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Unilever switches some ingredients to adapt to commodities shortages

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© Reuters. FILE PHOTO: Degree, a brand of Unilever, is seen on display in a store in Manhattan, New York City, U.S., March 24, 2022. REUTERS/Andrew Kelly

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By Richa Naidu

LONDON (Reuters) – As commodities – from crude oil to sunflower oil – remain in short supply, Britain’s Unilever (NYSE:UL) has changed the ingredient makeup for some of its products like deodorants and packaged food to cut costs and mitigate supply constraints.

The ability to switch ingredients and materials, something consumer goods manufacturers traditionally find difficult, became even more valuable after Russia’s invasion of Ukraine led to commodity prices hitting multi-year highs.

In April, Unilever boss Alan Jope said the company had begun altering some of its recipes so it could use rapeseeed oil instead of sunflower oil, which had become scarce since the invasion. Ukraine typically produces about half the world’s exports of sunflower oil.

According to Unilever’s head of research and development, Richard Slater, the maker of Dove soap and Knorr stock cubes is not stopping there.

“Globally, there was a shortage of silicon so we were looking at our deodorant and making sure that we looked at the formulations there…to use less ingredients that are under pressure,” Slater said in an interview.

Unilever, which makes Rexona, Dove, Axe and Lynx deodorants, dealt with this issue last year, he said.

In its home and beauty care businesses, the company has also been trying to reduce its products’ reliance on petrochemicals and make them more sustainable.

“That has a double benefit if you can get a better product that is more sustainable, but also reduce the pressure on some of those ingredients under cost pressure,” Slater said.

Many packaged goods makers have tried to wean themselves off palm oil, which has been blamed for deforestation and labor abuses, but is used in everything from P&G’s Tide pods to Ferrero’s Nutella.

On Thursday, Unilever said it had tied up with San Diego-based Genomatica to build and commercialize alternatives to palm oil and fossil fuel-derived cleansing ingredients.

“We’re not talking about a few thousand tonnes here, we are talking meaningful commercial scale,” Slater said, declining to provide details about how much of the new ingredient it plans to produce in the near term.

Sourcing alternatives to palm is also “really important from a supply resilience point of view” due to the pricing around the commodity, Slater added.

Unilever no longer relies solely on manual testing when it changes its formulas. Instead, it digitally models how new ingredients would affect products, Slater said.

For instance, he added, as it alters recipes for shampoos, the company uses robots to try dozens of differently modeled potential products on hair in a matter of hours.

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Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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