JPMorgan, PepsiCo, Magners: Business news in brief on Friday July 8

Associated British Foods, the owner of Primark, raised its earnings forecast for the year as the pound’s weakening in the wake of the EU referendum will boost profits from outside its home market.

The pound at its lowest in more than 30 years will provide a favourable translation effect at its sugar business and for profits made outside the UK, the London-based company said in a statement on Thursday.

As a result, the company no longer expects a decline in earnings per share. Performance in sugar improved, leading to a 4 per cent currency-adjusted sales gain for the company in the third quarter.

The shares rose as much as 7.1 per cent in London.

While sterling’s weakness will hurt profit margins at Primark, AB Foods gets about half its profits from outside the UK, and has expanded the Primark chain into the US over the past year to offset slower growth in its home market.

© Bloomberg

JPMorgan could be forced to move thousands of staff out of Britain if the country loses its automatic right to sell financial services to the European Union after last month's Brexit vote, bank CEO Jamie Dimon told an Italian newspaper.

Currently, banks based in the UK can sell services freely across the EU under a “passporting” system, but that is now in doubt after Britons voted to leave the bloc.

“The key issue is the 'passport rule' that we have in London and allows us to provide services to clients in the European Union,” Il Sole 24 Ore quoted Dimon as saying on Thursday.

“However, if the EU imposes new conditions on Britain ... the worst-case scenario is we would have to move some thousands of employees to other branches in the euro zone,” Dimon said.

JPMorgan has 16,000 employees in Britain and produced $14.2bn (£10.9bn) worth of revenue last year from operations across Europe, the Middle East and Africa.

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Magners cider producer, C&C Group increased sales by 24 per cent in the UK in the three months to 31 May, it said in a trading update on Thursday.

Bulmers - Magners' branding in Ireland - volumes increased nine per cent, while Tennent's increased by four per cent in Ireland and five per cent in British markets, the company said.

The company is on track to deliver 20% volume growth for the year in its core export markets of Italy and Spain.

“Tourism is up in Spain and Italy should benefit from the launch of a new format for Tennent’s premium range,” the statement said.

However, C&C warned the effects of Brexit are uncertain and that currency movements have the potential to undo profits made so far this year.

“With almost 50 per cent of profits denominated in Sterling and reported in euros, C&C is exposed to the translation impact of a devalued pound”, the company said.

The fact that the company is listed on both the Irish and London Stock Exchanges provides “a degree of balance to the risks associated” with the decision to leave the EU, the company said.

PepsiCo reported a better-than-expected profit for the second quarter, helped by lower raw material costs as well as strong demand for Frito-Lay snacks and new beverages in North America.

PepsiCo's shares rose 2.2 per cent in premarket trading after the maker of Pepsi and Tropicana also raised its adjusted profit forecast for the year.

PepsiCo's cost of sales fell 6 percent in the three months ended June 11.

New drinks such as Propel flavored water and Naked Cold Pressed juice helped drive sales, the company said.

Excluding items, the company earned $1.35 (£1.04) per share, beating the average analyst estimate of $1.30 (£1.00), according to Thomson Reuters.

Net revenue fell 3.3 per cent to $15.395bn (£11,828), but inched past the average analyst estimate of $15.37bn (£11.81bn).

Revenue from the Frito-Lay business which includes Doritos, rose 3 per cent.

PepsiCo said it now expects 2016 adjusted earnings of $4.71 per share, up from its previous forecast of $4.66 per share.

© Reuters

Political turmoil caused by Britain's vote to leave the European Union could knock demand for air transport later this year, the director general of airport association ACI Europe said.

Shares in major European airlines such as EasyJet, British Airways owner IAG and Ryanair have been hard hit since the Brexit vote, due to fears over travel demand and whether flying rights will be affected.

“The political instability and uncertainty it has created is already hurting business confidence and might end up doing the same for consumer confidence – this could affect demand for air transport later in the year,” Olivier Jankovec said in a statement.

Three per cent of Britons with holidays booked this summer plan to cancel due to concerns over the value of the pound, according to results of a survey commissioned by online deals website Travelzoo.

ACI Europe said May traffic data showed the impact of attacks and geopolitical tensions. Passenger numbers for Turkey were down 8.2 per cent, while Russia saw a 6.5 per cent drop.

Overall, traffic at EU airports rose 5.5 per cent in May, but dropped 2.5 per cent for non-EU airports, ACI said.

© Reuters