TOP NEWS
* Moody's raised Kraft Heinz Co.'s rating outlook to positive from stable after it completed key integration activities related to the 2015 merger of H.J. Heinz Co. and Kraft Foods. The rating agency also affirmed the food company's ratings for secured debt, unsecured debt and commercial papers. Moody's said it could upgrade its rating of Kraft Heinz if it continues to improve operating performance and adopts a more conservative financial policy.
* Nestlé SA said that by 2020 it plans to further reduce sugars by 5% and salt by 10% as it aims to improve its food and beverage portfolio worldwide. The Swiss food company will also look to complete its 2014 commitment to reduce saturated fats by 10% in products that do not meet recommendations by the World Health Organization.
FOOD RETAIL AND DISTRIBUTION
* Marks & Spencer Group PLC reported that its transformation plan's first phase, which focuses on downsizing the company's store estate, has affected its full-year 2018 results. For the 52 weeks ended March 31, the department store chain posted a basic EPS of 1.6 pence, a 77.8% decrease from 7.2 pence a year earlier. The S&P Capital IQ mean consensus estimate for normalized EPS was 28 pence. Profit attributable to owners of the parent also went down to £25.7 million from £117.1 million in the year ended April 1, 2017.
* Tesco PLC will close its nonfood website Tesco Direct on July 9, a move that puts 500 jobs at risk, after concluding that it cannot be profitable. The U.K. grocer will also close its Fenny Lock fulfillment center that handles orders for Tesco Direct. Tesco will focus on its online platform, Tesco.com, where customers can already buy items offered on Tesco Direct.
* Russian food retailer X5 Retail Group NV is testing three labeling technologies that are able to identify expired products. The projects include two types of color-changing labels that warn if the required storage or transportation temperatures of a product are not maintained and barcodes that prevent expired goods from being sold. The barcode, which is already being tested in 200 Pyaterochka stores in Moscow and the Moscow region, provides information about a product's shelf life.
BEVERAGES
* Constellation Brands Inc. promoted Jim Sabia to the recently created role of chief marketing officer. Sabia will oversee marketing across Constellation's alcoholic beverage portfolio. As a member of the company's executive management committee, Sabia will report to President and COO Bill Newlands.
PACKAGED FOODS
* Moody's placed all the ratings of Campbell Soup Co. under review for downgrade, from stable, following an unexpectedly sharp decline in the company's profitability in its fiscal third quarter that ended April 29 and the CEO's sudden resignation. The review primarily reflects the rating agency's expectation that Campbell's high financial leverage may continue for longer than anticipated and may rise further due to the recent deterioration in core operating performance.
* Packaged foods producer Dairy Crest Group PLC secured an investment of about £70 million from its investors for expansions of its cheese and whey production facilities, The Financial Times reported. The company's CEO, Mark Allen, said it had been a "year of considerable progress for Dairy Crest" as the company overcame "unprecedented cost inflation in the butter market," the report added.
* Maple Leaf Foods Inc. will repurchase 7,844,000 or about 10% of its common stock from May 24, 2018, to May 23, 2019. The Canadian food company can buy back a maximum of 40,600 common shares per day. This follows its previous program where it repurchased 3,312,600 shares at a weighted average price of C$32.80.
* Fonterra Co-op Group Ltd. lowered its full-year 2018 forecast for normalized earnings per share to the range of 25 New Zealand cents to 35 New Zealand cents. Citing higher costs as the reason for the earnings drop, the New Zealand-based dairy company also cut its dividend forecast down to a range of 15 New Zealand cents to 20 New Zealand cents per share.
* Meal kit company Marley Spoon is exploring a possible listing on Australian Stock Exchange, with analysts estimating the company to be valued at up to A$261 million, Australian Financial Review reported. The company's brokers, Canaccord Genuity and Macquarie Capital, sent detailed pre-marketing reports to fund managers explaining the company's business and earnings. The meal kit company is expected to raise A$70 million in a deal that may value the company at A$200 million.
RESTAURANTS
* Shareholders of the restaurant chain Bravo Brio Restaurant Group Inc. ratified its around $100 million merger with Spice Private Equity, an affiliate of GP Investments Ltd. The deal is expected to close May 24, according to a news release. BBRG's common shares will stop trading on the NASDAQ upon closing of the transaction.
* Dunkin' Brands Group Inc. will repurchase up to $250 million of its own common stock over a period of two years. Repurchases can be made at the discretion of management through the open market or through privately negotiated transactions.
TOBACCO & SMOKING PRODUCTS
* Altria Group Inc. created separate divisions for its core tobacco businesses and innovative tobacco businesses as part of the tobacco giant's dual strategies to boost profit from both segments. The core division will be overseen by Jody Begley, tobacco products senior vice president, while the innovative products division will be overseen by Brian Quigley, Nu Mark LLC president and CEO, and will focus on the development of a portfolio of noncombustible products. Altria also appointed K.C. Crosthwaite, current president and CEO of the U.S. arm of Altria's Philip Morris International Inc., as senior vice president and chief growth officer of Altria Client Services LLC.
INDUSTRY NEWS
* U.K.'s regulatory body Public Health England, or PHE, rolled out new guidelines for Starbucks Corp. and other coffee chains to cut the amount of sugar in milky drinks and juices, in a bid to control child obesity, The Financial Times reported. According to the new PHE 2021 guidelines, the companies are expected to cut sugar content by 5%. Juices including smoothies and blended and single juices should not exceed 150 calories, whereas the milk-based drinks must not top 300-calorie limit, marking a 20% reduction, the report added.
The day ahead
Early morning futures indicators pointed to a higher opening for the U.S. market.
In Asia, the Nikkei 225 dropped 1.18% to 22,689.74.
In Europe, around midday, the FTSE 100 slid 0.73% to 7,819.62 and the Euronext 100 shed 1.01% to 1,076.46.
On the macro front
Reports due out today are bank reserve settlement, MBA mortgage applications, PMI composite flash, new home sales and EIA petroleum status.
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