CORPORATE RESULTS [Gulf Times (Qatar)]
(Gulf Times (Qatar) Via Acquire Media NewsEdge) Nucor Nestle Union Pacific Verizon UnitedHealth BSkyB AMR TeliaSonera HCL TSMC eBay Keppel Corp IBM American Express Carrefour Goldman Sachs Group Inc yesterday said third-quarter revenue plunged 20%, hurt by weak mortgage and bond-trading results, but profit dropped only slightly as the Wall Street bank slashed compensation and other expenses.
Revenue from trading fixed-income, currency and commodity products for clients, one of the bank's biggest businesses, plunged 44%, a much sharper decline than those posted by rivals. Goldman said revenue from investing its own money in bonds and loans fell 46%. The bank's shares fell 2.6% in pre-market trading.
"Goldman showed that they are also mortal," said Michael Holland, founder of Holland & Co, which owns financial stocks but does not own Goldman shares.
Banks across Wall Street were hurt in the third quarter by the Federal Reserve's surprise decision to continue its bond buying stimulus instead of starting to wind it down. Customer trading volume dropped because the decision assured investors that they could hold onto their bonds for longer periods without worrying about rising rates.
Goldman responded to the weaker revenue by cutting the money set aside for compensation by 35%, to $2.38bn. So far this year it has set aside $10.4bn to pay employees, down 5% from the first nine months of 2012.
Overall, Goldman reported net income for common shareholders of $1.43bn, or $2.88 per share, down 2% from $1.46bn, or $2.85 per share, a year earlier. Per-share earnings rose because of stock repurchases.
Analysts had been expecting earnings of $2.43 per share, on average, according to Thomson Reuters I/B/E/S. But analysts had forecast higher revenue, and most of Goldman's earnings beat came from cost-cutting.
The bank boosted its dividend for the third time in less than two years, to 55 cents per share quarterly from 50 cents. The dividend is a relatively small expenditure for the bank, but Goldman is usually loathe to boost its payout if there are better opportunities for it to invest the money elsewhere.
"The third quarter's results reflected a period of slow client activity," chief executive Lloyd Blankfein said in a statement.
Steelmaker Nucor Corp reported a higher-than-expected quarterly profit yesterday and said better prices for sheet steel had boosted results at its mills.
Nucor said in September that some improvement in demand, as well as supply disruptions experienced by its competitors, could help results. Third-quarter earnings came in ahead of both the company's forecast and analysts' expectations.
The company said it expects "moderately lower" earnings in the fourth quarter. While metal margins should be stable, shipments usually fall late in the year, and Nucor has scheduled outages, related to upcoming expansions, at several mills.
The company took a charge of $14mn in the third quarter linked to the collapse of a storage dome at its new direct reduced iron plant in Louisiana.
Nucor's third-quarter earnings rose to $147.6mn, or 46 cents a share, from $110.3mn, or 35 cents a share, a year earlier. Net sales climbed 3% to $4.94bn.
Analysts, on average, had been expecting earnings of 39 cents a share on revenue of $4.80bn, according to Thomson Reuters I/B/E/S. Nucor had forecast earnings of 35 to 40 cents a share.
Nestle said competitive pricing helped to lift sales growth in spite of tough conditions in emerging markets and Europe, reassuring investors worried by recent negative news from its peers.
The world's biggest food group and rivals such as Danone and Unilever have been grappling with sluggish consumer demand in austerity-hit Europe and a slowdown in many emerging markets, hit by inflationary pressures and political instability.
But Nestle said yesterday that it achieved a slight pick-up across all its markets in the third quarter and expects the trend to continue into next year.
Underlying sales, stripping out the effects of foreign exchange, acquisitions and divestments, grew 4.4% in the first nine months of the year, helped by improvements in all three of Nestle's geographical regions - Asia, Oceania and Africa, Europe and the Americas.
That was slower than the 6.1% in the same period last year and just below a 4.5% forecast in a Reuters poll, but it was slightly better than the 4.1% growth in the first half.
Sales in emerging markets, which account for about 45% of group sales, were up by 8.8%, against 8.2% in the first half.
Nestle's group sales rose to 68.4bn Swiss francs ($74.7bn), lagging a 69.3bn franc estimate in the Reuters poll.
In the first half, Nestle's operating profit margin was 15.1%, against Unilever's 14% and 13.3% at Danone.
Railroad company Union Pacific Corp reported a 15% rise in quarterly earnings yesterday as increased shipments of automotive and other industrial products more than offset weak coal and agricultural volumes.
Railroads are seen as key indicators of how the economy is doing because of the variety of goods they transport.
Union Pacific, the largest publicly traded US railroad, said automotive shipments rose 8% in the third quarter, while industrial products were up 9. Coal volumes fell 7%, matching the decline at smaller rival CSX Corp Union Pacific, which operates 31,900 route miles and links 23 states in the West and Midwest, earned $1.15bn, or $2.48 a share, in the quarter, up from $1bn, or $2.19 a share, a year earlier.
Revenue for the Omaha, Nebraska-based company rose 4% to $5.6bn.
Analysts, on average, were expecting earnings of $2.47 a share on revenue of $5.58bn.
Verizon Communications Inc yesterday posted stronger-than-expected third-quarter earnings and revenue on strong wireless growth, sending its shares up 2.4% in early trade.
While the company's wireless customer growth numbers were slightly below Wall Street estimates, its Verizon Wireless venture with Vodafone Group posted good profit and revenue growth as customers spent more on their services.
"The numbers were fine but it wasn't a blowout quarter. It was a good third quarter," said Hudson Square analyst Todd Rethemeier.
Verizon Wireless added 927,000 net retail subscribers in the quarter, compared with Wall Street expectations of about 1mn customers, according to eight analysts, with estimates ranging from 900,000 to 1.2mn. Verizon has agreed to buy out Vodafone's 45% share of the mobile venture.
Verizon said it expects wireless customer growth to improve sequentially in the fourth quarter.
Verizon reported a third-quarter profit of $2.2bn, or 78 cents per share, compared with $1.59bn, or 56 cents per share, a year ago.
Excluding unusual items, Verizon earned 77 cents per share in the quarter, compared with Wall Street expectations of 74 cents, according to Thomson Reuters I/B/E/S.
Its wireless profit margin was 51.1%, based on earnings before interest, taxes, depreciation and amortisation(EBITDA) as a percentage of service revenue, and above its target range of 49% to 50% for the full year.
Revenue rose 4.4 to $30.28bn from $29.01bn. Wall Street expected $30.16bn, according to Thomson Reuters I/B/E/S.
UnitedHealth Group Inc said yesterday that its third-quarter profit rose about 1% as the enrolment of an additional 275,000 people in its health insurance plans offset higher operating costs in its private Medicare business.
Earnings were in line with analysts' expectations, but revenue fell short.
The company, the largest US health insurer, reported earnings of $1.57bn, or $1.53 per share, up from $1.56bn, or $1.50 per share, a year earlier.
UnitedHealth said revenue increased 12% to $30.6bn, slightly below analysts' estimates of $30.8bn, according to Thomson Reuters I/B/E/S.
CRT Capital analyst Sheryl Skolnick said in a research note that investors generally expect UnitedHealth to beat Wall Street estimates.
UnitedHealth and other US insurers are facing big changes due to government healthcare reform, including the start of new healthcare exchanges for individuals and small businesses. The company is only participating in a limited number of those markets.
The company forecast full-year revenue of $122bn, compared with analysts' estimates of $122.7bn.
Britain's dominant pay-TV provider BSkyB shrugged off the launch of rival BT's new sports service with strong customer demand for its TV and broadband services, sending its shares to a near 12-year high.
BT, a former telecoms monopoly, in August launched a new TV service showing Premier League soccer free to its existing broadband customers in a bold attempt to hold on to its core subscribers who had been moving to BSkyB in droves.
The offering is the biggest challenge to BSkyB since Rupert Murdoch launched the pay-TV group more than 20 years ago. . It had managed to grow during the economic downturn by selling more services to its existing base, such as broadband, as it became tougher to sign up new customers.
Yesterday the company, 39% owned by Murdoch's 21st Century Fox, said it had added 111,000 broadband customers in the three months to the end of September - the first quarter of its financial year - up 9% compared with the same period last year. That number, which also includes customers in Ireland, is comfortably ahead of analyst forecasts of around 80,000.
Overall the group posted revenue and adjusted operating profit in line with analysts' forecasts, with revenue up 7% to £1.8bn ($2.9bn).
The battle with BT took its toll on adjusted operating profit, which was down 8% to £285mn due to the higher price it had to pay for Premier League soccer rights.
American Airlines parent AMR Corp reported improved third-quarter results yesterday, aided by bankruptcy cost-cutting.
The carrier, which is looking to emerge from Chapter 11 protection by merging with US Airways Group Inc, had net income of $289mn, or 76 cents a share in the quarter, compared with a loss of $238mn, or 71 cents a share, a year earlier.
Excluding restructuring costs and special items, profit was $530mn, the highest quarterly earnings in company history, AMR Chairman Tom Horton said in a statement.
The US Justice Department sued to block the merger with US Airways in August, and a federal trial in the case is set to begin next month.
American, which would become the world's biggest carrier should the merger be completed, has renegotiated plane leases, cut management and frozen pension plans to lower costs since filing for bankruptcy in November 2011. New labour contracts with unions have also made it more cost-competitive.
Quarterly revenue rose 6% to $6.8bn. Passenger revenue per available seat mile, or unit revenue, rose 3.4%. Operating costs fell about 4%, as expenses tied to salaries fell 13%.
Finnish-Swedish telecoms company TeliaSonera said yesterday it increased its third-quarter profit by 15% from the equivalent figure last year as a result of layoffs and other cost-cutting measures.
Profits during the quarter amounted to 4.64bn kronor (€529mn, $720mn), exceeding the forecasts by analysts interviewed by Dow Jones, who expected 4.5bn kronor (€513mn, $697mn.) But net sales fell by 1.8% to 25.38bn kronor (€2.89bn, $3.94bn). "Profitability was supported by a further reduction in the cost base," TeliaSonera chief executive Johan Dennelind said.
Following a restructuring plan launched in October 2012, the company has laid off 1,460 workers, or about five% of the total workforce.
"It is crucial to have an efficient organisation and an appropriate cost base," Dennelind said.
HCL Technologies, India's fourth largest IT services provider, yesterday said net profit soared 64% in July-September as an economic recovery in developed markets spurred demand.
HCL, which is controlled by tycoon Shiv Nadar, said net profit for its first financial quarter hit Rs14.16bn (230.6mn), up from Rs8.64bn in the same period a year earlier and beating forecasts of around Rs13bn.
"HCL continues to strengthen its position in the momentum markets of the industry", with Europe turning in a particularly "healthy" performance, HCL president Anant Gupta said in a statement.
The earnings marked the eighth straight quarter of profit growth for the company based in Gurgaon, a satellite city of national capital New Delhi.
India's flagship outsourcing sector has benefited from increasing buoyancy in its main US and European markets and the companies say economic conditions in developed markets are fuelling greater customer spending.
Taiwan Semiconductor Manufacturing Co Ltd said it expects fourth-quarter revenue to fall as much as 11% from the previous quarter as demand for some high-end smartphones softens and device makers use up stocks of chips.
TSMC, the world's top contract chip maker, said revenue for the fourth quarter will be between T$144bn and T$147bn, down from T$162.58bn in the previous quarter.
Earlier yesterday TSMC reported a net profit of T$51.95bn for the third quarter, beating analysts' estimates.
EBay Inc on Wednesday gave a disappointing holiday forecast, saying the US economic environment, including consumer confidence, had deteriorated in part because of the shutdown of the US government.
Chief financial officer Bob Swan told investors on a conference call that industry growth rates for e-commerce had shrunk to about 13% in the third quarter, from about 16% in the previous quarter. "We really haven't seen any more positive signs in October," he added.
eBay expects revenue of between $4.5bn and $4.6bn for the fourth quarter, ending December 31, compared with the $4.64bn estimated by analysts, according to Thomson Reuters I/B/E/S.
Net income for its third quarter was $689mn, or 53 cents a share, up from $597mn, or 45 cents a share, a year earlier. Excluding the benefit of its sales of stakes in e-commerce companies RueLaLa and ShopRunner, eBay earned 64 cents, one cent better then expected. Revenue rose 14.3% to $3.89bn.
For the holiday quarter, eBay expects a profit of 79 cents to 81 cents a share, while Wall Street analysts estimate 83 cents.
The company kept its full-year forecasts, but CFO Swan said revenue and profits are likely to come in at the low end of eBay's forecast.
Singapore's Keppel Corp, the world's largest builder of offshore oil rigs, yesterday posted a 32% rise in third-quarter net profit as higher contributions from property offset a drop in earnings from rigs.
The company, whose biggest shareholder is Singapore state investor Temasek, earned S$457.6mn ($367.71mn) in the three months ended September 30 compared with S$346.4mn in the same period a year earlier.
Excluding gains from revaluation, impairment and divestments, Keppel's net profit rose 20% to S$403mn.
Keppel's offshore and marine arm order book stood at S$13.6bn as at end-September, up from S$13.1bn at the end of June.
Keppel Land, the group's property unit, on Wednesday reported a 70% rise in third-quarter net profit to S$126.4mn, helped by the completion of more projects in China.
The developer sold about 3,070 housing units in China during the first nine months of 2013, more than three times the 970 units sold over the same period last year.
IBM reported a 4% drop in third-quarter revenue, worse than expected by Wall Street, amid a decline in hardware and emerging markets even as it beat earnings estimates.
Chief financial officer Mark Loughridge said on a conference call for investment analysts that third quarters tended to be difficult for the world's largest technology service provider but added the company faced some particular challenges this year.
Profitability in its hardware business declined by $1bn year-to-date and currency effects had a $500mn year-to-year negative impact, he added.
There is increasingly less demand for hardware as software replaces traditional infrastructure. IBM has recognised that trend and is itself shifting to become a more software focused business.
Revenue dropped 4% to $23.7bn, below Wall Street analysts' expectations of $24.74bn, mainly due to the decline in its hardware division, excluding its System z mainframe servers, and in emerging markets, which were down 9%.
Hardware revenue was down 17%, while System z mainframe revenue rose 6%.
Quarterly net income rose 6% to $4.0bn, or $3.99 a share on a non-GAAP basis from $3.62 a year earlier, above estimates of $3.96 a share, according to Thomson Reuters I/B/E/S.
The revenue drop was worse than investors expected, RBC Capital analyst Amit Daryanani said.
Edward Jones analyst Josh Olson agreed, saying it was a disappointing quarter from a revenue standpoint.
The company reiterated its full year outlook of non-GAAP EPS of at least $16.25.
But ISI Group analyst Brian Marshall said there was concern that IBM's days of double-digit EPS growth are nearing an end.
American Express Co posted a better-than-expected 9% rise in quarterly profit as spending by corporate card users began to pick up after more than a year of sluggish growth.
A relatively affluent customer base has helped to insulate American Express from tepid consumer spending that has led to an overall decline in credit card usage in the US.
The company, which has fewer defaulting customers than rival credit card issuers, said on Wednesday that it had not suffered any direct impact from the US government shutdown.
"They largely cater to a consumer base who would likely be less sensitive to the fallout from what's going on in Washington DC," said Sameer Gokhale, an analyst at Janney Capital Markets.
For the third quarter ended September 30, American Express said spending on its cards rose 9% after adjusting for foreign currency translations—the biggest jump in five quarters.
Net profit rose to $1.37bn, or $1.25 per share, for the quarter ended September 30, above analysts' expectations of $1.22 per share, according to Thomson Reuters I/B/E/S.
Total revenue, net of interest expense, rose 6% to $8.30bn, beating average Wall Street estimates for the first time in five quarters.
Supermarket giant Carrefour, the world's second-biggest food retail company after Walmart, posted improved sales for the third quarter on Wednesday, with a good worldwide performance and despite low prices in France.
In the July-September period, the group booked sales of €21.11bn ($28.8bn), which once foreign exchange variations were factored out, meant a 2.7% rise from a year ago.
Over nine months, the sales rose 1.3% from a year ago, to €61.1bn.
In the company's new strategy plan, Carrefour remains committed to maintain operations in emerging markets, but only in countries where it is a dominant player. In the first six months of the year, the group posted a net profit of €902mn, up from a loss of €31mn in the same period of last year.
Finance director Pierre-Jean Sivignon said performance "continued to be led by emerging markets, but also the domestic market".
The company remained cautious however for its end of year outlook given an uncertain global economic context, especially after instability on the foreign exchange markets brought on by talk that the US Federal Reserve would scale back stimulus that had been propping up emerging country currencies.
Sales in home-market France turned to the green in the third quarter, up 1.4% when they had dipped in the previous quarter.
Sales in Brazil, Carrefour's second biggest market, rose 8.6%, and in Asia sales rose 3.7%.
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