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Incidents cast shadow over Europe’s leading start-up in sector

Two workers have died in separate accidents at Northvolt’s battery gigafactory in northern Sweden, casting a shadow over Europe’s leading start-up in the sector.

A 25-year-old Northvolt employee died on Friday after suffering severe burns in early November following an explosion on a production line.

Separately, a man in his 60s working for construction company NCC died after an accident involving a crane used to extend Northvolt’s battery factory in Skellefteå, just below the Arctic Circle in Sweden.

“This is a dark day,” said Peter Carlsson, Northvolt’s chief executive and co-founder.

Northvolt was the first homegrown European company to produce a battery cell from a gigafactory, in December 2021 in Skellefteå.

The site is one of Sweden’s largest construction projects, with new production lines being built and opened continually as Northvolt aims to produce 60 gigawatt hours of batteries a year — enough to power about 1mn cars.

The accident involving the crane on Thursday also seriously injured a second worker for NCC in his 20s. Police are investigating the incident and have cordoned off the construction site. NCC is also conducting its own probe into what happened.

Carlsson said of the two deaths: “We now come together in grief. The situation is devastating, and we are now working hour by hour to help each other through this.”

He called the Northvolt worker an “ambitious, positive and highly-regarded colleague, who it hurts incredibly to lose”.

Northvolt stopped the production line after that incident in November and undertook a safety review to ensure that such an explosion — which took place during regular maintenance — could not take place again. Production has since restarted.

The Swedish industrial start-up is ramping up production in Skellefteå at the same time as aiming to build three new gigafactories: one in central Sweden with Volvo Cars, one in Germany and another in Canada.

Started by two former Tesla executives in 2017, Northvolt is preparing for a potential IPO valuing it at about $20bn in Stockholm and is interviewing bankers. But investors are sceptical that the lossmaking company can list any time soon in the current market environment. Northvolt has raised more funding than any other European start-up, and is close to announcing more than €5bn in debt financing in the coming weeks.

The Swedish group also recently announced a breakthrough in battery technology for energy storage where it developed a sodium-ion cell that has no lithium, cobalt or nickel — all critical metals that are normally used and where China has an advantage.

Exclusive: Audemars Piguet’s Maverick CEO Gets the Last Word

François-Henry Bennahmias faced down doubters as he leveraged popular culture to transform Audemars Piguet’s business. Ahead of his departure from the now $2.6 billion brand next week, Bennahmias revisits his triumphs and setbacks, and hints at his start-up ambitions.

Few figures in Swiss watchmaking have been as disruptive or as divisive over the past decade as François-Henry Bennahmias. In the 11 years since he was appointed chief executive of the family-owned Swiss watch company Audemars Piguet, an obsession with hip-hop and street culture, the launch of a new line called Code 11.59 and his leather bomber jackets have won him legion admirers — and as many detractors.

Next week, the 59-year-old Frenchman will walk out of the company’s headquarters in the sleepy village of Le Brassus for the last time, leaving a gaping hole not just in a company whose revenues have more than tripled during his tenure, but in an industry that’s short on high-flying mavericks. Few chief executives in the conservative watch world have reshaped the brands they run like Bennahmias. Have any made luxury watches as desirable? Since his departure was announced in 2022 observers have been left wondering not just what will become of AP, but of the wider industry, as well as what one of watchmaking’s greatest showmen will do next.

Sitting in a meeting room in the company’s New York offices, 29 storeys up, Bennahmias admits he’s running on fumes. In previous weeks, he’s been in Dubai and Geneva representing Audemars Piguet at large-scale events, and he’s just come from the launch of the brand’s latest high-octane, high-profile collaboration — with rapper Travis Scott’s brand Cactus Jack — at the brand’s 57th street boutique. The following week, he’ll be in Miami for Art Basel. And as I entered the office, I caught a glimpse of him in a glass-walled meeting room in deep conversation with actor Kevin Hart. (More on that in a moment.)

Bennahmias begins on slightly guarded form for a known performer whose expletive-laden speeches and unpredictable on-stage stunts have become familiar. At last month’s Grand Prix d’Horlogerie de Genève, he stunned the audience when he planted a kiss on the lips of unsuspecting French actor Edouard Baer, who was hosting the event.

Seismic Impact

His relationship with the Audemars Piguet board is thought to have been fractious at times as he stretched the company into new territories, leading where other Swiss brands might not dare to follow.

“They gave me the possibility to achieve what we’ve achieved together,” he says of his employers a touch evasively. “Were they always at ease with all my visions? No. Are they happy about what happened for the last 11 years? Sure. So it’s a balance.”

What has happened since he was appointed interim chief executive in 2012 is that AP has reported record-beating revenues 10 years out of the past 11 years (during the initial coronavirus outbreak in 2020, a 4 percent slip bucked the industry’s brand’s 21.4 percent norm), leapfrogging the brand ahead of rivals and, climbing the Swiss league tables. This year, Bennahmias forecasts revenues of 2.3 billion Swiss francs ($2.6 billion), a result which should cement its position in the top four Swiss watch companies behind Omega, Cartier and perennial chart-topper Rolex.

With success has come criticism: While his acolytes express unstinting loyalty, painting him as a visionary leader, those less enthused have accused him of undoing the traditions of the brand and currying favour from characters with questionable reputations. Scott, the latest example, narrowly avoided criminal charges after 10 people died at his Astroworld Festival in 2021, including a nine-year-old child. The star’s public response to the tragedy was widely condemned.

In spite of this, or perhaps because of it, Bennahmias’ impact on the watch industry has been seismic. Who else, many have asked, would have partnered a watch company founded in 1875 and revered by collectors for its arcane high-end complications with Marvel? Or Jay-Z? Or LeBron James? But his tenure saw watchmaking conquer a younger, global, more diverse audience as “at some point, street and luxury merged,” Bennahmias said.

Stubbornly high borrowing costs continue to stall property market, analysts warn

UK house prices will probably fall further in 2024, according to forecasts by two of the country’s largest mortgage lenders, as stubbornly high borrowing costs continue to stall the property market and strain affordability.

Halifax on Friday projected that house prices will fall between 2 and 4 per cent next year, while rival lender Nationwide said prices would likely register a “low single-digit decline or remain broadly flat”.

“Even though house prices are modestly lower and incomes have been rising strongly, at least in cash terms, this hasn’t been enough to offset the impact of higher mortgage rates,” said Robert Gardner, Nationwide’s chief economist. “As a result, housing affordability is still stretched.”

Mortgage rates have declined from their recent peak level this summer as the Bank of England signalled it had reached the end of a blistering series of interest rate increases.

The lender calculated a typical first-time buyer on average UK income would have to pay 38 per cent of their monthly take-home pay in mortgage costs, above the long-term average of 30 per cent.

BoE governor Andrew Bailey warned on Thursday there was “still some way to go” before inflation hit its 2 per cent target and that interest rates would need to stay high for an extended period.

Few property analysts expect mortgage rates to fall quickly next year. Meanwhile, borrowing costs remain three times higher than the lows recorded in 2021, meaning the housing market is likely to stay subdued with low transaction numbers and soft prices.

The UK is on track to record just 1mn home sales in 2023, the lowest number in a decade, according to property website Zoopla.

House prices have proved more resilient than some analysts expected this year — declining just 0.1 per cent in the year to September, according to the Office for National Statistics. 

Karen Noye, mortgage expert at Quilter, said: “Much of the reason why house prices have remained buoyant in the face of serious economic headwinds is that this country has very little housing stock for its population”.

House price declines are steeper when adjusted for inflation, with average real house prices no higher than they were in late 2015, according to estate agents Savills’ research earlier this year.

The forecasts from the two mortgage lenders align with other analysts. Consultancy Capital Economics forecasts house prices will probably fall 1.5 per cent in 2024, and that mortgage rates will sit just below 5 per cent for most of the year.

“This will leave affordability very stretched in 2024, meaning that the cost of a new mortgage will continue to prevent many from buying,” said Andrew Wishart, Capital Economics’ senior property economist.

Savills predicts the housing market is already past “peak pain”, but still expects modest falls next year before house prices start to increase again in 2025. Analysts said the housing predictions are uncertain, depending on how the UK economy, jobs market and interest rates develop.

“A lot depends on what happens in the labour market and the true trajectory of mortgage rates,” said Richard Donnell, executive director at Zoopla.

“Pricing needs to keep adjusting, because consumers are not adjusting what they are prepared to spend. I think we are halfway through the market adjusting to higher mortgage rates.”

Europe’s largest media group sells RTL Nederland to smaller Belgian rival DPG Media in €1.1bn all-cash deal

Europe’s largest media company Bertelsmann is selling its Dutch TV operations for €1.1bn in a partial retreat from the European television market after antitrust watchdogs thwarted its attempts to create “national media champions” to rival global streaming services.

RTL Group, which is majority-owned by Bertelsmann, announced on Friday that Belgian media group DPG Media was acquiring its Dutch arm RTL Nederland in an all-cash deal. The division has €700mn in annual revenue and accounts for a tenth of RTL’s overall business.

DPG already owns the leading TV channel in Flemish-speaking Flanders, as well as French-language RTL Belgium, which it bought from RTL Group last year.

The sale of RTL Nederland comes after previous plans to merge the channel with domestic rival Talpa to create the leading TV network in the country was blocked by the Dutch competition authority earlier this year.

Thomas Rabe, chief executive of Bertelsmann and RTL Group, told the Financial Times that the sale to DPG was the “second-best option but still a very good one”, adding that he would have preferred the blocked deal with Talpa.

“We did fight for the merger a long time,” he said, adding competition authorities had an “outdated view” because they focused on market shares along national boundaries in Europe rather than taking a cross-country view. In-country consolidation was necessary as “size is required to be able to keep up with the competition with rivals from the United States and increasingly China, in particular with regard to streaming”, he said.

The sale of RTL Nederland values the Dutch operations roughly at a 50 per cent premium compared with RTL Group, according to data from S&P Global Market Intelligence.

RTL said it would generate a capital gain of €800mn for RTL Group that would be largely tax free. “We are getting a really good price,” said Rabe, adding that the bulk of the profit will be paid out to RTL’s shareholders through a higher dividend that could increase by €4 per share for 2024. In 2022, the company paid out €4 per share.

Bertelsmann, which holds a 76 per cent stake in RTL Group, was planning to reinvest its share in the profits into its business activities, he said.

Rabe indicated that the transaction could be a template for further divestments in other countries. “The same arguments that apply to the Netherlands also apply to other markets,” he said.

In 2022, Bertelsmann walked back from a planned merger of its French TV channel M6 with Bouygues-owned FT1 after regulators raised far-reaching concerns. But Rabe stressed that the German group was not currently in concrete talks about divestments in France or other countries.

The sale of RTL Nederland requires regulatory approval, but Rabe said he was confident that it would be granted by next summer as DPG Media — a company with €1.8bn in annual sales — currently has no TV operations in the Netherlands. “I cannot see any problem here,” said Rabe.

Christian Van Thillo, executive chair of DPG Media, said in a statement that the transaction would create “necessary scale to invest in the digital transformation of television”.

Regulator Ofgem proposes £16 annual bill surcharge to ensure suppliers are ‘resilient’

British households have built up record debts of £3bn with electricity and gas suppliers, according to figures released on Friday, highlighting the impact of the ongoing cost of living crisis with energy bills still relatively high. 

Industry regulator Ofgem said constrained household budgets had pushed the total amount owed to energy suppliers up by £400mn since mid-October.

As a result, Ofgem announced the launch of a consultation to help suppliers offset their higher debt costs by adding an extra charge to all household bills.

The proposals would add about £16 to the typical annual household bill from April, through adjustment to the price cap that limits the amount a supplier can charge per unit of energy. Ofgem said the move was necessary to ensure suppliers were “resilient” and able to help customers who needed support. 

“We know that cost of living pressure is hitting people hard and this is evident in the increase in energy debt reaching record levels,” said Tim Jarvis, director-general for markets at Ofgem. “However . . . we must take action to make sure suppliers can recover their reasonable costs, so the market remains resilient, and suppliers are offering consumers support in managing their debts.”

The cost of electricity and gas has fallen since last winter when record wholesale energy prices triggered by Russia’s full-scale invasion of Ukraine pushed the price cap as high as £4,059, prompting the government to step in to support households. 

But the ending of those subsidies has left many households still struggling to pay their energy bills. Although wholesale gas and electricity prices have fallen they remain above pre-crisis levels. This is reflected in the energy price cap, which had dropped to £1,834 but is still much higher than pre-energy crisis levels when it was usually below £1,100.

The proposed surcharge is designed to avoid a repeat of the market rout in late 2021 and early 2022 when 30 suppliers collapsed as wholesale energy prices surged and the price cap prevented them from passing on the extra costs to consumers.

At the time, Ofgem allowed the remaining suppliers to recoup the cost of bailing out the millions of customers of those failed companies by adding £82 to each household bill.

Gillian Cooper, director of energy at consumer group Citizens Advice, urged the government to do more to support struggling households. “Without action we’ll remain stuck in a cycle where rising levels of energy debt slowly pushes up the price cap and leads to higher bills for all,” she said.

The cooperation was unveiled during an all-day LVMH event that also revealed a partnership support program with its suppliers.

PARIS — The luxury world is recognizing that when it comes to sustainability, cooperation is better than competition.

In a groundbreaking tie-up of two of the world’s largest luxury groups, LVMH Moët Hennessy Louis Vuitton on Thursday revealed it will cooperate with Chanel to harmonize corporate and social responsibility reporting and audit schedules at the supplier level. It will also directly support its suppliers through a partnership program titled Life 360 Business Partners, and will launch LVMH Circularity, which will reuse unsold products from across group houses in new projects, among other initiatives.

The initiatives were revealed as LVMH held a full-circle day of sustainability under its Life 360 banner, bringing together brand presidents and creative directors at the UNESCO headquarters in Paris, hosted by the group’s head of image and environment, Antoine Arnault.

LVMH chief Bernard Arnault also acknowledged LVMH and Chanel working together. “The environmental challenge redefines the usual rules of competition,” the chairman and chief executive officer said. Arnault said that competition should be on design and creativity, and businesses can share information.

“I believe it is our duty to know how to rise above the usual patterns. This is why we have chosen to invite certain competitors today,” he added. “Progress of any kind is crucial. We must join forces.”

During the day, the French luxury group discussed its wins, such as meeting its 10 percent energy reduction target at its stores, and where it is facing challenges such as removing fossil fuel-based plastic from its packaging.

The partnership program with suppliers will include financial support and coinvestment, as well as education and other initiatives to bring the suppliers on board as partners, hopefully making any mandatory changes positive rather than penalizing.

“The name of the game from now on for us is going to be Scope 3,” Arnault told WWD, about extending its sustainability reach further afield. Scope 3 is the supplier level.

“It’s the part of our mission that we control the least by definition; however, we are going to try to help our suppliers and our partners be more active on this topic — to train them, and to invest with them in their transition,” he said. Antoine Arnault acknowledged that companies at this level often face big financial challenges to overhaul their businesses.

“However, we cannot compromise,” he added.

Compliance mechanisms will be stringent but supported with training. “It’s quite tough, but we hope they see it as something helpful and that will help them in their transition,” he added, using the example of vintners trying to transition away from pesticides and herbicides but grappling with lower yields at harvest. “We are going to help them transition also financially and find ways to be more helpful toward our common suppliers,” he said.

To that end, LVMH will be cooperating with Chanel at the supplier level.

Antoine Arnault said the two groups have the same vision of luxury and “strongly believe that we will need to work together to move faster.”

Mindful of regulatory and antitrust constraints, the groups will coordinate as much as possible on things like sourcing and vetting of suppliers. While the agreement is in its early days, they have several ideas on the table. Audits are one example Arnault shared. The groups hope to create a collective audit system so that suppliers do not have to repeat their work multiple times.

“We basically just started addressing it, but I know that it is really going to be helpful to have partners we work with.”

Chanel SAS president Bruno Pavlovsky spoke on video about building the alliance between the groups that often source from the same suppliers.

“These are collective challenges as all luxury brands are supplied with leather, cotton, silk and cashmere. Only defined alliances will allow us to help the upstream transform,” he said. Businesses and brands will continue to work within their own creative ecosystems.

“There is also an economic challenge. Right now, cotton from regenerative agriculture which meets all the correct criteria will cost more than bottom-of-the-range cotton, so collectively we need to accept that that is the case. I believe that it is clearly by creating alliances and working together on a defined subject that we will be able to make progress,” he added.

Onstage, Chanel supply chain and ecological transition director Eric Dupont said the privately held luxury house came to the decision to work together with LVMH due to the urgency of the climate crisis. “The stakes are higher than one brand or group,” he said. The alliance will see the groups work together on best practices, particularly on leather, and how to define standards for the suppliers.

At the end of the day, LVMH chief Bernard Arnault took to the stage to reiterate the company’s conviction that climate can be a business decision.

“Action for climate and biodiversity will only be effective if it is seen as a real industrial strategy. The reduction in greenhouse gas emissions cannot be improvised. The protection of biodiversity cannot be improvised. The shift in the agricultural model means that regenerative agriculture cannot be improvised. All these objectives can only be achieved through thoughtful, documented strategies,” he said.

Bernard Arnault also acknowledged LVMH and Chanel working together. “The environmental challenge redefines the usual rules of competition,” he said. Arnault said that competition should be on design and creativity, and businesses can share information.

“I believe it is our duty to know how to rise above the usual patterns. This is why we have chosen to invite certain competitors today,” he added. “Progress of any kind is crucial. We must join forces.”

Much of the day was focused on how luxury players can work together, even from sectors as diverse as spirits to fashion.

The French Fédération de la Haute Couture et de la Mode executive president Pascal Morand said the organization has been working intensively behind the scenes to foster collaboration between the houses.

“The main problem of the fashion industry itself is a volumetric problem,” he said, highlighting that the garment industry turns out about 130 billion pieces a year. Morand has also been working with the European Parliament on crafting some rules that will regulate the fashion industry, including the Eco-design for Sustainable Products Regulation.

Morand said the current proposals are focused on durability and functionality and ignore other factors, including fabric composition, as well as brand value. As a result, there is a paradox in the industry where sometimes luxury products are poorly rated on that scale, or vice versa, he said. “It’s not a case of bad intentions, but it’s a complex system,” of the hard metrics that are proposed.

Changing this system for the long term requires a combination of global governance and legislative solutions, alongside the private sector. At this stage, cooperation is needed to get accurate data and granularity needed to transform the industry.

“This is why we do work with each other…in search of rigor,” he said.

If the day was a music festival, the rock star was of course a McCartney, with Stella taking the stage in conversation with Arnault. The designer and animal advocate started her line in 2001.

“I’m the grandma of sustainability here,” she joked of her 20-year-plus advocacy of sustainability. McCartney has never used animal products in her designs, even when she was an outlier in the industry.

Things have changed. “The next generation of people we’re all going to employ, they will want to work in businesses like this,” she said.

“The biggest impact we have in a positive way on the environment is not using animal products. Agriculture is massively damaging to the planet,” she said, adding that working with animals as products can also be damaging to the people that handle the labor. “It can be very harmful to human welfare. I think that should be in the conversation also.”

McCartney discussed her work with LVMH’s Veuve Clicquot to create grape leather and cork soles for shoes, as well as her championing of Mirim, a plastic-free mushroom-based leather, which is poised to scale up.

“Scalability is the only real answer, because everyone in here — we have businesses to run, right? It’s the only way to swap out bad business. Innovation is really exciting,” she said.

McCartney had also been present at COP28 in Dubai. “You can lose a little bit of hope in that room; here I have a little more hope,” she said about bringing the various stakeholders together at the daylong conference. She encouraged the LVMH employees to be innovative to tackle issues from new positions. “You have to cooperate to solve this problem. Every day at work you need to think outside of the box.”

One example was creating new hangers, said Patou artistic director Guillaume Henry.

He took to the stage with Dior Men’s and Fendi women’s creative director Kim Jones and Dior perfume creation director Francis Kurkdjian to discuss the various efforts at each of their houses.

Henry said when he realized that getting a garment from factory to store took three hangers, the brand reduced it to one with a new design. He also noted that the brand’s core line of white shirts and black blazers, called Essentiels, is still its bestseller.

Jones discussed Dior Men’s collaboration with Parley for the Oceans that has resulted in two collections that are made from recovered ocean plastic as another example. Its denim capsule collection released in September is made with 100 percent regenerative cotton.

He’s taking on other collections and incorporating alternative materials as much as possible. “With 22 collections a year it is a challenge, but we are getting to the point where we can do that,” he said.

Kurkdjian said one of the biggest challenges for the industry is going to be changing consumers’ perceptions that quantity, heft and volume equals luxury. Kurkdjian noted the industry has spent decades telling the customer one thing, and now has to work to change that perception.

“Nowadays the challenge is to help the client discover that light and sustainable is precious, more than just big and gigantic. It’s a mindset,” he said.

Many of the brand executives acknowledged that transportation is one of their biggest carbon challenges, and they are working to find solutions including more shipping by ocean or rail instead of air freight or trucks.

Packaging is another challenge, both at the brand and the group level, with eliminating plastic a major roadblock. The group will also examine its advertising and media practices, including how photo shoots are conducted.

Speaking from the stage, Arnault was direct: “Things are not getting better, and businesses cannot continue to thrive in a world overheating,” he said.

Arnault added the group is willing to acknowledge that while it is making progress on its goals, there is still a long way to go. “But what I can tell you is that everybody inside LVMH is mobilized that we are conscious that we have a huge responsibility as the leader of the sector, and that we’re taking this into our hands,” he said. “Let’s also be at the same time realistic and honest, our goal is still to continue to grow. And we will continue within that constraint in a way to produce in the best possible way.”