Good morning, everybody. You are watching the pulse. Im guy johnson. To 20 feetrs fly up high. Meet the hover board. This looks like a fun way to spend your summer. Ofs, live with the ceo Bentley Motors. This is a books wagon owned business. We will talk to him about his exposure to russia and how he views the ongoing geopolitical story in relation to his business. Talking of which, we have been talking to a number of big bosses this morning who have significant business in russia. Ceo. F them is unilevers he says he is committed to the country. Caroline hyde joins us. He said earlier this month that a land ofssais asa as opportunity. Is that the sent to government this morning . He is not steering away from that. In june, he was meeting with the deputy Prime Minister saying they were looking at acquisitions over there. They recently bought a Makeup Company and russia. In russia. They have more than 6000 employees. An. Com think. Company. Glodutch is the pressure building . He was very calm, but clearly his Business Model is not changing. My thoughts and said tha ympathies definitely go out to the families. It is a definite reminder that we need to get the political leaders to stop and to come with solutions. It obviously makes the people suffer but it is not good for business, either. For hundredsaround of years and we will be around for hundreds of more years and we will continue to focus on the people everywhere in the world and make their lives better. Many of the conflicts you see in property and exclusion. You can trace it back in the ukraine as well. We have to be sure that we continue to help these economies do better. I think that will be the main contribution we can make. You say you want european politicians to step up. Do you want to see more sanctions . Do you want the netherlands or the u. K. To be meeting . To be leading . Saying we have too many conflicts in africa, the middle east, ukraine. It is time the leaders put a global government system in place. Obviously, that is what we will work on. We are committed to doing our business everywhere we can help the people. There is no reason for us to say we will not have longterm plans in every country including in russia. About 1 billion invested by russia. In this is a very compassionate and sensitive man. He was caught in a terrorist attack in 2008. The bombing of the tosaj mahal hotel. Cannotot someone they empathize with these terrifying situations but clearly he feels that his misses need to pressure politicians, but they are not going to change their Business Models because of certain unrest. Maybe not a direct impact as a result of the story we have mh17,covered via flight but nevertheless russian economy looking more tricky at the moment. Ruble weakening. A concern. T to be it has to be. He did speak optimistically about how the second half is going. As long as politics does not wrap up any further, as long as we do not have a terrible situation, he feels that we are troughing in terms of sales from unilever. They put out numbers that have disappointed. 3. 78 missed in sales. A 400 million euro hit from emerging markets. Russia continues to see an economic slowdown. It is teetering on recession. He says as long as the situation in ukraine does not escalate, we should hit a trough. He sees the second half improving as long as it does not escalate. A number of ifs there. Caroline hyde been talking to unilever ceo. The data has been interesting because the market was short and to the eurozone numbers we have had. We had the aggregate number coming together in terms of the manufacturing data. And services. Both have risen. Let me show you the euro. I want to show you this, because the market eurodollar. The market was clearly sure going into the data, particularly the german number. Thatan see the spike resulted from that. So the market was short. Therefore you get a much bigger leg higher. We are still out of the range. 1. 3474. Lets get an idea of what these numbers are telling us. That, we need to talk to hans nichols are International Correspondent in berlin. Im in berlin. Good morning, where the number was strong out of germany, soft out of france. When we get the composite number it is off the charts. Pmiame in at 54, the number that has services and manufacturing. The consensus estimate was 52. 8. So a full point ahead. That means there is a lot of strength in the euro zone outside just germany. Things picking up in spain. Unemployment dropped lowerthanexpected there. Overall, this is a positive number. In keeping with. 3 gdp growth. We will get growth later in the month. It may even be higher than that. It is that strong. We will watch and see what the euro does and what this means for the bundesbank or the ecb. Does it mean that they will have to strengthen the euro and have the germans less likely to do quantitative easing . Russiae note on exposure. We were bracing for bad numbers coming out of germany because of pressure exposure. Take a look at some of the companies there, what their revenues are in russia. Pretty high. Allel, basf, siemens, billiondollar sales but it does not seem to be affecting their bottom line. Its amazing. The fact we have had this strong number at a time when everybody was expecting the ecb to have to do more. But it paints a picture as well of the trouble inside the french economy. France seems to be the outlier. When i look at the poll numbers more in depth, well try to see how much more is there aside from germany. When you look at these numbers right away, part of it is explained by germanys strength but not all of it. Weigh againstto that, the softness of france. A tale of two countries. What france does in terms of their deficits, what they do for ratio. Ebt to gdp it will be increasingly difficult for hollande to figure out ways to stimulate the economy when the rest of europe is doing what it is doing. And that gets us back to sanctions, the mistrial warships. What does france do on those . Jobs andclearly needs growth but he could be in a difficult position. Guy . Hans, thanks very much, indeed. One other number that came through at the same time was italian retail sales. A really disappointing figure there. Some economy showing strength. Others very much not. France, italy may be suffering right now. Has nichols working his way through the date of this morning. Now u. S. Regulators have lifted the ban on bengurion airport. Some carrier say that could cancel more flight. Stillncern there safety. Elliott gotkine is live in tel aviv. The faa says it is safe . Israelis would say it has always been saved to come and go from israel, and the faa was overreacting. But the u. S. Federal aviation administration, the regulator and the u. S. , now says that after taking all the information into account, they have concluded that it is ok for u. S. Airlines to fly to and from israel if they want to. Some airlines may decide they still do not inc. It is safe to do so. Is still do not think it safe. There are a number of airlines that are still not flying. Korean airlines and Turkish Airlines. A quick look at the arrivals and departures. A vast majority of flights they canceled or not final. Thanks for the update. Elliott gotkine joining us from tel aviv. Bengurion as he says, not fully open. Coming up, were going to talk about moscow. And basfs relationship with russia. Geopolitical turmoil. Yes, it is affecting business but the numbers out this morning tell of strength. We will go through the details when we come back. Good morning, everybody. You are watching the pulse. Lets get back to our big focus. Today we are looking at how european businesses with exposure to pressure are responding to the standoff between the country and the west. Basf is definitely one of those companies. Controversialns actions in ukraine, the firm is strengthening ties with gazpromm. Earlier, and edward spoke to the companies ceo. We are talking about an asset swap deal that is going to go ahead. Everything is in place but some legal preparations we have to do internally still have to be undertaken. Therefore, since it will happen in the fall, not as previously announced on july 1. Is there a chance that anything of a political nature happening this from at a National Level within germany or an eu level . Is must be watching what happening in terms of conversations about sanctions in the eu. Actually, the deal has been approved both by the European Union and the German Government last year. And what is happening, we basically increase a share from 50 to 100 . Gazprom is already dealing with the german gas market and they have done this for many years and a very responsible way. I do not eat any reason why they should change their behavior any reason why they should change their behavior. Do you think further sanctions would be a bad idea . Given the relationship between gazprom and the german the economy. It is ups point time, to the politicians to decide what they want to do and they will implement it. If sanctions are really increased over the next couple of days. What exposure do you have to the russian market right now . How do you see that changing . Is the relationship between your business and russia, is it going to intensify or lesson as we look ahead . Look ahead . As we if the russian economy does not grow, our businesses not grow. More importantly, our business has dropped a bit during this year, which is hurtful th because we have a lot of agricultural business in the country. We do not see a good recovery on the chemical side. On the oil and gas side, weve seen no effect on the political crisis which we watch. Ok. So basf exposed to russia by this asset swap it is doing with gazprom. Gasx in russia. It is a Storage Company for exposure to russian gas. It is exposed vis a vis its stock. It is a big relationship. How does it work from here . Patrick lambert covers the stock. In terms of putting basfs relationship with russia into context, how does it compare with other companies . Its important. Typically the European Center has safe exposure sending products to the russian market, 2 . Very little. For basf, its 20 of net income. A significant 0 the oil and gas business is 20 . Where shall we be in terms of value and production . Its important. How exposed to think the company is . The numbers. Ut we do not understand the geopolitics. Gazprom is being left of every list because of his significance to western europe. But life is becoming harder for gazprom and russia. In. Getting deals done things are slowing down in the south sea pipeline. We will see how it is how it evolves. So far we have not seen anything. The deal has been set up. Swap. A there is no impact today. The impact on financials. Worstcase scenario, we go back to twhere we were in 2012. And nothing too much in terms of valuations. Those of the specifics relating to basf. Wn terms of feedstock, ho importance russia in terms of basf . Ive read,from what heirany imports 15 of t gas from russia. Basf is the same. Atusing gazprom source gas 50 so it is important. They are winning. The energy. But it is not just basf. If you put that into the context of europe, we are seeing the feedstock goingd down in north america. We see china going down on coal. And europeans in between. Your expectation would be that those costs would rise . Is going to get more expensive. That would put all chemical assets under pressure. If you were sitting in russia thinking about where you would position your business, which is to be thinking about europe or opening new plants in the south of am erica . We would see us going elsewhere. Germany is very important for basf. Based tur assets here. Story, if we were to have to have substitution, would only accelerate that . Means forf what that european business, is it in any way able to quantify what the competitive disadvantage is . Gas tellst sure net the full story. It is always very complicated. Basf system a good job moving down as much as possible in germany to mitigate some of the early stages but typically there is 300 short. But he sounds confident. He sounds he is ok with the story. Hes ok with russia. But longterm, this is a big concern for his business. I think long term, i think europe will have to find solutions. To get other sources of gas. The u. S. Has already opened a line. We are going to export more. Everyone talks about iran. There are solutions. Thei think at the end of day, other parts of the world on working are working on this and we are not. We cant. Nice to see you. Patrick lambert joining us on basf. We will keep speaking to ceos who have companies in russia. We will. Be live withvisio a bentley we will ask if he is cooling down on the russian story. We have heard that same line coming out of fiat yesterday. Is bentley saying the same story . Back in a moment. Give you a quick update on the equity markets. A tough start. Vision called recovery. Services and expansion for the Third Straight month. Services at the fastest pace in germany in three years. Dont worry. Things are still catchy in france as regards manufacturing. The lack of structural reform is defined by the progress in the spanish part of the map. These guys are going to produce double the level of growth of the french were able to achieve. The italians but to reorganize itse reorganize themselves. The euro was short going into these. There were a lot of options being bought at 1. 3450. Germany is dragging the rest of europe upwards. Is supporthere there in the Foreign Exchange market. As norway begins to reconsider their options in regards to th eir Sovereign Wealth Fund and russia. Results galore. The stock of the day is nokia. No longer a mobile phone company. Now it is all about networks and gears. Once you get rid of those moguls, the stock does quite nicely as their profits rise slightly. Once you get rid of those mobiiles, the stock does quite nicely as their profits rise slightly. Good morning, everybody. Welcome back. Youre watching the pulse live from bloombergs European Headquarters here in london. Im guy johnson. These are the Bloomberg Top headlines. U. K. Regulators are said to be close to a settlement with a group of banks. People with knowledge of the deal said it could come this year. A chinese manufacturing gauge has risen to highest level in 18 months. The preliminary reading was 52 which certainly beat analyst estimates. The e. Sumbings considering expanding sanctions against oscow since flight ma 17 was brought down. The tragic incident is of course changed a number of things. One of which is the thrust. A plane tracking app into the limelight. The site has seen a 50fold increase in traffic as more people study global flight paths. Were going to talk to its boss now, the guy who set it up. Hes the c. E. O. Good morning to you, frederick. The first question i have to ask you good morning, guy. Put in context what this event means for your business. We have seen a number of aviation events over the last few years. We saw the icelandic ice cloud which grounded us all for so long. A series of events. How does this one compare . For us, it has been the biggest one so far. As you mentioned, for us it all started with the icelandic ice cloud back in 2010 actually and en we saw a very big boost when m 36r7b370 disappeared in march. This one is even bigger. I was seeing some shots on the screen about what your app does. Briefly run us through. I notice on twitter you have over 100,000 followers. People do know it. Give us the information that you will give to people who use your app. The basic and most potential functions, we show the exact position of aircraft in realtime around the world. That is the core of the app and the website. How exactly do you do that . That strikes me as an awful lot of information. How do you gather it . We have our own crowd Source Network of socalled receivers around the world. As we speak, we have a little over 4,000 of these receivers feeding data to our network which we then put on the website and in our apps. How do you make money . I understand you can get the basic service or the premium. What is the difference . How many people sign up for the latter . The main revenue stream is the app sales that you mentioned earlier. So far the app has been the number one paid ap overall in 99 countries and in the app store. Thats the main revenue stream. The premium sup scription you mentioned is a good revenue stream for us but nowhere near the app sales and the number you mentioned with the twitter followers. Ach month our web site has vitors. Were able to get a fair amount of advertising revenue from that as well. The money we make we put into carry on. That was the question i was going to ask you. How do you reinvest that money . How do you bring the business forward . Our primary focus is and has been for several years now to build the coverage around the world so that the 4,000 receivers that i mentioned, wu put our money back into sending out more receivers around the world. We actually work with a manufacturer and manufacture these receiver ises and send them out to hosts around the world. Each week we send out about 50 new ones. I was reading somewhere this morning that you the function the not available yet. You the option of pointing a phone at an airplane flying above your head in the sky and your app can identify the aircraft and give all the details surrounding it . Yeah, that is the function available in the smart phone app. It uses the g. P. S. In the phone to be able to detect exactly where a user of the app is and also the gyroscope which detects exactly in which direction the phone is being pointed and that enables us to show which aircraft your pointing your phone or tablet at. What happened after we got news of the downing of flight mh 17 . Do the next 24 hours look like for the business and what could we see on the app when we actually use it . Walk us through the reyament of the situation on the ground and what it meant for your business . For our business, it meant a lot. Talking to your colleagues there for the following 24 hours. Also trying to do our best to keep the site online. I mean, the inflow of vitors to the website and users to the app brought down our servers a couple of times. We work very hard to try to keep the servers alive. One more question. Is it more apple denominated, your business or is it android as well . Curious to know the rell relative usage of apple versus android . Yeah. So in terms of app sales, apple is still bigger but android has gone substantially over the last two years. The difference is getting smaller every day. Interesting stuff. Frederick, thanks for your time. Were going to stay with the aviation sector. Were going to stay with the nordic angle on it. Easyjet is one of the biggest losers on the sto