’s Chief Executive Officer Jeff Gennette said on an earnings call Wednesday, describing the impact of the U.S.-China trade negotiations as a “stay tuned” situation.



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Final approvals for Adani coal mine to be decided within 3 weeks: Australia

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The process to obtain final approvals for Indian energy gaint Adani’s Carmichael coal mine in Australia will be settled within three weeks, the leader of the country’s Queensland state said on Friday as she sought to expedite the controversy-hit project.


If given the green light, Adani could begin breaking ground at its Carmichael mine site within weeks, after more than eight years of planning.



Adani group entered Australia in 2010 with the purchase of the greenfield Carmichael coal mine in the Galilee Basin in central Queensland, and the Abbot Point port near Bowen in the north. The massive coal mine in Queensland state has been a controversial topic, with the project expected to produce 2.3 billion tonnes of low-quality coal.


In addition to its impact on climate change, environmentalists have argued the mine could do serious damage to Great Barrier Reef World Heritage Area. Another major concern about the environmental impacts of the proposed mine has been that it would wipe out the most important habitat of the threatened black-throated finch.


Queensland’s Premier Annastacia Palaszczuk announced that the two last final approvals involving groundwater and endangered black-throat finch will be settled within the next three weeks.



According to media reports, Palaszczuk said the black-throated finch plan decision is due by the May 31, the groundwater management plan decision is due by the June 13th this year.


“I know initially people thought this was months, and what I’m announcing today is it’s in a matter of weeks,” she said in Cairns.


“Everybody needs to have these issues resolved. That’s the timeframe the Coordinator General has set,” she added.


Earlier this week, Palascczuk ordered the state’s Coordinator-General to bring Adani and the state environmental authority together for discussions stating that she was ‘fed up’ with the ongoing delays.


While the post the final approval, the mining giant could start the work on the mine within weeks the coal exports could take up to two years.


“Now it’s really a case for the independent regulator to work through their internal processes and then they can make a determination and then we will be in a position to then start construction,” ABC news quoted Chief Executive of Adani Australia Lucas Dow as saying.



“We’re not expecting any significant surprises. Our construction activity will start as almost immediately as we’ve got these approvals,” he said.


Dow said over the past 18 months the company had so far produced 11 versions of its groundwater plan and seven for the black-throated finch.


The groundwater management plan has failed to meet key environmental requirements, including identifying the source of protected desert springs.


Last month, the Federal Government granted its final environmental approvals for the project days before the election was called.


While construction at the mine could begin with approvals, Adani’s proposed railway line plan is yet to be finalised.


Dow said the state’s Coordinator-General would also be publishing dates for other key activities, including the deadline of completion for the rail line’s deed of access and required sublease.


“That will also give us certainty and will also give the folks of central Queensland certainty of our project being able to proceed and deliver those jobs,” he said.



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EY working on govt’s Air India disinvestment, to issue EoI soon

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The government has put top consultancy firm EY to work for divesting its stake in flag carrier Air India and “quickly” issue expression of interest (EoI).


“EY continues to be the transaction advisor for the sale of Air India. We have been directed to close the accounts for FY19 and provide updated data for EoI to take the disinvestment process forward,” said a senior Air India official.



“Until the transaction gets completed EY is our advisor. They will be paid their fees after disinvestment process is complete. The instruction now is immediately start the process for EoI. Of course, approval of the Union Cabinet will be required for it,” he added.


The development comes close on the heels of Prime Minister’s Office (PMO) directing the Aviation Ministry to speed up the process of strategic disinvestment of Air India and three of its subsidiaries.


In a letter to Air India Chairman Ashwani Lohani, Civil Aviation Secretary Pradeep Singh Kharola had advised to finalise the financials of Air India and its subsidiaries by end of June, 2019.


“Also, the accounts for FY19 would form the basis of bidding. Therefore, it is necessary that they are prepared with utmost caution so as to reflect the correct financial status,” Kharola had written in the letter which has been reviewed by IANS.


The Aviation Secretary directed the airline to get contingent liabilities and account receivables verified thoroughly besides a physical verification of the inventories. A list of pending litigations is also required to be drawn up.


The government had last year initiated the process to sell majority 74 per cent stake in the national carrier but the plan proved a damp squib with no private investor turning up for the offer.


In view of rising fuel price and weak investment environment, the government had put the process on hold maintaining that it would be taken up after Lok Sabha elections 2019.



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Grasim Industries plans to invest additional Rs 6,400 crore to add capacity

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Aditya Birla Group’s Grasim Industries plans to invest an additional Rs 6,400 crore in expanding its capacity as its existing plants are unable to meet growing demand from the local customers.


Dilip Gaur, managing director of Grasim, said the investment would be made in the speciality fiber business, which would increase its capacity by about 40 per cent in the next two years as the company.



“We have invested Rs 7,000 crore in the last 10 years and will invest a similar amount in the next two years as demand is fast picking up. We have to divert our exports consignments to the domestic market to cater to the demand,” he said.


The additional capacity will be commissioned at Vilayat plant in Gujarat in two years. Grasim also holds stakes in Ultratech and Aditya Birla Financial Services.


ALSO READ: I-T dept slaps Rs 5,872-crore tax demand notice on Grasim Industries



Sushil Agarwal, Grasim’s outgoing chief financial officer, said as Grasim mirrors the trend in the economy, they are expecting the government’s thrust on the infrastructure sector will help it to boost demand for cement and financial services business in the coming quarters.


“With the government planning to invest heavily in building infrastructure, it would boost all our business.”


“The government’s thrust on infrastructure development like construction of cement concrete roads, metro rail networks, airports, irrigation projects and increase in the pace of execution under the low cost housing program supported strong volume off-take of cement,” the company said in a statement. “All of these are expected to result in sustained demand growth for cement going forward. This augurs well for the industry,” it said.



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