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Blue Apron Puts Ebitda Breakeven On Table For Late 2018 Shares Rise

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NEW YORK – Blue Apron Holdings Inc (APRN.N) said on Tuesday it could break even on a key measure of profitability earlier than Wall Street analysts had expected, fueling a brief surge in the meal-kit maker’s shares.

Chief Executive Brad Dickerson said adjusted earnings before interest, tax, depreciation and amortization could turn positive as soon as the fourth quarter, as Blue Apron boosts revenue while cutting capital spending and administrative costs.

That would be a major milestone for the company which has not turned an annual profit by any measure since being founded in 2012 and has not moved closer since its high-profile initial public offering in June last year.

Blue Apron pioneered the meal-kit market, selling subscriptions for pre-portioned ingredients paired with recipes for restaurant-style meals like tilapia piccata and miso-glazed barramundi, but has faced a rash of new competitors including Amazon.com Inc (AMZN.O).

Blue Apron has spent heavily on moving one of three distribution hubs to a bigger, more automated facility, but that came at the cost of marketing efforts, meaning it focused on squeezing more revenue from its user base rather than attracting new customers.

With the distribution switchover completed, Blue Apron now plans to ramp up marketing again to battle for new meal-kit customers in the hope of boosting revenue.

“That breakeven EBITDA in ‘19 assumes that we would continue to improve margins going forward,” Dickerson said on a conference call with analysts. “The second thing it does assume is that we do return to some kind of full-year growth in revenue top line year-over-year.”

Blue Apron shares surged as much as 25 percent in morning trading to $4.20, but fell back to $3.46, a 3.4 percent gain. They are well below their June 2017 IPO price of $10.

Analysts on average expected the company to post negative quarterly EBITDA through at least the end of 2018, according to Thomson Reuters I/B/E/S.

FILE PHOTO: The Blue Apron logo is pictured ahead of the company’s IPO on the New York Stock Exchange in New York, U.S., June 29, 2017. REUTERS/Lucas Jackson/File PhotoStill, Blue Apron forecast first-quarter revenue of $190 million to $200 million, below analysts’ average estimate of $220 million, although the company has in the past been conservative with its revenue estimates.

REVENUE PER CUSTOMER UP

For the fourth quarter, Blue Apron reported a smaller drop in sales than expected and a tick up in average revenue per customer, which it attributed to a more varied menu and meals with shorter prep times. Total orders and customers fell.

Average revenue per customer rose to $248 from $245 in the third quarter and $246 a year earlier. Revenue was $187.7 million, down 13 percent but exceeding analyst estimates for $185.1 million.

Blue Apron had a net loss of 20 cents a share, beating analysts’ average estimate for a wider net loss of 27 cents per share.

Costs as a percentage of revenue improved from the third quarter, thanks to better recipe planning at its new hub in Linden, New Jersey, and seasonal benefits like cheaper packaging and fewer seasonal food items.

Blue Apron said it was launching a new national brand campaign in the final week of December, which it credited to the improvements at Linden.

It was the company’s first earnings report under Dickerson, who became CEO after co-founder Matt Salzberg stepped down in November. Dickerson joined as chief financial officer in February 2016 from apparel maker Under Armour Inc (UAA.N).

Amazon unveiled a deal to buy Whole Foods just as Blue Apron was preparing to go public, gaining what many saw as a food distribution network in the grocery chain.

Amazon has also been selling its own kits, with its website listing meals like tacos al pastor for two, but customers need to pay for an AmazonFresh add-on to Prime membership that is only available in select cities to order.

Reporting by Meredith Mazzilli;

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Blackrock Upgrades Outlook For Us Stocks On Earnings Momentum

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– The world’s biggest asset manager BlackRock Inc (BLK.N) upgraded its view on U.S. stocks, citing very strong earnings momentum, while cutting European stocks to neutral.

In a note on Monday, BlackRock’s global chief investment strategist Richard Turnill pointed to tax cuts in the United States and government spending plans as driving earnings growth and said the ratio of earnings upgrades to downgrades for U.S. large-capitalization companies was at its highest since records began in 1988.

Turnill said the “swoon” in equity markets in early February made U.S. valuations look more attractive, pushing the company’s three-month view on U.S. stocks to “overweight,” from neutral. It is BlackRock strategists’ first outright positive reading on U.S. stocks since May 2016.

“We believe the coming positive effects of new U.S. tax and spending plans are still underappreciated by markets,” BlackRock’s Turnill said in the note.

“We find earnings growth matters more than valuations over shorter time horizons at this stage of the bull market,” Turnill said, adding:

“Economic strength was already changing the tone of earnings momentum, but U.S. tax cuts and government spending plans lit a fire under the trend.”

Turnill noted that while earnings momentum in Europe was robust, it lagged other regions and said the euro’s strength is a “source of pain.”

The S&P 500 .SPX index is up more than 2 percent this year, while Europe’s STOXX 600 is down nearly 3 percent, in terms of price.

Reporting by Trevor Hunnicutt, Kit Rees and Thyagaraju Adinarayan;

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Uber Suspends Service In Morocco After Two Years

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BRUSSELS – Uber said on Monday it would suspend operations in Morocco, two years after they began, as it tries to bring its business into line with local laws.

Uber has already halted services in Norway and Finland as it waits for the regulatory framework to change in those countries, a sign of the less pugnacious approach the company is taking toward local authorities.

The U.S. ride-hailing company has faced bans, restrictions and protests around the world as it disrupts conventional taxi services. But its new chief executive, Dara Khosrowshahi, has struck a more conciliatory tone after a string of controversies that emerged under the former CEO, Travis Kalanick.

“Since we launched in Morocco over two years ago, there has been a lack of clarity about new platforms like Uber and how they fit into the existing transport model,” Uber said in a statement.

The company has engaged with policymakers to find a solution but “despite consistent dialogue … we have yet to see any constructive progress on the regulations and can safely say we have exhausted all measures.”

Uber will halt its services in Casablanca on Friday. It said services would resume as soon as new rules were in place.

Morocco only recognizes conventional taxis and has no provisions for private hire vehicles.

Uber has had to suspend its service using non-professional drivers in several European cities like Paris and Brussels, but it still operates a licensed service there.

Khosrowshahi, who took over at Uber last year, said in October that “regulating services like Uber is totally appropriate”.

Uber has 19,000 regular riders in Morocco and 300 drivers, who will be provided with financial support over the next two weeks.

“We are committed to supporting the hundreds of drivers that have benefited from the economic opportunities of using the Uber app. We will be working closely with them through this difficult transition,” Uber said.

Reporting by Julia Fioretti,

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Global Mining Deals Jump 15 Percent By Value In 2017 Ey

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LONDON – The value of global mining and metals deals hit a four-year high in 2017, according to accountancy firm EY, as financial distress abated and companies sold off non-core assets.

Mining and metals deals totaled $51 billion last year, up 15 percent from 2016 and dominated by coal and steel transactions, although the volume of transactions fell 6 percent.

“The focus for most of the sector in 2017 was consolidating balance sheet strength and maintaining capital discipline,” EY said in a quarterly report on the sector, published on Monday.

Coal transactions surged 156 percent to $8.5 billion as the world’s move to renewables prompted miners to shift away from thermal coal.

One of the biggest coal deals last year was Rio Tinto’s (RIO.L) sale of its Coal and Allied mines to Australia’s Yancoal (YAL.AX) for $2.7 billion.

Steel deals doubled to $13.3 billion, mainly comprising large Chinese mergers and divestments in Latin America, while gold transactions fell 34 percent to $7.3 billion.

Money raised by mining companies from stock exchange listings rose to $2.8 billion, the highest in six years but paltry compared to the $17 billion raised in 2011 at the height of the commodities boom.

For the coming year EY expects deals to be fueled by the industry’s return to investment-led strategies aimed at building portfolios rather than divestment-oriented deals that dominated in 2017.

“We expect to see more deals in 2018 as investment-led strategies begin to dominate, but the return of transformational consolidation across the industry is unlikely as capital discipline is maintained,” said EY global mining and metals transactions leader Lee Downham.

Prices of commodities such as copper, zinc, coal and iron ore surged for a second straight year in 2017 on a combination of dwindling supply and higher demand.

There will be renewed pressure on miners this year to participate in battery technology and reduce reliance on fossil fuels, EY said, while the drive to focus on business in lower risk jurisdictions should influence deals in precious metals.

Reporting by Zandi Shabalala;

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