Credit Suisse said its drive to cut costs, risky assets and focus on its investment bank were bearing fruit as its quarterly earnings beat analysts’ expectations and it raised the prospect of a cash dividend this year.
The results are a boost to the Swiss bank’s argument that its slimmed-down investment bank can prosper despite lacking the scale of Wall Street giants like JP Morgan and Goldman Sachs. Swiss rival UBS is largely pulling out of fixed income to focus on private banking.
Credit Suisse said yesterday first-quarter investment bank net revenues were stable versus a year ago, contrasting with weaker trading revenues at Wall Street’s top five banks.
But some analysts were cautious of drawing conclusions.
“It’s a better quarter than expected, particularly in the investment bank, but one swallow doesn’t make a summer,” said Rainer Skierka, Zurich-based analyst for private bank Sarasin.
“For me, Credit Suisse’s strategy is going to lead to more volatile results than those of UBS or someone focused on private banking. It’s up to investors to decide which they prefer.”
Credit Suisse reported first-quarter net profit of 1.30bn Swiss francs ($1.38bn), up from 44mn francs a year earlier. The result topped the average estimate of 1.26bn francs in a Reuters poll of analysts.
The rise was driven by its investment banking division, where spending fell 13% and charges on Credit Suisse’s own debt slid to 68mn francs from 1.5bn a year ago.
Credit Suisse’s wealth management arm, the other pillar in its banking model, posted a 7% drop in pretax profits as revenues fell 5%.
The Zurich-based bank said its restructuring — it is on track to meet a spending cut target of 4.4bn francs by the end of 2015 — would help it pay investors a cash dividend after last year’s largely stock payout.
Credit Suisse said its private bank, which targets clients with more than $1mn in bankable assets, won 12bn francs in fresh money from clients.
The bank suffered big outflows of money from clients in Europe, where Swiss banks are under fire for helping tax cheats, but saw new assets up nearly 10% in Asia.
Volkswagen
Volkswagen, Europe’s biggest carmaker, said yesterday it was sticking to its full-year targets even though profits fell sharply in the first quarter due to the “difficult market environment”.
Net profit slumped by 38.2% to €1.946bn in the period from January to March, VW said.
Operating profit fell by 26% to €2.344bn on a 1.6% decline in revenues to €46.565bn.
Customer deliveries, on the other hand, were up 4.8% at 2.314mn vehicles worldwide.
Chief executive Martin Winterkorn insisted that the group’s performance in the January-March period was “satisfactory ... in a challenging market environment.
“As expected, business in the first quarter was dominated by the difficult economic environment,” Winterkorn said.
“The markets were sluggish, especially in Europe, and not least in Germany. But we remain confident overall that we can pick up speed over the rest of the year” the CEO insisted.
“Despite all the economic uncertainties, the Volkswagen group is standing by its goals for 2013,” Winterkorn said.
Apple
Apple on Tuesday bowed to investors’ demands to share more of its $145bn cash pile, while posting its first quarterly profit decline in more than a decade.
The new expanded capital plan includes issuing debt for the first time to fund $100bn in share repurchases and higher dividends until the end of 2015. That doubles the amount from a programme set up last year and makes Apple the largest dividend-paying company in the world.
Chief Executive Tim Cook told analysts on a conference call that “some really great stuff” was coming in the fall and 2014. That suggested Apple would have no new products in the market for the next few months.
The new capital plan came as Apple’s fiscal second quarter profit slid 18%. While revenue rose 11%, it slowed sharply from 2012 and previous years.
Apple is forecasting revenue of $33.5bn to $35.5bn this quarter, lagging Wall Street’s average projection of $38.2bn.
Since hitting a record close of $702.10 last September, the world’s largest technology company has shed 44%, losing more than $280bn of market value — or more than the entire market capitalisation of Google.
Apple earned $9.5bn or $10.09 a share in the quarter, down from $11.6bn or $12.30 a year earlier.
The company reported better-than-expected second-quarter revenue of $43.6bn, beating Wall Street’s average forecast for $42.3bn, according to Thomson Reuters I/B/E/S, as iPhone and iPad sales surpassed investors’ lowered expectations.
Gross margins came in at 37.5% in the second quarter, while expectations were for 38.5%.
Apple’s shareholders will now get an annual dividend of $12.20 per share, making Apple one of the highest dividend-paying companies. With about 940mn shares outstanding, Apple will return $11.5bn to shareholders over 12 months, an amount that exceeds the market value of 200 other Corps in the S&P 500.
In a rare move, the company also said it plans to raise debt for the expanded programme but did not provide any details.
Barclays
British bank Barclays, looking to fix a reputation that was battered last year by the Libor rate-rigging scandal, said yesterday that it was back in the black, with a first quarter net profit of £839mn ($1.28bn, €983mn), compared with a loss in the first three months of 2012.
Barclays had reported a net loss of £598mn in the first three months of 2012, the bank noted in a results statement.
The bank’s profit was skewed by changes in the value of its debt and owing to an absence of the provisions seen a year earlier to compensate clients who were mis-sold insurance.
Adjusted profit before tax fell by a quarter to £1.79bn, hit in part by restructuring costs that totalled £514mn as part of Jenkins’ Transform programme, the bank said.
It added that bad debt provisions had fallen 10% to £706mn in the first quarter.
Boeing
Boeing’s first-quarter earnings jumped nearly 20%, handily beating analysts’ estimates and showing little impact from the 787 Dreamliner problems, sending the company’s shares up 3.2% in premarket trading.
First-quarter net income rose to $1.1bn, or $1.44 a share, from $923mn, or $1.22 a share, a year earlier.
Core earnings, which exclude some pension charges, were $1.73 a share. On that basis, analysts had expected $1.49, according to Thomson Reuters I/B/E/S.
Revenue slipped 2.5% to $18.9bn, hit by a halt in Dreamliner deliveries.
Analysts did not expect the cost of the Dreamliner fix to be significant compared with the $20bn expense of developing the jet and the $120bn in estimated costs for its initial production run. The 787 is designed for 50 years of production.
In any case, investors were prepared to overlook the cost of the fix, analysts said, because it has been amply flagged and factored into the stock price. Boeing shares have risen 18.6% since regulators grounded the Dreamliner on January 16.
Analysts focused on the ability of Boeing’s commercial airplane unit to rake in cash by delivering jets — cash that can be used to buy back shares, pay dividends or invest in new airplane programs, all of which are considered positive for the stock price.
Cash fell by $2bn in the latest quarter, less than some analysts had expected. And Boeing’s confidence about its ability to make up the Dreamliner deliveries in the rest of the year allayed fears about further cash depletion.
Broadcom
Broadcom’s first-quarter results beat expectations and the chipmaker said much of its growth this year would come from selling more components to smartphone makers.
Broadcom’s quarterly earnings report pushed the chipmaker’s shares up after hours as company executives said they expect their baseband chips to appear in upcoming handsets.
Broadcom, which sells wireless chips used in Apple’s iPhone as well lower-end devices popular in Asia, posted first-quarter revenue of $2.01bn, up 9.7% from the year-earlier period.
With investors concerned Apple’s expansion may be losing steam, shares of Broadcom had fallen about 1% so far in 2013, compared to a 12% increase in the Philadelphia Semiconductor index.
Like its competitors, Broadcom is trying to diversify its customer base with more sales to manufacturers including Samsung Electronics, Apple’s main rival in smartphones and tablets.
Broadcom’s chips integrating wifi and Bluetooth technology are used in Apple’s iPhone and other top-tier smartphones and tablets.
The company makes 3G baseband chips used in less expensive smartphones sold in Asia and other emerging markets, and it plans to launch high-speed 4G baseband chips compatible with more advanced networks.
Broadcom said revenue in the second quarter would be $2.10bn, plus or minus 4%.
Analysts, on average, had expected first-quarter revenue of $1.913bn and second-quarter revenue of $2.050bn, according to Thomson Reuters I/B/E/S.
Broadcom reported a net profit of $191mn, or 33¢ per share, compared with a net profit of $88mn, or 15¢ per share, in the year-ago quarter. Adjusted earnings per share were 65¢, beating the 56¢ expected by analysts.
Daimler
German automaker Daimler yesterday lowered its full-year profit forecast after large investments and generally weak markets hit its bottom line in the first three months of this year.
Daimler said in a statement that it booked net profit of €536mn ($697mn) in the period from January to March, a drop of 60% from the €1.347bn it booked a year earlier.
Operating profit, as measured by earnings before interest and tax (Ebit), tumbled 56% to €917mn on a 3% decline in revenues to €26.102bn, the statement said.
Overall unit sales were little changed at 501,600 vehicles worldwide, compared with 502,086 a year earlier.
Looking ahead, Daimler lowered its full-year profit forecast, saying it expected full-year operating profit to be “below the previous year’s level.”
Procter & Gamble
Procter & Gamble yesterday forecast current-quarter profit below Wall Street expectations and year-ago levels, sending shares 3.5% lower in early trading.
The world’s largest household products maker also posted fiscal third-quarter profit that topped estimates despite sales that were weaker than both the company and analysts had anticipated.
P&G, whose other brands include Pampers diapers and Gillette razors, forecast fourth-quarter core earnings of 69¢ to 77 cents per share, while analysts were looking for 81¢, according to Thomson Reuters I/B/E/S. P&G earned 82¢ per share in the fourth quarter of fiscal 2012.
P&G said it earned 99¢ per share on a core basis in the quarter ended in March, topping analysts’ target of 96¢. Core earnings exclude items such as restructuring charges.
Overall sales rose 2% to $20.598bn while analysts were looking for sales of $20.73bn. The company had forecast 3% to 4% in sales growth.
P&G’s organic sales, which strip out the impact of divestitures and foreign exchange changes, grew 3% — at the low end of its forecast of 3% to 4%.
The company saw the strongest volume growth in health care at 5%, helped by new toothpastes and a stronger cold and flu season.
On a net basis, the company earned $2.57bn, or 88¢ per share, in the fiscal third quarter ended in March, up from $2.41bn, or 82¢ per share, a year earlier.
The company had forecast core earnings per share of 90¢ to 96¢ and net earnings of 80¢ to 88¢.
Corning
Specialty glass maker Corning’s first-quarter profit beat analysts’ estimates, helped by strong demand for Gorilla Glass used in smartphones and tablets, as the company looks to touch-screen PC notebooks for further growth.
Rising demand for the scratch-resistant glass prompted the company to forecast a rise of 15% to 20% in sales at its specialy materials business in the second quarter, from the prior quarter.
The company is betting on selling Gorilla Glass for touch-screen PC notebooks to increase sales further.
Samsung Electronics Co’s Galaxy Note products, Nokia’s Lumia phones and Motorola’s Droid Razr use Gorilla Glass.
Net income rose to $494mn, or 33¢ per share, in the first quarter, from $474mn, or 31¢ per share, a year earlier. Excluding items, Corning earned 30¢ per share.
Analysts on average expected earnings of 24¢ per share on revenue of $1.96bn, according to Thomson Reuters I/B/E/S.
Revenue at the company, which makes products as diverse as smartphone screens to emission filters, was nearly flat at $1.81bn.
Sales at its telecommunications business fell 7% to $470mn, while those at its environmental technologies business fell 13% to $228mn. The company, which competes with Asahi Glass, raised its quarterly dividend to 10¢ per share from 9¢, and said it would spend up to $2bn to buy back shares.
Ericsson
Swedish telecom equipment maker Ericsson yesterday posted a drop in first quarter profit, weighed down by restructuring costs.
Net profit fell 86.5% to 1.205bn kronor (€139.5mn or $182.6mn) from 8.95bn kronor in the same period last year, when the company recorded a 7.7bn kronor gain on the sale of its stake in mobile phone venture Sony Ericsson.
The company also took a 1.4bn kronor hit from restructuring its Swedish operations.
The results were boosted by a 23% rise in North American sales, but a high portion of sales from low-margin maintenance contracts in Europe weighed on profits.
Capacity increase contracts are normally more profitable than network upgrade projects.
Revenue rose 2% to 52.032bn kronor even as the company faced currency headwinds, underpinned by rising sales in the Networks and Global Services units, Ericsson said.
Analysts polled by Dow Jones Newswires had expected a net profit of 1.8bn kronor and revenue of 52.52bn.
Sprint Nextel
Sprint Nextel Corp, an acquisition target of both Japan’s SoftBank Corp and Dish Network Corp, posted a smaller-than-expected quarterly loss, even as it suffered steep customer losses from the wind-down of its Nextel network.
Sprint, the No 3 US mobile service provider, yesterday recorded higher-than-expected revenue as customers spent more on wireless services.
Its first-quarter loss narrowed to $643mn, or 21¢ per share, from $863mn, or 29¢ per share, in the year-ago quarter.
Analysts expected a loss of 33¢ per share, according to Thomson Reuters I/B/E/S.
Sprint added 12,000 customers to its network, compared with expectations for additions between 110,000 and 275,000 from four analysts contacted by Reuters.
Including the Nextel network, Sprint lost 560,000 subscribers compared with expectations for a loss of almost 525,000 from five analysts contacted by Reuters.
Sprint’s revenue rose to $8.79bn from $8.73bn. Analysts had expected $8.71bn.
The company now expects 2013 adjusted operating income before depreciation and amortization at the high end of its previously announced target of between $5.2bn and $5.5bn, excluding costs of closing strategic transactions.
Sprint’s board is evaluating a $25.5bn acquisition offer from No. 2 US satellite TV service Dish, which challenged Sprint’s October agreement to sell 70% of itself to SoftBank for $20.1bn.
Ford
Ford Motor Co posted a higher-than-expected first-quarter profit yesterday as its North American unit posted its best quarter in more than a decade on the strength of new models.
Revenue in North America, the company’s largest market, shot up by one-fifth during the quarter and Ford added that its European restructuring was on track.
The second-largest US automaker reported a pretax profit of $2.1bn, or 41¢ per share for the quarter, down from about $2.3bn a year earlier. But the results exceeded the analysts’ average estimate of 37¢ per share, according to Thomson Reuters I/B/E/S.
Net income was $1.6bn, or 40¢ per share, up from $1.4bn a year earlier. Revenue rose to $35.8bn from $32.4bn.
Ford’s pretax profit in North America reached its highest level since at least 2000, when it began reporting the region as a separate unit. The company posted a $2.4bn profit there, with sales volume up 17%.
Ford posted a $462mn loss in Europe, reflecting higher costs and the economic downturn’s impact on consumer demand for new cars and trucks. In South America, Ford lost $218mn due to unfavorable exchange rates, particularly in Venezuela.
In Asia Pacific/Africa, Ford earned $6mn. In China, Ford’s market share was 3.6% in the first quarter.
Nasdaq
Nasdaq OMX Group reported a lower first-quarter profit yesterday as the transatlantic exchange operator set aside cash to reimburse firms harmed in Facebook’s botched market debut last May.
Net income attributable to Nasdaq totalled $42mn, or 25¢ a share, down from $84mn, or 48¢ a share, a year earlier.
Nasdaq said it set aside $62mn of expenses for its Facebook reimbursement plan. It set aside $10mn to possibly settle a probe by the US Securities and Exchange Commission into the problems surrounding the initial public offering.
Stripping out one-time charges, Nasdaq earned 64¢ a share. That was 2¢ higher than analysts had expected, on average, according to Thomson Reuters I/B/E/S.
Net revenue grew 1% to $418mn, as analysts expected.
Retail market makers have estimated they lost a combined $500mn due to Facebook’s IPO on May 18, when a systems failure at Nasdaq prevented timely order confirmations for many market participants. That left them trading in the dark in the midst of the leading online social network’s market debut. In March, the SEC approved Nasdaq’s plan to reimburse firms that meet certain criteria up to a total of $62mn. However, Nasdaq disclosed that the SEC’s Division of Enforcement was conducting an investigation relating to the systems issues.
Nasdaq said yesterday its total operating expenses would be in the range of $972mn to $1bn, up from guidance at the end of the previous quarter of $960mn to $990mn.
Bankia
Spain’s biggest bailed-out lender Bankia showed the first fruits of a painful restructuring yesterday, posting a €72mn ($94mn) profit for the first quarter of the year despite bad loans and the continued national recession.
Bankia, which came to symbolise Spain’s banking crisis after making a record €19.2bn ($25bn) loss in 2012, has benefited from a relatively clean slate after transferring troubled real estate assets to a state-backed “bad bank”.
The bank’s parent company BFA reported a net profit for the first three months of the year of 213mn euros, keeping it on target for a profit for the full year of €800mn.
However it may still struggle to hit that target as it copes with economic turmoil and tries to retain customers despite having to close over 1,000 branches.
The bank’s net interest income fell to €512mn in the first quarter compared to €844mn a year earlier, while its non-performing loans ratio stood at 13.1% of its total loan book at the end of March, well above a sector average of 10.39% in February.
The lender never published first-quarter results in 2012, when it was on the verge of a bail-out, barely a year after 350,000 small investors were persuaded to buy shares in the newly merged group of savings banks.
Norsk Hydro
Norsk Hydro, one of the world’s biggest aluminium makers, beat first-quarter earnings forecasts due to higher prices, sales and cost cutting and predicted demand for the metal would return to levels that match supply this year.
Hydro said yesterday its underlying operating profit rose to 1.08bn crowns ($184mn) from 578mn crowns at the same time last year, and against analysts’ average forecast of 726mn crowns in a Reuters poll.
The company has been cutting costs in recent months to improve margins, after aluminium prices dipped to $1,830 in 2012 and demand for the metal was up just 1%.
Aluminium prices were trading around $1,913 a tonne yesterday, but prices remain low — analysts have said it would take levels above $2,500 for firms to add new capacity.
Despite that, Hydro maintained its view that global primary aluminium demand, excluding China, would be up by 2-4% this year.
Whirlpool
Whirlpool Corp reported higher-than-expected quarterly profit and stood by its earnings outlook for 2013 yesterday as price increases and cost cuts helped the world’s largest appliance maker counter lackluster global demand.
Like many US companies, Whirlpool, the maker of Maytag and KitchenAid appliances has kept a lid on costs to offset weak demand, especially in Europe, which is reeling from an economic crisis.
Sales in the first quarter fell 2.3% to $4.25bn, missing the analysts’ average estimate of $4.39bn. Sales were essentially flat in North America, its largest market, and fell in Asia and Europe, Middle East and Africa.
The company expects 2013 industry unit shipments to stay flat in Europe, Middle East and Africa. In the US, shipments are expected to rise 2% to 3%, and in Latin America and Asia, gain 3% to 5%.
In the first quarter, net income rose to $252mn, or $3.12 a share, from $92mn, or $1.17 a share, a year earlier. Excluding special items, it earned $1.97 a share, beating the analysts’ average estimate of $1.93, according to Thomson Reuters I/B/E/S.
Whirlpool forecast full-year earnings of $9.25 to $9.75 a share, excluding restructuring charges, Brazilian tax credits and US energy tax credits. Analysts expected $9.64.
Barrick
Barrick Gold Corp reported an 18% drop in first-quarter profit on lower metal prices and volumes, and the world’s largest gold producer cut its capital spending for this year.
Barrick is under pressure after a series of setbacks at its largest development project, a slump in the price of gold and a shareholder revolt over executive compensation.
The company now expects total capex of $5.2bn to $5.7bn for the year, down from its previous forecast of $5.7bn to $6.3bn.
The company’s net profit fell to $847mn, or 85¢ per share, in the quarter from $1.04bn, or $1.04 per share, a year earlier.
On an adjusted basis, it earned $923mn, or 92¢ per share.
Revenue fell 6% to $3.44bn.
Gold price fell 3.5% to average $1631.33 per ounce during the first quarter from the year-ago period.
The company’s gold production fell about 4% to 1.80mn ounces in the quarter.