Malaysia-based AirAsia yesterday announced a six-fold increase in second-quarter net profit as Asia’s budget travel leader increased revenue despite what it called a “challenging” aviation environment.

Net profit was 367.2mn ringgit ($115mn), up from 58.3mn ringgit in the same quarter of 2013.

AirAsia said the jump was mainly due to foreign exchange gains on borrowings.

But it said revenue also grew 5% to 1.31bn ringgit as passenger numbers increased slightly.

AirAsia is led by flamboyant boss Tony Fernandes, a former record industry executive who acquired the then-failing airline in 2001. It has seen spectacular success and aggressive growth under his low-cost, low-overhead model.

While its rival Malaysia Airlines faces potential collapse after two disasters this year, AirAsia last month signed an agreement to buy 50 long-haul A330-900neo passenger planes from Europe’s Airbus. The deal is worth $13.75bn at catalogue prices.

AirAsia CEO Aireen Omar attributed the second-quarter performance in part to moves to cut down on less profitable flights. She said the airline also held firm on pricing in the face of “irrational” price competition from rivals. “AirAsia continues to be disciplined in an industry where irrational competition exists,” she said in a statement.

Fernandes said in a statement the outlook should improve in the second half of the year, predicting that competitors would move to more “realistic” pricing.

AirAsia said overall results in the quarter would have been better if not for losses suffered by its Thai, Indonesian, and Philippine subsidiary airlines.

Such struggles have not halted Fernandes’s expansionist ways.

The company announced last month it would re-enter the Japanese market in a tie-up with e-commerce giant Rakuten, jumping back into the country following its bitter split last year with All Nippon Airways over a budget carrier joint venture.

 

 

MTS

Russia’s biggest mobile phone operator MTS cut full-year sales and core profit forecasts yesterday, citing instability in Ukraine, its second-biggest market.

“While in Russia we still expect revenue growth at the upper end of our 4-5% range, the impact of the situation in Ukraine will limit the group’s revenue growth to at least 1% for 2014,” MTS chief executive Andrei Dubovskov told reporters.

MTS cut its revenue growth target from an earlier 3-5% range. It said it now expects operating income before depreciation and amortisation to be flat year-on-year, having previously forecast a 2% rise.

Dubovskov said second-quarter sales in hryvnia terms increased in Ukraine, where pro-Russian rebels are fighting government forces in the east, but he expected falls in future. He said the Ukrainian unit’s results would be hurt by the economic decline, rising unemployment, a weakening hryvnia, as well as the suspension of services in Crimea after it was annexed by Moscow in March and network disruptions in the east.

The company said earlier that MTS-Ukraine, the second-biggest operator in the former Soviet republic after Vimpelcom Ltd’s Kyivstar, was unable to service clients in Crimea.

The Ukraine crisis weighed on MTS consolidated results in the second quarter with total sales rising by just 1.4%, year-on-year to 98.9bn roubles ($2.7bn). Analysts had forecast a 1.7% increase. Revenue in Russia alone rose 4.5% to 90.4bn roubles, driven by data services, the company said.

“We are not seeing any difficulties in our main, Russian market,” said Dubovskov.

MTS also reported a fall in profits for the second quarter, mainly because of a one-off $320mn gain it booked a year earlier in connection with the settlement of a dispute in the former Soviet republic of Kyrgyzstan.

Its quarterly OIBDA fell 2.6% to 43.2bn roubles, which was still in line expectations. Core profit was also hit by the hryvnia’s devaluation. Net profit fell 27% to 21bn roubles, above a 17.5bn forecast.

MTS, controlled by oil-to-telecoms conglomerate Sistema, confirmed investment plans and its dividend policy.


BAWAG

Austrian lender BAWAG PSK nearly doubled net profit in the second quarter and boosted its core capital adequacy ratio to over 11%, it reported, putting it in good shape for the European regulatory health checks now underway.

Majority owned by US investor Cerberus Capital Management , BAWAG is one of six Austrian lenders lining up for the checks being led by the European Central Bank before it takes over as the euro zone’s main banking regulator in November.

BAWAG PSK was now looking forward to the results, chief executive Byron Haynes told Reuters yesterday after the bank reported its common equity tier 1 capital ratio hit 11.2% of risk-weighted assets in the first half.

Haynes declined to say whether Cerberus might now look to sell out, having acquired BAWAG PSK with other investors for €3.2bn ($4.25bn) in 2007, adding that no sale process was under way and a potential sale was beyond management’s control.

US firm GoldenTree Asset Management also now has a stake of nearly 40% in the bank, whose book value is around €2.3bn.

Its second-quarter net profit of €95.1mn ($127mn) brought the first-half total to €175mn, up 87% despite tough market conditions.

First-half core revenue increased 21% as reduced funding costs helped net interest income rise by a quarter. In a cut-throat Austrian market, BAWAG boosted its net interest margin by 0.53 percentage points to 1.84%.

It repaid the last €350mn of Austrian state aid in March, redeemed “non-sustainable” minorities of 400mn in the first half and paid off the remaining 60mn euros of non-sustainable Tier 1 instruments on July 31, it said.

 

 

Lowe’s Cos

Lowe’s Cos, the world’s No 2 home improvement products retailer, reduced its sales forecast for the full year, sending its shares down 4% in premarket trading.

The company reported better-than-expected second-quarter revenue as it recovered most of the outdoor product sales it had missed in the first quarter when a severe North American winter hurt results of Lowe’s and larger rival Home Depot Inc

Lowe’s said it cut its sales growth forecast to about 4.5% from about 5% to take into account its year-to-date sales. It lowered same-store sales growth forecast to about 3.5% from about 4% for the year ending January.

“We believe home improvement spending will continue to progress in tandem with strengthening job and income growth,” chief executive Robert Niblock said in a statement.

Home Depot on Tuesday maintained its full-year sales growth forecast of about 4.8%, which Canaccord Genuity analyst Laura Champine called “somewhat conservative”.

The company said it expected same-store sales to grow faster in the second half of the year as customers renovate homes with big-ticket purchases such as wood and laminate flooring in a recovering US housing market.

Lowe’s maintained its full-year profit forecast of about $2.63 per share.

Lowe’s same-store sales rose 4.4% in the second quarter. Analysts polled by Consensus Metrix had expected Lowe’s comparable-store sales to rise 4.1%.

Net income rose to $1.04bn, or $1.04 per share, in the second quarter ended Aug. 1, from $941mn, or 88 cents per share, a year earlier.

Revenue rose to $16.59bn from $15.71bn.

Analysts on an average had expected earnings of $1.02 per share on revenue of $16.55bn, according to Thomson Reuters I/B/E/S.

 

 

Vestas

Danish wind turbine maker Vestas Wind Systems posted strong quarterly earnings yesterday as it continued to emerge from a crisis in which it shed thousands of jobs.

The company raised its profits guidance.

The Aarhus-based company said it believes this year’s margin on earnings before interest and taxes, before special items, would be at least 6%, instead of 5% forecast previously.

The upgrade was based on “the improved cost base and the expected delivery plan for the second half of 2014,” it said.

The company, the world’s biggest wind turbine maker, reported its last annual profit in 2010, falling into the red after an ill-timed expansion plan and tough competition forced it to slash its workforce by almost a third.

Vestas made a net profit of €94mn ($125mn) in the second quarter compared with a €62mn loss in the same period a year ago, as revenue rose 13% to €1.341bn.

 

 

Volvo Car

Chinese-owned Volvo Car Group announced a return to profits yesterday in an upbeat half-yearly report that cited “solid” demand for the Swedish brand particularly in China.

The Gothenburg-based manufacturer bucked dismal sales trends in the global auto industry with a 15% hike in turnover to 64.78bn kronor ($9.39bn, €7.06bn).

Net profits was 535mn kronor in the first six months of the year compared to a 778mn kronor loss for the same period in 2013.

Sales in vehicle terms grew by 9.5% year on year to 229,013 units, compared to 209,117 for the same period in the previous year. “This first half result is both solid and encouraging,” chief executive Haakan Samuelsson said in a statement.

The group doubled its previous sales outlook for the year to 10%, partly due to strong demand from China where sales grew by 34.4%, largely offsetting a 10% fall in US sales.

“We are growing our presence in China and we expect to sell at least 80,000 cars there this year,” said Samuelsson, just a week ahead of the formal launch of the XC90 SUV — Volvo’s first fully new car since being bought by Zhejiang Geely Holding from Ford Motor Company in 2010.

Apart from banking in the growth of the Chinese car market where the group has three factories, it also said a “revival plan” was underway with new management in the US, where the Swedish brand has no manufacturing base.

In Europe, Volvo said the market showed “signs of recovery and growth”, with particularly good results in the UK, Germany and the Netherlands.

Nonetheless, the group’s operating profit is expected to stagnate in 2014 “due in part to an expected negative impact from exchange rates and the continued investment program”.

Volvo Cars was separated from the Volvo Group’s truck, engine and construction machinery business in 1999 and employs 22,300 globally.

 

 

Hikma Pharma

Hikma Pharmaceuticals Plc reported a 44% jump in first-half profit helped by a strong performance at its US injectibles business, but the Jordanian drugmaker cut its sales growth forecast for branded drugs citing shipment issues in some north African markets.

The company, which makes and markets branded and non-branded generics and injectibles, lowered its full-year revenue growth forecast for the branded drugs business to a low-single digit percentage from about 10% earlier.

Hikma said limited availability of foreign currency reserves restricted product shipments in Sudan, while a restructuring of distribution channels in Algeria dragged on sales in that country in the first half.  The Middle East and North Africa region accounted for 40% of Hikma’s branded drugs sales.

Hikma, which was founded in Amman in 1978, said adjusted profit attributable to shareholders rose 44% to $176mn in the six months ended June 30.

Revenue rose 16% to $738mn. Revenue from injectibles rose 41% to $346mn.

The company, which benefited from a shortage of the antibiotic doxycycline last year, said in May that it was focusing on high-value products in its injectibles business.

Adjusted operating margins in the business rose to 41.0% in the first half from 28.5% a year earlier.

The company said it would pay a special dividend of 4 cents per share. It’s regular interim dividend was unchanged at 7 cents per share.

Hikma paid a special dividend of 3 pence per share last year to reflect the strong performance of its generics business.

 

 

Glencore Xstrata

Mining giant Glencore Xstrata reported a sharp improvement in first-half performance yesterday, marking a big switch back into profit.

The group, which came into being with a mega merger last year, said it had made a net profit of $1.72bn during the first half of 2014, up from a $9.39bn loss a year earlier.

The deep loss during the first half of 2013 was largely due to massive write-downs after Swiss commodities group Glencore’s merger with Switzerland-based mining company Xstrata.

Cost-cutting since then had allowed the company to return to return to growth and to grow its cash holdings, it said.

During the six-month period, Glencore Xstrata saw an eight-percent rise in its adjusted earnings before interest, taxes depreciation and amortisation (Ebitda) to $6.46bn, which it largely put down to the Xstrata acquisition.

In the light of this performance, Glasenberg said the company would raise its interim dividend to share holders by 11% to six cents per share.

Glencore also said it had finalised its sale of the Las Bambas copper mines in Peru to a Chinese consortium for the net sum of $6.5bn, as well as its acquisition of Caracal Energy, a Chad-focused exploration company, for $1.6bn.

And it said that it, in line with a previously announced share-buy-back programme, it would return $1.0bn in capital to shareholders over the next six months.

 

 

Geely

Geely Automobile Holdings yesterday posted a 20% fall in first half net profit, hit by slowing sales at home as local brands fall out of favour and a drop in exports to major markets in eastern Europe and the Middle East.

Geely, whose parent company owns Swedish carmaker Volvo, said net profit fell to 1.11bn yuan ($180.6mn) for the January-June period from 1.398bn yuan the same period a year ago. The figure beat analysts’ average of forecast of a 959mn yuan profit.

Turnover fell 32% year-on-year to 10.16bn yuan. It sold 187,296 vehicles during the first half, down 29% from a year ago.

Geely said it decided to revise down its full year sales volume target to 430,000 units from 580,000 units.

Geely had said in March that it will consolidate brands and sales network to cut costs amid sluggish sales.

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Schoeller-Bleckmann

Schoeller-Bleckmann Oilfield Equipment said sales slipped 1% in the second quarter as customers spent cautiously on high-precision components.

Revenues fell to €118mn ($157mn), the Austrian company said yesterday, slightly below the 121mn-euro average estimate in a Reuters poll.

Bookings rose “slightly” in the second quarter from the first quarter, SBO said, lifting first-half bookings 13% to €228mn.

Schoeller-Bleckmann, some of whose oilfield service companies are active in Russia and are affected by US and European Union sanctions, said their effect on the company “cannot yet be assessed.”

The Austrian company supplies equipment to major oilfield service companies like Halliburton, Schlumberger, Baker Hughes and Weatherford.

Schoeller-Bleckmann said in May that bookings were weaker in April than in the first quarter as customers repaired equipment instead of ordering new.

This helped the company’s repair and maintenance business, which has higher margins than equipment sales, but had a negative effect on top-line growth. Operating profit rose 21% in the quarter to €24mn and earnings per share rose 14% to €0.99, missing market expectations.

 

 

Hochschild

Silver miner Hochschild Mining reported a 4% rise in first-half adjusted core earnings, helped by its aggressive cost-cutting programme and increased output from its mines in Peru and Argentina.

Hochschild’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $94.3mn, from $90.4mn a year earlier.

Net revenue fell 8.6% to $282mn for the six months ended June 30.

The miner, which cancelled dividend payments until its financial situation improves, said the capital required to bring its flagship Inmaculada gold and silver project in southern Peru to production restricted payment of an interim dividend.

Hochschild, which has been battling rising costs and falling precious metal prices, backed its production target for the year and said the Inmaculada project is set to be commissioned at the end of the year.

Attributable silver equivalent production from the company’s three underground mines in Peru and Argentina for the period rose 3% to 11.85mn pounds, Hochschild said in July.

 

 

Staples

Staples warned that its sales could fall in the current quarter as it sells fewer computers and core office supplies such as ink and toner in North America amid stiff competition from online retailers and big-box chains.

The company has been spending heavily on advertising to promote itself as a seller of products other than traditional office supplies. It has also been investing to boost its online business.

Staples is facing increased competition from mass merchants such as Wal-Mart Stores and online retailers such as Amazon.com, which offer cheaper products.

Staples said in March it would close 140 of its North America stores this year to boost profits and focus on its online business.

The company said yesterday it closed 80 of these stores in the second quarter ended August 2.

Smaller rival Office Depot said in May that it would close 400 US stores by the end of 2016.

Staples forecast a profit of 34-39 cents per share for the third quarter ending November.

Analysts on average were expecting 37 cents per share, according to Thomson Reuters I/B/E/S.

Staples’ net income fell 20% to $81.9mn, or 13 cents per share, in the second quarter. Excluding items, the company earned 12 cents per share.

Total sales fell 1.8% to $5.22bn.

Analysts on average had expected a profit of 11 cents per share and revenue of $5.16bn.

Staples’ North America and online sales fell 6% to $2.3bn. The company’s shares were trading at $11.80 before the bell.