CORPORATE RESULTS
Gazprom slips from top spot with $38bn profit
The world’s largest gas company Gazprom yesterday reported $38bn in net profits for 2012, a decline of 10% from the previous year that deprived it of its status as the world’s most profitable company.
The profits were still the third-biggest of any global company last year, but Gazprom’s profitability was limited by falling sales in the domestic market, combined with rising costs.
Profits for 2012 amounted to 1.183tn rubles ($38.17bn) compared with 1.307tn rubles ($42.2bn) in 2011, the Russian gas leviathan said in a statement.
Gazprom said that during the year net sales of gas fell by six% as deliveries to Europe and other foreign countries rose just two% while those to the ex-USSR states fell 17%.
Operating costs, meanwhile, shot up by 18%. The fall in profits for the company was the first drop in a decade which has seen Gazprom exponentially increase earnings.
The earnings left Gazprom with the third biggest profits of any company worldwide in 2012 after ExxonMobil which posted a profit of $45bn and Apple with almost $42bn.
Gazprom had led those two groups in 2011 after currency conversions.
The Russian state is the dominant shareholder, with 50.002% of of Gazprom’s equity.
According to its annual report, Gazprom controls 18% of the world’s gas reserves and 14% of production. Proven and probable gas reserves rose to 23.4tn cubic metres in 2012, up 2.6% from 2011, it said.
However over the last year it has been operating in a hugely difficult environment amid an economic slowdown, falling demand and increased competition on the domestic market from homegrown rivals such as Novatek.
There has also been mounting criticism of Gazprom’s pipeline-based delivery strategy at a time when liquid natural gas is becoming more in demand, and there is also concern that the company has come too late to the shale gas boom.
Rosneft
Russia’s largest oil producer Rosneft yesterday saw its net profit slip 13% in the first quarter to $3.3bn on seasonal factors that included lower sales volumes of petroleum products.
Its reported profit for the first three months of the year was slightly above the consensus and included only 10 business days of the company’s previous acquisition of Russia’s number three oil producer TNK-BP.
Pfizer
US pharmaceutical giant Pfizer yesterday reported higher earnings but lower revenues on the loss of some popular drugs to generic status as it trimmed its 2013 profit forecast.
Pfizer reported net income of $2.75bn, up 53% from $1.79bn in the year-earlier period. Revenues came in at $13.50bn, down from $14.89bn in the year-earlier period.
Pfizer’s per-share earnings came in at 38¢. The adjusted earnings came in at 54¢ per share. Pfizer had been forecast by analysts to report 56¢ per share.
Pfizer said the drop in revenue was primarily the result of losses of exclusivity of its Lipitor anti-cholesterol drug in the second quarter of 2012 in Europe and Geodon, a schizophrenia drug, in March 2012 in the US.
Lloyds
Lloyds Banking Group’s first-quarter profit jumped and the bank upped its cost savings target, sending shares to a near two-year high and close to the price at which the state could break even if it sold its stake.
Shares in Lloyds, 39%-owned by the British taxpayer, gained as much as 6.9% and hit a high of 57.2 pence, after it said underlying profit trebled to £1.48bn ($2.3bn), on improved margins, lower costs, and falling losses on bad loans.
The government considers a sale at 61 pence would enable it to break even after it pumped £20.5bn into the bank to keep it afloat during the 2008 financial crisis.
ANZ bank
Australia and New Zealand Banking Group yesterday reported better than expected half-year net profit of A$2.94bn (US$3.04bn) bolstered by a strong Asian showing.
Australia’s third largest bank by market value said the result for the six months to March was up 1% on the same period last year.
However the bank’s preferred measure of underlying profit, stripping out one-off costs and gains, climbed 10% over the same period last year to $3.18bn, beating expectations of $3.13bn.
Melbourne-based ANZ will raise its interim dividend by 11% to 73¢ a share.
Sydney’s ASX 200 market rallied 1.3% on the strong earnings report from ANZ whose shares closed up 5.78% at a record $31.84.
Japan Airlines
Japan’s two-biggest airlines said yesterday they would take a revenue hit of more than $200mn from the grounding of Boeing’s Dreamliner as the troubled aircraft takes to the skies again.
All Nippon Airways (ANA) and rival Japan Airlines (JAL), which reported full-year earnings yesterday, together account for half of the Dreamliners in service globally and had to cancel thousands of flights in the wake of the crisis tied to the next-generation jets’ lithium-ion batteries.
ANA, which operates 17 of the Dreamliner’s 50-strong global fleet, said its fiscal year net profit soared 53.1%, as cost-cutting and a boost in demand for international travel helped it shrug off its Dreamliner woes.
The firms said they expected revenue in the past and current fiscal year would come in about ¥22.5bn ($230mn) lower due to the Dreamliner issue, though ANA said the pain would be lessened if it can restart flights by June as the next-generation aircraft undergoes a battery fix.
JAL, which re-listed in Tokyo last year after a high-profile bankruptcy restructuring, said its net profit in the fiscal year to March came in at ¥171.7bn ($1.8bn), while it slashed its full-year earnings outlook by almost a third to ¥118bn.
Sales rose 2.8% to ¥1.24tn in the 12 months to the end of March, it added.
ANA earned ¥43.1bn in the year to March, up from ¥28.2bn a year earlier, as revenue climbed 5.1% to ¥1.48tn, it said.
The carrier expects a ¥45.0bn net profit in the current fiscal year.
UBS
Swiss banking giant UBS reported yesterday a slight drop in its first quarter net profit, but nonetheless easily beat market expectations due to an influx of fresh cash.
During the first three months of the year, the bank saw its net profit slide 4.5% compared to a year ago to 988mn Swiss francs (€804mn, $1.052bn).
The result was, meanwhile, far higher than the expectations of analysts polled by Swiss agency AWP, who had predicted on average a net profit of 510mn Swiss francs for the quarter.
The result was also a clear improvement on the previous quarter, when Switzerland’s largest bank posted a net loss of 1.9bn Swiss francs.
UBS said its better-than-expected performance largely rested on its wealth management business, which posted a 664mn Swiss franc profit before tax, as well as an influx of fresh capital.
During the first three months of the year, UBS saw net new money inflows of 15bn Swiss francs, representing “the highest quarterly net inflows since 2007,” the bank said in its earnings statement, and threebn more than investors had anticipated.
UBS’s investment bank, which is in the midst of a massive restructuring after being the source of numerous scandals that burdened the bank with catastrophic losses during the 2008 subprime crisis, managed to rake in 977mn Swiss francs before tax.
In the fourth quarter of 2012, that unit suffered a 243mn-franc loss.
UBS also said it had brought down its expenses in the investment bank division by two% during the first quarter.
Thomson Reuters
Thomson Reuters Corp reported a 7% decline in first-quarter operating profit because of severance costs and a decrease in revenue at its Financial & Risk division, which caters to banking clients.
That decline did not change the company’s outlook for the remainder of the year and it reaffirmed its forecast for 2013 revenue growth in the low single digits.
The company reported that revenue from ongoing businesses rose 2% to $3.1bn before currency changes on the strength of its Legal and Tax & Accounting divisions. First-quarter revenue met analysts’ expectations, according to Thomson Reuters I/B/E/S.
Thomson Reuters is the midst of a turnaround after Thomson Corp’s $17bn acquisition of Reuters Group. The 2008 merger coincided with a financial crisis that prompted banks, which are core customers of Thomson Reuters, to slash costs and cut staff.
Revenue at Financial & Risk, after subtracting acquisitions, divestitures, and currency changes fell 3%. This is because the division had negative net sales from the cancellation of subscriptions in 2012, the company said.
By region, the company had its strongest performance for its financial products in the Americas, where revenue was up 2%. Revenue for Europe, the Middle East and Africa fell 3% while it declined 2% in Asia.
On a net basis, Thomson Reuters reported a loss of 4¢ per share against earnings of 35¢ in the year-earlier period. On an adjusted basis, the company reported earnings per share of 38¢ compared with analysts’ forecast of 32 cents.
Starwood Hotels
Starwood Hotels & Resorts Worldwide, whose brands include Sheraton and Westin, reported a quarterly profit that handily beat analysts’ expectations as more people checked into its hotels at higher room rates, particularly in North America.
Starwood said revenue per available room (revPAR) — a key metric for the hotel industry — for all its hotels in North America open for at least a year rose 6.2% in the first quarter. Occupancy increased to 68.6% from 67.3%.
Higher demand drove a recovery in the US hotel industry through 2010 and 2011. However, with hotels running at near-peak levels, operators have had to ramp up room rates at a faster pace to drive results, Suntrust Robinson Humphrey analyst Patrick Scholes said.
Net income from continuing operations rose to $143mn, or 73¢ per share, in the first quarter from $129mn, or 65¢ per share, a year earlier.
Excluding items, Starwood earned 76¢ per share, easily topping analysts’ expectations of 53¢ per share.
Revenue dropped 10% to about $1.54bn, but was ahead of the $1.47bn analysts expected.
OCBC
Oversea-Chinese Banking Corp , Singapore’s second-biggest lender, posted a 16% fall in first quarter profit, hurt by lower contributions from its insurance unit and weak interest rate margins. OCBC earned S$696mn ($564mn) in the three months ended March, compared with S$832mn a year earlier. Its profit was above the S$656mn average forecast of eight analysts polled by Reuters.
The bank earned 60% of its profit before tax from Singapore and 25% from Malaysia in the first quarter.
Shares of OCBC are up about 12.2% so far this year, outperforming rises of about 10% by bigger rival DBS Group Holdings and nearly 8% by United Overseas Bank.
DBS and UOB will announce first quarter results on May 2.
Herbalife
Herbalife posted surprisingly strong quarterly earnings and raised its full-year profit forecast, putting pressure on high-profile investor Bill Ackman, who is betting against the nutritional products company.
Ackman’s Pershing Square Capital has a $1bn bet against the “multi-level marketer” whose weight loss products are sold through a network of independent individuals. In recent months Ackman has called the Los Angeles-based company “a pyramid scheme” and predicted that its shares will eventually be worthless.
Herbalife’s first quarter net income grew to $118.9mn, or $1.10 per share, in the first quarter, compared with $108.2mn, or 88¢ per share, a year earlier.
Excluding a hit from the devaluation of Venezuela’s currency and expenses related to defending the company from criticism by Ackman and other high-profile investors, the company earned $1.27 a share during the quarter — 20¢ more than the average of analysts’ estimates compiled by Thomson Reuters I/B/E/S.
Net sales rose 17% to $1.1bn.
Based on those results, Herbalife raised its 2013 forecast for adjusted earnings per share to a range of $4.60 to $4.80 from $4.45 to $4.65 previously.
