Toyota reliance on US deepens as emerging markets falter [Gulf Times (Qatar)]
(Gulf Times (Qatar) Via Acquire Media NewsEdge) Toyota Motor Corp's reliance on the US market to drive record profits is deepening this year, its latest outlook showed, with strong sales of refurbished SUVs and Camry sedans expected to offset weakness in Thailand and other emerging markets.
The world's best-selling automaker, which analysts say could be overtaken this year by German rival Volkswagen in global auto sales, also said it would stick to utilising existing plants to maximum capacity before investing in new factories.
Toyota yesterday posted ¥692.7bn ($6.76bn) in April-June operating profit, up 4.4% year-on-year and its best quarter ever with solid US sales, cost cuts and a weaker yen bolstering profits.
That exceeded the ¥637.3bn mean estimate of 13 analysts surveyed by Thomson Reuters I/B/E/S.
North American operating profit rose 45% to ¥149.7bn, surpassing Asia excluding Japan, which posted far more modest profit growth of 5.6% to 110.3bn yen.
"Conditions in Thailand, India, Brazil and other emerging markets are weak," managing officer Koki Konishi told an earnings briefing. "But we're trying our best to get an additional 50,000 vehicles out of Japan to offset some of that, and to reach around 2.3mn in the US," he said, referring to Toyota's 2014 calendar year sales targets.
For 2014, the company trimmed its global group-wide sales forecast to 10.22mn vehicles, a reduction of 110,000 vehicles. The Toyota group includes Daihatsu Motor Co and Hino Motors.
Toyota raised its North American sales target for the financial year to next March while cutting its target for Asia excluding Japan and China, although its first-quarter profit margins in Asia rose slightly.
Toyota, which does not plan to build any new plants globally until around 2016, is still giving no hints on what its future investment plans might be. The automaker has annual global production capacity of about 9.8mn vehicles for its Toyota and Lexus brands, Managing Officer Takuo Sasaki said.
For the year to March 2015, Toyota stuck with its full-year operating profit forecast of ¥2.3tn. That would be a record high, although just a 0.3% increase from a year earlier as the tailwind from a weaker yen that helped boost export profits runs out of steam.
Cable TV and telecoms firm Numericable said it had won 16% more new clients than a year ago in the second quarter at an improved average revenue per user despite cut-throat competition in the sector. The group was the victor of this year's fight for control of media group Vivendi's French mobile operator SFR.
Financing of the SFR deal, which it said was on track to close by the end of the year, delivered a net loss for the period of €118.4mn against a profit of 23.6mn a year earlier.
Numericable's existing business, which offers packages of pay-TV, Internet and fixed-line calls, produced earnings before interest, tax, depreciation and amortisation (EBITDA) up 1.8% at €156.7mn ($209.4mn).
On July 30 the French competition authority said it would carry out an in-depth review of the Numericable-SFR deal, which would put the country's second-largest mobile player into the hands ofbnaire Patrick Drahi.
Drahi holds 40% of Numericable through his Dutch-listed holding company Altice. Vivendi chose his offer over a rival one from industry number three Bouygues Telecom.
French bank Credit Agricole yesterday said the collapse of Portuguese lender BES had slashed its second-quarter profits, and warned that it faces a US probe for possible sanctions-busting.
But the bank, one of the biggest in Europe by capitalisation, reported a strong underlying performance and its shares surged 5.74% to €10.88.
Credit Agricole said net profit for the three months through June slumped to €17mn ($23mn) from €696mn a year ago after it wrote off its stake in Banco Espirito Santo.
The group said it had been deceived by the family behind the Espirito Santo companies, and would back any legal action by a new management team.
This was a second such blow for Credit Agricole: two years ago during the Greek debt crisis it lost a total of €8.7bn on its investment in Greek bank Emporiki.
Credit Agricole now deemed its 14.6% share in BES to be worthless, and its total costs from the collapse to be 708mn euros.
Of that, the bank said €502mn came from losses at BES and €206mn from asset write-downs.
Credit Agricole also said it was being probed by US authorities over dollar transactions which may have breached US sanctions. The bank was cooperating fully with US officials, Credit Agricole managing director Jean-Paul Chifflet said alongside the results.
Credit Agricole has not made any specific provision for the matter, although the total money it has set aside for litigation is 1.1bn euros.
Excluding exceptional items, particularly BES, Credit Agricole would have made a net profit of €1.69bn.
Motorola Solutions, a maker of walkie-talkies and radio systems, forecast a drop in sales for the current quarter and reported lower-than-expected second-quarter revenue as sales declined in North America.
Operating margins shrank to 9.9% in the second quarter ended June 28 from 13.6% a year earlier.
Total sales fell 7% to $1.39bn, well below the average analyst estimate of $1.96bn. Sales in North America dropped 14% to $841mn.
The company earned 47¢ per share, excluding items.
Motorola Solutions forecast earnings of 35-41¢ per share from continuing operations this quarter. Chief financial officer Gino Bonanotte said the profit forecast was below second-quarter levels due to a higher tax rate.
Italy's largest bank Unicredit defied expectations yesterday to post a 37.8% surge in first-half profit helped by increased demand for loans, in a positive sign for Italy's struggling economy.
Net profit in the first six months of the year was €1.1bn ($1.47bn), beating analysts' expectations of 1.042bn euros, the bank said in a statement.
In the second quarter of 2014, profit rose to €403mn, up 11.6% compared to the same period last year and ahead of predictions for 296mn euros.
"The positive results achieved in this quarter confirm the group's strong performance, despite the uncertain macroeconomic environment," chief executive Federico Ghizzoni was quoted as saying.
"Italy displays increasing profitability and new loan origination increases by over 50% versus first half 2013," he said.
The upturn in profits for Italy's largest lender is a glimmer of hope for an economy struggling to pull itself out of the deepest recession since World War II.
Last week Prime Minister Matteo Renzi was forced to admit the eurozone's third-largest economy is likely to miss the government's 0.8% growth target this year.
Unicredit crept back into profit in the first quarter after suffering a staggering €14bn loss last year as it wrote down the value of assets and increased its loan loss provisions.
Office supply retailer Office Depot raised its full-year adjusted operating income forecast, saying cost savings from the closure of some US stores were expected to be higher than previously anticipated.
Office Depot's sales jumped nearly 59% in the second quarter ended June 28, helped by the acquisition of smaller rival OfficeMax.
Office Depot said in May that it would close 400 stores in the US by the end of 2016, with 165 stores closing this year.
The company raised its adjusted operating income forecast for the year ending December to at least $200mn from at least $160mn.
Office Depot bought OfficeMax in November to better compete with online retailers such as Amazon.com, drugstores and wholesale retail chains such as Wal-Mart Stores, which are attracting shoppers with their lower priced offerings.
Net loss attributable to Office Depot shareholders widened to $190mn, or 36¢ per share, in the second quarter from $64mn, or 23¢ per share, a year earlier.
Office Depot's sales were $3.84bn compared with $2.42bn in the year-earlier quarter, which did not include OfficeMax sales.
Excluding items, Office Depot posted a loss of 2¢ per share and revenue of $3.78bn for the second quarter.
Analysts had expected a loss of 2¢ per share on revenue of $3.81bn, according to Thomson Reuters I/B/E/S.
Edinburgh-based insurance and pensions group Standard Life reiterated concerns that a vote next month for Scotland's independence could create economic and financial risks and said it was sticking to plans to move operations out if necessary.
Standard Life, which has so far been one of the most outspoken Scottish firms about issues around independence, drew up detailed contingency plans in May to potentially move some operations out of Scotland to protect itself from upheaval if Scots voted in favour of splitting from the United Kingdom.
The insurer said at the time that it would not hesitate to move parts of its operations to England or register its funds there to protect its market position. Any relocation could put some 5,000 Scottish jobs at risk.
Standard Life said yesterday, as it reported first-half results, that it had not been given any clarity on the economic and financial concerns it raised including those about Scotland's currency, regulations and European Union membership.
Standard Life posted a 12% rise in first-half operating pretax profit to £339mn ($571.7mn) yesterday, beating analysts' average expectation of 321mn pounds in Thomson Reuters I/B/E/S.
The insurer said it was benefiting from the British government's decision last year to automatically enrol workers in company pension schemes, adding that it expected over 300,000 new auto-enrolled customers in 2014.
Assets under administration rose 4% to £254.1bn in the six months ended June 30, while fund management arm Standard Life Investments posted a 5% increase in third-party assets to £108bn pounds. Its dividend rose 7.3% to 5.6 pence.
Time, the largest magazine publisher in the US, reported a fall in quarterly revenue, hurt by a decline in subscription revenue and newsstand sales, and cut its full-year revenue forecast.
The publisher of Sports Illustrated, Time magazine and People is facing steadily declining circulation and advertising revenue — like Meredith Corp and News Corp — as consumers shift to reading on smartphones and tablets.
This is Time's first earnings report following its spinoff from Time Warner Inc Time publishes more than 90 titles and operates 45 websites, and gets more than half of its revenue from advertising.
The company cut its full-year revenue forecast to $3.30-$3.37bn from $3.35-$3.42bn, citing a payment default by its second-largest wholesaler, the relocation of its headquarters and sale of Mexican publishing unit Grupo Expansion.
Analysts on average were expecting revenue of $3.35bn, according to Thomson Reuters I/B/E/S.
Time posted a loss of $32mn, or 30¢ per share, for the second quarter ended June 30, compared with a profit of $75mn, or 69 cents per share, a year earlier. On an adjusted basis, the company earned 30¢ per share.
Revenue fell 1.6% to $820mn. Subscription revenue fell 2%, while newsstand sales fell 13%.
Advertising revenue rose about 3%.
Analysts expected an adjusted profit of 16¢ per share on revenue of $821.3mn.
Aggreko, the world's biggest temporary power provider, said yesterday it expected sterling strength to hit results for the rest of the financial year after it posted a 9% fall in half-year pretax profits.
Interim chief executive Angus Cockburn said the company had been hit significantly by the strength of sterling relative to currencies such as the dollar, Brazilian real and Russian rouble, despite strong underlying growth.
The British firm, whose kit powers major events and covers electricity shortfalls such as the Commonwealth Games in Glasgow, said pretax profits fell 9% to £132mn ($222.6mn) from 146mn a year earlier.
However, underlying revenue and trading profit rose 12% and 6% respectively, sending the company's shares to the third highest spot of the FTSE 100 risers.
The company, which has a market capitalisation of £4.40bn, said it continued to expect full-year underlying trading profit to be similar to last year's 312mn.
It also said order intake for the first half of the year was 488 megawatts, ahead of the 397 megawatts secured in the same period last year.
Cockburn, who is due to step down as interim CEO after 14 and a half years, said he was considering his options, which some media reports suggested might include joining former CEO Rupert Soames at support services firm Serco
This leaves the company without a CEO until Chris Weston, currently the head of Centrica's British Gas division, joins next year after serving a 12-month notice period.
German top-of-the-range carmaker BMW said yesterday that profits rose in the second quarter of 2014 on the back of increased demand for its vehicles worldwide.
BMW said in a statement that its bottom-line net profit rose by 27.2% to €1.771bn ($2.4bn) in the period from April to June.
Underlying or operating profit was up 26% at €2.603bn on a 1.8% increase in revenues to €19.905bn.
Unit sales rose by 5.3% to 533,187.
"The BMW group increased sales volume, revenues and group earnings in both the second quarter and the six-month reporting periods, continuing the successful development of our business," said chief executive Norbert Reithofer.
"Business benefited perceptibly from an increase in sales volume, with exchange rate factors damping the scale of the increase in revenues," he said.
Following the "strong" first-half performance, BMW said it would stick to its sales volume and earnings forecast for the full year 2014. "We are on track to achieve our targets for the full year," Reithofer said. "Within a market environment which continues to be challenging, deliveries to customers and group profit are both expected to rise significantly," he said.
"After our record sales volume performance in the first half of the year, we are now targeting a significant increase in the number of vehicles delivered to customers in the current year and hence a new sales record of over twomn vehicles," Reithofer stated.
Such significant sales growth would also have a positive impact on pre-tax profit, the CEO said.
"We are aiming for a group profit before tax figure, which will be significantly higher than in the previous year," he said.
In the second half of the year, however, the pace at which earnings increase would be influenced by high levels of expenditure for new technologies, Reithofer cautioned.
(c) 2014 Gulf Times Newspaper Provided by SyndiGate Media Inc. (Syndigate.info).
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