However, possible commodity inflation and the rising value of Dollar vis-a-vis Euro may pose profit margin and pricing challenges for Heinz in future year.
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Oil, technology and basic industrials are suffering margin contraction from pricing and weakening revenues.
The company managed to leverage its pricing at the margin, raising revenue per unit 10% compared with a volume growth of 3% in the quarter.
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While Amazon attracts customers as the pricing standard, traditional retailers lose margin.
Quarter after quarter, Apple beats its gross margin guidance based upon more favorable than expected component pricing.
However, margin expansion will continue to be hindered by competitive pricing, low investment yields and decreasing capital reserves.
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Companies like Kantar, IPSOS and GfK, who do not own significant high-margin database or currency products, are subject to pricing pressures that result from a lack of differentiation and newer marketplace tools.
We believe that Disney has superior pricing power to News Corp and therefore our margin forecast for News Corp stands at a lower value of around 40%.
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However, first-half gross and operating profit margins fell from 53.2% and 33.9%, respectively, to 50.2% and 31.1% due to increased advertising and marketing expenses, more aggressive pricing and a greater proportion of sales from lower-margin products.
The company noted margin improvements which they expect to continue, and forecast modest rig count improvements and pricing increases.
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On the other hand, it could be an expensive endeavor for Amazon with high investment costs in data centers and competitive pricing to fend off market entrants, but that would be a low-margin strategy.
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