SocGen reshuffles management team after Q4 loss
Societe Generale has reshuffled its management team and will seek cost cuts after swinging to a fourth—quarter loss on the back of a weak eurozone economy and one—off charges.
France’s No 2 listed bank said finance chief Bertrand Badre — who is stepping down to join the World Bank after only a year in the job — would be replaced by his deputy Philippe Heim, while Jacques Ripoll, head of its GIMS asset—gathering division, was leaving the group, as Reuters reported on Tuesday.
The bank pledged to cut costs over the next three years with its new team and a revamped structure, without giving details.
SocGen racked up a quarterly net loss of €476mn ($641mn), it said yesterday, compared with a net profit of €100mn for the same period a year earlier. Analysts had been expecting a loss closer to 237mn, according to a Reuters poll of eight banks and brokerages.
The bank blamed “significant” one-off quarterly charges, which it had flagged last month as accounting losses on the value of its own debt and a goodwill write-down for its Newedge brokerage joint venture with Credit Agricole.
It also warned of the weak economic backdrop in Europe, citing rising loan-loss provisions at its French and Romanian operations, and said Russian unit Rosbank had lost money in 2012.
One unexpected charge was a €300mn legal provision booked for 2012. SocGen gave no details about the charge.
The bank will pay a dividend of €0.45 per share, after skipping a shareholder payout last year, having reached the end of a year-long drive to beef up its balance sheet by selling assets, cutting costs and laying off staff.
Total
Total beat analysts forecasts in the fourth quarter, posting a 13% rise in adjusted net profit to €3.08bn ($4.2bn), buoyed by high oil prices and a bump in refining margins.
“Solid results in a tough year of disruption,” said Societe Generale analysts in a note. Analysts said the results compared favourably with larger European oil majors BP and Royal Dutch Shell, which reported earlier this year.
Total plans to raise its exploration budget in 2013 under an investment policy that takes advantage of high oil prices and financing from large-scale asset sales.
The world’s fifth largest oil company by market value said it would spend $2.8bn on exploration in 2013, up from $2.5bn last year, with prospects to drill in Ivory Coast, Gabon, Kenya and Brazil.
Chief Executive Christophe de Margerie said he expected oil and gas output to grow by 2 to 3% in 2013, putting the French firm back on track after attacks on pipelines and a leak in the North Sea hit production in 2012. Output slid by 2% to 2.3mn barrels of oil equivalent per day last year, but de Margerie confirmed a 2017 target for 3mn barrels of output capacity.
Brent crude oil prices have been on an upward trend since November, averaging $111.6 per barrel in 2012 and trading near $118 yesterday.
Total planned to sell assets worth $15bn to $20bn by 2014.
Net investments were seen at $22bn in 2013, unchanged from the previous two years.
The group confirmed a target announced last September to expand output by about 3% a year on average for 2011 through 2015.
Commonwealth Bank
Australia’s largest lender Commonwealth Bank yesterday posted a 1% rise in first-half net profit to Aus$3.66bn (US$3.77bn), sending its shares to an all-time high.
The bank’s result for the six months to December 31 was up from Aus$3.62bn in the same period the previous year.
Commonwealth’s cash profit, a measure often preferred by financial institutions, rose 6% to A$3.78bn, slightly above analyst expectations.
The profit growth, due mainly to a stronger performance from its domestic and wholesale businesses, pushed its shares to a record high close of A$67.11, up 2.43%, having hit Aus$67.38 earlier in the day.
When the bank floated in 1991, its shares were Aus$5.40.
Chief executive Ian Narev described it as a “a strong result which continues to demonstrate the benefits of the group’s consistent, long-term strategy”.
This included “a focus on the customer, disciplined management of volumes and margin, a focus on productivity, and a willingness to invest in long—term growth, particularly through technology”.
Narev said that since the bank reported its full—year results last August, the global economy had improved, which had helped the company, but he remained cautious.
Narev’s remarks came as consumer sentiment surged to its highest level in more than two years in February, indicating that central bank interest rate cuts were having their desired stimulatory effect.
The lender declared an interim dividend of A$1.64, a 20% increase from the previous year, which analysts said was “a sure stamp that the bank feels, despite low credit growth, it is in a healthy position”.
Western Union
Western Union, the world’s largest money transfer company, forecast a decline in 2013 earnings as it cuts prices to keep up with nimble competitors that have eroded its market dominance.
Western Union said it expected to earn between $1.33 and $1.43 per share in 2013, compared with $1.69 per share in 2012. The Englewood, Colorado-based company also reported a 47% decline in fourth-quarter earnings.
Smaller rivals such as MoneyGram International have won market share by charging less for transferring money, competition that has intensified since the lapse of some of Western Union’s exclusive contracts with financial institutions.
The company said in a statement that it expects to incur expenses of $45mn this year as it looks for additional cost savings, which might include job cuts.
Chief Executive Hikmet Ersek has come under fire from restless investors who have demanded a strong response to the decline in earnings.
Speaking on a conference call with analysts, Ersek said he expected lower transaction fees to result in a decline in revenue this year in Western Union’s mainstay business as an agent for the transfer of money between individuals.
Western Union said consumer-to-consumer revenue, which accounts for more than 81% of its total revenue, fell more than 2% in the fourth quarter. Total revenue fell less than 1% to $1.42bn.
Net income in the three months to December 31 fell to $237.9mn, or 40¢ per share, from $452.3mn, or 73¢ per share, a year earlier. Excluding items, the company earned 42¢ per share.
Analysts on average had expected earnings of 35 cents per share on revenue of $1.4bn.
In a recent filing with the US Securities and Exchange Commission, Western Union said proposed laws in some countries in Africa, south Asia and eastern Europe would prevent exclusive deals with agents.
This could increase competition in India and Russia, where the company’s premium prices can sometimes be 50% to 60% higher than those of its competitors.
In Mexico, Western Union’s near-20-year exclusive relationship with Mexican financial services group Grupo Elektra ended last February and the company’s transactions in the country have declined while MoneyGram’s have grown.
Storebrand
Storebrand, Norway’s biggest life insurer, missed fourth-quarter profit forecasts and cut its return on equity target, saying it needed to boost reserves in the face of tougher regulations and rising life expectancy.
Storebrand said it made an underlying profit of 489mn Norwegian crowns ($89mn) in October-December, lagging the mean forecast of 593mn in a Reuters poll, though up from 268mn in the same period the year before.
The group said it would not propose a dividend and cut its target for return on equity after tax and before amortisation to above 10%, from 15% previously.
Storebrand must put more money aside due to new international regulations and to pay for the pensions of Norwegians, who are living longer than previously expected.
Storebrand’s fortunes contrasted with those of its Nordic cousin Sampo, which yesterday forecast a good year ahead after reporting a bigger-than-expected rise in fourth-quarter profit.
Storebrand will not pay a dividend for 2012 and probably not in 2013 either, said its chief executive. It may however consider it when the results for 2014 take shape and the new regulations have been put into place.
“When I look at 2014 compared with 2013, then a lot of things would have fallen into place and been organised by then,” Odd Arild Grefstad told Reuters after presenting the company’s quarterly results.
Deere & Co
Deere & Co, the world’s largest farm equipment maker, reported first-quarter results above analysts’ expectations as farmers geared up to plant the largest corn crop in US history following the worst drought in the US Midwest in 56 years.
The company also raised its forecast for net income this year to $3.3bn from $3.2bn. Analysts had estimated $3.26bn on average, according to Thomson Reuters I/B/E/S.
“Relatively high commodity prices and strong farm incomes are expected to continue supporting a favorable level of demand for farm machinery during the year,” Deere said.
The US Agriculture Department said this week that farm income would soar to a record $127.6bn this year, up 15%.
Deere said it expects total sales of agriculture and turf equipment to rise by about 6% in the year ending October.
Sales of agriculture and turf equipment — which make up about three-quarters of Deere’s total revenue — jumped 16% in the quarter ended Jan 31.
Total revenue rose 10% to $7.42bn, well ahead of the $6.72bn analysts had expected.
Net income attributable to Deere rose to $649.7mn, or $1.65 per share, in the first quarter from $532.9mn, or $1.30 per share, a year earlier. Analysts expected first-quarter earnings of $1.40 per share.
Duke Energy
Duke Energy Corp, the largest power company in the US, posted an increase in quarterly net income yesterday in its second quarterly report since its merger with Progress Energy.
For the fourth quarter, the company posted net income of $586mn, or 62¢ per share, compared with $333mn, or 65¢ per share, a year earlier.
Excluding special items, Duke earned 70¢ per share, beating the analysts’ average estimate of 64¢.
Charlotte, North Carolina—based Duke has 57,000 megawatts of generating capacity and 7.1mn electricity customers in North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio.
Thomson Reuters
Thomson Reuters reported a 2% rise in quarterly operating profit yesterday, largely due to cost cutting, and forecast higher revenue in 2013 as its division that serves financial institutions begins to turn around.
The global news and information company said it expects revenue to increase in the low single digits this year. Analysts had been forecasting a 2% rise.
Profit in the quarter increased on the back of “continued cost containment and lower reorganisation costs”, the company said. Organic revenue was flat.
Thomson Reuters said revenue from ongoing businesses in the fourth quarter rose 2% before currency changes to $3.36bn. It was not immediately clear what the change in costs was on the same basis.
Adjusted earnings increased to $497mn, or 60¢ per share, from $445mn, or 54¢ per share, a year earlier.
The number of Eikon desktops installed rose 33% in the fourth quarter from the previous quarter to 33,900.
For the fourth quarter, revenue at the Financial & Risk division increased 1% due to growth in its Governance, Risk & Compliance business and its acquisition of electronic foreign exchange platform FXall.
Revenue in the division’s Europe, Middle East and Africa region and in Asia was down 3%, respectively, while the Americas gained 6%.
Its Legal division, which includes WestlawNext, reported that revenue rose 2% in the quarter to $861mn.
Thomson Reuters recently acquired London-based Practical Law Company, which provides guidance and analysis tailored to specific areas of the law.
The board approved a 2¢ annual dividend increase to $1.30 per share.
Peugeot
French automaker Peugeot Citroen reported a record loss of €5.0bn yesterday but said it was on the road to recovery from crisis, and the government insisted that nationalisation is not on the agenda.
PSA Peugeot Citroen, the biggest French carmaker and Europe’s second-biggest after Volkswagen, shocked France in the middle of last year when it announced huge job cuts and a plan to shut a plant near Paris.
But in announcing its annual results, the group said it had built the foundations for recovery after cleaning up its balance sheet and implementing a tough restructuring plan.
Peugeot blamed the results on a previously announced asset write-down of €4.7bn last year and on the crisis in the European car market.
The loss compared with a profit of €588mn in 2011, while revenue for the year fell 5.2% to €55.4bn.
The results were worse than forecast by analysts and overshadowed the previous record loss of 1.2bn in 2009.
The operational loss for 2012 stood at €576mn, sharply down from a onebn profit in 2011, with net debt at €3.0bn, the company said.
The dire state of finances at the privately owned company has prompted some talk of nationalisation in order to rescue one of France’s most iconic companies and biggest employers from catastrophe.
The company’s auto division has been burning through cash at a rapid rate, as much as €200mn a month in the middle of last year, and ended the year with a negative cash flow of €3.0bn.
In announcing its huge write-down on assets last week, the company said it would reduce that negative cash flow by half over 2013 with a return to balance by 2014.
PSA Peugeot Citroen, which has a strategic tie-up with General Motors (GM) of the US, is in the midst of a restructuring involving deep job cuts.
The plan involves the loss of 11,000 jobs between 2012 and 2014 and the closure of a plant in Brittany and another northwest of Paris.
Nice
Israel-based software provider Nice Systems yesterday reported better-than-expected fourth quarter profit on strong demand for its data analytics software and introduced a dividend plan.
Nice also said board member David Kostman has been appointed chairman, replacing Ron Gutler, who has been chairman since 2002.
Nice earned 70¢ a share excluding items in the fourth quarter, up from 60¢ a year earlier as revenue excluding items rose 12% to a record $240mn.
Analysts on average expected adjusted earnings of 66¢ per share on revenue of $246mn, according to Thomson Reuters I/B/E/S.
Nice said it expects its initial annual dividend to be 64¢ a share, or 16¢ quarterly. The first payment is expected to be in the second quarter of 2013.
For the first quarter of 2013 Nice expects revenue excluding one-time items to be in a range of $220mn to $230mn and EPS excluding items to be in a range of 57 to 62¢.
For the full year it forecast adjusted revenue of $940mn to $970mn and adjusted EPS of $2.55 to $2.65.
Heineken
Heineken, the world’s third-largest brewer, beat expectations for 2012 profit and said Africa, Asia and the Americas should drive continued volume and revenue growth, offsetting weak European markets.
Europe’s largest beer maker also said yesterday that savings that should outweigh rising costs.
The brewer of Heineken — Europe’s best-selling lager, and Sol, Strongbow and Tiger, said input prices, including malted barley and packaging, would rise only slightly after rising 8.3% last year.
Heineken said it expected to achieve €525mn of cost savings under its TCM2 programme from 2012-14, with €25mn of gains from the acquisition of APB now added to its initial target. It had reached 196mn euros of savings by the end of December.
Its net profit before one-offs rose 7.1% to €1.70bn ($2.3bn), compared with a forecast for 1.65bn in a Reuters poll.
Like-for-like net profit rose 1.6% — Heineken had forecast 2012 profit would be flat on that basis.
After taking full control of Tiger beer maker Asia Pacific Breweries last year, 64% of Heineken’s volume and 59% of operating profit comes from emerging markets, on a par with rival Anheuser-Busch InBev.
In the Americas, including a large Mexican business bought in 2010, Heineken sold 4.2% more beer. In Africa, where it dominates in Nigeria, volumes rose 3.6%. Operating profit in the regions rose 7.9% and 9.8% respectively.
In western Europe, where austerity has accelerated a general decline in beer drinking, volume fell 2% with operating profit down 6.6%.
Heineken faces a challenge there in 2013.
Reckitt Benckiser
Reckitt Benckiser, the household goods and drugs group, said yesterday that net profits rose last year thanks to strong global demand for its health and hygiene products.
Earnings after taxation increased by 4.8% to £1.83bn ($2.87bn, €2.13bn) in 2012, compared with £1.75bn in 2011, Reckitt said in a results statement.
The Anglo-Dutch maker of Dettol surface cleaners, Durex condoms and Nurofen pain relief pills, added that revenues grew 1.0% to £9.56bn.
Reckitt’s other key brands also include Air Wick air fresheners, Harpic toilet cleaners and Strepsils throat lozenges.
The London-listed company added that it was targeting net revenue growth of 5.0 - 6.0% for 2013.
The group had agreed late last year to buy US-based Schiff Nutrition for $1.4bn (€1.1bn).
Husqvarna
Garden equipment maker Husqvarna predicted its key European market would stay tough after losses rocketed in the fourth quarter as retailers held back from buying stocks ahead of the key gardening season.
The Swedish group said yesterday it would invest 1bn crowns ($157mn) in a chainsaw chain production unit in Sweden, and increase capacity for cylinders for two-stroke engines for chainsaws in the US and Sweden.
The world’s biggest maker of chainsaws, trimmers, lawn mowers and garden tractors said its operating loss was 362mn crowns in its seasonally weakest quarter, against a year-ago 236mn loss and a mean forecast in a Reuters poll for a 125mn loss.
Chief executive Hans Linnarson said European markets weakened significantly in the quarter and its clients were cautious about building up inventories for the coming gardening season.
Weak consumer demand for winter products such as snow throwers and chainsaws also weighed on sales, the firm added.
Sales fell to 4.5bn crowns from 5.0bn, against a 4.6bn forecast.
TUI AG
German travel and tourism group TUI AG reported first-quarter results that beat expectations, helped by the performance of Europe’s largest tour operator TUI Travel and better profitability at its hotel business.
The group, which holds a 56% stake in TUI Travel, reported yesterday an underlying first-quarter loss before interest, taxes and amortisation of €141.5mn ($191mn).
That was less than the €161mn loss expected on average by analysts in a Reuters poll.
TUI caused a stir in the travel industry when it was revealed in January that it had approached TUI Travel over a possible nil-premium, all-share merger. But the German group decided against making a bid, saying it was not in shareholders’ best interests at current share prices.
TUI Travel reported first-quarter results last week and said more Europeans were booking all-inclusive holidays to make the best use of dwindling incomes.
Along with TUI Travel, TUI AG also operates its own hotels and cruise business.
Barclays Kenya
Barclays Bank of Kenya posted yesterday an 8% rise in pretax profit to 13.02bn shillings ($148.8mn) for 2012, helped by slim growth in its loan book and a fall in bad debt.
The bank, a unit of Barclays, said it would pay a dividend per share of 1 shilling, 11% higher than the previous year.
Market analysts forecast strong results for Kenya’s banking sector after inflation and interest rates fell sharply in 2012 and the local currency stabilised following a torrid 2011.
Adan Mohamed, Barclays’ outgoing managing director for the east and west Africa region, told an investor briefing that total income rose 4% to 27bn shillings, while costs were up 5%. He said bad debts fell to 3.8bn shillings during the year from 5.5bn shillings in the previous period, aided by significant recoveries.
The bank’s loans to customers rose to 104bn shillings in 2012 from 99bn shillings in the previous year, while the cost—income ratio was stable at 52% in 2012, Mohamed said.
Barclays and South Africa’s Absa Group plan to merge the bulk of their African businesses outside of South Africa, with Barclays relinquishing direct control of eight of its operations on the continent in exchange for 129.5mn new shares in Absa.
Telenor
Norwegian telecom operator Telenor yesterday posted a 32% rise in 2012 profits and said it would increase its investment pace this year, primarily in the lucrative data traffic sector.
For the full-year 2012, net profit rose to 9.49bn kroner (€1.29bn, $1.73bn), owing primarily to favourable tax items.
Earnings before interest, tax, depreciation and amoritisation (EBITDA) rose by 6%, to 31.89bn, while sales climbed 3.3% to 101.72bn.
In 2012, the operator spent about 12.1% of sales on investments, excluding licence and spectrum acquisitions.
As fixed telephony declines and competition in the mobile phone sector intensifies, Telenor is increasingly focusing on high-speed Internet and data traffic for its main revenue.
In its home market Norway, which has been close to saturation for a long time, “data traffic is perhaps the most important thing for it to continue to grow,” Carnegie analyst Espen Toergersen told Norwegian television.
After launching fourth generation services in Norway last year, Telenor now plans to do the same in Denmark in March.
The company said it expects organic sales growth of three to five% in 2013, and a gross operating margin of around 34%.
With some 148mn subscribers, Telenor is one of the world’s biggest mobile telephony operators, offering services in a dozen countries in Europe and Asia, and in a number of others via its 37.5% share of Russian operator Vimpelcom.
Last year, Telenor re-established itself in India, buying back licences in six regions. It was among eight mobile operators whose licences had been cancelled by India’s Supreme Court earlier on grounds that a 2008 licence sale was under-priced.
Telenor’s costly presence on the highly-competitive market has been criticised by analysts.
In the fourth quarter alone, its Indian unit registered an EBITDA loss before interest, tax, depreciation and amoritisation of 444mn kroner, but aims to break even in 2013.
Dr Pepper’s
Dr Pepper Snapple Group reported a 2% increase in fourth-quarter revenue as strong growth in Latin America offset flat North American volumes.
Net sales in Latin America, which accounted for about 7% of total revenue in 2011, rose 7% in the quarter ended December 31.
The maker of soft drinks such as 7UP, Sunkist and Hawaiian Punch said profit rose to $170mn, or 81¢ per share, from $166mn, or 77¢ per share, a year earlier. Revenue climbed to $1.48bn.
On an adjusted basis Dr Pepper earned 82¢ per share. Analysts on average had expected a profit of 85¢ per share, according to Thomson Reuters I/B/E/S.
Revenue rose to $1.48bn, slightly below market estimates of $1.49bn.
Dr Pepper also said it expects profit for the current year in a range of $3.04 to $3.12 per share and sales growth of about 3%.