04/05/2016 BBC Business Live


04/05/2016

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This is Business Live from the BBC with Sally Bundock and Ben Thompson.

:00:08.:00:10.

Big tobacco versus the European Union.

:00:11.:00:11.

The two sides battle it out over health warnings, graphic images

:00:12.:00:14.

Live from London, that's our top story today, Wednesday, 4th May.

:00:15.:00:38.

The big players in the tobacco industry have joined forces

:00:39.:00:40.

to oppose an EU ruling, but can they hold back the tide

:00:41.:00:43.

of regulation as pressure mounts to crack down on smoking and put

:00:44.:00:46.

Also in the programme, when is an iPhone not an iPhone?

:00:47.:00:51.

Tech giant Apple has lost a trademark fight with a handbag

:00:52.:00:58.

maker in China over the name of it's most well-known product.

:00:59.:01:01.

We're live in Beijing with the details.

:01:02.:01:03.

And markets are bouncing higher in Europe but with mixed

:01:04.:01:05.

earnings news we'll talk you through the winners

:01:06.:01:08.

The firm that lost it's way is back on track.

:01:09.:01:24.

The Co-Founder of sat nav giant Tom Tom will be here in the studio.

:01:25.:01:28.

As Donald Trump effectively seals the Republican nomination

:01:29.:01:30.

in the race to become the next US president we want to

:01:31.:01:33.

know if Business people make good politicians?

:01:34.:01:34.

Will tobacco firms be forced to sell their products in plain packaging?

:01:35.:01:57.

They'll find out later whether new EU rules

:01:58.:01:59.

Philip Morris, British American Tobacco and Imperial Tobacco have

:02:00.:02:03.

all joined forces to attack the legality of the ban

:02:04.:02:05.

which the European Union hopes will cut the number of people

:02:06.:02:10.

smoking across Europe by 2.4 million.

:02:11.:02:12.

The Smoke Free Partnership, which is part funded

:02:13.:02:15.

by the European Commission, say smoking costs the EU

:02:16.:02:19.

The new rules, voted on last year, included a ban on flavoured

:02:20.:02:26.

cigarettes, a ban on so called "lipstick-style" packs aimed

:02:27.:02:29.

at women and the requirement for 65% of each packet sold

:02:30.:02:31.

Crucially the commission also said that plain packaging could go ahead

:02:32.:02:44.

when "justified on grounds of public health".

:02:45.:02:46.

Europe's highest court will rule today on whether or not the EU's

:02:47.:02:49.

actions are "proportionate" and if they work against the single market?

:02:50.:03:04.

With me is Shane MacGuill, a tobacco analyst with

:03:05.:03:08.

Let's talk about the ruling. Which way are we expecting it to go. We

:03:09.:03:18.

have had an indication from the EU about what they are thinking? The

:03:19.:03:26.

advocate general ruled against the tobacco industry changes. It is part

:03:27.:03:29.

of the rising tide of regulation around the world, not just in Europe

:03:30.:03:34.

against tobacco firms, we have seen strict rules being enforced on them

:03:35.:03:37.

in other parts of the world. And it strikes me there is only one way for

:03:38.:03:42.

this to go, so it is about how the tobacco companies deal with it

:03:43.:03:45.

rather than trying to win any big concessions? They recognise the tide

:03:46.:03:49.

is moving out for them in terms of regulation. Today's judgement will

:03:50.:03:55.

be another case in terms of the idea that the health objectives that

:03:56.:03:59.

regulators is primary to the ability of the tobacco industry to generate

:04:00.:04:04.

revenue. The industry want to manage the regulations that they're faced

:04:05.:04:06.

with across the world and minimise the effects on their own business.

:04:07.:04:10.

What is more damaging to the tobacco firms? Is it the graphic images that

:04:11.:04:15.

we see on some cigarette packets in some parts of the world or is it the

:04:16.:04:20.

concept of plain packaging? I would argue that plain packaging is more

:04:21.:04:24.

detrimental to them because it removes any capacity that they have

:04:25.:04:29.

to communicate with consumers. Graphic health warnings, although

:04:30.:04:32.

they are extensive and they must have some effect on smokers, allow

:04:33.:04:37.

room for branding of the product. So plain packaging which inhibits the

:04:38.:04:40.

industry from communicating with consumers or smokers is more

:04:41.:04:44.

damaging to them in the longer run. Of all the images where brand

:04:45.:04:48.

something so important, the tobacco industry, it is key, because that's

:04:49.:04:52.

what allows them to charge higher prices and allows them to have the

:04:53.:04:55.

lifestyle that's built around a certain brand and why people choose

:04:56.:05:00.

one or other because essentially the product is pretty much the same?

:05:01.:05:08.

Some of the iconic significant Bretts are iconic globally. It is

:05:09.:05:11.

something they need to generate brand identity to create more

:05:12.:05:16.

revenues. Briefly, just a last thought, as that screw tightens in

:05:17.:05:19.

Europe, the push into emerging markets for ta bobbing co firms will

:05:20.:05:23.

be more important than ever? It becomes increasingly important. They

:05:24.:05:29.

are looking at markets where regulation is less restricted and

:05:30.:05:33.

where tax is lower and to have that leverage to continue to build brand

:05:34.:05:37.

identities and engage consumers will be crucial for them going forward.

:05:38.:05:42.

Absolutely. We will keep a close eye on things from Europe. Shane, for

:05:43.:05:46.

now, thank you. Donald Trump has become the US

:05:47.:05:49.

Republican presidential nominee in all but name after victory

:05:50.:05:51.

in Indiana forced rival Mr Trump, unpopular with many

:05:52.:05:54.

in his own party, now has a clear path to the 1,237 delegates needed

:05:55.:06:01.

to claim his party's crown. The oil giant Royal Dutch Shell has

:06:02.:06:13.

published first quarter earnings down 83% to $814 million,

:06:14.:06:24.

down from $4.8 billion in The oil giant says capital

:06:25.:06:26.

investment in 2016 is now more likely to be $30 billion rather

:06:27.:06:31.

than previous guidance Fiat Chrysler has announced a deal

:06:32.:06:33.

with Google to double the size of the tech giant's fleet

:06:34.:06:37.

of self-driving cars. Fiat will supply 100

:06:38.:06:39.

Chrysler Pacifica vans and provide engineers to help

:06:40.:06:40.

integrate the technology. Prosecutors in Brazil have filed

:06:41.:06:44.

a $43.5 billion civil lawsuit against iron miner Samarco,

:06:45.:06:46.

and its owners BHP It follows the collapse of a dam

:06:47.:06:50.

they owned that caused a massive Let's take you to the live page

:06:51.:06:58.

and killed 19 people. Let's take you to the live page if

:06:59.:07:11.

it is working. It has been difficult this morning. Let me see whether it

:07:12.:07:16.

It has got frustrated. There we go. It has got frustrated. There we go.

:07:17.:07:22.

It is loading up. The live page is a place to get all the news that we

:07:23.:07:25.

don't have time to cover on the programme! Wets can't show you

:07:26.:07:29.

either! It is taking a long time. Have some patience. It is there. It

:07:30.:07:33.

is there. All the reaction to stories, of course over the morning,

:07:34.:07:36.

dominated by two things in the UK, Sainsbury's results, we will touch

:07:37.:07:40.

on those later and also the retailer, Next too, but Shell also

:07:41.:07:45.

there. We've touched on it. First quarter earnings falling 83%, coming

:07:46.:07:47.

in at $814 million. Apple has lost a trademark fight

:07:48.:07:51.

in China, meaning a firm which sells handbags and other leather goods can

:07:52.:07:54.

continue use the name "iPhone". A court in Beijing ruled in favour

:07:55.:08:00.

of the Chinese technology company, which trademarked "iPhone"

:08:01.:08:03.

for leather products Stephen McDonell is in

:08:04.:08:05.

Beijing for us. Stephen, just explain this for us. A

:08:06.:08:19.

leather goods manufacturer wants to use the name iPhone, why? Well, on

:08:20.:08:24.

the face of it, it does seem bizarre, but it makes legal sense.

:08:25.:08:30.

Local Chinese company, has beaten Apple in court over the right to

:08:31.:08:34.

sell its leather bags, calling them iPhone. These are bags, you might

:08:35.:08:39.

put a laptop in or a phone. Letter bags. Apple took them to the local

:08:40.:08:44.

trademark authority and lost. Took them to a local Beijing court and

:08:45.:08:48.

lost again. Now in Beijing's high test court, lost a third time.

:08:49.:08:52.

Crucially, what Apple was not able to prove is that in 2007, it was

:08:53.:08:59.

already an established famous brand here when this Chinese company

:09:00.:09:04.

lodged its registration because it didn't start selling iPhones here

:09:05.:09:08.

until 2009. So they have it, Apple lost. People are able to come to

:09:09.:09:14.

China now and buy a perfectly legal iPhone leather bag which has nothing

:09:15.:09:20.

whatsoever to do with Apple. Stephen, an intriguing tale, thank

:09:21.:09:24.

you very much. It sounds like a David and Goliath story, doesn't it

:09:25.:09:25.

and in this case, David won. Hong Kong is down 1% and you can see

:09:26.:09:40.

behind me, the night before was grim on Wall Street as well. As was it

:09:41.:09:44.

was in Europe too on Tuesday. All because of the bad news about

:09:45.:09:48.

economics. Eurozone growth forecast lowered. Also concern about China

:09:49.:09:52.

and that's really dampened sentiment. So what's happening now

:09:53.:09:56.

in Europe? Well some of the main markets in Europe are bouncing back

:09:57.:10:01.

after heavy falls, but not so for London, the DAX down a bit and the

:10:02.:10:10.

CAC flat. Shell's shares, there is a tongue twister, they're up slightly

:10:11.:10:13.

in London because their news is better than expected. BHP Billiton

:10:14.:10:17.

shares down and falling now in London too off the back of the news

:10:18.:10:22.

we mentioned about the mine in Brazil and prosecutors hitting them

:10:23.:10:25.

with big sums of money. So lots to talk about in a few minutes with our

:10:26.:10:31.

markets guest, but for now, let's hear from Michelle on what we can

:10:32.:10:34.

expect on Wall Street today. The earnings parade continues this

:10:35.:10:37.

Wednesday. One of the most highly anticipated is the first quarter

:10:38.:10:45.

results from at thes lard want expected loss Teslar, investors are

:10:46.:10:48.

beginning to ask is it its share price too rich? This is time for the

:10:49.:10:55.

maker to prove doubters wrong. Turning to the media, CNN maybe

:10:56.:10:59.

beating Fox News when it comes to ratings in the United States, but is

:11:00.:11:03.

the same true for their respective parent companies? 21St Century Fox

:11:04.:11:13.

is expected to report a rise in profits and a rosy picture is

:11:14.:11:17.

forecast for Time Warner which owns CNN. Teeing up Friday's Government

:11:18.:11:25.

jobs data, watch out for the latest snapshot from private employers.

:11:26.:11:29.

Joining us is Maike Currie, investment director

:11:30.:11:30.

Let's pick up on Shell and the interesting thing about Shell is

:11:31.:11:40.

cutting that expenditure for the year.

:11:41.:11:45.

About 10% in Shell's case, it is a big difference? It is a big

:11:46.:11:48.

difference and what we have seen over the last two years, almost two

:11:49.:11:52.

years, these oil companies fighting the low oil price and of course,

:11:53.:11:55.

companies like Shell and BP being the big boys are better positioned,

:11:56.:12:00.

but even they are struggling now and the big question for a company like

:12:01.:12:04.

Shell is how sustainable the dividend is, the income payment is

:12:05.:12:08.

that the company makes to shareholders. Shell hasn't cut its

:12:09.:12:12.

dividend since the Second World War. If the woes continue with oil price,

:12:13.:12:15.

this comes into question. It is the first set of numbers from Shell,

:12:16.:12:20.

isn't it, since their 15th February deal with BG Group. Shell being

:12:21.:12:24.

transformed in many ways, not just by the lower oil price? Absolutely.

:12:25.:12:30.

That deal with BG divided Shell. Some said, will it add value to

:12:31.:12:33.

Shell or will it take value away from Shell? It will be interesting

:12:34.:12:38.

to see where Shell goes from here. Short and sweet, but we'll talk more

:12:39.:12:42.

about Donald Trump, of all things, later in the programme, but for now,

:12:43.:12:46.

thank you. The head of Tom Tom will be

:12:47.:12:51.

here to give us the Inside Track on how the company's been

:12:52.:12:56.

rebuilding its business after Google shook up the market

:12:57.:12:58.

with its free mapping app. You're with Business

:12:59.:13:01.

Live from BBC News. Profits at the supermarket

:13:02.:13:03.

Sainsbury's have come in better than expected,

:13:04.:13:06.

but still mark a second The company made a full-year pre-tax

:13:07.:13:09.

profit of ?587 million compared Our Business Editor Simon Jack joins

:13:10.:13:16.

us from the Business Newsroom. Simon talk us through these. We look

:13:17.:13:31.

at this closely the rivalry between the supermarkets and the battle with

:13:32.:13:32.

the discounters? It will have declining sales. Food

:13:33.:13:59.

prices have fallen 4% over the last two years and if you add that to the

:14:00.:14:03.

white hot competition it is getting from its noisy neighbours, Aldi and

:14:04.:14:07.

Lidl it has been a difficult period indeed. Sainsbury's has been

:14:08.:14:17.

resilient against the newcomers and has held its market share stable at

:14:18.:14:25.

16.5%. It bought Argos. So people will now be looking at how it

:14:26.:14:30.

executes on that strategy. A tough time for supermarkets. A good time

:14:31.:14:35.

for shoppers during this food deflation, but Sainsbury's is

:14:36.:14:38.

holding its own. Shares off a little bit, but it has done better than

:14:39.:14:41.

some. All right, Simon, thank you very much.

:14:42.:14:45.

Simon Jack joining us from our business unit.

:14:46.:14:50.

the tablet is working, so I can show you some of the news, including news

:14:51.:15:03.

from the payday loans firm Wonga. It is reporting pre-tax losses because

:15:04.:15:08.

of reduction in UK consumer lending volumes, as it calls it, but it is

:15:09.:15:12.

basically the tougher lending criteria. It is also saying it is

:15:13.:15:16.

trying to be more responsible about who it is lending to. Looking at

:15:17.:15:23.

some of the other stories on the Business Live page. What is going

:15:24.:15:30.

wrong for Next? Coming through with numbers not so good this time.

:15:31.:15:39.

Our top story: Tobacco giants are in court today in a final

:15:40.:15:44.

attempt to reverse the EU's Tobacco Products Directive.

:15:45.:15:49.

The new rules would mean that cigarettes will have to be

:15:50.:15:54.

sold in packs of 20, and 65% of the packet must be

:15:55.:15:57.

There is also debate about entirely plain packaging.

:15:58.:16:08.

Now, it wasn't too long ago that the paper maps were king,

:16:09.:16:12.

and rows over which route to take were common.

:16:13.:16:16.

All that changed, though, with the advent of the sat nav

:16:17.:16:18.

Tom Tom was one of the firms that led that revolution.

:16:19.:16:28.

In the final quarter of 2007, the firm made $124 million,

:16:29.:16:31.

But it didn't take long for things to go wrong.

:16:32.:16:35.

Two years later in 2009, the company made a loss

:16:36.:16:38.

of $43 million in the first quarter of the year.

:16:39.:16:40.

Well, the market was turned upside down almost overnight by Google's

:16:41.:16:46.

decision to start offering a free mapping service for phones.

:16:47.:16:53.

Since then the company has undergone a bit of a revolution,

:16:54.:16:56.

and now has a deal with Uber to provide it with digital maps.

:16:57.:17:05.

As well as traditional mapping tech, the company has also been branching

:17:06.:17:08.

out, launching a range of gadgets from smart watches and fitness

:17:09.:17:10.

Corinne Vigreux is the co-founder of Tom Tom, and she joins us now.

:17:11.:17:18.

Good morning, nice to see you. Let's just talk about this. It was a fall

:17:19.:17:27.

from grace, you were doing so well at the top of the market, Tom Tom

:17:28.:17:35.

Rumack were revolutionising the way that we made our way around the

:17:36.:17:38.

world, but overnight, things changed, Google launched its free

:17:39.:17:45.

app. Not only that, 2008 was a perfect storm, there was the crisis,

:17:46.:17:56.

we had found that the level of penetration of the sat nav is was

:17:57.:18:00.

quite high. So we had to reinvent ourselves. We knew we had to

:18:01.:18:06.

diversify, and we acquired a competitor. Our aim was to be the

:18:07.:18:11.

best navigation, to know the road the best on the market, and we

:18:12.:18:17.

started working on big technology that today is going to help us be a

:18:18.:18:25.

major player in driverless cars, so we have invested a lot of money in

:18:26.:18:28.

knowing every ten centimetres of every road in the world. But you had

:18:29.:18:34.

the likes of Google emerge, and that came already on people's smart

:18:35.:18:39.

devices, but also car manufacturers as well were putting sat nav devices

:18:40.:18:46.

as a part of the car, so you no longer need to get a Tom Tom. That

:18:47.:18:52.

is true, but we are still selling a lot of devices, in Europe we sell

:18:53.:18:57.

more than 4 million per year, and in the UK, last year, and in Germany,

:18:58.:19:03.

the sales of sat nav stabilised. So there are still a lot of customers

:19:04.:19:07.

valuing the independence of a sat nav in the car, no roaming charges,

:19:08.:19:14.

never out of coverage. And Tom Tom has been working along time on

:19:15.:19:17.

routing and traffic information, it is still the best on the market

:19:18.:19:21.

today. How would you differentiate yourself from something that is

:19:22.:19:25.

provided for free and you are asking people to pay a couple of hundred

:19:26.:19:31.

dollars for it? If you have a telephone, you have to connect, you

:19:32.:19:34.

have to be online to be able to download information. With the Tom

:19:35.:19:41.

Tom, it is a no-brainer, it is dedicated navigation, and we keep

:19:42.:19:44.

working really hard to make that the best it is, and it was interesting

:19:45.:19:50.

in London yesterday, to see all of those cabbies using our products,

:19:51.:19:56.

and that was the testimony that they are the best product on the market.

:19:57.:20:00.

You have launched a lot of new devices, some of them smart devices,

:20:01.:20:04.

but you are also looking at the driverless car. Yes, it is quite

:20:05.:20:11.

nice to have made it to the dictionary as a synonym to sat nav,

:20:12.:20:15.

we got voted yesterday, top 50 gadgets in the last century, so it

:20:16.:20:20.

is very flattering, but at the same time, we focus on the next 25 years,

:20:21.:20:25.

and I think we were be playing a major role in the way we move in

:20:26.:20:29.

cities in the next 25 years and in bringing technology for self driving

:20:30.:20:35.

cars. If cars are driverless, they need external information. Yes, it

:20:36.:20:39.

is a mix of sensors, but they need to know exactly what is happening on

:20:40.:20:48.

the road, and we are working on 3-D high-definition road mapping, and

:20:49.:20:52.

you need that when you don't have a driver behind the wheel. Do use the

:20:53.:20:57.

voice of Darth Vader for one of your Tom Tom? I was told by one of my

:20:58.:21:04.

presenter colleagues. Yes, Bart Simpson. We have got them all. You

:21:05.:21:08.

should have a Ben Thompson voice, maybe. I hear enough sallied undock

:21:09.:21:11.

voice right next to me. It's now just 50 days until polling

:21:12.:21:15.

stations open for the UK's But when it comes to the business

:21:16.:21:18.

debate, it's easy to focus on the powerful voices

:21:19.:21:24.

behind billion dollar companies - but the majority of UK firms

:21:25.:21:26.

are actually small and medium sized The BBC has been scouring

:21:27.:21:29.

the country to find out what EU membership means to small businesses

:21:30.:21:33.

- those on the front line. My name is Bethany Sawyer. The

:21:34.:21:46.

company is called Bio farm UK Limited, and we distribute leeches

:21:47.:21:53.

to hospitals. They are used in post-reconstructive surgery, so it

:21:54.:21:58.

is if you are reattaching a limb, a digit, a skin draft. At the moment

:21:59.:22:04.

there is a clause which means that because leeches have been used for

:22:05.:22:07.

so long in medicine, we are able to supply them without hassle, however

:22:08.:22:13.

I do think there is a definite move towards more and more EU medical

:22:14.:22:20.

device regulation. There are several medical device directives coming

:22:21.:22:22.

out, more in the pipeline, so the longer we stay in the EU, the more

:22:23.:22:27.

complicated it will get for us. It would mean we potentially face

:22:28.:22:32.

submitting massive amounts of paperwork to supply with the EU

:22:33.:22:37.

medical device regulations, and that is a considerable cost, a

:22:38.:22:38.

considerable addition to your overhead.

:22:39.:22:41.

Tune in tomorrow where we'll be speaking to another small business

:22:42.:22:44.

with a more favourable view on EU membership.

:22:45.:22:46.

And of course you can find more from our series "EU: Business Talks"

:22:47.:22:49.

A quick update on the story at the start of the programme, the ruling

:22:50.:22:55.

from the European court of justice in the European union related to the

:22:56.:22:59.

tobacco companies. The court has ruled that the new EU directive has

:23:00.:23:06.

tough rules and is valid, and it will allow member states to

:23:07.:23:08.

introduce further restrictions, including things like plain

:23:09.:23:12.

packaging, the ban on things like menthol cigarettes, and graphic

:23:13.:23:19.

warnings on packages. The advocate general gave his advice some weeks

:23:20.:23:22.

ago saying that he felt this was the right decision, so it comes as no

:23:23.:23:26.

surprise. That is the decision just fruit from the European court of

:23:27.:23:30.

justice. We asked you to get in touch to tell us whether you believe

:23:31.:23:33.

business leaders make for good politicians. This is following

:23:34.:23:38.

Donald Trump winning the last element in the race to become the

:23:39.:23:44.

nominee for the Republican party. We will discuss that in just a moment,

:23:45.:23:47.

but just run through some your comments. We like this one: It says

:23:48.:23:58.

that you two, referring to Sally and I, no more about business and would

:23:59.:24:02.

be better politicians than Donald Trump! And one from Ryan who says,

:24:03.:24:08.

Mike Bloomberg is an example, but he is the exception. Let's

:24:09.:24:23.

Maike Currie, in reintroduce vestment

:24:24.:24:26.

what you think of Donald Trump? It is staggering that he has come from

:24:27.:24:41.

this far, and now we have the firing gun in one of the most ugly

:24:42.:24:46.

presidential races, because both candidates have very un-favourable

:24:47.:24:50.

ratings, so it will be interesting. And what is so interesting about

:24:51.:24:53.

Donald Trump, he has got to the position he has done because the

:24:54.:24:58.

media is assessed with him, but also coming out with radical statements

:24:59.:25:03.

on immigration and health care. But the trick then is getting any of

:25:04.:25:07.

those into policy if and when he wins the presidential race. It is

:25:08.:25:11.

one thing having those views, it is another making them into policy.

:25:12.:25:16.

That is a key point, because there is a difference between a highly

:25:17.:25:19.

charged presidential race and actually being the President. The

:25:20.:25:23.

way the American political system is set up, you have Congress, the

:25:24.:25:26.

Supreme Court, and all of these bodies serve to put grit in the

:25:27.:25:30.

wheels, so it is difficult to get policies through. And thinking ahead

:25:31.:25:37.

as well, we have about 20 seconds left, so we can't say very much, but

:25:38.:25:42.

a lot of discussion in the market again about US interest rates and

:25:43.:25:46.

when they may change. Does this have any effect on that at all? US

:25:47.:25:51.

elections really don't have a big impact on the market, but June is

:25:52.:25:54.

the key month, the later part of June, we will see whether the

:25:55.:25:58.

announcements on interest rates, and more policy and central bank.

:25:59.:26:01.

Morning. This coming weekend should see the warmest weather of the year

:26:02.:26:16.

so

:26:17.:26:17.

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