The Wall Street Journal - 02.08.2019

THE WALL STREET JOURNAL. ** Friday, August 2, 2019 |B3

discussed last week.”

Earlier this week Verizon

turned on the faster service in

parts of Washington, Indianap-

olis, Atlanta and Detroit. To

date, its 5G signal in cities like

sent shares tumbling last week.

Fiat Chrysler posted an 8.9%

operating margin, or operating

profit as a percentage of reve-

nue, in North America in the

quarter, higher than Ford’s 7.1%.

Big pickups give the Detroit

car makers a vital profit lifeline

as pressures build in the U.S.

and abroad, especially in China.

The three companies account

for more than 90% of U.S. sales

of the big rigs, which analysts

estimate generate the bulk of

global profit at GM and Ford

and a substantial portion of the

bottom line at Fiat Chrysler.

The three Detroit compa-

nies have cut most of their car

lines to focus on pickups and

sport-utility vehicles. They

have been rolling out new

models that are commanding

higher prices. GM’s Chevrolet

Silverado and GMC Sierra left

showrooms for about $45,500

on average in the second quar-

ter, up 6% from a year earlier.

“You’re really starting to see

the earnings potential of our

truck franchise,” GM finance

chief Dhivya Suryadevara told

reporters. The company stood

by its full-year earnings guid-

ance of $6.50 to $7 a share.

GM’s operating profit for the

period fell to $3 billion, or

$1.64 a share, better than the

average analysts’ estimate of

$1.44 a share. The auto maker

said revenue dropped 2% to

$36.1 billion. GM warned

China’s car market will likely

continue to struggle. Industry

sales there fell 12% in the first

six months of the year, and

GM’s sales sank 15%.

Elsewhere, earnings have

slumped at the German luxury

car makers as trade tensions,

slowing China demand and

higher costs for developing

electric cars take their toll.

BMWAG reported its sec-

ond-quarter earnings tumbled

29%.DaimlerAG also said it

would accelerate cost-cutting

efforts in the second half after

reporting its first quarterly

loss in a decade.

Sales of big pickup trucks
to American buyers are help-
ing Detroit’s car companies
counter a sputtering global
auto market.
General MotorsCo.’s shares
rose Thursday, before pulling
back with the broader market,
after the auto maker forecast
an acceleration in profit
through the rest of 2019, which
executives said will be driven
by an overhauled line of its big-
gest pickup trucks.
GM’s profit from North
America climbed 13% in the
second quarter, and the com-
pany posted a 10.7% operating
margin in the region—the high-
est in two years—helping offset
weak China sales that more
than halved its quarterly in-
come from that market.
Fiat Chrysler Automobiles
NV also surprised investors
this week with an upbeat out-
look after its Ram truck brand
and Jeep business drove
higher margins and operating
profits in North America, lead-
ing to flat second-quarter op-
erating profit overall.
GM and Fiat Chrysler solidi-
fied their profitability lead in
North America overFord Mo-
torCo., whose operating re-
sults in the region slipped in
the quarter. Ford’s top-selling
pickup-truck franchise helped
offset losses in China and South
America, but higher-than-ex-
pected costs and a disappoint-
ing profit outlook for the year

BYMIKECOLIAS

Trucks Steer Detroit Through China Woes

Ford

GM

Fiat Chrysler

FiatChrysler

Ford

GM

North America earnings*,

change from a year earlier

Sources: the companies(earnings);FactSet(stockprice)

*Adjusted earnings before interest and taxes

20

–10

–5

0

5

10

15

%

’182017 ’19 ’17’18’19 ’17’18’19

2Q

Home-Field Advantage

TrucksalesintheU.S.areliftingprofitsforGMandFiatChrysler.

Stock price performance since Jan. 1

40

–20

–10

0

10

20

30

%

Jan. Feb. March April May June July Aug.

plans to add a plant-based Im-

possible Whopper at its more

than 7,000 U.S. restaurants be-

ginning Aug. 8, expanding on a

test earlier this year.

Chris Finazzo, Burger King’s

president for North America,

said the plant-based patties

contain less calories, fat and

cholesterol than traditional

Whoppers, and have drawn

new customers to the chain in

seven test markets. The sug-

gested price of $5.59 is about

a dollar more than for a regu-

lar meat Whopper. “We think

the health benefits and envi-

ronmental benefits make it at-

tractive to our guests,” Mr. Fi-

nazzo said in an interview.

Dunkin’ Brands GroupInc.

last week added breakfast

sandwiches made with Beyond

Meat’s imitation sausage at

restaurants in Manhattan.

Impossible and Beyond

mimic ground beef by extracting

proteins from soy and yellow

peas and combining them with

starches, oils and juices to pro-

duce patties that convincingly

sizzle, brown and bleed. Both

companies promote their burg-

ers as better than beef for hu-

man health and for the environ-

ment, by reducing the

environmental impact from live-

stock, the grain they consume,

and their waste.

Impossible said plant-de-

rived foods contain less cho-

lesterol than traditional meat

and pose less risk of food-

borne illness arising from

slaughterhouse contaminants.

Beyond cited studies linking

consumption of animal-based

meat to an increased risk of

cancer and heart disease.

BUSINESS NEWS

Beyond and Impossible pat-

ties contain about 20 grams of

protein, similar to a quarter-

pound of traditional beef, ac-

cording to data from the com-

panies and the U.S.

Department of Agriculture.

The alternative burgers con-

tain about 250 calories, versus

about 290 for ground beef.

Plant-based patties tend to

contain roughly five times

more sodium than beef, though

the companies say consumers

often salt their beef burgers.

Impossible’s burger contains

nine grams of carbohydrates

and Beyond’s contains three,

versus none in beef.

On the other hand, meat al-

ternatives contain no choles-

terol, compared with 80 milli-

grams in a 4-ounce, uncooked

beef patty. Both Impossible and

Beyond burgers contain more

iron than beef—about 25% of

an average consumer’s daily

recommended intake, versus

about 10% for beef. Beyond’s

burger has six grams of satu-

rated fat and Impossible’s eight,

versus 8.6 in ground beef.

AChipotle Mexican Grill

Inc. spokeswoman said the

fast-casual chain avoids foods

with artificial colors, flavors

or preservatives and views

plant-based meats as too pro-

cessed. Chipotle sells other

meat-free options including

vegetarian burritos and tacos,

along with salads.

Beef producers, fearful that

plant-based products could cut

into sales of traditional burg-

ers and steaks, want to play

up beef’s nutritional distinc-

tions. Kenny Graner, a North

Dakota cattle rancher and

head of the U.S. Cattlemen’s

Association, said the industry

should launch a campaign sim-

ilar to its “Beef. It’s What’s for

Dinner” advertisements.

Plant-based burger makers

say their products are better

for the planet than beef.

Whether they are better for

consumers’ health is a differ-

ent question.

Debate over the nutritional

merits of patties made from soy,

peas, coconut and other plants

is growing as meatless products

stampede into tens of thou-

sands of supermarkets and res-

taurants, and their manufactur-

ers rush to ramp up production.

Beyond MeatInc. andIm-

possible FoodsInc. say their

plant-based products contain

less cholesterol and saturated

fats than other meats. Some nu-

tritionists point out that they

contain almost as many calories

and more sodium than beef and

that they are highly processed.

“People assume that be-

cause it’s plant-based, it’s in-

stantly healthy food,” said De-

siree Nielsen, a dietitian who

advises clients on eating and

hosts a vegetarian cooking

show on Amazon Prime.

“That’s clearly not the case.”

Ethan Brown, Beyond’s

chief executive, said his com-

pany’s products are a clear nu-

tritional improvement on beef.

“Are we a lot better, from a

health perspective? Abso-

lutely,” he said.

Beyond’s shares have rock-

eted nearly eightfold since the

company’s May initial public

offering, putting the company’s

current value at $11.8 billion.

Late Wednesday, Beyond con-

ducted a sale of 3.25 million

shares at $160 each. Mean-

while, Impossible in May raised

$300 million in new funding

from private investors, valuing

the company at $2 billion.

Burger King said Thursday it

BYJACOBBUNGE

ANDHEATHERHADDON

Debate Sizzles on Meatless Patties

Vital Signs

Salesgrowthforplant-basedburgersisoutpacingthatoftraditionalmeatpatties,whichhavemore

gramsoffatthanmeatlessrivalsbutlesssodium.

Number of servings, change

from previous year*

Sources: NPD Group(servings);USDA,the companies(nutritional data)

*For the 12 months ended in May of each year †80% lean beef

15

• 15


• 10
  
  
  • 5
  
  
  
  

0

5

10

%

2015 ’ 16 ’ 17 ’ 18 ’ 19

Burgers

Veggieburgers

andsandwiches

Select nutritional data for a quarter-pound uncooked patty

287

194

22 6

80

75

250

20

18

0

390

240

19

14

0

370

CALORIES

PROTEIN(grams)

FAT(grams)

CHOLESTEROL(milligrams)

SODIUM(milligrams)

BEYOND

BURGER

GROUND

BEEF†

IMPOSSIBLE

BURGER

Burger King plans to expand a test of the Impossible Whopper.

BEN MARGOT/ASSOCIATED PRESS

closer in size to Verizon or

AT&T Inc. The merger still

faces challenges from a state

lawsuit seeking to block it.

T-Mobile said last week it

added 710,000 net postpaid

phone customers in the second

quarter, while AT&T’s wireless

business added 72,000 in the

period. Postpaid customers

are considered lucrative for

carriers because they pay their

bill monthly under longer-

term contracts.

Verizon has put upgrading

its network to 5G at the heart

of its corporate strategy and is

working to identify ways to

generate fresh revenue from

businesses and consumers.

Matt Ellis, Verizon’s finance

chief, said the company has

the right strategy regardless

of whether T-Mobile and

Sprint merge. If the deal goes

through, the companies will

spend two to three years inte-

grating their networks, he

said. “That’s a big lift, as they

Chicago has been ultrafast but

spotty, in part because it uses

high-frequency airwaves that

don’t travel long distances.

Executives defended the

carrier’s spectrum portfolio

and said they have the assets

they need to expand coverage.

Hans Vestberg, Verizon’s chief

executive, told analysts the

company was quickly expand-

ing its coverage in some of the

first 5G cities and touted the

ultrafast speeds available.

Verizon executives have

said it would take years for

the network upgrades to bring

in more revenue. The carrier

has said it would eventually

charge $10 a month for the

service, but is currently waiv-

ing that charge for new 5G

customers. Its 4G service,

meanwhile, faces competition

for subscribers in the satu-

rated U.S. market. Verizon is

trying to draw new customers

and upgrade existing custom-

ers to pricier tiers of its un-

limited data plans.

Verizon had 118.12 million

wireless connections, includ-

ing tablets, smartwatches and

other devices, at the end of

June, compared with 117.9 mil-

lion at the end of March.

Mr. Vestberg has restruc-

tured Verizon by type of cus-

tomer served rather than prod-

uct sold. The strategy could

help de-emphasize legacy prod-

ucts like Fios video, which lost

52,000 customers in the second

quarter.

Overall, net income attrib-

utable to Verizon was $3.9 bil-

lion, down from $4.1 billion a

year earlier. Quarterly revenue

declined slightly to $32.1 bil-

lion from $32.2 billion a year

ago. Revenue within Verizon’s

media unit, which includes Ya-

hoo and AOL properties, was

$1.8 billion, down 2.9% from a

year ago.

Verizon Communications

Inc. added more wireless cus-

tomers in the second quarter

than some analysts expected

as the carrier stepped up its

promotions and pushed to

bring faster 5G wireless ser-

vice to more cities.

The carrier said it added

245,000 net postpaid phone

connections during the period

compared with 199,000 such

connections added during the

same period last year.

JPMorgan Chase& Co. an-

alysts said earlier this week

that they expected Verizon to

top their expectation that it

would add 175,000 postpaid

phone connections in the sec-

ond quarter. Verizon’s earn-

ings come nearly a week after

rivalT-Mobile US Inc. re-

ceived approval from federal

antitrust officials to merge

with Sprint. The union would

create a wireless company

BYSARAHKROUSE

Verizon Adds Wireless Customers at Faster Pace

Verizon'snetpostpaidphone

additions

Source: the company

800

• 400


• 200

0

200

400

600

thousand

2017 ’ 18 ’ 19

2Q2 019

+245,000

 Heard on the Street: Calm

before the 5G storm........... B12

The process to sell a piece
of Miramax may be reaching
its final act.
Several potential buyers
have expressed interest in
purchasing a stake in the stu-
dio, which is owned byBeIN
Media Groupand has pro-
duced popular and critically
acclaimed films such as “Good
Will Hunting” and “Pulp Fic-
tion,” according to people fa-
miliar with the matter.
Among the leading con-
tenders to take a partnership
stake in the studio areLions
Gate Entertainment Corp.,
Viacom Inc. and Spyglass
Media Group, the people said.
Qatar-based BeIN is seek-
ing to sell as much as 50% of
the studio in a deal that
would value the company at
as much as $650 million, ac-
cording to people familiar
with the matter.
Miramax Chief Executive
Bill Block and Chief Operating
Officer Bob Osher, veteran en-
tertainment executives, will
stay with Miramax after the
sale of the partnership stake,
one of the people said.
Lions Gate, Viacom and
Spyglass declined to com-
ment.
Founded by Harvey and
Bob Weinstein in 1979, Mira-
max in the 1990s became the
best-known producer of inde-
pendent film, credited with
finding box-office hits in the
art house and collecting a
trove of Academy Awards in
the process.
In today’s marketplace,
Miramax’s library, which in-
cludes “Shakespeare in Love”
and “Chicago,” has renewed
value as streaming services
create a seller’s market for
programming and smaller stu-
dios look for ways to expand
and better compete with Walt
Disney Co. and AT&T Inc.’s
Warner Bros—companies big
enough to command major
box-office returns and launch
their own streaming services.
A group that included Col-
ony Capital and the Qatar In-
vestment Authority sold Mira-
max to BeIN in 2016 for an
undisclosed amount. Colony
Capital and the Qatar Invest-
ment Authority paid about
$650 million to buy Miramax
in 2010, years after the Wein-
stein brothers left Disney.
The Miramax assets could
help Lions Gate bulk up in an
ecosystem that many execu-
tives say requires scale, espe-
cially since the company lacks
the megafranchises that com-
petitors have.
Lions Gate already distrib-
utes the Miramax library on
home entertainment.

BYBENJAMINMULLIN
ANDERICHSCHWARTZEL

Bidders

Emerge in

Miramax

Sale Talks

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