tv BBC Business Live BBC News January 31, 2019 8:30am-9:01am GMT
this is business live from bbc news with victoria fritz and sally bundock. investors "like" what they hear from facebook, as revenue smashes forecasts, despite recent scandals. live from london, that's our top story on thursday 31st january. shares in the social network surge after its latest earnings allay concerns about users and advertisers turned off by the recent storm of negative publicity. also in the programme... china's vast manufacturing sector shrinks for a second consecutive month, raising fresh fears about the pace of slowdown in the world's second—largest economy. and the markets are open across europe and as you can see, the ft—se
100 leading the charge. and from niche specialist to global business — we'll get the inside track on sole bliss shoes, which provides stylish footwear for ladies with bunions. which provides stylish footwear it counts royalty among its customers. also in the programme, politicians in britain say that fashion brands‘ lack of action on ethics is shocking. but would that really put you off a $1t—shirt? you off a £1 t—shirt? let us know — just use the hashtag #bbcbizlive. hello and welcome to business live. we start with facebook — shares in the world's biggest social network have jumped in after—hours trading after its revenues came in much better than expected. the numbers show, for now, there's been little impact on the business from a storm of negative publicity — from fake news to privacy to toxic content — and the threat of
tougher regulation. let's show you the details. in the three months to december, facebook made revenues of almost $17 billion. that's up just over 30% on the same period last year. 6.8 billion of that was profit, a record for the firm. unbelievably, the network is still growing. almost two and a third billion people log onto facebook at least once a month — 1.5 billion of those every single day. and that total figure is up 9% on last year. the results will be a welcome relief for facebook‘s investors. it's had a tough year, including, injuly, the biggest one—day loss in stock market value for a us company after it warned of the impact of issues like data privacy initiatives. here's our north america technology correspondent dave lee.
since march 2018, facebook has faced scandal after scandal. it began with cambridge analytica, it moved onto serious data breaches. there were complaints about political manipulation and concerns about how the company is doing market research on teenagers. what has that meant for its bottom line? compared to 2017, in 2018, facebook profits were up by 39%. it seems these users are, for the most part, turning a blind eye in the face of facebook‘s many scandals. now more than 2.7 billion people use of facebook people use a facebook product every single month. but where users seem not to care, the same will not be said for regulators. there are huge fines coming for facebook. the question is, how damaging will that be? parmy olson is here, senior technology writer at forbes. welcome to the programme, parmy, you
we re welcome to the programme, parmy, you were listening to the conference call from mark zuckerberg late yesterday after these results came out. what you make of what place but had to tell us? first of all, you could forgive mark zuckerberg fulfilling a bit smug right now because 2018 was a horrible year, reputation wise, for facebook. as you first mention, incredible results, revenue profit up, use growth is up, still growing. one thing they mentioned is that the growth is being driven in developing markets. indonesia and the philippines, for example, but there is still growth in north america and canada so, despite everything, people are still signing up. why are we, do you think? i think the network effects. it has 2.3 billion users, two points 7 billion when you include instagram and what sap and
friends and family have to be are as well —— whatsapp. and even though it is unpopular to use it, people still checking, check on groups and events. what about this issue about how facebook is used by other information, what about swaying collections, serious stuff going on in the background that they keep apologising for but it is undermining trust in facebook. what did mark zuckerberg say about that, if anything? he didn't say too much about it. he wasn't asked too much about it. he wasn't asked too much about it. he wasn't asked too much about it because i think investors on the call last night and the a nalysts wa nt to on the call last night and the analysts want to put that behind them. 2018, the apology tour, the year of fixing security, right now, 2019, back to business. a lot of focus on building products, like facebook stories, which is what they copied from snapchat, disappearing videos and photos and there was a lot of talk on the call about the potential to make money from that.
so fewer people are going on the facebook news feed, the endless scroll, and more are going onto stories, there will be a lot more focus on the business side of monetising the users who go on to stories. so what about this bringing together all of the elements, instagram, whatsapp, facebook, into one entity. he said that was not for commercial reasons, which seems weird. absolutely, he was asked about bad bank it came out in the news that the messaging services are merging but he was saying it is very early days. he was kind of downplaying it almost, saying there was no commercial benefit to it, which was a very blunt thing to say, i thought and he said the reason for it was to push out encryption, of all things. when you encrypt messages, advertisers can't read what you are saying but he wants to do this notjust for whatsapp but to push it out to messenger as well and make it a broad strategy across messaging apps. thank you, parmy, for your
time and lots more detail on the website as always. yes, absolutely. let's take a look at some of the other stories making the news. tesla made a profit of almost $140 million in the three months to december — avoiding a loss for the second quarter in a row. but the profit was lower than expected. meanwhile, it's been announced tesla's chief financial officer — deepak ahuja — is leaving. samsung has warned of weaker earnings for the year ahead — after reporting a 29% drop in profits for the last three months of 2018. profits fell in both its computer chip and smartphones divisions and it predicts a fall in revenue for the year ahead, amid trade tensions and a slowdown in china. investment in the uk car sector almost halved last year and output tumbled. the industry's trade body says inward investment fell to $770 million last year, while production fell more than 9%. the society of motor manufacturers and traders says brexit fears have put firms on "red alert". general motors says it will suspend
operations at 11 car plants in michigan amid the extreme cold facing the us midwest. the firm says it took the decision after being urged to conserve natural gas amid local supply issues. talking about a chill, a chill running perhaps through the manufacturing sector in china, which has contracted for a second month in a row. fuelling fears that the world's second largest economy is in trouble. sharanjit is in singapore. interestingly, on a normal day, this might cause markets to wobble, but not today because of all the other news coming through, but tell us about china. indeed, this is the purchasing managers index which tipped up to 49.5 but remained ever so
tipped up to 49.5 but remained ever so slightly below that 50 point level that separates growth from contraction and this is worrying because china reported its weakest economic expansion in 28 years last year and growth, as we have all been saying, is expected to slow further. the us china trade war is creating a great deal of economic uncertainty, which is why we watch these numbers, really for clues on how much china is being hit. both sides are currently meeting in washington to ease trade tensions and if the two sides can't agree by the 1st of march, the us has said it will increase the tariff rate from 10% up to 25% on chinese goods, worth an estimated $200 billion. big numbers, thank you, sharanjit. let's talk about stocks, they were advancing in the asia—pacific region on thursday. corporate earnings in the us are also offering reassurance to investors. we will talk more about the latest signals from the federal reserve in a moment but never far
from the spotlight, sharanjit mention them, the meetings between chinese negotiators and their cou nterpa rts chinese negotiators and their counterparts in washington and talks to try and resolve the trade dispute continue. european stocks are rising for a second day, as you can see, led very much by the energy companies. we had pretty strong earnings from shell out about an hour and 40 minutes ago. well, let's get more on those hints from the us central bank of fewer rate hikes this year. michelle fleury reports from outside the federal reserve in washington. patience, that was the word of the day, as fed officials signalled they would take a wait and see approach to interest rate policy. by unanimous decision, officials inside here voted to leave a key interest rate unchanged, in the range of two and a quarter, two and a half percent. they also indic indicated that the balance sheet, which grew in the wake of the financial crisis,
would remain sizeable. at press conference with the fed chair, he said the us economy remains strong but he also warned crosscurrents, citing slowing growth in china and the eu, as well as dixit and trade talks. the reaction from the financial markets was insolent, the dowjones industrial average was up from 450 points on the news. part of the reason is it caught many people by surprise. after all, for the past few years, the federal reserve had been raising interest rates. now it is taking a pause. michelle was on fed watch. joining us is sophie kilvert, senior investment manager at seven investment management. good morning, sophie. so if we start with the fed, that news was what markets wanted and a massive jump on wall street but also in asia as well. that is right and it was such a turnaround from the last meeting they had back in december, where jerome valke was still talking about raising rates possibly twice this
year. now markets expect to know more rate rises this year and his comments last night work much more conciliatory to markets and markets raised on the back of that this morning. one of the things that rose asa morning. one of the things that rose as a result of the fed was gold, rising of course a little bit higher, but quite interesting what is going on in the gold market. central—bank gold buying has a p pa re ntly central—bank gold buying has apparently reached a half—century high. that is right and it is driven a lot by emerging markets who previously had a lot of reserves in the dollar. they want to diversify away from that, that makes sense, but it is russia that has driven the gold buying. ithink, i haven't got the figure, i thought i had, but they bought a huge amount of gold last year, and that was funded by selling us treasuries. they really wa nt selling us treasuries. they really want to not be holding the us dollar as much, particularly if the fed isn't raising rates and it could possibly weaken. we are seeing with the earnings coming out, in this
kind of economic environment, the winners and losers are becoming quite stark. samsung already suffering and facebook coming out with very strong earnings, apple doing better and this news out of china about manufacturing. the risks haven't gone away, have they? they certainly haven't but i think the big force we had in december and at the beginning of the year were maybe a bit overblown. they were on sentiment, more the more on the fundamentals and the global economy is still growing. the imf said it will grow around three and a half percent this year, not bad overall, so percent this year, not bad overall, soi percent this year, not bad overall, so i think if investors can look through the upheavals and what is going on in the world, things are all right. sophie, we will stay on a positive note for as long as we can. she is back later. still to come can women with bunions still wear stylish shoes? a sentence i thought i would never art on television. the answer is yes, thanks to sole bliss which has grown from niche to global player with 170 stockists in the uk and europe. we'll find out how its
founder lisa key got off on the right foot. you're with business live from bbc news. let's go on a road trip first, we are doing that a lot at the moment. we are, we are looking at the topic of construction and what is going on post brexit. the sector employs 2.5 million people in the uk, and is reliant on supply chains with the eu. ben thompson is on a construction site to hear about some of the challenges they face. welcome to greenwich, in south london, the next stop on our road trip around the country looking at how firms are preparing for brexit. as that chaos continues in westminster, more and more firms are looking at how they would cope with the potential no—deal exit.
today, we're looking at the construction industry. two big worries here. one is access to labour and the other is access to materials, much of which comes from the eu. let me introduce you to zack who is from construction. good morning. we talked there about the two things, labour skills and access to material. it is an industry very reliant on the eu, isn't it? yeah, i mean, you only have to see coming in today how many different languages are being spoken in the corridors. if that labour, particularly on the big projects in london and places, if that were to dry up, there could serious problems and delays potentially. when we talk about those materials as well, i was surprised at how much we import from the eu just to keep the sites moving. yeah, well, i mean, whether those are components of whether those are taps coming in from spain or it is steel coming in from other parts of europe, it is totally reliant on stuff coming in from overseas. and what are the implications, if that stuff gets held up of the border, there's a longer queue, maybe some of the stuff takes a bit longer to get here,
what sort of problems does that create? well, this is an industry, it is called the supply chain and it works as a chain and if there is a break—in that chain, it delays everyone and that is problems forever on the implications are for the person buying the property, or for the contractor building it, there are costs because their costs regardless of whether they are able to get material in and actually complete the project or not. fascinating, zack, for now, thanks very much. so there yo uare, you have a taste of what the construction industry so there you are, you have a taste of what the construction industry is contending with right now. they just want some answers so that on sites like this, work can continue and of course with that deadline creeping ever closer, the big worry is will they get any answers about what happens next. your're watching business live — our top story. facebook users have continued to rise despite a series of data privacy scandals and criticism over its attempt
to stem toxic content. let's change the subject. making a niche product can often be a big challenge but, for our next company, it's been a key part of their success. we are talking bunions. do you know what we are talking about? there you 90, what we are talking about? there you go, the handy diagram. a bunion is a bony lump at the base of the big toe. they can be painful — and, on average, 55% of american women have them. sole bliss is a firm here in the uk which has been making specialist shoes for women with bunions since 2017. it expects to have a turnover of about $1.3 million this year — and has already received celebrity and royal approval, with camilla, duchess of cornwall and dame helen mirren seen wearing the shoes. lisa kay is founder of sole bliss shoes. and you have brought some shoes in.
as soon as i saw virtue, i thought of theresa may straightaway. if you put the shoe down, so we can get a good shot of it. tell us why you started this company. good shot of it. tell us why you started this companylj good shot of it. tell us why you started this company. i have been in the shoe business for about 30 years andi the shoe business for about 30 years and i myself am a bunions sufferer, as is my mother and as was my grandmother before her, and it took mea grandmother before her, and it took me a while to realise that it wasn't just my family that were suffering, but really, there were lots and lots of ladies who suffered as well. when i started looking into it, i was horrified by the numbers. we will let you pick up the shoe, because it is important for you to describe how they work. let me describe them. inside every pair of sole bliss shoes, there is a patents pending technology. there are many components in this technology. the first being the three separate layers under the foot. so one
comforts and cushions, one contours and won support under the foot. and the most important part, really, is this bunion bed. inside here, the bunion is allowed to breathe, relax and it is accommodated here. if you're bunion is very large, it will stretch to that size, if it is smaller, it will stay where it is. so essentially, bunion relaxation on the side of the shoe. i was staggered by the numbers, 38% of women in the uk over the age of 30 have got bunions, and yet you seem to be the only person, the only business in the uk, providing shoes that people can wear pain—free. business in the uk, providing shoes that people can wear pain—freem isa that people can wear pain—freem is a tricky business, the shoe business is very technical. it took me five years to developers. why so long? because it is a very technical issue, you have to have the depth in the schubert make them look elegant and pretty. you need special materials, so i sought out special
materials, so i sought out special materials —— the depth in the shoe. and you have to make sure that although the lady's feet are comforted and they are wide and deep enough at the front, that they are also held in place at the back. all of that takes a long time to develop. when it comes to bunions, it was seen as a real taboo about talking about them. it was widely speculated in the press that meghan markle may have had them, had an operation, whatever, to which there is no comment, we don't know but the point is it raised the issue and goes to show how people don't want to talk about this or even admit to having them. they don't and i really don't understand it, with 10 million women in the uk alone suffering. and it is hereditary, isn't it? it is and if you are wearing fully fitted shoes and you have a predisposition, it gets worse. and you are, really, strictly an online business. we are, yes. how do you market, then? people
who are suffering with issues with their feet, surely they want to try these things on, get a feel for it, get different styles? because if it doesn't work, it is another amount of money wasted. well, we find that we have a very good uk—based customer service, excellent, we have a very good uk—based customerservice, excellent, helpful people online and also by the phone and we talked it through and people are comfortable and... and your shoes are made in spain, aren't they? they are made in spain, yes, and it is where i have been working all my life. i know you are a bit concerned about brexit, but not too much. well, i think like everybody, really, every business, there are challenges ahead. i feel like really, every business, there are challenges ahead. ifeel like i have got my supply chain sorted, i feel like everybody is in the same situation, really. we need certainty and once we have that, then we can plough ahead, really. lisa, thanks for coming in, it has been
absolutely fascinating, lisa, founder of sole bliss shoes. global drinks firm diageo has reported strong results. the company also says it's ready for any kind of brexit. but ceo ivan menezes told the bbc that a no—deal brexit will bring challenges. we operate and manufacture guinness and bailey's on the island of ireland, both sides, north and south. we have about 13,000 truck crossings a year across their border. we have a number of small businesses that work with us that also operate on both sides of the border, so, for us, it's important that free movement across the border continues. that is the boss of diageo. we have talked to shoes, we have talked drinks and now we will talk fast fashion. sophie is back and we are highlighting this story on bbc
online, politicians basically blasting some big names that we know very well, like jd blasting some big names that we know very well, likejd sports, sports direct, saying they are failing to commit to reduce their environmental and social impact and they say they're in action on ethics is shocking. this is interesting and the whole issue of fast fashion, where are your clothes made and if you actually understand what happens to the cheap clothes you buy, how they are made and where they are made, are you more oi’ they are made and where they are made, are you more or less keen to actually buy it or do you want to buy better quality butjust less of it? that is the ongoing issue that both consumers and the fashion industry have to cope with. both consumers and the fashion industry have to cope withm both consumers and the fashion industry have to cope with. it is worth saying that not every fashion retailer is struggling with issue. lots of companies have done a lot of things, like asos and prime, prime candidates for that fashion label. that is testament to the consumers. if people show the interest in the
integrity of the fashion brands and how they are changing and where supply chains are coming from, the brands need to to them. react so primark and others, they use organic cotton, the supply chain is pretty good and it talks about the fact that our behaviour as consumers, we have gotte n that our behaviour as consumers, we have gotten used to paying very little the clothes, so the degree that some people buy clothes for one holiday and don't bring them home with them, they get thrown at the end of the holiday. we have changed a lot. i think we have and even going back to the lady with issues, people are tempted now to buy online and if something doesn't fit, they may be don't send it back because it is cheaper and they still don't wear it and maybe it goes in the bin or to the charity shop with the tag is still on. thank you for your tweets, they were coming in as we were talking through the programme. one from michelle is interesting, some people don't have the choice to buy anything but cheap fast fashion, it is all they can afford and they need
to clothe themselves and families. good point. jerome says if something is ridiculously cheap, someone is being exploited by less and better quality. for one thing, it will last longer. it is an interesting story and it has everybody discussing the various implications. and the high street as well, we must remember, they have had such a tough time. their margins are being massively squeezed and to be ethical in your supply chain and else comes at a cost. it certainly does, 2018 will not be remembered fondly by the british high street, it was really tricky and i think that will continue this year, certainly for those companies who haven't adapted with the way consumers have changed. jd sports, named as one that is not committed, is doing really well, its earnings last time were really strong. that is right, not everyone is thinking about the ethics behind it, people just need to be able to clothe themselves. thank you, sophie, good to have you with us. that is it from business live, plenty more news through the rest of
the day and on the web page. hello there, good morning, it has been a very cold eyed, temperatures across the uk widely below freezing and every nation recorded its lowest temperature of the winter so far, -13 temperature of the winter so far, —13 in rural areas of scotland, —8 in northern ireland, so the real risk of i swear there were showers yesterday. freezing fog patches around this morning and over the next 24 hours, snow will be the significant hazard —— the real risk of ice where there were showers. this area over to the west is throwing up the front into southern areas today and in the cold air, we will start to see some snow. the freezing fog in central northern areas will clear away, sunshine across many northern areas of england, scotland and northern ireland. bit of sunshine to the is living before the cloud thickens up from the west and the rain will move
this way. it will turn quite breezy, and easterly wind, especially down towards the south—east as the cloud thickens and the rain pushes in and it will be a cold day, temperatures barely above freezing across northern parts, 3—5dc elsewhere. let's focus in on the slope for the evening rush hour, bevan, the west country, south wales, hampshire and dorset seeing significant snowfall through the rush—hour and that will spread further northwards tonight, into the london area, the south—east, the south midlands and into mid wales. through the night, these are the sorts of accumulations we are expecting. 3—7 centimetres in the south—east, as much as 10—15 in the south—east, as much as 10—15 in the higher grade of south—east wales and the west country and the west midlands. —— over the higher ground. those totals until friday morning will most likely cause some travel disruption. elsewhere tonight, some snow showers into the north—east of england and north of scotland.
temperatures in these northern part getting down as low as —2, — six degrees. not quite as cold in the south—west with the snow falling. friday, still snow falling in southern areas but it will gradually ease off, you will have the lying snow across southern areas and another batch will push into the south—west later on. elsewhere, snow showers to the north—east of england, northern scotland, some sunny spells in between. a cold day again, 3—5dc, so a lot going on over the next 24 hours. you're watching bbc news at nine with me, annita mcveigh. the headlines... a new study warns the government isn't ready for the prospect of the uk leaving the eu with no deal — in two months‘ time. more than 20,000 physios, pharmacists and paramedics are to be recruited to work alongside gps — to allow doctors to spend more time with the patients. plans to introduce new powers to control and monitor suspects thought to be carrying knives
in england and wales temperatures in the uk plummet, making it the coldest night of winter so far — more snow is forecast. meanwhile, it's —30 in chicago, as cities across the us midwest come to a standstill in a deadly cold snap known as a polar vortex. and the heart—warming reunion — the chance to say "thank you" to the stranger who saved this woman's life.